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tv   Trending Business  Bloomberg  August 28, 2016 9:00pm-11:01pm EDT

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♪ it is monday, the 29th of august. this is "trending business" with me, rishaad salamat. ♪ rishaad: live in tokyo and singapore this hour. mixed messages when it comes to the asia-pacific, a rate hike is coming. the boj vows to expand stimulus if necessary. government pension fund may go on a 50 billion dollars shopping spree after its investments tumbled. feeling the heat, speculators
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under scrutiny as china clamps down on unusual movements in the markets. let us know what you think of our stories. follow me on twitter at @rishaadtv and include #trendingbusiness . downome sales in australia 9.7%. .his is a volatile number let's find out. that number quite a big drop after an 8.2% gain in june. trying to see if there is reaction from the aussie dollar. it has fallen further than where it was. it was down .25 percent, now off by .3%. weakness about the
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u.s. dollar strength following those hawkish comments from janet yellen over the weekend? the chance of a rate hike coming through from the fed in september? you can check out on the bloomberg. we are seeing most markets under pressure. all stray off by .8% -- australia off by .8%. it is about the strong rally coming through in the nikkei, the yen weakness and governor kuroda's comments lifting the equity market. on friday, but solid buying to kickstart the trading week, a different story across asia. have a look at the asia index minus japan. down by .8%, pressure from health care and basic material stocks and telcos under pressure.
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consumer goods looking stronger, .2%, butstocks up by excluding japan, not such a great day for regional markets. show you the japanese yen. this is the story we have been focusing on on the back of governor kuroda does and janet yellen's comments. it continues to weaken against the dollar, down by .1%. rishaad: we will look at losses at japan's government pension fund. it doesn't fly they could be set for a shopping spree. what is this all about here? we are seeing is that if the pension fund does commit to their targets, we could see them by japanese stocks, which could give a boost to the japanese stock market. according to our calculations, the fund it needs to buy 53 billion dollars of domestic shares in order to meet their
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allocation target. this. look at they are falling short of their allocation target for japanese stocks and foreign stocks. whichly asset class in they went overboard is with domestic bonds, and that is up,, so theds are weight of their holdings increased to 39%, when they were aiming for 35%. that if theeeing pension fund is sized to honor their targets, which would be at 25% of their portfolio, we could stream them by more stocks. -- could see them by more stocks. take a listen. with 50% equity holdings, the earnings ratio may appear volatile in the short-term, but in the long term, it is easier to achieve the profit target the pension fund system aims for.
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we don't intend to change our style, where assets have accumulated too stable dividend and interest income. they are talking about volatility because this strategy has faced challenges. they saw a $52 billion loss in the fiscal year ending in march. rishaad: we have one positive, haven't we? the japanese economies famously low jobless rate, or is it a positive? shery: they have a very, very low jobless rate, 3.1% at the end of june. that would be the lowest since 1995. graph,s you look at this the job-to-applicant ratio has been steadily rising, meaning more jobs available for job seekers while unemployment rates have been falling.
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thatroblem with this is hidden in the data is the fact that long-term unemployment among men and their prime working years has jumped fivefold since the early 1990's. take a look at this other graph i have for you. you can see that we are seeing even amid an overall increase in the workforce that there were 14.7 million male workers aged 25-44 years old, and that is the and 48 years.- you might think we are seeing more female workers during that time, but the fact is that there is more likelihood that these women will have part-time jobs instead of full-time jobs, which a less and also have fewer benefits. rishaad: thanks very much indeed. a lot of people are betting on interest rates looking at what came out of wyoming over the
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weekend. at that, andng in the ticket of the comments from governor kuroda. >> the japan's central bank has alleged to expand its stimulus if necessary. governor kuroda said there is ample space for additional easing and the banks package of asset buying and negative interest rates. raised about been the effectiveness of central bank policies and spurring growth, a topic discussed in jackson hole. policymakers rejected radical ideas and underlined the need for fiscal support. uber is among the right heading firms that has suspended operations and abu dhabi. that is after dozens of drivers were arrested, according to the national. ae publication reported driver saying 50 drivers were detained at a police station and 70 cars impounded. abu dhabi police declined to
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comment. uber says they hope to resume operations there soon. the agricultural bank of china managed a rise in profits of 0.5% in the second quarter. that is as it deals with increasing pressure from bad loans. seven pointose to $16, beating estimates of $6.7 billion. it is china's third-largest lender by assets. it set aside nearly $2.8 billion for bad loans. and announced it will raise funds with a plan to sell $12 billion in securities over the next three years. rishaad: right, having a look at refining. it came to the rescue for sinopec, the company outperforming its rivals. its fuel making business help to whether cheap crude. it was a big benefit to be downstream, wasn't it? absolutely right. the downstream operation came to
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the rescue and kept the world's biggest refiner in the black in the first half. sinopec posting a 19.93 and yuan profit, $3 billion. it is down 22% from 2015, but if you look sequentially, it was more than double what it posted in the second half of 2015 when sinopec posted its worst profit since 2002. that low crude price environment lowered sinopec's supply cost when it turns crude into fuel at the pump. the results stand in stark contrast to petro china and cno oc, which both posted there were second half results since listed. the two are primarily explores. crudes plunge killed their bottom lines. cnooc had its first-ever half-year loss as brent crude averaged 30% below levels in the first half.
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sinopec continues to be a defensive play among china's big itse oil companies as refining exposure puts it in position to benefit from a low crude price environment. sinopec says it will increase refining in the second half i at least 3.5%. it already process is nearly twice as many barrels of crude a day than petro china, some 4.6 7 million barrels a day. million barrels a day. crude production at sinopec fell 11.5% in the first half. china produced the least amount of crude in july since october 2011. rishaad: we will check on how sinopec another chinese companies open later in the program. we want your opinion. tweet us your thoughts at @rishaadtvand include #trendingbusiness.
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how iran might crush hopes of an opec oil freeze. have a look at it. will assess the impact of currency swings on china's biggest airlines. is it a silver lining? plus, no radical ideas, please. the bank of korea's belief and the power of monetary policy. -- in the power of monetary policy. ♪
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rishaad: you are back with "trending business". us aweek, tuesday brings new measure of japan's economy, giving us an idea of whether the government's attempt to persuade people to spend money is working. prices have continued to fall. outa, gdp figures wednesday. economists suggesting expansion
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of 7.7%. if so, that is the best growth among major economies. export seen as lacking potential. new leadership at the central replacingurjit patel raghuram rajan and providing uncertainty. pmi number on thursday, recent figures indicate resilience, but economist are forecasting a slight drop this time around. we have payroll growth in the u.s. expected to moderate and august after the strongest two months of hiring this year. the job numbers due later this week. in the chief joining us right here in hong kong today.
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i will start off with the payroll number. it does matter. at jackson hole, there was this call for stop using the same medicine to cure the ills. we need new medicines, but we did not get them, did we? >> the u.s., europe, and japan, ecb did anhe adjusting speech, saying we have to be aware that monetary policy is less efficient. thatght be the case monetary policy is counterproductive. rishaad: some are already saying that. >> especially in europe. negative rates have been bad for banks, reducing profitability. unwilling to lend more in the future. central bankers feel more and more that most of the burden
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should be shifted from monetary policy. what is the rest? where can you do more with fiscal policy? you can do more in few places, germany. of surpluseslture in germany. you can probably do more in australia and canada, but it is very limited to you don't have a big space to do more fiscal policy, so you're left with structural policies. it takes years and years. reforms in germany took at least a decade before they kicked in. the improvement in the labor market is just starting. central banks are in a difficult position. monetary policy is normally a countercyclical policy.
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it is not done to support the economy for years and years. economistsd what call in fiscal dominance. butou stop easing, immediately budgets are in trouble. if the ecb says we will stop. it is to negative for banks. immediately, he would see spending skyrocketing. they cannot stop. they are trapped continuing because of the fiscal constraints. rishaad: it's the old adage isn't it of giving a heroin addict more heroin. >> absolutely. to monitorscinating because of that. kurodan, no way governor cannot stop. japanese backs are holding two
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years of gdp in bonds. if you stop and japan, immediately a banking crisis. my worry is central banks worry the burden should be shifted to policies and government should do more with structural reforms, time,s, but at the same they are constrained to not stop. they cannot stop. rishaad: does a widening cap gapween u.s. rates -- make a difference? >> we should not be too worried about that. we have all the indicators are very much well oriented, jobs, pmis, orders.
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gdp growth is not significant. janet yellen has to hike. she said a very stupid reason why, because i might have to cut later in time. rishaad: i found that bizarre. >> it is a stupid thing, but it is true. at the same time, let us not forget that there is a tremendous decline in long-term growth in these countries. long-term growth was around 6%, so normalizing monetary policy meant driving rates up. long-term nominal growth is around 3.5% now. so normalizing interest rates means driving long-term risk to 3%. rates will be higher, but moderately higher. rishaad: also we get the dollar, which has strengthened before we
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get a rate hike. that is damaging, isn't it? but this isourse, another discussion. there was a very interesting discussion last year at jackson hole on that. every country looks at its own economy, so janet yellen looks at the u.s. it's improving, so she has to start hiking. she does not look at the rest of the world. rishaad: she has been. this is what she does. does not do is say i have a problem in brazil or china, so i don't hike. that she does not do. she will hike.
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what we decided collectively to do with that, we have very free-floating capital. there was a big discussion today with the imf and other economies , we have so big capital flows, and this is also an effect of monetary policy. that ity is so huge complicates stabilization for the currencies. rishaad: great talking to you. we have to take a break. coming up next, china's electric vehicle makers, cracking down. why the industry is facing a wipeout. ♪
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rishaad: this is this is bloomberg. ♪ -- this is "trending business".
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china posing strict standards and capping manufacturing for the electric car industry. china has been keen to promote these cars, why is it suddenly changing the rules now? has identified electric cars as a strategic priority airly so they can combat pollution and reduce reliance on oil imports. to encourage them, they have created a class of new licenses for companies outside the auto industry to encourage innovation and provide competition for the incumbents. thatwe are hearing now is the government is considering tapping the number of new licenses -- capping the number of new licenses to 10.
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there are 200 companies in the various stages of development, so the majority of them by the math will fail. rishaad: a lot of money being poured into new energy vehicles, particularly the startups. are things becoming overvalued when it comes to all of this? we interviewed analysts who told us that there is a bit of froth in the sector. thatrecently, we reported one company raised $1 billion from investors, and a lot of the tech giants in china have backed various startups. the backdrop to this is that china has put in a lot of subsidies to encourage electricnt of vehicles. subsidies from the government can make up to 60% of the sticker price of an electric vehicle, so there is a lot at stake here. there is a lot of money to be made.
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rishaad: thank you very much indeed for that. joining us there from singapore. got to take a look at some other news. a proposed billion-dollar lng plant backed by petronas given a boost. the developers says nothing has been change, but plans to meet with local leaders and government officials in coming days. somefy has caught --icians in the spot fire crossfire. it has retaliated against musicians who introduced new ,aterial exclusively on apple making their music and songs harder to find. spotify has been using such practices for about a year. spotify says it does not alter search rankings. right. a look at what we have coming up, china in the spotlight on wild stock swings and
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investigations when it comes to speculation in the market. a brand-new trading week. shanghai and hong kong set to open. it does look relatively positive at the moment. ♪
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♪ rishaad: asia-pacific mixed at the moment, signs of a rate hike coming. railing after comments from governor kuroda that stimulus will be expanded if necessary. the dollar at a two-week high against the yen. bloomberg news calculating that japan's government pension investment fun would need to spend $50 billion on domestic shares to meet its goal of
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having a quarter of its portfolio in stocks. it was 21% at the end of june. a 22% declineth in profit in the first half, net income down $3 billion. china's big three energy companies suffering, petro china cnooc saw itsand first ever loss. the glut continues and supplies are low. juliette: we are seeing the shanghai and hong kong markets following that downward trend. certainly flat on the open. keepingcks we will be our eye on, sinopec seeing its profit drops, and
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prada sales sliding. back into theming retail space, moving higher. , downa's seeing losses .1%. evolution mining has completed an offer at $2.22 a share, raising 331 aussie dollar's, down 8%. a large block trade of crown shares crossing through early this morning. japan is where we are seeing a lot of the positive movement coming through, up right over 2%.
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governor kuroda's comments giving a good upside boost. the fact we have seen the u.s. dollar strengthened and put pressure on the yen, a nice boost to exports. standout performer. japan, it is quite a down day. the kospi is off by .3%, the worst-performing currency, so some selling pressure in that index. also, weakness in taiwan, off by .2%. malaysia slightly up on the open. up by .4%. some weakness in some of the commodities players, showing janet yellen's comments have not frightened too many people. there hasn't been that flight to safety, so gold still weaker, -- .3%.nt 1%
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thatn day today apart from pop in japanese equities. right.: china launching more than 700 investigations into price wings on stock markets. the shanghai and shenzhen recentlymicroblog published this. >> they want to camp down speculation. tamp down speculation. halted. have been that china's regulatory committee has said they want to step up their supervision of this area. the chairman has emphasized the ond for a tough stance market excesses and have
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published cases of trading to show what they are doing about it. the shanghai exchange said on its microblog that it is monitoring brokerage reports, especially those that could move share prices. by the 10% daily limit, dropping by a third over the last month. the shanghai composite has advanced 0.7% since july 26, compared to 8% before that. rishaad: market still recovering from those huge losses last year. if you're going to make price movements and get rid of volatility and try to dampen things down, is it going to be hard? >> to some extent. investors arerket retail investors, 80%. those are the mom-and-pop type who want to make a quick profit. factmay be deterred by the
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that they might not be able to make such great profits. sources are saying that more traders are sitting on the sidelines. brokerages are saying the crackdown will squeeze out bubbles. could say curbing speculation could make chinese stocks more tracked of global investors and money managers. the argument to boost regulations is that it strengthens when you look at the examples laid out, the shanghai exchange has shown cases of spoofing. these are orders to create the illusion of demand, but canceled before the order is executed. markets because shares her bed at a higher price than they would be otherwise by you that. towards some push regulation to stamp out market manipulation. just stocks,s not
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is it? the regulators are looking at things outside of that. >> they have said they want to clamp down on asset baubles or stop them from forming. there is evidence and signals they're looking at ron's, stocks, and the real estate market. last week, there was speculation because central banks started auctioning 40 day reverse repose, and there was speculation that they were trying to clamp down on axis mending. -- on excess lending. peer-to-peer institutions as well. so all these factors point to chinese authorities trying to keep a lid on things really. rishaad: thank you very much indeed. right. boj pledging to boost stimulus .f needed
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governor kuroda says he has ample room for additional easing. jodi schneider is in tokyo. does this give us any idea for what happens at the boj meeting next month? >> it points to it. governor kuroda statements were interesting, saying there is no doubt there is ample room for further easing and all three dimensions, the negative rate, adopted earlier this year, and also further asset purchases. some analysts are telling us they may be looking at asset -- bond purchases from local governments and public corporations that invest in projects such as roads and hospitals. the commons also seem to indicate that there is a push back on analysts who are saying
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the boj has reached the limit of policy options and is running out of room. governor kuroda seems to be saying the opposite, we have plenty of options and we may use them. rishaad: how might this conference route -- comprehensive review affect policy, and will it be enough? the comprehensive review, which was announced at last beth's meeting in july, will the easing that has taken place over the past several years. as nots see the review affecting the opportunity or ability of the bank to go ahead and do further easing. governor kuroda's comments seem to be saying that as well in jackson hole. going toehensive it is be and what exactly the review will turn up will be very interesting. it is making it one of the most closely watched meetings for some time. choir, which is
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singing this tune about inflation and price targeting, how does that all play into this? cpi in week, we saw japan falling for the fifth consecutive month, those numbers far from the price target. in hisr kuroda mentioned remarks that inflation and inflation expectations were very important, and that is something the bank was going to try to target. the fact that we are so far from that 2% inflation target, and he is mentioning this, indicates that there is a good chance of some policy action next month. rishaad: thank you very much. right here at let's check on some other stories. the deputy foreign minister the u.k. toing think again.
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he said negotiations would be difficult and britain would not the allowed to cherry pick the best of what the block has to offer. he said he hoped the u.k. would declare its intentions to leave soon. chrysler seeing samsung as a partner for its auto parts division. sergio marchionne declining to comment on whether they are in talks. keen to buy some or all of the operations, with an -- rest in lighting and did say is that the opportunity is an opportunity that has been looked at by a variety of other people. we have no interest in just selling. it has strategic value to us. all nippon airways has
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canceled dreamliner's because of engine problems. it had proms with the roles were as prompting checks of all engines. it will discuss these issues with the engine maker in march. boarding and attempted flight of its the message redesigned airliner for a second time, problems with on board to systems. it was heading for washington state, but turned back about an hour into the flight. mitsubishi says the plane will be fully inspected but will not fly to the u.s. today. china's three biggest airlines expected to see losses of more than $1 billion from currency swings this year. our aerospace reporter has been going over this.
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what results were the market be focusing on in particular? numbers people will be looking closely at is rexng to be the fo translation loss. this loss was massive last year, offsetting whatever benefits the chinese carriers had with low fuel hedging and prices being so low. they have been making efforts to sell -- raise money in the bond market, then to bring down their exposure to foreign debt. certainprobably see evidence of how aggressive they were in doing that in the first half this week. asian airlines facing stiff competition from gulf carriers. these low-cost ones as well. how does that affect them? >> interesting enough, chinese
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carriers are also giving some competition to their neighbors as well. cathay pacific for one. have been aggressively expanding international flights, offering more nonstop definitions -- destinations to .urope there is more competition with all these international flights. they are addressing the competition they are facing with the gulf carriers of the same time. rishaad: thank you very much indeed. right. up next, accompanied company shaking up the online dating world with some 2.5 billion introductions through the mobile app coffee and bagels. this is bloomberg. ♪
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right.: let's have a look at the business flash headliners. both wagon korea won't take
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steps after the emissions scandal. 83,000 vw cars, environment ministry launching investigation and 23 foreign carmakers 110 diesel models for possible manipulation. cheaper oil hurting sinopec's bottom line, posting a 22% decline in profit in the first half, net income down to $3 billion. the big three oil companies in china have all been slumping. having its first-ever half-year loss. sinopec sees the glut continuing and prices staying low. a declininghat is market. out with the first half
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decline since listing in 2011. , revenuen europe falling to 1.8 billion dollars, i miss. net earnings on the way down also. not as badly as analysts had been thinking. the luxury industry struggling. product struggling because it's handbags too expensive and slow to invest online as well. the online dating industry has become big is this in recent years, over $2 billion a year. our next guest cofounded coffee meets bagel four years ago, raising $8 million in series a funding. it focuses first on east asia. thank you for joining us. >> thank you for having me. rishaad: how does it work? >> coffee meets bagel is a female and power dating app.
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we are doing things we know are important for women, safety, privacy, and quality. the way the service works is our send matches to all of our members. rishaad: they could be male or female is mark -- female? limited selection of quality bagels. you have 24 hours. when there is a mutual light, we connect you to a private chat line. you can get to know each other more and set up a date. rishaad: how does the revenue part work? >> our business model is similar to other casual premium games like candy crushed. the service is free to sign up and use. if you don't want to spend a
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dime, you don't have to. additional you want premium services to accelerate , you canng promises buy some items. rishaad: ok. how did you come up with the name? >> it is a quirky name. when we first started this service, we wanted to target young professionals. busy professional and finance and hong kong, and i knew how difficult it is for busy people to meet new people. that was our target. youngs one thing professionals report to on a daily basis, coffee. what goes well with coffee? bagels, because we started in new york city. it because when you talk about bagels or coffee meets bagel, people play on the
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word. it is a fun concept. rishaad: how does it differ from other matchmaking sites? >> a lot of millennial dating apps focus on casual hookup culture. is a veryts bagel female focused mobile app. it is focused on quality and making real relationships happen. we invest our time and effort on making sure our algorithms find relevant people. it's about focusing your attention on limited profiles, and you will be one of the limited profiles that other people will pay attention to, and it will be much more highly likely that you will end up with more meaningful connections and meaningful dates because of that focus on quality. rishaad: are you profitable? >> we are not yet profitable.
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one reason is because like a lot , we had toartups focus on markets. this year we have started to focus on our monetization scheme. we have been experiencing double-digit growth and monthly revenue. it has been really promising. rishaad: how much does it cost per customer to acquire them? >> we don't spend a time of monarch on customer acquisitions. where are you planning to expand? only officially launched in hong kong or singapore, however we plan japan and korea this fall. rishaad: right. ok. ipo anytime? >> we will keep our options open long-term. rishaad: thank you very much indeed.
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coffee meets bagel. up next, hitting a sour note, the streaming war between spotify and apple heating up. we are having a look at that. this is bloomberg. ♪
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rishaad: an escalating battle between apple and spotify is leaving musicians in the crossfire. spotify has been retaliating against ms. susan's -- musicians who introduced new music on rival apple music. what is really going on? >> the streaming war is intensifying. musicians who exclusively choose apple music to release their songs, find the songs buried in search rankings of spot of five. they have also been told they will not get their tracks featured on spotify playlists. that is what people familiar
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with the matter are saying. according to them, this practice has gone on for about a year, but it seems efforts have escalated over the past few months. apple and spotify have been at it since before apple music's debut, especially after apple propose changing song writer royalties that would increase costs for competitors like spotify. spotify has complained about exclusive deals being harmful, but it has also sought to make exclusive deals with some artists as well, so maybe it is the case of the pot calling the kettle black here. rishaad: amazon may be introducing subscription music streaming. how does that play into this? that may happen as soon as next month. some reports suggest that amazon is close to signing agreements with the biggest record labels for that.
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what this means is amazon will take competition up a notch, amazon and spot of five. foron will offers services $9.99 a month, the industry standard price point. streaming has been becoming big business. growing, sue understand why everybody wants a piece of the pie. rishaad: thank you very much for that. we go to break, let's talk movies. low-budget horror film from sony , ending suicide squads three rico run at the top of the box office. -- three-week run at the top of the box office. don't read it raked in more than 26 main dollars over the weekend. suicide squad was relegated to
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second place with $12 million, a total of 228 million since it opened a month ago. we watch of the dollar can hold on to gains post-jackson hole. ♪
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monday, august 29. you are watching "trending business." we will be paying a visit to singapore this hour. japanese markets sharply on the up. region prettye much down, or flat. gold on its longest losing streak since may.
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japan's giant government pension fund may be going on a shopping spree. do let us know what you think about our top stories. follow me on twitter. much.ay pretty look at that very solid session we are having on the nikkei, up 2.2%. those comments from kuroda and a weaker yen will do that for you. through,ness coming this is the best-performing market in the region. jakarta coming online. also coming under quite a lot of selling pressure. it is down 8/10 of 1%.
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yuan, the worst-performing currency in the region. shanghai pretty stat. curbsld still get these to stop the fluctuating activity. 1%. a third of hong kong also weaker by a third of 1%. see the conceit has -- casinos coming under pressure. australia, rounding out the end of its earning season. evolution mining has completed a share offer.
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weaknesseen some gulf. through in the losses.n sessions of investors are looking for safe havens at the moment. offshore you the rmb, this is suggesting the central bank's determination to defend the dollar and 6.7 is their main mantra. thank be set for a shopping spree. what could this mean for the markets? >> this depends on whether or not they want to commit to those
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targets. the value has fallen with the markets plungingto. hashas seen -- the topix seen double-digit losses for the year. 20% -- 21%w holding of investments. take a look at this graph. falling behind on the japanese domestic stocks as well as foreign stocks. the only asset class they have overshot would be domestic bonds. the weight of their holdings has -- has passed the target. they would have to spend $53 billion on domestic stocks in order to get to that target. it is true they have some leeway when it comes to their commitments.
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they are allowed some deviations from their allocation targets, but it seems right now the fund is committed to investing as much as their initial strategy. take a listen. >> with 50% equity holdings, earnings ratio may appear volatile in the short-term, but in the long term, it is easier to achieve the profit target the pension fund system aims for. we do not intent to change our management style. the reason they talk about the volatility in the short term is because of the strategy, it has seen some challenges. domestic debt is the only asset class that posted a profit and has seen a $52 billion loss for the fiscal year ending in march. rishaad: the japanese economy, slow growth. it does have this famously low rate of unemployment, doesn't
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it? is that seen as a positive? >> on the surface, it looks like a big positive. the unemployment rate at 3.1%. the lowest since 1995 and if you take a look at this graph, not only the unemployment rate is falling but the job to applicant ratio has been steadily rising. there are more jobs available for job seekers. given that long-term unemployment among men in their prime working years has jumped fivefold since the early 1990's -- take a look at this other graph. 14.7 million male and 44,aged between 25 which would be the lowest and 48 years. you might see female workers rising a little bit and that
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positive, but the fact is it is more likely that fema workers will have low-paying jobs, fewer benefits in the form of part-time jobs instead of full-time jobs. rishaad: positive, but the thank you very much, indeed, for that. we have those comments coming through from kuroda in jackson hole which sent the yen down against the dollar. let's have a look at that story and some of the others. , the bojs central bank will expand its stimulus program is necessary. forda said there is space additional easing in the package. questions have been raised about the effectiveness of the central bank policies, a topic discussed at the jackson hole symposium. policymakers rejected radical ideas.
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at the cultural bank of china, they managed to eke out a meager profit rise, just half of 1%. it deals with increasing pressure from bad loans. it pared down it's bad loans by the bad loans by 3%. the bank needs to strengthen its capital offers and will raise securities over the next three years. let's take a look at prada. it is up 2%. it had been falling. revenue was down 15%, missing analyst estimates. slow sales were seen and most
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regions -- in most regions. worldwide, a luxury business in general has been struggling to grow. rishaad: refining came to the rescue for the chinese oil and gas giants. the company outperformed its to mastic energy rivals -- it's domestic energy rivals -- its domestic energy rivals. >> using its downstream business coming to the rescue, keeping the world's biggest refiner in the black in the first half. sinopec posting 3 billion u.s. dollar net profit. it was down 22% from the same period in 2015, but more than double of what it posted in the second half of 2015. loweredd crude prices
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supply costs when it turns that crude into fuel. the results stand in stark contrast to its rivals in china which both posted their worst results since they listed. brent crude average 30% below levels in the first of. it did -- sinopec continues to be a defensive play. it puts it in good position to benefit from a low crude price environment. it will increase refining in the second half by 3.5%. it already processes nearly twice as many barrels of crude a day. refining, it is the nation's number three oil explorer. crude production fell more than
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11% in the first cap. -- first half. ahead, china is taking a tough stance but could it be bad for business? we will be talking to a canadian fx trader. this is bloomberg. ♪
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rishaad: the dollar was near a two-year high against the yen. thank you for joining us. let's get straight to it.
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we have this jobs report later this week. if it is really strong, it could move that decision forward. what is your view? >> i think it really could. i am still leaning toward a december hike. the job report, i think there will be certain pressure on the repricing of september and i think we will see that in the market. right.: what do you make of what came out of jackson hole? we had a guest and he was saying, nothing radical and it was business as usual. >> i think the market was a little bit surprised. did not really come out with anything new.
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that is first of all. you sell the market react accordingly -- you saw the market react accordingly. i think that is the key. the market has to be cognizant about the market is going to interpret these moves. historically speaking, the fed has seldom moved when the probabilities have been below 60 or 70%. of workstill has a lot in front of them to guide the market to that comfort zone. rishaad: absolutely. bank of japan governor said, everything was still in play, all three major lines he is using. he is quite happy to let the fed do the heavy lifting. i think he wants them to raise rates sooner rather than later.
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, there is auroda good opportunity for him to do so. up at the-yen trading top of the near-term range. if you look at the markets reaction to past stimulus efforts by the bank of japan, it seems rather timid. traders still have that in their mind. they doubt the bank of japan's ability to guide the currency. the heavy lifting will be left to the federal reserve board. if they do raise interest rates sooner than later, we will see another bounce in the u.s. dollar. is this a one and done deal or will they go back to that often talked about interest rate normalization? that will dictate the longer term trend for the u.s. dollar.
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when we see what is going on, it was strange janet yellen was talking about raising rates in the context of -- so she could cut them if things worsen. >> a little bit surprising. that would be the worst possible outcome we could see for the u.s. dollar. there might be some political play. still a lot of uncertainty leading up to the election and november. -- in november. we have to be a little guarded about that because we really do not know what to anticipate. headwinds thecal fed has to face going forward. they will probably pass on september. aboutd: let's talk something closer to us in the
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asia-pacific. the australian reserve bank could cut again -- or could they? governor is quite happy with where the aussie dollar was. economy is sputtering along in australia, showing signs of coming alive. the inflation aspect is worrisome for the rba and this leads me to believe they could cut rates again at the next meeting. that could put pressure on the australian dollar. they may benefit from the uptick in the u.s. dollar. possibility certainly. rishaad: steve, let's look longer-term. medium-term, in fact. let's go to october.
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make a difference in the fx space? or is it a nonevent? >> a lot of it is priced in right now in the sense that it governcted the pboc will with an iron fist and maintain the yuan until that is over. i think that is one of the main focuses. we may hear some policy issues being discussed at that point. they will try to keep the iskets very tame up until it out of the way. i am not looking for any major of people in the rmb -- any up heaval.
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primarily, what they were trying to do was shipped speculators along the curb. speculators were getting too comfortable. they wanted to push that so the reaction -- the funds they are supplying could free flow better to the real economy. i also think they were really concerned about the speculative aspect and combining those two ideas, i do not think this is a monetary policy play. markets to come back very quickly. rishaad: joining us from singapore. this proposed eight and 5 billion -- a .5 billion. has signaled a fast change of
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heart if the location is moved. it plans to meet with leaders and government officials in the coming days. he declined to comment on whether they are in talks. .e did have sources telling us >> we have a very good relationship with samsung, both as a supplier and a strategic partner. >> it is an opportunity and has been looked at by a variety of other people.
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theaad: depends -- president saying the terms are .till being negotiated the fastest-growing regions in the next five years and helps to expand 10% annually in those markets. next, caught in the crossfire. we have details, just ahead. ♪
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rishaad: some musicians are caught in the crossfire.
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been retaliating against musicians who give exclusives to apple. >> looks like spotify's punishing singers and bands, choosing to give apple music exclusive rights, according to people familiar with the matter. their songs will be buried. they will not be able to get on they are playlist once made available. this fred talley is has been hacked -- this retaliation has been happening for about a year. apple and spotify have been at especially after -- spotify has an
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estimated 39 million paying members. apple music has about 15 million and it is catching up really quick. amazon could be introducing a subscription music streaming business as well. >> what this means is that amazon will take competition up a notch. it will join the battle between apple and spotify in the streaming space. that may happen as soon as six months. some report suggesting amazon is close to signing agreements with the biggest record labels for that. services atoffer $9.99 a month. streaming is big business and it has taken over digital downloads as the largest source of music revenue. almost $2.5 billion.
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expect more players to get into the space. there is another kid in town letting users listen for free and that is pandora. users turn down the volume when the ads come on. they have to watch out for pandora. according to pandora, if you want control of the music you hear, you can offer a premium option. i am still listening to music the old fashion way. i am listening on cd. rishaad: i am still on audiocassettes. briefly looking into what has been happening in the movies. we have a low budget horror movie from sony.
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costing $10 million to make. it has made that money that and more by raking in $26 million over the weekend. ♪
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♪ rishaad: a look at our top stories, japanese shares out of step with the region. governor kuroda pledging to add stimulus, saying he has room to move. the yen declining. fundorld's biggest pension may go on a $50 billion shopping spree after its investments tumbled. of 25%hort of the goal
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of its portfolio and equities. it also has room to offload domestic bonds. executiveler chief seeing samsung has a potential partner against the backdrop of growing interest by sam son for the -- samsung for the auto parts business. sergio marchionne declining to comment whether they are in talks. sources saying they are keen to buy some or all of the operations, with particular interest in lighting. straight to japan as it goes on its lunch break. the morning session has outperformed the rest of asia. let's have a look. the nikkei going on that lunch break up over 2%. thank you, governor kuroda and janet yellen, because we have seen that stronger dollar way on , up bykei -- on the yen
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over 2%, led by those exports, 7%.ha motor up over elsewhere, a lot of selling. if i show you the regional index without japan, down over 1%. a lot of weakness in emerging-market stocks and currencies. we have been talking to wells fargo, mentioning that one of the areas of weakness we are likely to see hammer down following the fact that janet yellen was more hawkish than expected was going to be in the emerging markets space. that is what we are seeing. 32% chance of a september rate hike on friday, now 42% according to fed fund futures. some of thek at weakness in the market, the hang seng and hong kong down by .5%
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of the moment, pressure from casino stocks. galaxy entertainment sold off in new york and falling in hong kong trade as well. extended market has declines in the latter part of the session, down over 1%. having a look at some of the stocks we are watching, a number of earnings coming through. in hong kong, agricultural bank down by .3%, bad loans have says it climbed, but will raise 12 billion dollars over three years to get back on track. 22% dropoming through, in first-half profit. prada looking not too bad even though it did host a fall in sales on weak demand. that luxury storing -- story hitting retailers. beach energy is looking good, likely to return to a profit
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next year after reporting 588 million austrian dollar loss. it should be back in the black in 2017 following a merger. coca-cola looking good in sydney, up over 5%. being soldining is off, not only on weakness in gold, but it has completed an institutional share placement, raising 331 million australian dollars at $2.22 per share. dollar-yen weakening, holding at 102 point 11, down by a third of 1%. not too much of a move in the yuan fixing, but off-shore a little stronger. reiteratede boj has its pledge to boost stimulus if needed. governor kuroda says he has ample room for additional easing
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when he addressed central bankers in jackson hole. brent miller is in tokyo. what clues does this give us for the meeting on the 20th next month. ? >> that's right. nextve a wait until the meeting. governor kuroda is signaling that an increase of current policy is possible. we know that means negative interest rates could be cut further. it could also mean an increase in asset purchases. whether he does that are not, we don't know. is pushing back on the view from some analysts that he is running out of ammunition. on the one hand, analysts indicating that governor kuroda is up against a level of bond purchases. some other analyst are questioning the idea of whether the boj could move into local government bonds and corporations, helping to fund
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infrastructure projects. rishaad: how will the comprehensive review possibly affect policy action, if at all? a wildcard card, but as we have seen, the governor has no intention of retreating. his intention for this review is to look at ways to improve policy to meet the 2% target. that said, we don't know what happens if the review comes in with a negative judgment on how policy is doing at the moment, whether that throws into question heading for a 2% inflation target in two years, so it is a wildcard. rishaad: tell me about inflation targeting and indeed that target. how does all this play into it? there is pressure for governor kuroda to abandon this. sore point for the
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boj. last week, consumer prices came in with a 0.5% decline, putting them back where they were when governor corrode us started the easing program three years ago. -- governor corrode a started the easing program three years ago. there is a possibility that they couldlet that go or it finally force governor corrode kuroda's hand to boost stimulus. rishaad: let's move to china where the country has launched 700 investigations into wild price swings in markets. we have a look at why these regulators have stepped up this monitoring of stock movements. are trying to dampen
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speculation and wild stock swings. they say there have been 774 investigations open since the beginning of july into wild price springs -- swings. 38 and best have been halted. china securities regulator has emphasized that they need a tough stance on market excesses. they have published cases of what they call abnormal trading. it is not just stock movements. also scrutinizing brokerage reports which may move share prices. the strategy so far seems to be working. 10% limitping by the have dropped by a third, and also the shanghai composite has
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advanced 0.7% since july 26, compared to 8% in the two months before. rishaad: we are still struggling, at least chinese investors, to make up the losses they suffered last year. will this make it slower for them to recoup losses? >> you could see some traders setting out. you look at china's stock market actions, 80% of the volume is from retail investors. a lot of these are quick gains to take advantage of pricing. bloomberg sources say more traders are sitting out. brokerages are saying that the crackdown will squeeze out small , bigger companies as well, so a change in the companies that investors are going into. speculation could also attract global investors to the chinese market as well.
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the less wild swings may give global investors more confidence. rishaad: they take the longer-term view i suppose. the regulators are not confining themselves to the stock market only. been signaling that they are looking at cooling of the markets, so bonds markets in the real estate markets as well. in july, they said they wanted to curb asset levels. -- asset bubbles. day are auctioning 14 reverse repos for the first time in six months, and the government is trying to contend with shadow lending by limiting peer-to-peer lending as well. these different movements are signaling that they are trying to cool what is going on in the markets in general, not just stocks. there is also something to be said for regulation.
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,ome of the published cases there were seven examples of ordersg, which is where are placed to make it look like greater baltimore demand, when there isn't. they are trying to clamp down on the manipulation of prices as well. rishaad: right. let's have a look at some other stories. selling a stake in crown resorts, reducing ownership by a half. the privately held investment vehicle agreeing to sell 35 million shares. shares in crown falling 2% in sydney. copper, well, expected to keep on falling after erasing gains. started to have
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switch to a net short position. goldman sachs says prices will be dragged lower by an "supply storm." was at demand for copper its lowest in 17 months in july. as of friday's close, down more than 2% this year. of deputy foreign minister germany has warned those hoping the u.k. can secure a good deal on leaving the eq to think again. -- the eu to think again. difficultns would be and britain would not be allowed to cherry pick the best the block has to offer. he hopes the u.k. would declare its intention soon so talks can begin. up next, currency crash. the weaker yuan a drag on airlines. the details are coming up. this is bloomberg. ♪
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rishaad: right.
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takata seeing more unwanted headlines. the incident happened last monday. few details have been released. the truck was carrying airbag inflator's and propellant. theywagen korea has said will not take legal action in response to a ban on 32 models over the emissions scandal. the ban affecting 83,000 cars. korea's environment ministry into 23 investigations foreign automakers as well is 100 10 diesel models for possible manipulation of testing and data. not,g to the skies were all the pond airways canceling nine dreamliner flights because of engine problems.
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erosion and turbines prompted checks of all planes in the fleet. thesaid it was discussing issue with the engine maker since march. inee planes suffered trouble flight and turned back on one engine only. mitsubishi aborted a test flight of its domestically designed airliner for a second time due to problems with onboard systems. faulturned because of a in the air conditioning system. it was heading for washington state, but turned back an hour into the flight. mitsubishi says the plane will be fully expected but will not fly to the u.s. today. china's three biggest airlines expecting losses of more than $1 billion from currency swings this year. that as earnings season continues his week. reporter has been going through the numbers. what will the markets really be focusing on? >> as you mentioned, a lot of
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people will focus on what the foreign translation loss will be in the earnings announcement this week. they had a huge loss last year, which offset much of what they had benefited from with the lower fuel price. translation loss, and also they have been trying to reduce their foreign debt exposure by raising funds in the local bond market to bring down that foreign debt. we will probably see some evidence of how effective that was. in asia, airlines are facing stiff competition from the gulf and low-cost carriers. how does that affect the chinese airlines in particular? >> interesting enough, chinese carriers are actually putting competition to its neighbors because a lot of nonstop international flights from china to cities in europe and u.s.
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that has given a lot of competition to cathay pacific. chinese carriers are addressing the competition they are facing from the gulf carriers as well. rishaad: tell me something, what about the second half? visibility will be very important. the thing is people will want to know exactly what they are seeing in the month to come. ,> the second half obviously the important factor is how more aggressive they will be on raising funds in the domestic bond market to bring down foreign debt exposure. a key loss they have been seeing in their earnings. their benefits of low fuel prices, so that is one of the factors they will continue to do, and probably something to monitor whether they will
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continue. fuel prices.tor is because they are not fuel hedging, they basically benefit 100% on low fuel prices. that is a number we will look closely at. rishaad: thank you very much indeed for that. these carriers will report this week here at in the next few days, a crucial new measure of japan's economy. giving uses for july an idea of whether the government's attempt to do persuade people to part with their money is working. friday, prices have continued to fall. india now, out with second-quarter gdp figures. talk to seet we an increase of 7.7%, the best among major economies. export seen largely as liking their potential. new leadership at the reserve bank, urjit patel replacing
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raghuram rajan, and that provides fresh uncertainty. china manufacturing data, the latest check on that. this is pmi on thursday, some resilience, but economists forecasting a slight slump. fallial pmi expected to below 50, 40 9.9. any number above 50 indicates expansion, below that, a contraction. looking for tobacco a share of japan's e-cigarette market. we will have a look at what is becoming a booming industry and head over to tokyo for that. ♪
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areaad: new regulations expected to pull the plug on the 200 plus companies that make up china's electric car industry. the government is imposing strict new standards on technology and could cut the number of manufacturers. promotes been keen to its own electric vehicles, and it seems absurd to be tightening the rules now. >> yes, good morning. china has been promoting electric vehicles as a way to combat air pollution and reduce the reliance on imported oil. you are right.
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it seems counterintuitive that they are clamping down. is behind this is that too many startups have sprouted as a result of this new license the government created to give to companies outside the auto industry. rationale behind the new license originally was to encourage innovation and inject competition for the traditional automakers. , anave seen many startups estimate of 200 plus companies, involved in developing electronic vehicles. me something, a lot of money is poured into these new energy vehicles, but degrees startups. are things becoming a bit overvalued? we have had a lot of news about startups raising a lot of money. we just reported recently that wm motor raised $1 billion from
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investors, so just from that you can see there is a lot of interest from venture capital firms trying to get into the space. saidnalyst we interviewed that there is a bit of concern that there is a bubble building. prizesly there is a big to be had if you get one of these licenses, including a brand, but if you do not own the technology, you could burn through the cash and it will be game over quickly. rishaad: absolutely. but tell me something, is it a case of them perhaps trying to rationalize this because there are too many players? what are you hearing about that? license theye new created, we are hearing from the china auto association that the government is considering the number to
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there are 200 plus companies trying to get in this space, by pure mathematics, a lot of companies will fail. rationality audi -- is to make sure that who remains has the level of technology to be competitive globally. rishaad: thanks a lot for that. joining us there from singapore. competition heating up in japan's e-cigarette market. phillip morris and japan tobacco releasing new devices this year, and they both see users shifting to these new products. thinking -- vaping could be the future. >> it does. phillip morris and japan tobacco have launched these new products in japan that have really taken off. the market has gone from near
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zero to about $4 billion. rishaad: tell me something, what are we talking about? are these e-cigarettes? they are different. these are heating the tobacco, but not earning it, right? >> that's right. the heat to liquid products you find in the u.s. are not what we are talking about. products with a feeling that comes off than nicotine that is released. in any case, the demand is huge. largely because of what we are ofing in smoking trends traditional cigarettes, where the health risk or are very well known. rishaad: this is growing exponentially, but is this unique to japan, this type of vaping?
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>> i don't think so. it is available in other parts of asia, but it was only introduced this year in japan. rishaad: let's look at the asia-pacific, japan heading in opposite direction, solid gains down to governor kuroda's remarks about his wiggle room, loads more room to maneuver for him. -- propellinging the nikkei up to have weakness elsewhere. that is it for this monday edition of "trending business". "asia edge" is coming up. ♪
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♪ angie: good day. it is the middle of the asian trading day here in hong kong. , oneat work at the busiest of the busiest ports in the world. there you have it. we are live in hong kong. this is "asia edge." ♪ angie: i'm angie lau. a top stories this hour. governor kuroda's comments lift stocks in tokyo, on a day when the rest of asia is falling. he told jackson hole he has plenty of room to add.
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japan's giant government pension fund may go shopping after the value of its investments tumbles, it might have to spend $53 billion. and it was to the rescue, sinopec outperforming big rivals. 98%, and a first ever first-half loss. also coming up, caught in the crossfire. artists find themselves caught up in spotify and apples fight for streaming supremacy. juliette: and i am juliette saly keep an eye on the markets. it is a tale of two central banks today. governor kuroda's comments that the bank of japan may add more stimulus is lifted -- has lifted the nikkei up over 2% on the lunch break. emerging-market stocks entrancing getting a hammering after janet yellen putting the likelihood of a september rate hike on the table. the yuan at a five-week low.


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