tv Trending Business Bloomberg August 21, 2016 9:00pm-11:01pm EDT
of the technocrat and says fiscal virtue must be enforced. let us know what you think of our top stories. use2w me on twitter1 and @rishaadtv, and use #trendingbusiness. david is having a look at what is happening does far. asia closee cap, -- just to recap, asia flat last week -- asia week. flat last taiwan, 3.96%, roughly in line
with estimates. ,xport numbers from south korea first 20 days, slightly lower year on year move, .3%, call it flat. we are looking at a long streak of monthly declines in south korea, 18 straight months now. volumes are still quite light across the equity space. going adjustment. will the fed raise rates? what we have seen since friday into this morning and into what we're seeing right now is a lot of u.s. dollar strength coming
back. -- whenever we hit the 100 level, we get decent buying into the dollar. the euro weakening as well. at $.76.e dollar rishaad: right. shares in fortescue on the up up, it tripling -- on the tripling its full-year profit. how do these numbers stack up for fortescue. paul: very impressively. $984 million full-year, eight eat, better than tripling. revenues are the weak spot, down 17% to a shade over $7 billion. take a look at their costs, $14 per metric ton.
they paid off a lot of that as well. at9 billion, the debt pile $5.2 billion now. fortescue promising better things going forward. , another impressive story, $.12 per share. this time last year, it was two cents. over the course of the start of the year, up 160%. rishaad: right. talking to the bluescope steel chief executive later on, also out with all your results. i think it was 160% up, cost cutting responsible. david: that's right. another good news story from blues go. the full-year profit
there, $359 million. shares did spike around the middle of july when blue scope updated the markets. a cost out story here as well. they have had had some tough times. tax deal fromd the state government, 200 workers were let go. there is also a pay freeze at the plant as well. it has paid off for them in terms of the result, up 100 60%, the dividend three cents per share. bluescope steel shares up better than 4% right now. rishaad: right. thank you very much indeed for that. vanke profit up, jump in markets, biggest residential developers seeing a decline in net income against the backdrop of this ongoing ownership battle.
has seemed torket have bounceback and helped vanke in the first half. >> you could say this is the good, the bad, and the ugly. , netood are the results income rising 10% to 800 million dollars, revenues surging 49% on that rebound in china's property market and searching prices in key markets. also, it's longer-term strategy is focusing on the middle class and leading regions, it is paying dividends as reflected in the results. the bad is this ongoing shareholder struggle. the first half results help to offset the fallout after a conglomerate emerged late last year as the biggest shareholder. managemented a vanke outcry, calling the stake
unwelcome. onlyhen chairs that shares resumed trading after being halted for six months. otheruabble involves stakeholders, like china , whiches and evergrande has taken a 5% stake in vanke, so three large companies at odds. this all leads to the ugly part of the equation, the impact on operations. july contracted sales declined. the president saying management is under mounting pressure as banks and ratings companies , andw vanke's credit risks contracts are at risk of termination. fund managers are getting nervous as well. rishaad: thank you very much
indeed. we won't have a more detailed look at that power struggle later on the program. we want your opinion. tweet us your thoughts at @rishaadtv, and use #trendingbusiness as well. some stories we are watching for you today. well, welcome back. >> thank you. it is great to see you. a 2016 fed rate hike may be on the table. stanley fischer said the u.s. economy is already close to meeting the central bank's goals and that growth will gain steam. his remarks come less than a week before janet yellen speaks on friday at an annual symposium in jackson hole, wyoming. investors are looking for clues from central bankers on the timing of potential interest admits modest growth, strong job grains, and moderate increases in inflation. futures traders are now assigning a 22% probability for
a september rate increase, up from 16% a week earlier, and now even odds in december of this year. a multibillion-dollar deal may be in the works in the u.s. pharma industry. pfizer is close to an agreement to buy medivation for about $14 billion. run is the latest in a long of blockbuster deals between the drug and biotech worlds. people from a with the matters say that deal may be announced later on monday. pfizer is expected to pay a premium of 30% on the friday close. pfizer would gain prostate cancer treatment, already approved for seo and the u.s. and elsewhere, and it is projected to generate more than $1.3 billion in annual sales by 2020. you can see a list of pfizer's latest deals, including that deal for about $17 billion last year.
japan's biggest brokerage plans to hire bankers in the u.s., resuming a push to boost its investment banking business. rising volumes of mergers and stock offerings in the u.s.. numeral is looking for bankers to cover technology, consumer, and pharmaceuticals. the brokeragele has no clear numerical target, he has room to recruit. his remarks reflect nomura's strategy to tap into the world's biggest investment banking market, even as it shrinks and equity research and leveraged finance. whyaad: we are looking at the philippines are hitting out at the u.s. and threatening to pull the country from the united nations. as thaty bloomberg.com/asia. the power of chinese consumers
rishaad: we're looking at the big events this week. earnings out of petrochina company expecting improvement from the first quarter. despite crudes slight recovery, second-half sales out look remains dim, production expected to decline 5%. wednesday, debt of $41 billion. they may gain market share in asia thanks to trouble at noble
group. thursday brings us a snapshot of the health of the hong kong economy. trade figures will give us an idea whether that slowdown is deepening. an indication of the strength of the yen waiting on prices, the japanese government releasing its inflation numbers. cpi numbers out, core cpi fell 4/10 of 1%, the same as june. the strengthening more than 15% this year, a stronger currency means lower import prices. we will have a look at the ,rospects for japanese stocks equities, and the japanese economy. great to see you. i notice that you are not exactly negative on japan. that flies in the face of a lot
of investor opinion. >> that's right. for the same reason that most investors are pessimistic, we are optimistic. that is a contrarian value. i know there has been a lot of disappointment around the boj or the hopes of helicopter money in at it but if you look broadly, there is a lot of talk around yen strength. the yen against asian currencies which have been .trengthening, yen against won so while it has strengthened against the u.s., it has weakened against the won. if you look at the banking sector, particularly positive on japanese banks. , we haveecause we know
seen the end of rate cuts and japanese banks suffered all the way down to negative, and now you look at the yield curve in japan starting to stiffen. that is a great environment for japanese banks, which have been crushed over the past year or so. cheap.: banks are very also, you think that negative rate story has been baked into the price. what else you like in japan? is that it? the entire japanese market when you look at topix and equity risk premium around 8%, the guys who have suffered from the big strengthen yen and also consumer
discretionary stocks, there is a lot of pessimism around. economic indicators have been improving. they are in good shape. cyclically sensitive areas in japan, and in particular the value play of banks appeal to me. to the: ok, let's move interest rates in the u.s., a hike expected at some stage, but stanley 50 or -- but stanley fischer has left that they're open for this year. >> when you look at the fed commentary, it is pushing more towards the dovish side. toseems like they do want risk higher inflation to avoid deflation. in a way, less is more in the
u.s. now. the market probability of another rate hike for september is around 40%. there is going to be one more rate hike around december. 2015, we had 25 basis points of a rate hike, but if you look at the shadow fed funds rate, which includes tapering and quantitative easing , what happened in the u.s. was equal to around 300 basis points of rate hikes, so we have gone through tightening in the u.s.. from here, one rate hike will not impact much more. 2016 is likely to be a lot better. rishaad: we have seen interest rates, bond yields negative in
many places, but if you look at , it has.s. libor exponentially gone up and keeps rising. we have they year to date chart to .82. up we have not had a move like that since just before the financial crisis. why is this happening? is it prospects of policy or does it go deeper than that? >> when you look at it face value, that libor rate, spatially, the move has been the high since the global financial crisis, so it brings back bad memories and leads to higher financial costs. it is like a rate hike. a lot of that move is on the back of the changes in the money markets fund which will take
place in october, so some money is moving into government funds. that is exacerbating that move. also, liquidity conditions. the liquidity is week, putting upward pressure on libor, but when you look at the move up, look at it against the liber rates, they have been going in the exact opposite direction. i'm sorry. very, very quickly, what about this whole idea that you are getting this because liquidity is drying up and also this is exactly what happened just before the financial crisis. we essentially saw a credit crunch. >> that's true. rising in libor spreads is something worth watching.
it is crowding out u.s. dollar lending. it all has an impact on the spread. it is definitely from our point of view, we look at full activity levels so low, but libor rates moving up, so we have to put hedges in our portfolio. the cost of protection is low now. always a pleasure talking to you. some breaking news coming fixing, 6.66yuan as opposed to 6.62 in the last session. fixing the weakest yuan since june 27. that just coming in right now. blendingalibaba shopping with social networking. it is going down well in china. details are ahead. ♪
♪ rishaad: this is "trending business". to shake offying the perception that it is china's version of amazon or ebay. investing in startups, and the strategy seems to be working. tell us about this social media approach to online shopping. it is miles apart from amazon, isn't it? >> amazon is where you go when you want to get something. you may visit amazon once every couple of days. alibaba is different. up to 25users spend minutes per day on the site. sentiment tends to be all encompassing, where
his facebook, twitter, amazon, they are tailored and vertical. that is the big difference. rishaad: what are you saying here exactly? we have a situation where we have all those things amalgamated? >> amalgamated, yeah. target thetrying to young, aspirational, middle-class buyer, big spenders, and this audience online more from their services, they're mobile apps, community coming gauge meant. they want to talk about fishing tackles, makeup, or whatever it is. that is what alibaba is trying to do to drive up engagement. suggest that this amazon or ebay should follow suit? >> i think u.s. audiences are very different. it is an interesting approach.
i think they could learn a thing or two. a viable lesson to even a global giant like facebook. buttons now has buy on pages. it is interesting to see how the u.s. evolves. rishaad: thank you very much. right. we are going to the flicks. suicide squad still at the top of the north american box office for a third weekend despite challenges from a string of new releases. the film pulling in $20 million, $262 million. to not such good news for paramount pictures, the remake of been her debuted in fifth place, making just $11 million in its first weekend. chargeup, the new man in
million, less than expected. vanke has warned that the second half may be challenging, all admit and ownership and struggle. all admit and ownership struggle. medivation, $14 billion. an agreement could be announced as early as monday. pfizer expected to pay a premium of 30% over the friday close. pfizer has been relying on cancer drugs to boost revenue. straight to the shanghai and hong kong open. david: we are looking at a mixed bag. the markets underperforming, taiwan, south korea, retesting massive amount of money has come into these markets. with the hawkish comments out of the fed and trying to manage expectations, indeed we might
see that rate hike this year. we are seeing a reversal of those positions. taiwan down 1%. south korea down .70%. markets flat, shanghai in the mix, the nikkei there. areonly meaningful moves these markets here. taiwan.ook at the move up is capping where we are for oil prices. 51 is doing this. financials down 2%. oil and gas down 2%. -- try one is doing this. they weaken the fixing the most since june 27. this is your rate. 6.6673.
at dollar-yen. move to 95ar-yen to within the next month, a note out from citibank. we might hit this level before the next boj meeting, which j.p. morgan says, expect intervention. the move from here to there is because of decreased likelihood that japan can come up with a good reason to intervene in the markets. i mention the move down and commodities. the biggest move at the moment is the move for silver, down about 2%. it is still the world's best performing a economy. that is a seven-week low. it is at its lowest level since the first week or second week of
july. rishaad: right. fo0a vanke opening .5 percent higher. a warning the second half may be more challenging with his ongoing ownership battle. we have been tracking all of this. the company claims business is being disrupted by this management struggle, but tell us about it. >> it does appear and tractable. the most recent development was a board meeting, and management, which is trying to stave off a hostile takeover was not able to get the outright majority it needed to bring in a white knight, the shenzhen metro. is acond-largest owner state-owned company, and it voted against the proposal. 'sina resources has let vanke
management have a free reign for 10-15 years. the other thing that makes as complicated is that the founder of this company, a man who has peaks one highest seven continents, he owns less than 1%. he is in no position to defend themselves so he's trying to bring in these other competitors. ,hen you bring in evergrande more than 6%, and has not indicated whether they will side with management or other hostile parties. rishaad: it is like a stalemate. is there any resolution? what are people telling you? clearre are not regulations on what will happen when there is a takeover bid. baoneng does not have a seat on
the board, so it has no management control. haveis the first time you had a hostile takeover in china. there is no precedent. rishaad: barbarians at the gates, as it were. >> management is not using that expression. competitors, insurance companies, state owned conglomerates, it is much more complicated. rishaad: i am having real trouble getting my hand around -- head around it actually. >> there was an interesting statistic today, more than two party have seen themselves as potential targets, which means other companies, primarily insurance companies, than 5%en more ownership stakes. in china, that is interpreted as a potential takeover bid. rishaad: thank you very much indeed. right. looking at the incoming indian central bank governor, known to
be low-key compared to his predecessor, raghuram rajan. but like his predecessor, urjit patel is an inflation hawk. it looks like the government is going for stability, perhaps continuity. rosalind: those are key factors. urjit patel has been working alongside raghuram rajan for three years now to set policy. a some way, it will be continuation, perhaps more low-key compared to raghuram rajan, who has seen some frictions with the government. maybe and terms of policy and getting along with the government, it might be seen as a positive thing. let's look at how the markets might be reacting to this announcement. there was speculation that the next governor might be inclined to do more in terms of pushing
the inflation level, lower interest rates, and be less stringent on things like reviewing bank assets, bad loans for example. thatad: that is something raghuram rajan got credit for, trying to get the banks to clear up these nonperforming loans. there was quite a bit of political opposition. rosalind: that's right. the bonds and sensex has been driven to highs. that is partly because of continuing stimulus from central banks globally. and bondsarkets driven to highs, you see there, but that may be tempered by this appointment. he is seen as an inflation hawk,
therefore he is likely to keep pressing on this 4% target, set and did help rajan the first place. that is likely to affect bond yields. standard chartered's bank says bond markets are likely to see him as a stronger inflation-centric policy hawk. .hey see bond yields rising the challenges are quite a few. inflation targeting is one of those. rosalind: the key one. it has roque and above the rbi target of 6% in july. they want to see that come down. there is a $20 billion outflow from maturing currency deposits. they have to look at how that will impact things. also, bad loans continue
cleanup continues. rishaad: thank you very much indeed. right. checking on some other stories. china's state grid corporation saying it is having deep regrets over the bid to block the bid. grid toa rejected state grid two weeks ago, citing national security concerns. iraq plans to raise crude exports by 5% in the coming days , including an agreement to resume shipments from three kuk.ds in your cook -- kir experts were halted after a payment dispute in march.
crude prices down 1.1%, but still above that $50 a barrel level. the singaporean prime minister was briefly taken nil while littering an address. he had been speaking for two hours when he stopped and had to be helped by medics. he returned an hour later to finish the speech. became unwell due to heat and hydration, but had not suffered a stroke. americabe watching second-quarter gdp number later this week, a revision, giving us another idea of the health of the economy. however, we have lots of questions over gdp and whether it is irrelevant measure of growth and how important is it as an economic indicator? all, what is wrong with gdp? >> part of the problem is that it has been around for so l ong, and indicator born out of
the depression. the economies across the world have changed so much since then. technological advances have shifted services, making gdp increasing the problematic in capturing the true level of activity. example, $10, you can buy a , whichever one you want. it will buy you a compact disc or a month worth of streaming. how do put a price on that? airbnb is another great challenge, one of the biggest lodging companies in the world if you count the beds, but it does not own any of those beds. it is becoming increasingly difficult. is that itproblem does not capture inequality, such a big theme right now. what are the consequences of the problems and what you are saying here? >> if policymakers are two
locked into counting on gdp as the key metric, that is the problem. we have had analysis out of ubs showing widening revisions from the third rate, the third to the second rate. that loops back into the real economy because of that negative response. that impacts policymaking. later, you find out it was not too bad in that quarter after all. ogjapan right now, that the has done some fresh analysis of 2014 and said the economy looks better than what we thought. rishaad: the boj said the but the prime.5%, minister's office said it contracted. what are people doing about it? >> the search for replacement is not going well. it is not easy to do.
perhaps the more realistic approach is to bolster some other readings and use those. if you are an investor, there are all these new indicators, satellites to read factories in , a concerted plan to augment the gdp coverage. the statistics agencies are trying to bolster the way they count these, and the measure, defensebest offense -- is that there is no credible alternative, so we are stuck with it. rishaad: thank you so much. right. rio de janeiro, fireworks taking place, the closing ceremony coming to its end there. the united states winning the medal race ahead of written and china, the best away games for britain and its history. michael phelps became the most successful olympian ever.
it is affecting 21,000 passengers. uber telling investors it won't they more than $2 billion for lyft. to thee opposed acquisition at any price. at $9ought a sale billion. uber has not made a formal offer, but has considered a deal since 2014. .hina plans to sell a 15% stake the restructuring is due to be completed by 2018. reported a net loss in the first half, saying it does not propose an interim dividend.
let's discuss the outlook with the chief executive. thank you very much indeed for joining us. what is this game? >> it is a chinese mah-jongg game, strategy game. it is a role-playing game. it has enjoyed high popularity since it was launched in china. we launched a mobile version of it that was a huge hit. rishaad: how much of your business comes from the games business? what is the outlook there as well? >> about 20% of our revenue comes from games. highve been enjoying a rate of growth in the past five three online. jx
launch, itt month of has made the top place on ios over 500and generated million renminbi in the first month alone. rishaad: you made a huge loss in the last reporting, but that is down to a one-off item, but even if you strip it off, it was a 100 million plus loss. >> no, this was a one-time right off. our bottom line and topline are still very solid. the business is growing fast.
we are transitioning from a traditional licensing model. strategy going global has been a huge success on mobile. based on past success, we are services,into content including a recent acquisition. it is a tough business to be in, isn't it? it is so competitive in china. >> it is. it is. have been and that competitive place for a long time. after five years of effort -- average what is your
revenue per user look like in five years? to --t varies from a game quarter, it has 1.1 billion renminbi and over 600 million monthly active users. good forctually pretty a utility software company. now we are expanding into content. that will increase -- rishaad: that dovetails into the games business with content there. tencent has done very well with its gaming software. do you need to create more games are buy new games? in launching our
jx online mobile game, it is because of the partnership that has brought the success. we will continue that partnership, both in the game area and hopefully in other areas. also, facebook is a partner with us on the cheetah mobile side. outlook,10 seconds, how is it looking for the rest of the year? >> we are confident going into q3 and q4. all of our businesses will continue to grow. mobile has recovered from the slowdown and has captured growth. rishaad: thank you very much indeed. up next, the spending power of the chinese tourist is
chinese visitors to japan hit a record and shall july. it is called explosive shopping. what is attracting chinese tourists to japan in such record numbers, even though there is a backdrop of the strong yen? >> indeed. actually it is a big increase. ago, it with a year increase near 30%. there are more visitors despite the stronger yen and the tax hike for imported goods for china since april. what is attracting this tourist? the golden rule is that they
, by japanese-- food and do some historic sightseeing, fuji mountains, then travel to tokyo. there is a lot of combination attracting chinese tourists, but important part is the explosive shopping here that is attracting chinese tourists. ok now, which of the industries is benefiting the most from chinese tourism? there is a lot of like you know a lot of like industries benefiting, but the best nowanies, the hotels, but as the trends show that you know most of the tourist visiting, 40% of them are young women in their 30's, so cosmetic cosmeticsand selling
♪ rishaad: monday, august 22. i am rishaad salamat. you are watching "trending business." live in tokyo. mumbai, sydney. oil down after its longest run of gains in four years. iraq intends to boost exports by 5% despite the global glut. china's leading developer and .anker shrugging off control and the fed number two signaling
another rate hike remains possible this year, days before janet yellen addresses jackson hole. follow me on twitter. do not forget to use that hashtag as well. straight to the trading. jakarta just starting off. thed: investors are getting first. rate.ut the new reference keep in mind, the previous reference rate, they have cut that four times this year. markets are up .1%. the currency, a little bit of pressure. we are still seeing some weakness. that is about a seven-week low for the currency against the dollar. when you look at equity markets right now, we are at a big
picture right here. that are up are pushing towards the highs of the session. we are in much better shape. with thetill very thin exception of markets here in hong kong and china, where we are continuing to see renewed interest. nowhere near levels of 12-14 months ago. nothing much interesting there. australia -- the reason i'm talking about this market, have a look when it comes to mining stocks and resources. the strong u.s. dollar having any sort of gains. , aver, copper, oil, gold very decent run this year. .7% lower here for the basic
material stocks. although that comes down to the u.s. dollar strength. it strengthened substantially friday. we had a sharp cap down for asian effects and we are continuing to see that early monday. have a look at the taiwan dollar. once you get to 30, that should be a seven-week low. the other one, let me just get you an update. back above 1120. we are right in between your 20-day moving average. that is basically how it looks. we are caught between those averages at this point. take a look at china. profit jumping. country biggest residential developer seeing a decline in net income.
have a look at the housing market there. that should help out the bank in the first half. >> the good, the bad, and the ugly. an overused cliché, but it is applicable. first half results, net income 49%.g 10%. revenue surging you talk about the rebound in china's property market and the surging prices. also a longer-term strategy of focusing on the middle class and leading regions. that is paying dividends. the bad news is the ongoing shareholder struggle now going past more than half a year. first half results helping with the fallout just a bit after this obscure conglomerate emerged as their biggest shareholder. that prompted a management outcry that continues today. their chairman calling the larger state as unwelcome. trading shares resumed
after being haunted for six months. the shareholder squabble involved the big, state-owned giant, china resources, and a rival developer, ever grant, which says it has taken a 5% stake. you have at least three key stakeholders at odds. this leads to the ugly side of the equation. that is the impact on operations. analysts say july sales declined and the president says the management is under mounting pressure as tanks and ratings companies seriously review their credit risk and contracts are at risk of termination. the big problem is the uncertainty at how the shareholder fight will play out. mysterious takeover group, nobody knows what it is.
and the source of capital is very unclear. everyone is scrambling to figure out what moving parts are. it is unclear how it is going to end up. managers are getting nervous. aberdeen asset management has sold off its entire stake, citing the uncertainty involved with the ownership struggle. rishaad: thank you. let's take a look at what is going on in the oil markets. with crude on the way down. iraq saying it will raise production by 5% in the coming days. then sharples is with me now. >> we had seen, over the past seven days, oil go from a bear market to a bull market within three weeks. the market is probably primed for a little bit of softness. nigeria.also to hostilities and the militant group will talk
with the government about possible action or how they can come up with a resolution. that is adding to the bearish sentiment. rishaad: that is what we have there. iraq and libya could be in the mix for lifting oil production. >> libya has been spoken about on a regular basis the last three or four years or so. skepticism about whether they can get to any point. that is another factor the market has to think about. oil prices have climbed to a level where most analysts thought they would be by the end of the year. whether they can move any further from here is probably the question. plus, we have the informal talks. >> these have come to resemble very formal talks. discussion around it and people coming up with all sorts of ideas. >> and a freeze has been bandied around. the last time that was talked about was in april. we still have a month.
a lot of time. a lot of talk between then. no doubt, we will as we head over to the informal meeting. we are talking about commodities. let's talk about what happens with steel. we will be speaking to their ceo in about 20 minutes. half past mid-day and you are watching-- if you are in sydney. let's get back to the other stories we are watching for you today. >> thank you. a 2016 fed rate hike might be on the table. the federal reserve vice chairman says the u.s. economy is close to meeting the central bank goals and that growth will gain steam. it comes less than a week before fed chair janet yellen speaks on friday. investors are looking for clues from central bankers on the timing of potential interest rate hikes with modest economic
growth, strong job grains -- gains and moderate increases in inflation. take a look at the w.i.r.p. futures traders are assigning 22% probability to a september rate increase, up from 16% a week earlier. even odds in december of this year. a multibillion-dollar deal might be in the works in the u.s.. pfizer is close to an agreement to buy a company for about $14 billion. this is the latest in a long run of blockbuster deals. people familiar with the matter say the deal might be announced on monday. pfizer is expected to pay a premium of about 30% from the company's friday close. through the deal, pfizer would treatmentstate cancer already approved for sale in the u.s. and elsewhere. and it is projected to generate more than $1.3 billion in annual
sales by 2020. we do take a look at the bloomberg. you can see the function buyp. that is within the pfizer equity. you can see a list of their a $17 deals, including billion purchase last year. japan's biggest brokerage, number of -- nomura, plans to hire bankers in the u.s. in a boost to increase its business. their ceo has been a limiting jobs and shutting business in europe and the americas to save about $700 million and stem 60 years of losses overall. theyhift comes as anticipate rising volumes of murders and stock offerings in the u.s. they are looking for bankers to cover technology, consumer, and pharmaceuticals. while the brokerage has no target, a top target say they have room to recruit 20 people. rishaad: looking ahead, the
they are going to ease without hesitation. there is a sufficient chance the bank is going to do something new at the september meeting. he has not made any indication like that before. both he and the deputy governor have said the comprehensive policy review is going to be done in september and will not lead to any kind of cut back of monetary easing. this is the first time he has come out and said not only are we reviewing policy, but there is sufficient chance that we are going to add to our monetary stimulus. what that means and whether it is going to be a surprise is unclear. makingseems to be stronger and stronger statements about what the boj is going to do or may do. maybe he is trying to get away from that surprise element and give people a heads up. rishaad: what were the expectations for the review that the bank of japan is currently
undertaking? >> we did a survey earlier this month and the majority of people said that the review increased chances of further monetary easing. economistsy of thought the boj would review policy and add to what they are doing. they did not think the bank would cut negative rates. expectation within the markets was that the boj was going to come out and say, you have reviewed our policy which is working or not working. and then they would say we are going to add to this for some portion of our stimulus. these remarks only served to confirm those expectations, i think. rishaad: thanks very much. we are going to stay with all things japanese. be about to get worse. next month, many are expected to
downgrade their full-year outlooks because most of it was made months after the results came in. this is a bit of a surprise given the yen has been strengthening all year. david: well, it is. these companies are still projecting a net increase in aggregate earnings for the biggest japanese companies. that is more of a question of timing. typically, they do not downgrade their full-year forecast until they get close to the end of the second quarter. that is when they start making these adjustments. we are expecting a wave of them. we could see that, after these adjustments take place, the net figure would be calling for a decline in earnings from the previous year. investors have priced a lot of this in. what is at stake if the picture gets even worse?
david: as you say, investors have voted with their money against abenomics. that much is clear. the policy has failed. stock prices are down, as you pointed out. at the same time, economic policy moves forward. abe is still looking to companies to increase their capital expenditure in japan, to increase wages. the expectation is that could happen at a time when company profits are poised to decline for a second year. aftert becomes reality the adjustments are made, that would pretty much bury those policies and we would be back to square one in terms of what can be done and what kind of policy types are necessary to rebuild confidence in companies in the domestic economy here. otherwise, they are going to keep spending more money abroad and looking abroad for growth as opposed to investing the cash here in japan. very muchhank you
indeed. edward joining us from tokyo. having a look at some of those business flash headlines now. we are looking at the consideration of as much as $3 billion. a deal could be reached this with a premium. this could be the type of premium we're looking at here. $2arket value of just over billion. lower cost and higher margins helping fortis to metals -- metals being the highest performer. all, $984 of it million. that was ahead of estimates. it is better to travel than arrive.
the chief executive of the company says the market outlook for 2017 is positive. and also pointing to the one infrastructure plans, which he reckons is going to be a big lift for their bottom line. india, the deputy governor will see an ability with national investors. he has spent the last years helping them drive the biggest reforms in their 18-year history, including setting a target for inflation and getting into their balance sheets. book, a look at their own we are trying to get them to address some of their bad loans. we are going to take a break. indonesia, the country with over
rishaad: this is "trending business." having a look at indonesia's returning finance minister. on taxo crack down evasion. aiming to boost revenue by at least $12 billion. she is saying it is inexcusable for indonesia to have one of the lowest tax collection rates in the region. >> of constitution, the government has the power to collect taxes. by constitution, the people have to pay that. >> there was a shortfall last
year. >> there is a shortfall. >> it is a shortfall which can be explained by the weakening of trade. the biggest shortfall is our ability to collect. this is effectiveness on corruption. >> now that you are back, what would be a message to those who might be evading taxes or continuing corrupt rectus is quest -- practices? ourselves.mproving if you are not paying, i am going to take it. seriously. indonesia needs to have the compliance level. it is not acceptable for a indonesia.e this is not because we are poor. this is not because we don't have business people.
sides, these both us, isr as well as for not able to have trust, confidence, and credibility. i am going to do my homework, but i expect these people to also do their homework. >> how much tax reform do you think you can get done? for example, the revealing of bank accounts or credit card transactions. you need to get the legislature on board. there are a lot of national and regional legislators who have been the target of these corruption probes and even arrested. indonesia is always having this note trust perception. that is the biggest and the toughest job. >> i would like to talk about the debt to gdp ratio, which is
relatively low. but is mandated by law at 3%. do you see room to perhaps scrapped that an increase physical spending because the global macro environment is weak and the commodity cycle has gone down, which is so critical to the indonesian economy? now, there area a lot of leaders voicing -- i can understand that thinking. we are not like russia or brazil. 5.18%.in a maybe the third highest growth in the world. in this case, we need to have a fiscal policy that can improve quality. we have to improve the collection of the taxes. it is not something that you just pump more money into and
expect everything is going to float. that is not the situation in indonesia. we will look at all of this possibility. by now, the law is very clear. i think it is going to fit well today. that was indonesia's finance minister talking to my colleague, stephen engle. the big events we are watching for you this week, we have tuesday, earnings out of petro china. it did feel the effects of oil prices bottoming. despite crudes slight recovery in the second half, the sales profitslooks dim with expected to decline 5% this year. glencore is out with its numbers on wednesday. the focus will be the progress they made on cutting the debt mountain.
glencore may have also gained market share in asia. that would be perhaps put down to the troubles of its singapore-listed competitor, noble group. the economy is slowing and doing so as china does. trade figures give us an idea of whether that slowdown is deepening in any way, shape or form. they say that the maintenance inputs rose 130% in the first half of the year. there was a question about those numbers. getting indication for the strength of the yen, we have the government release of inflation figures on friday. fell .4%. that would be the same as june. the yen has strengthened more than 15% this year. it does mean that a stronger currency translates into lower input prices and lower inflation as well. , we have the top of
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♪ brand new apps, shows to go, ♪ ♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. ♪ rishaad: our top stories, oil on the way down. iraq looks to increase exports. iraq will lose crude shipments by 5%. , this less than three weeks after it tumbled into a bear market. helping higher margins metals, profit jumping
to $984 million. for 2017 isutlook positive, based on demand from road and the one belt, one infrastructure plan. pfizer nearing a deal to buy medivation. an agreement could be announced later today. a premiumected to pay of 30% on the friday close. relying on new treatments and cancer drugs to boost revenues. tokyo closing out the morning. we haveckluster, but been vacillating between gains and losses. volumes,en you look at not much conviction there. a quick look at equity markets, like this. upyo and japan in general, .25% in the morning session.
also dealing with extreme weather, japan facing tornado warnings in tokyo and other nearby prefectures. 1.59% is the yield on the u.s. 10 year, so pushing towards the ceiling bill gross indicated. a quote from him basically says that when you look at 1.59% on the u.s. treasury, that is the cap because of what is happening outside the u.s. chances are we will not get above that number for the 10 year treasury yield. through, wecomes take the cap out. this is how the 10 year treasury looks over the past year. that's where we are at the moment. we will be stuck at these levels in the meantime.
some movers we are following across japan and australia, renesas is one of the options to buy the u.s. chipmaker intersil. we are looking at maybe $3 billion. vita $2.1 billion, so a decent premium there, shares down 4%, the company confirming it is one of the options, not the only one, they are pursuing. hearts united is a holding company that provides services. that on the back of news it has won a videogame debug order from one chinese game manufacturer. sales for july actually fell. in australia, let's start with cuttingdown 5.5%,
outlook. is $4.90 a share. fortescue out with earnings. they sought to reduce it debt levels, creating more cash flow. dividendsking about and infrastructure in china will continue. prices,t does to steel hard to tell. bluescope steel up 4%. we will speak with the ceo later on. profit, earnings before taxes, up 50% for this current fiscal quarter. shares up over 4%. rishaad: absolutely. it is australia's largest steel , some stellar full-year
numbers, profit rising 160% put down to lower cost and higher prices. great result here for you. tell us what was behind it. thank you. probably three key things. the macroeconomic environment for steel was negative because of the oversupply, particularly north asia. our reduction a cross all steelmaking operations was a significant contributor. the investment in current businesses has improved sales across our footprint. we are getting returns from the investment we made in northstar other 50%, the since then, margins are up 60%. three key themes in the face of a challenging steel environment. many people say that
this recent run-up and rebound in steel markets this year is a bit of a blip. how do you read the situation? 2016 fiscal year was the worst macroeconomic environment for steel bluescope steel we have seen since -- steel since bluescope steel listed in 2002. that sent a price signal to wind back production, and we have seen distressed steel assets as a result of that around the world. we are seeing a bit of a bounceback because of that negative price signal. sustainable,it is but i think margins will be at higher levels going forward simply because 2016 was unsustainable. they are good levels of the moment, and we think they will and 2017 will be
better than 2016 from a price margin perspective. is down to cost cutting and the other cuts you have made their to improve those to improvethere those margins. is the steel market out of the woods or will we see another slump in china? still tooink there is much deal supply in the world, so further restructuring is required. that's why we will make sure our balance sheet is bulletproof. three hundred 27 million dollars of costs out of our business when we made a $750 million profit, moving us best in quartile steelmakers. we have some the best products for building construction in the world, so we have a future mapped out that is insulated
from the industry, but the industry will be facing challenges going forward. the challenges you faced is high energy costs, which would have been exacerbated by the fall in the aussie dollar in the last couple therers, but you say needs to be a policy response from the australian government over this. tell me, what would you like them to do? we highlighted four years ao that there was going to be shortage and australia. we identified there was a lack around gasency infrastructure, pricing, supply, and demand. we have also seen state government stop exploration on so clearly gas prices are going up high because of policy constraints. adon't know yet that there is solution, but we have been doing
everything we can to reduce our reliance on natural gas, projects to recycle energy, so we are responding and that respect, but at some point the government will understand that because there is so much price pressure on consumers at the state and federal level that improvements and state policy are required. i think that conversation is now happening. perhaps it could have happened more aggressively four years ago. rishaad: indeed. does it mean that if we don't get a policy response, then the sort of damocles still hangs over the port? i don't think natural gas will be the issue there. we have it as a large cost base, but there are other manufactures in australia where natural gas is a bigger percentage of their cost base. i think the challenge for the port is that we have a significant read line -- realign in 10 years time.
we need to demonstrate to investors and the board that we can justify a future investment in a realign because we have been producing good returns. the cost reductions delivered have been outstanding. our future is within our hands. group ofeam and a employees and the broader company have to make sure we are cost competitive. that is our mantra, and we are on the path to delivering that. final question has to do with their u.s. operations, you have done well there. how far is that down to protectionist measures there now? or is it down to a u.s. economy that is recovering and recovering well? i think the u.s. economy has been recovering over the last few years. that has been contribute to our improvement year on year.
real-time steel industry margins are absolutely expanding because of antidumping duties. when is no doubt that australia does antidumping, it takes a while, and one would not always say you are happy with the anti-helping outcomes. on u.s. does antidumping steroids. it has been incredible in terms .f the levees the steel price differential between u.s. midwest prices and asian prices is out an all-time high. one would have to think that antidumping has something to do with that. is, the u.s. economy improving, but in steel, antidumping is making a big difference. rishaad: thank you very much indeed. bluescope steel chief executive results is stellar earlier today. let me tell you about the news that emerged over the weekend. it is about the incoming indian central bank governor, known to
be low-key in comparison to his predecessor, raghuram rajan. like his predecessor, urjit patel is an inflation hawk. how are investors reacting to this appointment? >> positively at this point in time. the government has chosen continuity over change by promoting urjit patel to the governorship. policy consistency is a given. bond investors are likely to be extremely happy. isyou mentioned, urjit patel seen as an inflation hawk. he was the original author of the report that resented the inflation targeting regime now in place. , thisings are clear governor will be operating in an environment where inflation targeting has become the rule. second, it is the monetary
policy committee that will be defining rates. rishaad: right. will it be the government's call? basically the government's handpicked successor and will he play ball with the government and do as they say and cut rates? >> that is unlikely for two reasons. one, rising inflation. cutrnor raghuram rajan rates, but many argued he cut rates later than he should have, sinking oil prices. consumer prices have become uncomfortably high for the bank of india. that, the monetary policy committee will be a committee of the government and the bank of india, including the heaven or on the panel, but it will be a collective decision, much along the lines of how the
fmoc operates in the united states. he is seen as a fiscal conservative. as a personality, he is not very outspoken. policy andy district not opine on matters outside of what the central bank operates in. always great talking to you. we have to take a break. next,e have coming up alibaba trying to shake off the perception that it is merely the ebay or amazon of china by pushing into social media and entertainment. this is bloomberg. ♪
billion dollars for lyft. the ceo is opposed to the acquisition at any price due to the scrutiny the deal would face. ft attempted to sell at $9 billion. uber has not made a formal offer, but has considered a deal since 2014. maker made money that will be used to update products and continue that restructuring program due to be completed by 2018. japan airlines canceled 130 domestic flights because of a typhoon. the storm is expected to make landfall in tokyo. 25,000 passengers have
had their travel plans disrupted by the typhoon. canceled 96 domestic flights affecting 21,000 passengers. chinese visitors to japan hit a record in july, spending so much that there is a special word to describe what happened, explosive shopping. brett miller is in tokyo. what is attracting chinese tourists to japan in such numbers? >> firstly it is a relatively short flight from beijing and shanghai to tokyo. the proximity of japan is working in the country's favor. along with the appeal of the , but most of all we are seeing the interest and shopping from chinese tourists. chinese tourism is having a big
impact in areas in tokyo. that is where the biggest impact is. rishaad: right. well, this comes against a backdrop of a strengthening yen, so what is benefiting the most from chinese tourism? >> it is deftly retail. we are seeing some transport company's, particular he companies involved with tour groups, even companies producing buses as well. where we see it most is companies that have managed to adapt to the new inflow of chinese tourists, and they are the ones that do special packages, offer chinese-language staff. that is where the main gains are for japan. how are the shopping trends changing and how have
they changed over the years? >> they have changed quite radically. we are seeing a big shift away relatively speaking from electronic goods. that was a big area of appeal for japan, foreign tourists coming in and buying high-end consumer electronics. what we are seeing now is that chinese companies are producing higher-quality electronics. we are seeing purchases of cosmetics, health related goods. chineseshift in who the tourists are now. what really stands out in the record tourist numbers are the number of women coming across from china, chiefly in their 20's and 30's, and that is driving demand for cosmetics and health related products. rishaad: brett miller joining us from tokyo. tourism, explosive buying in the country.
alibaba is trying to shake off the perception that it is essentially china's version of amazon or even ebay. the company has been pushing into social media in an effort to persuade customers to spend more time shopping. the strategy appears to be paying off. toe is our asia tech editor tell us about the social media approach that alibaba has made its own. >> what alibaba is trying to do is target young, aspirational, middle-class consumers, big spenders, crucial to alibaba's future growth. they set up online communities where buyers can discuss products. they have a newsfeed with already 80 million plus. if they were running a news site, they would already be pretty respectable. the idea is that when shoppers and then, they buy
they stay, and that ramps up engagement and possibly ann kerr urges more purchasing. -- possibly encourages more purchasing. rishaad: how is alibaba during when it comes to that? that is a key point. obama isionally, i'll not known for social media. tencent is the leader and that space. , 80s gaining traction million plus viewers for its news feed. people are spending on average about 25 minutes per day on its mobile app, as opposed to let's say once every couple of days for amazon. people go to amazon with a specific intent. they buy, then they get out. with alibaba, it's trying to encourage people to stay and buy more. ?ishaad: 25 minutes per day that is something, isn't it? is going to be their bread
and butter in the medium-term. what do ebay and perhaps amazon have to learn from alibaba? or should they learn anything? >> the u.s. audience is very different than the chinese audience. the chinese audiences expect their online shopping service to be a lot more all-encompassing, book a trip, livestream and so on, and i think it will be interesting to see how the space evolves. rishaad: thank you very much. war fax the cold machines and the korea of in c hammer -- mc hammer. the list of 20 century things best consigned to history. ♪
watching theill be u.s. gdp quarter numbers this week. few people questioning whether gdp is a relevant measure of growth. what is wrong with the state of gdp? few technical and philosophical things. the technical things is that revisions fromdp the first read to the second read, often being change, and it
is the investors that look at the first read to buy and sell. only months and weeks later, they are told on that things were better than we thought. and have already reacted that loop has happened back to the real economy. that is one negative. the second, how gdp is counted. increasingly a service-dominated economy, and that is a harder to capture. rishaad: you can't compare it like to like anymore, can you? airbnb is a lot harder to measure, unlike hilton, which is easier to measure. rishaad: what is the read through and the consequences? is if real consequence
policymakers are over dependent. let's hope they are not tailoring their policies, but there is the political dimension. people boast about good gdp reports. politicians get criticized it gdp numbers are bad. rishaad: anything thing done to address it? > >> investors are trying to bolster gdp with other indicators. rishaad: domestic happiness is one indicator. cheers. thank you very much. that is it for this edition of "trending business". ♪
>> a live look at victoria harbour. lots of momentum here in hong kong. we are live in the city. this is "asia edge." i am yvonne man. rightp story this hour, expectation signal that a hike is still in the cards this year. the u.s. economy is close to meeting the fed's goal. the yuan strengthens on the dollar and its closest peers.
profit jumps three folders lower cost boost margins. coming up this hour, india's new central bank prepares to take the reins. >> hopefully we get a little bit of excitement when mumbai opens in about 40 minutes. i'm watching what is happening with your money today. it's not the most interesting trading session. it's very subdued. you have to kind of force -- there we go. on the downside, you have the rest just below water. down agetting sold little bit. even in china where there was a pickupin