tv Trending Business Bloomberg August 23, 2016 9:00pm-10:01pm EDT
♪ rishaad: it is wednesday the 24th of august. i am rishaad salamat. this is "trending business". ♪ rishaad: we will be visiting singapore, sydney, and beijing this hour. asia-pacific markets extending wall street gains. investors are waiting the fed. off, record profit in the first dividend in seven years. the turnaround plan is seemingly working.
postal savings bank of china closer to the world's biggest ipo. 40,000 branches, would you believe it? follow me on twitter at @rishaadtv. don't forget to use #trendingbusiness. trading day underway and hong kong in 30 minutes. singapore, taipei, and malaysia starting the midweek session. david: hopefully the second day of gains. the first one in four days yesterday. friday weresince not a selloff. back to the levels of last friday. there is a lot of caution across markets, not just equities. look what is happening across the fx space, dollar saying the reststrength, but
of the currencies, uneventful so far. as aussie dollar, the euro well, the taiwanese dollar getting the best bid. classesok across asset and see the price action. 10 year bond yields, have a look at this. year, this is very interesting. the last time we have seen such a tight and narrow trading range on the yield of the u.s. 10 year was the start of 2012. is what we have been seeing so far this august. belowuth korean 10 year the u.s. 10 year, 1.43%.
we are watching oil prices pulling back, giving up half of the gains overnight. analysts have turned bleak, have a look at this comment. this is the most depressing comment you are ever see from an analyst. there is no more optimism in the short-term, the last piece of good news has already been talked about. i will leave it there. higher, aantas shares record full-year profit and the first dividend in seven years. the turnaround continues here. his work ask whether is done at the airline. asked that he was question a short time ago. enjoying the job and being at qantas, so i
suspect i know what his answer will be. 57%,nderlying profit up $1.5 billion, full-year net profit up 80%, as shade over $1 billion. qantas getting tailwind from cheaper oil prices, but it has been the ceo's transformation strategy that has delivered the goods here. old aircraft have been retired. new aircraft orders have been deferred. 5000 workers lost their jobs, but has helped to save around $2 billion. let's hear what he had to say. >> we do see the strong performance continuing. this business has taken costs out and improved revenue dramatically. over $1.66ivered billion. david: calling this record
profit the best qantas has had since the global financial crisis. rishaad: what about that dividend? cents a share, but a long time coming, hasn't it? paul: it has. waitedshareholders have seven years for this day, but finally seven cents per share. take a look at this chart. if they had not delivered a dividend, there would have been some stiff questions asked. earnings per share well above where they were in 2009 when qantas last paid a dividend. that's why say if there had not been a dividend, some ugly questions would've been asked. buyback,nounced an some expectation from the market they would see something along those lines, but shares performing well, up 1.7%. qantas share price tripling over the last three years, so a
real vote of confidence in the efforts of alan joyce here. rishaad: quite a difference to what we were talking about three years ago. joyce joining us live later on bloomberg. you don't want to miss that. just after 10:30 a.m. hong kong time. let's talk about postal savings bank of china, closer to the biggest ipo this year. we have a look at the details. how much could it raise? >> $8 billion is the number. postal savings bank of china was to cap the lies on the stabilization of sentiment towards chinese shares. people familiar with the matter say they could raise that $8 billion and a hong kong ipo, seeking approval as early as tomorrow. the listing could happen as early as september. it would be the world's light and thelargest ipo
biggest since alibaba in 2014. the bank is ubiquitous across china with 40,000 branches, more than double the number of the world's largest bank and more than four times the number of the ubiquitous wells fargo. ipos havenancial gained an average of just 1.1% so far this year, which may not make for this to be the most ideal time for postal bank. march, theyos in are both down so far since those listings. like those two other banks, postal bank is seeking to fund expansion. it reported an 11% increase in first-quarter profit.
rishaad: thank you very much indeed for that. let's look at some other stories. at thehaving a look ambitions of one of china's richest men. he has big ambitions and expanding his sizable movie empire. group isman of wanda prepared to buy two companies in the u.s. worth more than $1 billion each. that is a precursor and going after the big six movie studios he sees owning an american movie studio as a requirement to build the empire. it has offered the same amount for a u.s. cinema change.
he wants to create a billion iny with $2 market value and $100 million in sales by the end of the decade. raw materials, eva lee and mining will search for more investments and assets after an agreement with glencore. materials, evolution mining will search for new investments in assets after in agreement with glencore. it is seen as a way to trim borrowing. assets due trimming to its $17 billion debt pile. that thereg told could be a deal to buy monsanto. it could create the world's biggest producer of feed and pesticides. asgress was made on issues price and termination fee.
it's just the latest in a wave of consolidation in the global agricultural industry. we had kim china move forward with its takeover after given the green light. rishaad: another story we are tracking, china's debt problems aren't quite what it seems. have a look at it, bloomberg.com/asia. later, battle for control of china's biggest developer, does that signal a wave of hostile takeovers? our next guest says the federal reserve will hike rates at least once this year. ♪
reserve the federal chairman speech remains the headline event this week. our next guest is expecting one rate hike in december. he is in singapore. what is your thinking behind this first of all? >> sure. thank you for having me again. of the speak from federal governors coming out in the u.s., everything from stanley fischer's upbeat opposite comments about the u.s. economy, saying u.s. jobs are near full and improving. potentiallyley saying there might be a surprise rate hike here in september, but all eyes will be focused towards the jackson hole, wyoming this
friday as janet yellen speaks. at ising i like the look the fed funds future market, and they are going to maintain some leastility and raise at one time this year. i think it will be in the december meeting as fed funds futures are pointing to a 55% chance of a hike at that december session. think there is too much noise coming out of the fed with various fed officials making their views known? do you think things have to be reined in a little bit? >> i agree 100%. it is almost like there should be a quiet time for some of these fed governors. , month-to-month,
hawkish or dovish tones change wildly. up the fed funds futures, the volatility on the fed funds futures moved so much from month-to-month, good jobs report, whether we have strong housing, or any of these figures that the fed is looking for for their overall mandate to get back to that 2% level, so i think a little bit of caution from the overall fed governors would be beneficial to not spook the market so much. markets,talking up the we have u.s. major indices just shy of record levels. comings a lot of noise out of the fed which affects daily movements, but over all volatility is down. indicating ahat is degree of complacency, arch you? >> yes. volatility at the index, commonly referred to as a fear gauge on the u.s. markets,
is it pricing in some downside risks at this point? we had a little bit of volatility come back into the market this week with an 8% rise monday, but that only puts the level at 12.38. this is a relatively low level. however, unless there is something that surprises the market over the next couple of months, i would look for volatility to remain relatively low heading into the u.s. elections in november. rishaad: is this the calm before the storm? many pundits are predicting a crash, right? so what gives? yeah, look, you will always have outsiders calling for doom and gloom. a bit ofere is complacency in the markets, but
i don't anticipate all of a sudden the vix going up to the $20 or $30 handle overnight of something drastic were to happen. if we have polar opposite running for president, whoever gets elected, the could potentially at that point the a short-term volatility spike, but i don't anticipate their being doom and gloom as some of these downside pundits are calling for here over the next re-six months. -- next 3-6 months. rishaad: how are your clients s&pving given the u.s. looking as though it has stretched valuations, particularly when you look at hong kong and singapore? are you finding value here rather than over in the u.s.? >> a little bit. what ourtrack
customers trade, not only the u.s., but across asia. the one common theme you have seen, our customers over the last month have been slight net sellers. the things they have been sellers on, all these stocks have been at or near 52-week biggerso some of the --s, alibaba, until, costco intel, cosco, and ge. we do have some positions where people are net buyers. this has been a building theme. people are looking for dividends, and where are they looking for it. financial sector, wells fargo, bank of america, barclays, we do see aggressive buying. outside of the financial sector, ford motor company is being
aggressively bought and added to our customers portfolios, not only across the u.s., but asia as well. u.s. investors are stocks.at the fang what are they looking at there? these stocks look fully priced to some extent anyway. i would agree. i think they are getting stretched on valuations. our customers have been adding the fang stocks, facebook and amazon, especially after their upside beat. addingrs have still been those positions, but might be getting long in the tooth in terms of valuations for a further rally in those stocks. rishaad: we have some breaking
news, i better leave things here. let's have a look at this pboc move, gauging interest from the primary dealers 24 hours ago, the pboc will inject 50 billion yuan with these 14 dave reverse repos. this is just coming through with traders. helping with the liquidity situation there. let's have a look at the latest business flash airlines. , down 7.6%time of it , despite posting a profit of just over one million ringgits. saying booking trends are encouraging. the parent company is also lower
in the session. more thanrevenue rose 5% to 66 billion aussie dollars and a dividend of $.95. andoutlook is challenging, wes farmers saying capital expenditure next year between 1.3-1 $.6 billion. samsung has a promo the new seven, supplies not keeping up with preorder demand. it says it is adjusting the e due toeleas stronger than expected orders. it does feature and iris scanning locking system and supports high dynamic range of video. we are looking at why unless are painting a gloomy picture of the hong kong exchange despite its long-awaited shenzhen tile.
it has averaged more than 85 billion hong kong dollars. that is 28% more than this year's average. investors will likely have to face the reality that turnover they increase as much as expect, and they cut their rating to sell from neutral. analysts not that impressed with this announcement. goldman sachs saying that are as an absence of positive news flow for the company. shenzhen thinking the connect was the last catalyst for the stock. given that the link only contributed to 1.3% of total revenue, they don't expect that link to have that much of an impact. rishaad: what does this mean for the stock price? >> for the stock price, we saw oft before in the lead up
that announcement come the stock gained more than 3%. since then, it has plunged more than 5%. price estimates put the stock at 8.6% lower and the next 12 months. thinking shares could fall 20% by the year in. kong exchange, given how they performed in the past year, that would not be surprising, net income declining 27% on year on lower trading in stock nowhalf, the trading 34 times estimated earnings compared to global peers, which makes the stock expensive, so an lessee further downside. rishaad: thank you very much indeed. how india'swater, struggling tech startup scene has led to the industry's first dead pool lists.
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♪ awesome internet that's super whoa... ♪ ♪ everything is awesome xfinity. the future of awesome. ♪ rishaad: asian energy shares dipping after oil prices reversed gains. because equities higher of gains on wall street, mixed data putting a question over recent hawkish federal reserve comments. investors waiting for janet yellen's speech. qantas shares taking off after a record annual profit and first dividend and seven years. doubledng pretax profit
to 1.5 billion aussie dollars. qantas announcing a stock buyback of $366 million. citigroup saying the aussie dollar said to appreciate 5%, the kiwi more than 2%, not much policymakers can do about it. willsay the near neighbors benefit as global bank selloff sterling and the euro. it is the open in shanghai, hong kong, and manila. they are seeing the aussie at $.80, central banks pairing holdings, we will talk more about that. there is nothing happening. have a look at japan. there is not much to say. volumes are light.
coming off highs of the day, very flat for him. this is how chinese markets are opening up. moment, h-shares still trading below net assets. a few minutesxing back from the pboc, weaker, 6.64. are looking at 140 billion renminbi. billion, flat on the , fairly renminbi reflective of what's not happening across the majors. have a look at this. tse, the japanese yen,
take your pick. at very mild dollar strength coming through. go,prices down 1%, there we 40 $7.63. have a look at this graphic on the bloomberg. it shows you that despite the week,in oil prices last funds have been reducing their exposure to oil etf's. look at the inflows from mid-june to early august, it shows you how quickly sentiment changes around the oil price. intelligencemberg has some nonofficial data from growthn the resilient picture painted by authorities.
, what is the latest here? there have been some new developments, and some of them quite surprising. new about china's data. in 2016, a few things have happened which have added to the concerns. , wetly, the first quarter had year on year and quarter on quarter growth rates for gdp that did not add up or make any sense. ane recently, there was index which was getting a , awing amount of attention business survey that painted a gloomy picture of what was going on in china small business sector, and publication of that index was canceled suddenly with no explanation from the research institute behind it. if anything, doubts about china's data have increased so
far in 2016. rishaad: tell me what is the alternative. so many people come out with them. what have you been looking at? curate at we do is we set of eight alternative indicators which we call the china animal spirits indicators. what they do is provide a comprehensive and consistent look at what is going on in china's economy through the lens of independent and low profile data. we are looking at things like electricity output, same-store , throughput of port,ners at the shanghai macau gaming revenue. historically, there has often been a sharp divergence between
animal spirits indicators and the official data. often the official data is strong, while animal spirits indicate that it is weaker. if we look at the numbers for june, july 2016, our animal spirits indicators are pointing industry,nd in pointing to strengthen property and investment, pointing to modest growth in exports and stability and consumption. data and the official the alternative measures are both telling the same positive story on china's growth momentum. rishaad: i'm curious to find out about confidence. whendence is fundamental it comes to what happens in the future. do we have any other measures gauging that? what we do is we take advantage of the vast store of news on the bloomberg system and do a news trends search.
in this case, we search for instances of stories that had the word china and crash, and what we found was whilst growth was certainly stronger, sentiment remains weak. the number of stories with the word china and crash, which we take as an index of concern about the outlook, remains at historically high levels. the reason for that is that whilst growth has rebounded, the underlying cause of that rebound is another surge in credit, another surge in state-sponsored investment, and that of course raises concerns about the medium-term outlook for china's financial stability. rishaad: thank you. we will stay with china and have a look at some company news, or should i say company drama. it shows a spotlight on what could be a growing trend.
china inc. enters a new era of takeovers. let's talk about this hostile e, surprising considering how big the company is. tell us about that and what it signifies. the interesting thing about --s is that vake is regarded vanke is regarded as one of the best run companies in china. its founder is a bit of a rock star. he has climbed mount everest. rishaad: he has climbed the highest peaks on all continents. >> and mount everest twice, apparently. 1%n though he owns less than of the company, he has been
allowed to run it the way he wants. suddenly, you have this hostile andorate raider coming in basically saying we will not let you run things anymore. we don't know how this will play at, but the point is, here is company that was pretty much sacrosanct and has now become a target. rishaad: now there is a white night as well. >> we don't know if it is white or gray, and that is the problem. there is always a political back story. may or may nott or theth him second-largest shareholder, china resources, controlled by the central government. it is a very delicate dance. rishaad: what does it mean for broader china? there's something like $7.5 trillion now in the shadow banking system, and it's looking .or places to park itself
property companies are big targets. property companies now have outside shareholders with greater than 5%, and a quarter of these have said they are interested in taking control, hostile or otherwise. rishaad: barbarians at the gate. thank you very much indeed. a quick check on some other stories we are following. the world bank planning a bond sale next week, dominated -- imf specialin the drawing rights. the first batch will be three years securities with a face r, about 500 million sd $300 million. the singapore stock exchange may change the rules again, scrapping the minimum trade
price requirement for large-cap stocks. such shares says have more liquidity and are not volatile. sgx introduced buffers after a penny stock crash. cotton reviewing products out of concern it sold cheap bedsheets as premium egyptian cotton. company's third pullingcustomer, products, saying they were miss labels and terminating the .elationship otre talking about the do com dead pool. >> these are companies that are
dying or all already dead. this one has just started up in india. it is compiled by a firm called traction technologies. they look at various metrics for tech industry startups. for example, the number of people employed, shrinking team sizes, the kleins and user traffic -- declines in user traffic. they have 800 identified on its books. online education, e-commerce, social media. it is a subscription service. sois making money out of it, it could be an example of his
this as usual, companies taking advantage when other companies are looking fairly weak. rishaad: thousands of tech startups in india, are they still attracting investment? for example, recruiters can look at it, larger companies, investors can look at it and invest in those companies. mean it is a death knell for the companies that are on it. there are a lodge number of startups. there are more than 19,000 according to the ministry of finance in india back in february. a .9 billion last year, but they billionlen down to $2.7
the biggest market for swiss watches. the u.s. is expected to retain it. the strong u.s. dollar is the some luxury goods spending, but sales have been declining at a slower rate than hong kong. japan is the fourth biggest luxury watch market. yorks falling 5% in new after the company expects shipments after better-than-expected results. maker recovering from four years of losses and in talks with lenders after defaulting on loans. biggest oil companies may use special dividends to soothe investors with a collapse in energy prices. us what is going on.
is going to be said by these various oil companies? i think they will report very weak numbers as they come into midyear results. difficult first half of the year, oil averaging $40 a barrel, production declining at high single digits in china, and there has not then much in the way of downstream demand growth. we will see week numbers from these companies. capitalpositive is that expenditures are coming down, cash flow remained strong, so we do have cash flow that they can use potentially to pay higher dividends. what about them. they may not report a substantial decline.
>> the big problem is the has announcedment a reform of pipeline tariffs, gas prices in china still too high, so upstream or midstream prices need to fall. what the government has done is lowered the tariffs on pipelines. biggest part the of their business. they make a lot of money from shipping gas from central china to beijing. that will impact that company negatively. rishaad: which are the ones that will do better, upstream or downstream? downstream will report slightly than better numbers. sinopec will report a profit for the year. margins, but what were seeing are a rebalancing of oil markets. think prices will slowly
recover over the next 12-18 months. that should benefit upstream plays that have been beaten down more. recover will it really that much? $50.ve a range of $40 to shale comes into play. short-term, prices will remain around $50 for the second half of the year, but i do think we will punch above the $50 or $60 a barrel. next year, you will start to see u.s. production stabilize. oil production is dropping by a percent in china, colombia, mexico, some of the offshore operations are seeing declines as capital expenditure gets cut. we are seeing big declines elsewhere even as u.s. shale is stabilizing. there is also the issue
of the man, isn't there? the man has remained effectively uplly, --ut s supply, well, we have more coming on. rishaad: demand over the last year was good. >> demand of the last year was good. there are signs we are seeing demand growth slowed down as oil prices start to recover, and the will be something of a headwind on demand growth. when it comes to opec, opec has been increasing production by one 1.5 million barrels a day year over year. iran is now up to 3.8 5 million barrels a day. the saudi's are pumping at maximum capacity. i think there is more downsidely motivated than upside in places like libya. i think opec this unlikely to be
able to expand production. they could stabilize oil production, but stabilize would mean we still have a glut. production,tabilize that will basically reflect where we are. what we are seeing is a balanced market. we were oversupplied in the first half of the year, the market allen's. the problem is were not seeing what we need to in the second half of the year. a rangees probably bound, but over the next 12-18 months, the direction is higher. rishaad: thank you so much. still to come, the japanese carmaker joining the race for china's electric vehicle dollar. we are live in tokyo. ♪
supply frames to cars. how on earth is it compare here? it is similar to tesla in the way that it is an ev startup. its first car is a sports car. tesla inferent from terms of how it views the industry. it plans to become a supplier for other ev startups and provide technologies rather than underl its own vehicles its own brand. rishaad: what does china mean for glm? only evs probably the startup in japan, but china is a
different story. there are thousands of startups and hundreds of projects because the government is doling out generous subsidies for the companies. the chinese government has also betting that the ev market will triple by 2020. a lot of the new comforters are i.t. companies backed by alibaba and tencent, but they don't have engineering histories. they have to outsource for technological know-how. rishaad: a quick word on tesla, what do the japanese carmaker's prospects look like? ev startups and china are customers for glm, but they want them to have their own core technologies, so there is still a question. rishaad: thank you very much
♪ >> from our studios in new york city, this is "charlie rose." charlie: bryan stephenson is here. he has dedicated his life in fighting racial discrimination. his efforts have also focused on putting a spotlight on the legacy of slavery in america. he also won a landmark supreme court ruling. it held mandatory life without parole sentences for