tv Trending Business Bloomberg September 4, 2016 9:00pm-11:01pm EDT
election. it is know what you think of our top stories. follow me on twitter at @rishaadtv , include #trendingbusiness as well. singapore, taipei, and kuala lumpur just starting up. we are looking at asia extending the global rally that started on friday. this follows the massive session into europe, carried into the middle east. oil had a decent bid just coming off that. raising oil for asia. were looking at substantial
downside for three health care providers. the government is saying they are aware there is sick growing list-- there is a growing of health care providers looking to jack operates. over in japan, let me show you what is happening, 1.2%. the yen is getting whipsawed today. we are closer to 104. one specific group of stocks, , have rallied quite sharply in the past few weeks. a lot of this comes down to what has been happening in the bond markets. you have these yields on the longer end of the curve now back to the highest level since march.
the two year is not budging. it is seen as helping the banking sector there. 62 out of 80 or so banks right now. back to the currency markets. i mention the jobs number on friday. september likely not going to happen for the fed. it is a complicated conversation, but look at the moves in the fx markets. dollar weakness, kiwi on the way out. -- way up. china,: g-20 summit in leaders warning and being warned that are rising tide of protectionism is affecting growth and recovery. who is making these comments? everyone from the imf to
the wto to the oecd, policy makers are using the g 20 summit as a venue to voice those concerns over rising protectionist measures around the world. i spoke to the oecd head as well as the wto head, and they both warned about the negative impact of protectionism. take a listen. a trade is no longer locomotive of growth. lagging likeally investment, so no surprise why the world economy is only growing at 3%, even below the rate of growth pre-crisis. >> trade in general is a positive for the country. deal with those forces of unemployment with anti-trade measures. you will be shooting yourself in the foot. christine lagarde has
warned that we could see the lowest growth year since the global financial crisis. of the g-20 communiqué obtained by bloomberg did mention that leaders will talk about the equal importance of fiscal policy and monetary policy unordered to boost growth. this is the second and final day of the g-20 summit, so we are expecting several closed meetings followed by a wrapup statement by chinese president xi jinping. actually, we have shinzo abe and xi jinping expected to hold talks, the first in a while. shery: yes, it is. it is a closely watched one. we are seeing growing bilateral detentions because of territorial disputes in the east china sea. sources are telling us that
willo abe and xi jinping have a formal sitdown instead of just a handshake. now we are expecting an actual sitdown. beijing has taken more assertive measures, sending more vessels near these islands that are controlled by japan. the latest tensions have not impacted trade between those two countries or dented chinese tourism to japan, which has seen the largest number of visitors in july, a record number of thesers in a month, but challenges in bilateral relations and political tensions complicate the outlooks for the two countries when both of their economies face challenges. rishaad: thanks a lot for that. right. samsung giving itself two weeks to start replacing galaxy note 7 s after announcing a recall.
it realized it needs to move quickly on this. >> there were two clear things at stake, the patience of their their brand and really trying to keep that intact. by issuing the two-week deadline to recall 2.5 million galaxy ise 7 smartphones, samsung trying to show it is on the front foot and will do whatever it takes to protect its brand and keep its customers happy. helped by the market. we are seeing samsung shares track higher, up by .1%. compare that to those of the samsung sdi shares, the company that provides 70% of the batteries to samsung. they are down by almost 2%. they didn't quite sharply on the open, off by 5%. recall is behind the that there have been at least three reports of batteries
overheating while charging, causing the smartphones to explode. the korean economic data reporting that some sun has stopped ordering batteries from sdi. the timing could not be worse for samsung. it occurs just as apple is to release iphone seven and comes ahead of crucial back-to-school demand. the recall came from the top, and the head of the mobile division has labeled it heartbreaking. >> it is difficult for me to specifically comment on the loss. i can say it is a large amount that is a pain to me as well. made thisss, we have decision because customer safety is the most important issue to us. analysts put the cost around $1 billion. it is less than 5% of samsung's projected net income of $20.6 billion this year. our analysts at bloomberg intelligence say the long-term impact will be minimal.
consumer reports has told us that the greatest threat is customer loyalty if no further guidance is given from samsung. wait orearly adopters has this recall affected samsung's early lead over apple, set to launch its new iphone later this week. rishaad: indeed, that is coming up on the seventh. do tweet us your thoughts using @rishaadtvand include #trendingbusinessas well. some other stories we are monitoring for you today, here is around that. itsanjin shares sank as receivership filing was accepted. they asked for a plan by november 5. since the fell 30% company applied for court receivership. filed for bankruptcy protection in the u.s.. as of sunday morning, 68 vessels were stranded or import.
it's part worries about deliveries ahead of a busy shopping season. of armk's acquisition comes into effect today, adding to their debt load. is $150 billion, five times adjusted earnings according to moody's. increase abouty 5.5 times would be a downward trigger on its by you wish in. at also says softbank banks leverages rising more than expected. softbank share price is rowling -- rallying. japan has called on the u.k. to make its exit from the european union more predictable. japan released a 15 page document on its foreign ministry
website voicing concerns about the uncertainty and lack of clarity surrounding brexit. the document underlines the importance of financial passporting to u.k. and japanese banks. that's the ability to freely sell their services across the eu. rishaad: right. later in the show, southeast asian leaders welcoming president obama one last time. watching thers reserve bank of australia closely. glenn stevens making his final call it tuesday's meeting. we will go over to sydney for more. ♪
offer was made well the deputy crown prince was visiting tokyo. onhuram rajan stepped down sunday. he said multiple layers of scrutiny from entities that don't have technical understanding will only her decision-making. insold the biggest overhaul history, switching to inflation targeting and pressuring vendors to reveal bad debt. the initial challenge for urjit patel will be to tackle accelerating inflation and slowing growth. lynn stevens will be hosting his final policy meeting on tuesday. -- glenn stevens will be hosting his final policy meeting on tuesday, expecting to hold at 1.5%. traders are pricing in a 50% chance of further easing as they wait to see if the fed hikes this month.
at cmc iset analyst in sydney. but he hasxpected, left his mark on australia, the economy, and the rba. >> he has. people would say that he has been one of the most effective central bank governors around the world in the last 10 years. he was responsible for some very aggressive and successful action out of the global financial crisis when he cut rates aggressively. legacies is his communication. he is a gifted if laid-back communicator, varies the sink and what he has to say. sisi -- something
they are very short and to the point, but with all the information you need to know and the same applies to the ministry. a central bank others could learn from. theaad: he talked about limits of monetary policy and how it was not as effective as it used to be. it is a theme echoed in the g 20 . >> it is. i think glenn stevens has been consistent. the rba has been reluctant
instruments -- in stimulus. his clear view that the fed should get on with the job and the time is right for them to make the next rate increase, which will have the benefit of taking some of the pressure off our reserve bank but other central banks around the world. rishaad: i mentioned the g-20, and the theme is to get the global economy growing again. with all the stimulus out there, what would happen if we did not have it? that is the question. >> it is. it is a question we will probably never know the answer to come up but that is the core of the central bank debate, isn't it? here would we have been if they had not acted. have force
politicians to act more to introduce reform. would have lessened the risks that now face is because of extreme central-bank stimulus. on the other hand, as we have seen at other times in history, without stimulus, the human costs can be large in terms of high unemployment rates and adjustments to economy's. that 3% going on about growth rate, is that why you are reducing your exposure to equities because you think corporate profits are not healthy looking down the road? is one of the reasons. we are in a situation at the moment where the bullish scenario for equities probably only involves modest increases and general sideways movements based on the fact that
valuations are very high. they do incorporate large couldate interests, so we keep drifting higher, but the risks look larger. there are significant risks in europe with the european banking situation. it is uncertain how markets will react if we see higher rates from the fed and other places. favorite lightening your exposure a little anyway. rishaad: how does this alter your strategy? there are many moving parts, not the least of which is on the commodity side of things. , we are in one of those situations where it is difficult to take a broadbrush approach to commodities. commodities are in different places of the moment,
so you have to focus on particular areas. if we were to see u.s. dollar strength, which i think is likely more or less over time, then that would be a negative for some commodities. on the one hand, oil markets, are headed back towards a balanced situation and will get support. , wehe other hand, iron ore will likely see the surplus of supply get worse over the next year or 18 months and there is downside risk. you would have done well on the oil market if you're buying it at $41 and selling it when it hit $47. you could make money time and time again by doing that. >> that's right. i don't think it is too early to stop doing it. i think oil is generally going to be in a range of $20.
i think what oil has got going for it is we do have visibility now on a return to a balance. is uncertain. it depends on whether you think the market will grow at 1.1 million barrels a day or 1.4 million barrels a day, but essentially it is growing back into balance. that means if we get to around the bottom of that range or a thebelow, i don't discount possibility of u.s. dollar strength and inventory related pressure getting us into the high 30's, but between about $36 level to be going back to the well and buying upper 40'sing in the and possibly demented to upper 50's if you have a long enough time frame. rishaad: we have to take a break
withad: you are back "trending business". going on in hong kong as voters turnout in record numbers. the first election since these so-called occupy protest two years ago that saw student protesters clash with police. votingurnout, people will past when the polls were meant to close here. >> that's right. they kept the polls open in some places because there were huge queues and not enough polling stations in some of the districts. when you look at the numbers that have come back, it is
reflection of the politicization of hong kong after the occupy protest two years ago. tose protests are thought have failed because they did not manage to get any concessions out of the chinese government on electoral reform, but what they did do is let a size a whole generation of people, and what we are seeing are younger people coming out and voting for younger parties. rishaad: what are the surprises and indications? >> we have not action got any results yet. is ahift we are seeing shift away from these traditional and democratic pro democracy people towards a more radical people. it does not look like any of those candidates are calling for independence from china will get in. we have got a lot of the younger so-called local list parties that are pushing for what they
call self-determination. self-determination in this case would be voting at some point by hong kong people about hong kong's political future after the high degree of autonomy which has been guaranteed up until 24/7. rishaad: a lot of people saying that is being eroded at the moment. us about the blocking position that there is here. >> one of the things the pan democrats have is the government can't make any changes to the basic law. the means they can't foist electoral reform package that beijing wanted to introduce two years ago. this is a package where basically beijing vets who the candidates are. looking ataintain the numbers that blocking
♪ at our toplook stories, g 20 leaders warned about protectionism. debby keough and oecd saying trade is suffering and posing a threat to the world economy. the oecd said more than 1000 protectionist measures have been passed since the financial crisis. china and the u.s. agreed to cooperate to drive growth. south korea's biggest container shipping line plunging. 's lenders have found
restructuring plans insufficient after filing for court receivership last week. has 68 vessel stranded at sea and imports as well. samsung's recall of new smart phone will not be cheap. estimates compiled said the decision to replace the 2.5 million devices will top $1 billion. catch batteries that can fire and explode. the timing could not be worse with the iphone seven due out later this week samsung sang the estimated costs is "heartbreaking." markets, korea, shanghai starting off this week. heartbreaking. it is basically a morning worth of sales for samsung. broader markets looking like this.
we will be watching the philippines closely. acre shareholders planning to the vast his shares. jobse looking at a post u.s. rally right now. the u.s. dollar on the back foot right now, helping sentiment right now. al and gold on the way up little bit of the moment. at 104.en roughly go, 103.87. , that'sese renminbi where it is trading. there is an ipo we are watching closely right now. construction,e there we go. trading debut on limit up regardless of price.
that is one thing we are .atching have a look at japanese financials. it is seen as helping the margins of a lot of these japanese lenders when the long end of the curve goes up. you are looking at an expansion and margins there, up 2% right now. there we go. 71 out of 82. this brings me to the next story, bond markets, 30 years at the highest level since march. the 10 year might turn positive today. has the longest losing streak since 2007. ahead of what the boj is expected to do in recalibrating their policies for the economy. have a look at the three stocks we are watching in hong kong.
china, the other two casinos as well, more gambling stations. for 100 whenized it starts operations, 25 next inr, and the other 20 50 january 2018, a positive surprise for company shares. rishaad: chinese currency data suggesting the yuan could resume his deep appreciation trend ones the g-20 gathering is over. what is the thinking here? statements in the last hour from the chinese and u.s. sides following the meetings in hong trail -- in hangzhou. hasrding to china, the yuan no basis for continued appreciation against the dollar.
the data suggests otherwise. if we bring up the chart, we can in the run-upps to the g-20 here, the pboc and authorities in china have been trying to keep it stable. they want to deflect any chance of criticism of its currency policies at the g-20. don't want to give its trading partners any excuse. what you are seeing is basically fairly clear evidence that any time the pboc has strengthened its fixing rate by more than 3/10 of 1%, the currency immediately erases those gains on larger than average for him intraday. more headlines here? rishaad: more reverse repos taking place. they are trying to free up the system and liquidity. >> to come back to this real quickly, this chart shows pent up selling pressure. it suggests two months of relative calm could end after g-20.
, august 3,ed dots august 11, august 17, basically following stronger than average fixing rates of at least 0.3%. of those occasions, we saw immediate spikes in volume and selling pressure. basically, a lot of analysts are using this kind of intraday volatility, intraday movement, as better evidence of trader intent rather than the distortions that could have been caused by the fixing. move.d: the fed likely to basket. have this sdr how does this affect depreciation, if at all? >> they want to keep it stable ahead of the inclusion and internationalization of the renminbi.
if we get further weakening data for the china economy, a much tighter approach from the u.s. fed, you could have more volatility, more outflows, more downward pressure on the yuan. however, most analysts we surveyed, the median forecast calls for a 1% decline from now through the end of the year for u.s..s. dollar yuan and -- dollar and yuan, so not a lot. rishaad: taking a look at some sums global recall of the galaxy note 7, apparently causing the company one been dollars. the damage to the brand could be greater still. how did you work it all out here? what is the extent of the damage? >> the market is saying one .rillion yuan --won operating profit is a trillion argue that theld
effect is not significant. in terms of brand equity -- rishaad: that is something intangible, isn't it? it's hard to build one up, but easy to break down and destroy a brand. >> definitely. if we went back to history, last year, the p/e ratio was about eight times for samsung. now the company is trading at about 10 times. you could argue that there could be some premium priced in given that the market has more confidence on samsung's ability to offer a consumer product with strong branding. losing itsmsung was .peciality in big displays the p/e ratio went below seven times, so it could be quite
worrying in terms of the damage to the brand equity, not just earnings. rishaad: if we look at simple earnings, other companies are likely to be feeling the heat from this problem as well. >> yes, there are beneficiaries and companies who may suffer. iphone would benefit. chinese companies could benefit as well. on the flip side, the suppliers of samsung, including samsung of, the battery provider this problematic galaxy note 7, and qualcomm, they could also be heard. rishaad: thank you very much indeed. the trials and tribulations of
samsung electronics. right. half of said to buy php's gas fields in western australia. pay $400ny will million in a deal that sees it takes a stake in jupiter gas field as well. woodside will run the north scarborough fields. angela merkel's christian democrats were beaten by the alternative. it is seen as a backlash against open border refugee policy. social democrats won the election, but the afd came in second. it highlights growing public unhappiness with her policies. britain's biggest business lobby says there is uncertainty over the long-term outlook to leave the european union. it says it expects to see
deterioration in growth. debatesssment comes as continue over how brexit may affect the economy. the manufacturing index has recovered and activity is at all time highs. trudeaunister justin signed a cooperation agreement and alibaba shopping platform. we caught up with the trade minister at the g-20 summit and talked about the significance of the deal. the 20 first century, and the age of the technology revolution, the age of easy , those canadian lobsters, if you buy one on alibaba, if you are in china, it you buy one of those great nova scotia lobsters, it would be in your house in 72 hours. that is amazing. what to me is so important about
this as trade minister is that we have to be rethinking how we think about international trade. it is not just for the big multinational companies. trade is about finding ways for small and medium-size companies to get direct access to consumers around the world. that is important because it will help to stimulate the global economy, but also important politically. we heard here at this g-20 a lot of talk about the protectionist sentiment which is really sweeping the world. can we escape this low growth environment? now is the time for countries around the world, starting with the g-20, to invest for growth. now is not a time for austerity. now is a time to be investing for growth and jobs. when canada says that, we are advising others to do what we
israel space communications losing a third of its value after its satellite was destroyed last week. shares of the company falling to their lowest in 10 years. this has raised questions about how they will be sold to a chinese investor. will be compensated nearly $300 million for its loss. chinese banks making up for lost time as they seek to raise capital to tackle rising bad loans. lenders have been bolstering their finances. china civic announced plans to raise $6 billion. chinese banks with record first-half lending despite having the highest amount of bad debt in 11 years. right. breaking news, a pmi index coming in with better than expected 52 point one, better than july as well.
that means we are growing. composite emi, manufacturing -- pmi, manufacturing as well, slightly below the composite number of 51.9 in july. with week for australia rba decision do. second-quarter gdp numbers on wednesday. thursday, trade numbers as well. let's discuss with the head of asia-pacific research and securities. thank you for joining us. it is a big day. a bit sad about glenn stevens departure. , the whole market in fact went to his recent speech. danthe accolades flowed
over how wonderful he has been treating us as governor for the past decade. tomorrow, i think things will be anticlimactic in contrast. no one is expecting anything. so let's hope he slips out the door quietly and enjoys a good retirement. at 1.5%, the rate, but you are thinking about another rate cut early next year. we are not looking for a cut at all. i think 1.5% should probably be the floor for us. . have been saying that i do think the limits of monetary policy have been hit. i don't want to go around g-20 saying we are at zero, what do we do next? australia has been growing for 25 years. we could have a recession at some time, so we would like to keep a few bullets and the
chamber, so i would like to see 1.5% stare -- they where it is. there's nothing wrong with tolerating low-inflation for a little longer. ,he discussion you just had that we need to talk about trade, investment. economywe need a real to do real things rather than sitting back and waiting for the central bank to spur growth when there are limits have been tested. rishaad: it is interesting. you said in your notes that q3 gdp is likely to come and go on wednesday. why did you say that? stage, we have a lot of partial data to con. we don't know what trade is doing to the sector and we don't know what the government is doing for that particular quarter. we will get that information tomorrow. it growth is .5% quarter on , 3.5% year on year, which is what the rba expected
in its august statement, and so i think it should come and go and the rest of the week we will be talking about july that the -- july data. that is far more interesting to what happened in april, may, in june. rishaad: we have the jobs report on friday, i have then calling it a curious egg. there was not much good in parts there, however, the point is has it right anything to the chance of a rate hike this month? >> i really don't see anything for a rate hike this month. know, janet yellen and a few of her dovish colleagues have ramped up the script recently. it's about the markets keeping the possibility of a rate hike alive between now and the end of the year. i certainly don't think they are
preparing for a september hike at all. having itll number, at 150000 and the nine wages buys the fed a little bit more time to see what subsequent reports would be. we would not rule out a december hike, but we saw that and fetching number plummet recently , so i think we need all the data to print one way in order to be absolutely secure for a december hike, so our base case is still 42017. rishaad: let's move to china. we are trying to get a head start on the week. a lot of data coming in thick and fast, trade numbers come inflation figures, among a host of others. >> we certainly do. we are pretty upbeat for this trade report for august. july was just terrible across the board. that at all.rcoat
we have seen a disconnect between the pmi subcomponents such as orders for imports and exports. in fact, we are expecting a good trade number this week. that is good for risks, aussie dollar, so expect some good news there. , we are belowport consensus the last i saw. in this case, it is about food prices. we can escape the fact that pork is a big contributor to the food price index and in turn the overall cpi, so while the food price index does drag down the overall number, we did notice are you look at ppi, we actually starting to see some upstream price pressures. we have seen ppi turnaround .ramatically from last year we could even see a minus one or so, so we are seeing a pickup in upstream prices, and that something we need to take a good
president obama says goodbye to asia this week. his last trip is the leader of the west after the g-20, traveling to laos for the asean summit. talks are clouded by a trade deal hanging in the balance. the backdrop of the visit is different this time around, isn't it? sawittle of the optimism we last year, where we saw the
signing of a strategic partnership. several issues here, the future of the transpacific partnership agreement is in question. there are concerns about the south china sea, how china will ignore the ruling by the hague, and the rising threat of seek a. all of these issues expected to be on the agenda. as you know, what is key is ofping the cornerstone obama's asia pivot, tpp. there is growing antitrade sentiment in many parts of the world. the only way obama can get the deal ratified is during the lame-duck congress session. expect obama to make a strong case for tpp and laos and assure asean leaders that the deal will be push through. rishaad: this is his last asean
meeting, isn't it? it is the first one for the philippine president. what is expected there? >> he makes his international debut at the asean meeting. he is an experienced diplomatically. he is a longtime air swept to power in the last election. all eyes are on how he will navigate his first meeting with world leaders. he is known to be blunt. some say he is unpredictable with his comments. with will take place criticism of his deadly war on illegal drugs. more than 800 people have been killed and police operation since he was sworn in. to meet president obama and they will discuss human rights, the south china sea. he has made it clear that obama must listen to him and his defense before raising concerns. it could be very interesting. rishaad: thank you very much.
recovering. a record turnout in the election in hong kong. let us know what you think of our stories on twitter. david is looking at what is going on. david: we are even talking about 75% of asia on the way up. it is hard to say that this is down to anything but what has been happening. money is moving out of the dollar and bonds, getting into --ity and the korean won korean yuan.
that is the short version of the story. asia is up by roughly 1%. still very good day. singapore is up the most in a month. south korea is also up the most in about a month. yields on the 15, 20, and 40 here are back on levels after a losing streak. below zero on the japanese 10 year. that is one part of the story. i mentioned currencies earlier -- money is getting out of the dollar into the yuan and the kiwi dollar.
the previous forecast was at $.65. at's wrap up with a look samsung. this is a company that supplies most of the batteries for that affiliate. speculators are now buying into this japanese stock which supplies the batteries for the note seven and china not covered by the recall. this. just look for going back to our top stories, the g-20 summit, world leaders warning about protectionism threatening growth of global recovery. we are at a summit in home show
-- hangzhou. everybody from the has all learningwto, about rising protectionism around the world while shinzo abe told leaders that free-trade -- the head of the wto explained that there is a lot of misinformation about trade causing unemployment but the measureshat anti-trade would be like shooting yourself in the foot. aboutmakers are warning growth. christine lagarde saying that we could see the lowest growth year since the global financial crisis. this is the final day of the g-20 summit so we are expecting to see many meetings today and then a wrapup statement by president she jinping. -- xi jinping.
relations has been pretty frosty after a deployment of a u.s. antimissile shield over south korean soiled. perhaps the most closely watched meeting today will be between president xi jinping and prime minister shinzo abe. relations have been frosty over territorial disputes in the eastern china sea. rishaad: thank you. we have more from hangzhou throughout the show. tweet us your thoughts. hentgen shipping having a rough time when the market opened. they have actually improved somewhat. the company trading for the first time since friday. it is the biggest container line in south korea, disrupting the consumer supply-chain they're ahead of the busy christmas shopping period. let's get over to singapore.
got has been the outcome yet reporter: as you mentioned earlier, we have had a lot of ships being stranded because ports are not allowing them to get in or some of the vessels have actually been stranded at the port itself because the vendors are demanding money. they are a lot of ships being stranded where a lot of cargo is basically not be unloaded and not being shipped to the likes of walmart or other retail outlets. what is the company and the government doing to help these instructions? -- destructions? reporter: the government will provide some sort of funding support to some of the vendors
and south korea. also, extending the maturity on debt to provide some sort of neds and financial restrictions -- some sort of and ease -- and -- an ease in financial restrictions. hopefully, when these go into effect, some of the vessels will be allowed into the ports to unload. rishaad: are there any precedents here? what is the next step for hanjin ? reporter: the next step is to figure out with the company actually has more ammunitions to revive or if it doesn't. for the next month, we will get an idea what the court sees with its evaluation of the company and the company will have to
come up with its own revival plan and submitted to the court itself. we will know and probably a month which way the court will decide for the future of hanjin. rishaad: thank you. let's have a look at some of the other stories we are watching. rosalind: frost banks acquisition of the british and my conductor designer comes into effect today. theng to the weight of japanese mobile carriers debt load, the debt was at $115 billion, five times adjusted earnings. 5.5 timesse above could be a downward trigger on .he cd valuation
softbank's beverages also rising more than expected. the cost of insurance is falling, our default risk model signals a deterioration in their credit this year. central banks should be independent and strong enough to say no to attractive proposals says -- sunday and he on said that multiple layers of scrutiny by entities that do not have the correct technical understanding can hamper decision-making. he steered rbi through a major overhaul. must deal withr slowing growth. officials in hong kong are plowing through ballots after a record turnout in the legislative council election. 2.2 million people cast their votes. paul was officially close on 10:30 on sunday night. some people were in line until
2:00 in the morning to vote. not result inill a new government but it is likely to affect the ability of the chief executives to put forward policies and could influence his chances of staying in the job next year. barack obama's final asian tour, looking at what he is hoping to achieve. next, we look at what is you beat about -- unique about china and the exchange rate policy. this is bloomberg. ♪
the comments made following talks with president obama and hangzhou. stephen engle is joining us in the studio. on when itt is going comes to currency policy. strengthenhina to flexibility -- that is nothing new. china says the yuan has no basis -- we areiation assuming that will be against the u.s. dollar following the talks between xi and obama. there is no basis for continued depreciation of the yuan against the dollar. there is increasing yuan selling pressure countered by an occasional boost in the fixing rate to kind of smooth things out ahead of the g-20.
as you can see, those three red dots are the increase in alatility following at least 0.3% increase in the daily .ixing that shows increased volumes and selling pressure that almost eliminates any of that gain that they might be trying to intervene with in stapling up the selling pressure. the yuan has weakened against the dollar in august. they could have been worse. rishaad: we are talking about the yuan depreciating, but look at the euro and the pound. these are currencies which are on an absolute slide. xi and obama had talks
and they were expectations that they might issue a joint statement. what came out was a fact sheet rather than a statement. the fact that it was mentioned in the fact sheet means that it is important to the u.s. the chinese currency has against thist 70% reference -- that is quite a lot. i think the u.s. is a bit concerned. reporter: where do you think it will continue to go? now that the g-20 summit finishes today, bets are that the fed will tighten by december 30 guest: as soon as the gain of 20 leaves town -- [laughter] guest: we think we are going to start looking at the bilateral cross. the chinese have always used the exchange rate usually as a tool in their bilateral relationship against the u.s. as your story points out, the
outflow pressures from china is going on all the time and the closer the fed gets to the next hike, the more that chinese borrowers are trying to get out of u.s. dollar and hong kong dollar debt into something else, primarily on short debt. that kind of outflow of pressure will continue. it is not a lot. calls whena lot of we verrilli cnes outflows. they have managed to stabilize the outflows but they have tightened up the capital flows because of the overwhelming bias of getting money out. this morning's headlines -- the chinese are really serious about not competitively devaluing their currency even more. they could lose more reserves.
they could tightened up capital controls. is that theappen trade weighted basket has been sort of like a black diamond run in the first half of the year -- a skiing reference here. we expected it to find out into a bunny slope. it is going to continue to weaken. reporter: is that the line in the sand for pboc? reluctanty are really . the key here is that they do not want to spook their own constituents. firms and housing. , asaad: the point being this economy liberalize his and opens up, isn't necessarily a one-way bet? until they actually
restructure their debt, we think that is a one-way debt. it always was, but in another direction. everybody was getting into assets. guest: he was in the other direction because the fundamentals were pointing the way. in we have a debt problem china that is getting tougher and tougher to resolve and as long as that continues to be the case, the banks will actually be more and more reluctant to lend which means the economy will continue to weekend. many people will find a rational to send money out of the country. reform must get a broad, mustn't it? you cannot have these companies -- the irony is that the banks lend to
larger companies reform must gea broad, mustn't not to smaller enterprises. guest: china is being a lot of lip service to reform the we think of the top leadership is quite distracted right now. the number one issue for top leadership right now is who is going to be on the standing committee next year. that is absorbing all of their attention. i think they want to do something on the reform but they just do not have the bandwidth to really focus on that right now. reporter: political infighting is strong but also, political -- tailwinds, i guess, pushing to the fdr basket. how significant is that? is that only significant for china? look, the way we put it jinpingthe g-20 is a xi
thing. it is very important for the pboc governor. he sees it as a signature achievement. in terms of overall importance, sdr is0 is here and to here. right now the reality is that the offshore market is dying. the chinese have been very, the on the currency side is hum control, control, control. they are controlling the market so much that they are squeezing the life out of it. at the exact moment that china's currency comes of age, it it enters the sdr basket -- internationalization is actually making it go the other way. rishaad: so you have a very negative outlook? guest: not negative -- just the
truth. [laughter] you can handle the truth, stephen. it is a negative picture you arbitrary. is there a will to resolve and? guest: if the secession questions are resolved, then, in principle, they have got a couple of plans in place to deal with steel and coal in those are pretty easy to measure and they have got numerical numbers out there. what the g-20 is saying is that , you know, give us some measurable progress markers and. it will not be that hard to see whether it is working or not. rishaad: thanks, guys.
a quick check on the business headlines. saudi arabia considering the tokyo stock exchange -- the nikkei newspaper reporting those remarks and the energy minister -- sources telling bloomberg the plan may be off while the crown prince is in tokyo. plan --ing out a pharmaceuticals based in the country may leave. his statement on the foreign ministers website. it also warned that pharmaceutical companies could shift funding today you once britain's departure has been finalized. the parent company of citroen will open a factory in southwest china. the plant in chengdu with the capacity to produce 300,000 vehicles a year. it will also make vehicles under a different name.
♪ looking at samsung, its share price pretty much unchanged right now against the backdrop of its recall of the note 7 smartphone. since in moving quickly to restore his reputation. that is going to be tough. reporter: that is the main thing, reputation to the brand. consumers have been waiting for the note 7, followed by a lot of
concerns with the battery, particularly the batteries picture by samsung sdi prices coming under pressure today. there is a note saying that samsung will not be taking batteries from them anymore. these are the ones that allegedly caught fire in three devices. this is behind the recall -- 2.5 million phones. samsung trying to really make sure that it is ahead of the recall because they want to protect their brand. it could not have come at a worse time. apple is about to launch their iphone. we understand that the recall came from the head of samsung's mahmoudiya vision saying that the recall is heartbreaking. it is difficult for me to specifically comment on the loss. it is a large amount. nevertheless we have made this
decision because of her customers safety is the most important issue to us. rishaad: the damage is likely to be huge. what about the financial cost? , thette: financially .ecall is about $1 billion it is a drop in the ocean for samsung, about half a day's revenue. costsunclear whether the are going to be with you by samsung sdi. analysts are saying that the real risk is to their brand. a professor from the national university of singapore saying that damage to the reputation is far greater than their financial loss. rishaad: coming up, golden oldies.
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♪ rishaad: g leaders warning about the dangers of protectionism. -- g-20 leaders warning about the dangers of protectionism, posing a threat to the world economy. protectionists measures have been passed since the financial crisis. the u.s. president and the chinese president agreed to cooperate to drive growth. counting underway in hong kong. 58%.ut reported to reach
the election is expected to test the appeal of anti-china activists demanding a sharper break with china as well as establishment politicians calling for the resignation of the beijing backed president. any sustained rise above 5.5 could remain eight downward revision of softbank. it's $32 billion purchase of arm holdings adds to the debt load. we have the bowls on the charts. a couple of markets heading in the opposite direction. david: just one, manila. the rest of asia extending from friday. dollar, the u.s. japanese government bonds, we
will talk more about that later on. equities looking like this. it has been a while since we have seen gains like this. singapore and south korea of the most in a month, 80% of stocks on the way out. being dragged down by the philippines. flesh things out and have a look at where we are. it is time to re-examine where we are. september is historically not the best month, in fact the worst month for equities. hang seng off to a great start, third straight day of gains, levels from august 2015. look at this rally from the start of the year. ,ave a look at where we are this market is the under because of dollar-yen. look at that. laste back to levels of
may. do we get a breakout? it depends on where we go from here. there is your trend channel. you have a little break out there. we are back towards 104. australia should be the highest level going back to july. a little pullback recently, but you look at how the banks are being bid up as well. let's break this down for you. that is how australia looks. ,t is a decent rally gold-mining stocks leading the charge. basic resources and the mining sector. they have been hit hard
, thee australian session government announcing some fees charge will not be supported by legislation. the worstout performers. who are they and tell us more about the background here as well. this is due to a clarification. it is not a law change. what a clarification about kind of fees that aged care providers can charge. they have become aware that some providers are charging for capital refurbishment or asset replacement. that is not allowed. any fees charged have to benefit residents or cover normal operation. apra is off 20%. estia off 20% as well.
fees are a key driver of earnings. we are seeing a bit of a repricing going on. rishaad: things will get worse as a result of this clarification from the government. >> it is not a regulatory change. it has been around for some time, so we could see penalties for fees charge that were not act.ed under the aged care some active law firms enjoy launching class-action suits. this kind of thing is right up their streets, so let's watch this space. rishaad: thank you very much indeed for that. what is going on in japan at the talkingharuhiko kuroda achieved lending rate at the expense of bank profits. haruhiko kuroda making this speech as we speak here this is what we have at the moment with the yen on the move and trading
above the 104 level. we are at 103.82. more on what has been happening in japan in the comments from the central bank governor of the bank of japan. some other stories we are following, woodside set to buy half of bhp's scarborough gas fields. the company will pay $400 million, deal that will take stakes into other gas fields. thefield will remain operator. nickel from the philippines may shrink 30% this year. it is cracking down on errant miners, saying an audit initiated by the president means that more than 100,000 metric tons of production have been
lost. with everything. businessman -- a philippine businessman in talks ofh banks to sell his shares philweb. shares did tumble on those comments. russia and saudi arabia agreed to work together as the two biggest oil producers. outliningshot of details. vladimir putin told bloomberg that everyone should be on the same page. was that ifte production was frozen, then everyone should do it, including iran. when iran is starting from a low level has result of sanctions, it would be unfair.
i think that from the viewpoint of economic sense and logic, it would be correct to find some sort of compromise. rishaad: let's get more on this and get over to erin clark in tokyo. how our markets reacting? together?ment to work >> right. like you said, over the weekend, saudi arabia's deputy crown prince and russian president vladimir putin met in china during the g 20 summit. they discussed ways to stabilize the oil market. they said that they would work together as the world's two largest producers to ensure market stability. what they did not say as how they would do that. a lot of people had been hoping there would be announcement that they would agreed to freeze
production, but they did not mention anything about that. the outlines of working together to ensure stability were vague. the market is disappointed by that today. wti and brenda falling today. brent are falling today. rishaad: even though oil entered a bull market a few weeks ago, it still trading around $45 a barrel. what is the major factor driving the price fluctuations? >> there are a couple of factors. the first is the next opec meeting later this month in algeria. the idea of freezing production has been floated. i'm sure there will be a discussion about that. the big wildcard is iran. there was a proposal earlier this year and producers met to discuss freezing, limiting output, freezing them at existing levels. that did not happen because iran did not join.
iran is returning to international markets after sanctions were lifted and are trying to boost production to back where they were before sanctions, so we will have to see if there is an agreement this time. the other factor weighing on prices is this oversold -- oversupply. and refinersut, will have to work through that inventory. rishaad: thank you so much for joining us. we have to take a break. up next, i look the g 20 as it warns about protectionism. the latest from hangzhou is next. ♪
about negative interest rates and how it has lowered banking profits and margins. actuallyto say he is saying it is vital for that 2% inflation target to remain in place. also, how that will play out when it comes to the economy. he is maintaining that commitment to that 2% goal. that is what we have at the moment. 103.81.unmoved at china hasummit in been warned of a populist backlash against trade that is threatening what has been a fragile global recovery. tell us more about these warnings. policy makers are very concerned about rising
protectionism around the world. they are urging governments and businesses to fight to keep goods flowing across borders. i spoke to the head of the wto and the canadian trade minister. they both said protectionism would have a negative impact on global growth. they explain some of the misinformation about trade. take a listen. >> a lot of people say that trade brings about unemployment. particularly in the developed and more mature economies. that is just plain wrong. trade accounts for a very small percentage of the unemployment in those countries. most of the unemployment, more than 80%, comes from innovation or in proved, increased productivity. against innovation or productivity, but that is the reality. trade ministers is so important about this is we really have to be rethinking how
we think about international trade. it is not just for the big multinational companies. trade as about finding ways for small and medium-size companies to get direct access to consumers around the world. we have heard here a lot of talk about the protectionist sentiment. it is really sweeping the world. the canadian trade minister told me that it was right to be worried about protectionism in such an environment. canada along with many others were worried about the growing anti-trade rhetoric coming out of the u.s. during the election year. rishaad: now, what about today's agenda? the big thing is shinzo abe meeting with xi jinping. this could be their first sitdown chat in a while. shery: that's correct.
very closely watched, especially given that we have high tensions over territorial disputes in the east china sea. thisrces telling us that will be a formal sitdown in the evening, not just a handshake. handshakehat awkward of the 2014 aipac meeting. right now, we are seeing growing tensions between the two countries, fortunately not affecting bilateral relations when it comes to business or we are seeing chinese tourists going to japan and the largest numbers. in july, it was a record as well. we saw south korea's president meet with xi jinping, there relations frosty after it was announced they would deploy a missile shield over south korean soil. many closed meetings being held today, the final day of the summit, which will wrap up with a statement from xi jinping.
rishaad: indeed, after this meeting in hangzhou, president obama traveling to the asean summit in laos. his last trip up to this part of the world as leader of the u.s.. it is very different this time around, isn't it? during his asia trip last year, we saw the signing of a strategic partnership as a reason to celebrate. around, uncertainty over the future of tpp, a cornerstone of president obama's asia pivot. global commerce, but there has been growing antitrade sentiment in the u.s., something we have seen in other parts of the world as well. the only way obama can get tpp ratified as during the lame congress session.
expect obama to make a case for tpp. he's likely to ensure asian leaders that tpp will be pushed through. there are other issues like the south china sea. china has said it will ignore the ruling by the hague, and of course the rising threat of zika. all these issues are expected to be on obama's agenda while in laos for the asean summit. rishaad: this is the last set of obama will beat attending, but the first four the philippine president. are we expecting fireworks? haslinda: sparks maybe, fireworks i'm not sure. a debut of sorts. thes inexperienced medically. we will keep an eye on how he navigates this first meeting with world leaders. some say he is unpredictable and blunt. talks will take place amid
global criticism of his deadly war on illegal drugs, 800 people have already been killed in police operations since he was sworn in. set to meet obama and they will discuss human rights, the south china sea. he has made clear that obama must first listen to him before raising concerns. stay tuned. we have to see what happens. rishaad: thank you a lot for that. reserve bank of australia governor with a final policy meeting on tuesday. no change when it comes to rates. the bank expected to hold at a record low 1.5% hot on the heels of two cuts over the past four months. a 50%s are pricing and chance of further easing by the end of the year. they are waiting to see if the fed hikes this month. chinese banks seeking to raise capital to tackle rising bad loans.
lenders have been bolstering finances. china civic announced plans to raise $600 billion. chinese banks are straining finances with a record first-half lending despite having the highest amount of bad debt in 11 years. communications after its satellite was destroyed in last week's fire, shares falling to their lowest in 10 years. questions about space communications plan sale to a chinese investor. did tell the tel aviv stock exchange that it will be compensated $300 million for its loss. up next, selling stake, live in manila to find out about another attempt to offload shares. this is bloomberg. ♪
the stocks having their bag rally in more than four weeks here. we have speculation that the fed will raise interest rates this month dampen down by what we saw out of that jobs report on friday. for all materials producers in sydney having a good day, leading gains on the msci asia-pacific index. south korean market moving to the upside, the won at a two-year high. 1.2% in the black for the hang seng index. a good day, having the highest level we have seen in a year, up 1.5% gain. shenzhen and shanghai also gaining ground. right, some events shaping the markets in the days to calm. have a look at the circus of world leaders moving from china to laos. summit taking their,
president obama attending. theonal stability will top agenda, leaders emphasizing the potential threat to growth and trade. the strength of that again is affecting japan's economy on thursday. we just heard haruhiko kuroda saying they are still targeting that 2% inflation level and saying they need to get there as soon as possible. growth numbers expected to come through showing perhaps annualized 2/10 of 1% growth in the last quarter. also, growing concerns about the japan's of gdp and ruling democratic party expected to reassess how that data is compiled. on thursday, the incoming reserve bank of australia thernor will be speaking at asian development bank conference. he served as deputy governor since 2012 and is seen as an
inflation targeter much like his predecessor. artificialng to intelligence as its search business begins the plateau in china. shery ahnoke toi about the web's new era. >> i think artificial intelligence is very important. the next episode for the internet is a i. we started from pc-based internet. it has lasted for 10-15 years. over the last 4-5 years, it is pretty much mobile. but now mobile also plateaued. everyone has a smart phone now. the next growth driver for internet will be artificial intelligence, and baidu is the core of the technology. >> linked to that is autonomous
vehicles, very popular these days, and you've just received approval from california to test drive them on those roads, so what can buy do provide for the car market compared to global tech giants like apple and google? >> i think we have a number of advantages. we have been doing mapping for more than a decade to autonomous driving relies on high definition maps, and we have the best technology for that. also, the chinese government is very friendly to self driving cars. us favorable terms. for example, they would have a controlled area for us to test self driving cars. have invested in artificial intelligence technology for the and self driving cars heavily rely on image recognition. we are at the very front of this
our cars ared making progress almost every day. like you mentioned, we have a permit to drive on california roads. baidu's chief executive talking toin li shery ahn on the sidelines of the g 20 conference in hangzhou. that is it for this monday addition of "trending business". next, and angie lau will be around. asset allocation at ubs chief investment office, the wealth management arm. this is bloomberg. ♪
♪ angie: it is the middle of the trading day. in the markets, it is all green. we are live in hong kong. this is "asia edge". ♪ angie: i am angie lau. the top stories, a rare meeting, the leaders of china and japan to hold their first one to one talks in more than a year. president obama prepares for his last asian summit as the leader of the united states. he is heading to laos. waters, hanjin sinks and
trade with a vessel stranded around the world. also, the final countdown, hong kong tallies the last ballots in iquitos for relations with beijing. i am keeping my eye on the markets. the list august i can remember, september has so far delivered. you are looking at the best day in weeks for asia-pacific. where extending what we saw on wall street and europe. is not disappointing. we are looking at the best day for gains, south korea, singapore, in about a month. japan on a lunch break. i will flesh out some of these lines from the central bank governor there. gold mining stocks leading the way frustrated, the best day in seven weeks. hang seng up to the highest level since august 15 last year.