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tv   Trending Business  Bloomberg  September 5, 2016 9:00pm-11:01pm EDT

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is "trending business." ♪ rishaad: taking a look at what we are watching. obama cancels talks with duterte after he used less than diplomatic language. another output for ease of speculation as saudi arabia says there is no need to cap oil production.
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hanjin seeking to stop vessels from being stranded. let us know what you think of our top stories. straight to the markets. hong kong getting underway in half an hour. goinglumpur just getting on tuesday morning. labor day currently in new york. david: when you look at the basically next. this is what asia is looking like. let's talk about europe. -- flat --fat slightly lower. just above water there. ftse 100 down. asia-pacific, what we have seen has been a kickoff when it comes to japan. have a look at new zealand and south korea. volumes are flat. of korea just comes down
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to the turnover because of the surge in trade in hanjin shipping. korean air and all the related companies in that trade. taiwan out with inflation numbers, missing expectations. just over half of 1% for august. it is much higher. no clear direction for asian markets. have a look at currencies. the dollar is up a little bit at the moment. europe butsession in a bit quiet when asia started. .he dollar to yen, backup as you can see, the australian dollar is in the next. we are not expecting any move on the cash rate target that that means you are looking at the fifth straight day of gains for the australian dollar.
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we are waiting for inflation reports on the taiwanese dollar. the you want comes out with a fixing -- the yuan will come out with a fixing in about 15 minutes. that.elds -- look at very, very close to returning positive. it has been quite a ride. have a look at the graphic which shows this, down for eight straight days. what are we doing now? over ..55% results will come out in the next hour. just to show you guys what we did -- there we go. we are looking at an average 0.4% of just a little over . that is the amount. selloffheaper given the . we would get a better indication later on. president obama
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canceling a meeting with his filipino counterpart. the decision was made after duterte lashed out at him for interfering in the philippines and they are war on drugs. let's find out more with our east asian correspondent. is it another step back for obama on his last trip to asia? potential fireworks yesterday. style, duterte innovative, reporter asked how he would explain to obama his war on drugs which has led to thousands to. he replied with a string of expletives. >> i am a president of a sovereign state. [indiscernible]
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nobody but nobody -- you must be respectful. do not just throw away questions and statements. haslinda: you can totally understand why obama canceled his meeting with duterte which would have been the first between and since duterte came to power. .all it a snob it is -- comedy snub. -- call it a snub. >> i just heard about some of this but i have seen the colorful statements in the past. clearly, he is a colorful guy. haslinda: a colorful guy. you have to wonder what the filipinos make of their president bush debut in the -- president's debut in the international diplomatic scene. fruity: is it just
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language -- the operative word there be a 30. does it have any real implications haslinda:? there must be some implication a pickup.ll it the two countries are long-standing allies. and they need each other. the u.s. for territorial disputes. , the philippines is a way to engage the region in the asia pivot to counter the aggression from china. this incident highlighted the challenges obama faces as he prepares to leave office. the tpp hangs in the balance of uncertainty. putting u.s. credibility on the line. we also have an ally in the philippines causing destruction as you see in duterte, while
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china is being aggressive. not everything obama may have hoped for. rishaad: thank you for that. talking about the philippines. serendipitously, breaking news from inflation numbers there. a benign picture. move. 1.8%, a 1/10 of 1% slightly more benign than july. it is below the target of their central bank of 2.4%. cpi up 2%. let's have a look at what is going on with brent. this fell shy of agreeing on an output freeze. this is flagged as a significant announcement. in fell shy of delivering.
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a significant announcement that initially excited and then disappointed. they routed by more than 5% then defaulted after the saudi energy mnister said there is no need to cap production and the market is improving and he said the two countries will hold further talks in algiers later this and in vienna. the russian energy minister claimed the countries have a number of tools at their disposal and that russia would join an agreement to cap .eduction in the second half several opec countries have voiced their support while algeria's oil minister said an agreement must be reached soon because oil below $50 is not acceptable.
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saying that these promises are only being made to stop the further drop in prices. morgan stanley saying any caps on production would do little to address near-term oversupply. at the same time, iran signaling that it is ready to pump more oil. this white line is actually the accrued prices. this orange line is output good it continues to rise even though we have seen prices fall. the persian gulf state is looking to retain market control following the removal of international sanctions earlier this year. they could raise production to 4 million barrels per day in three million. from 3.8 elsewhere we have seen iran continuing to pump more oil. analysts are saying that the
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algiers summit could set the stage for the reemergence of opec's prisoner dilemma, the likelihood of opec and non-opec producers achieving -- remaining elusive. rishaad: we're going to look at some of the deals out there and one of the agrochemical spaces where one company is upping the ante. monsanto increasing its offer a second time to $56 billion. they are willing to pay 2% more than its previous stand. bid.evious largest is the worlds seed supplier and a pioneer of crop biotechnology. it's gtmo seats are the majority of corn and soy plants grown in the united states.
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china is also -- china pharma plans to use the proceeds from the listing to fund acquisitions , expand many fracturing, build warehouses. how will a oil production freeze impact businesses? oil.ll speak to set sat -- set oil. -- statoil. ♪
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glenn stevens hosting
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his final policy meeting. paul allen has more on this. issues,a still has its has it not, now? the world is bifurcated when it comes to interest rate policy. economistwe handle 26 surveyed saying no change today or in october. the cash rate expected to stay put at 1.5%. wait toing seems to be see what the u.s. federal reserve does in september. if they raise the cash rate that is going to make things much easier for the reserve bank of australia in terms of the australian dollar. that doesn't solve the other problems half week inflation and as you say, unemployment. .nemployment looks pretty good
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the quality has been in question. stevens having his last meeting in charge. he has overseen a lot of action. the mining boom, the global financial crisis, and now he is leaving. the incoming governor does not have a nod of ammunition to play with. it will be interesting to see what he can do in 2017. the rba has to keep doing the heavy lifting. >> let's get some more on this. sean, it is going to be a tough act to follow? >> definitely. a great record of 10 years
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of inflation. for the most part, pretty steady growth. no actual recession and indeed no recession since the early 1990's. it is a very strong legacy that has been mentioned there. there is a delicate balancing act. out about keeping the economy on an even keel. we have traded a out at the bottom of the hour. the rba -- very, very surprising if they did. cut has followed an inflation rating and australia can only see inflation once a quarter. that is why the november meeting is more the focus. what we will will be looking for 98%y -- i think it is about
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which is probably fair. that we see perhaps just a little bit more language around the rebound the housing market. they cut rates, they argue that the housing market wasn't running away. without to cut rates over soaking the housing market. it has been a strong month in australia. net exports, a flat contribution. is coming spending out at the same time. that will help shape forecasts tomorrow. we have a situation where he leaves -- it is the australian dollar -- it is in exactly the same place as he left it. >> that is quite a statistic. it has been a period this incredible volatility.
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there he, very close to 60 in a 2008 when markets were panicking. so, so,conceded -- helps to help stabilize the market and we had highs above 110. so, there's been a lot of volatility but overall the rba's dairy committed to a floating exchange rate does think it has been a great offer and that the fault in the australian dollar in the last three years has been beneficial in offsetting the unwinding of the mining boom. >> keeping on the central bank theme, we're still waiting on the fed and they are not going to do anything in september. again, this leads us into a position where that is all we are going to talk about some extent anyway and volatilities
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likely to be -- well, it is going to be off the table. certainly, a busy day when the fed actually announces and we have got the doj within a number of hours -- there is a reasonable amount to absorb. certainly, with markets still not quite sure how the fed -- more hawkish -- jackson hole will actually -- bubble that duties that this month's meeting? there will be a great deal of caution over it because -- but ifthe payroll we did go into been meeting with a 30% chance of a rate hike obviously, then, there is a fair bit of risk for the u.s. dollar on a steady hand -- >> just a file question, sean, here, as well [indiscernible] .
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trying to create the yield curve, as it were. within make any difference? yeah, look, a speech yesterday was interesting in terms of trying to shake expectations for the meeting that is coming up this month and your charts earlier on the surge , it has to be so causing some concerns at the boj. here as unwound on one rallies that the boj has been applauding. .hey do have their hands full the surge in yields -- caps off in response to their july meetings. more volatility -- maybe they respond by perhaps expanding the duration of their purchases at the upcoming meetings with perhaps -- we think to actually think that they are probably
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running out -- so, it is actually going to be hard for them to buy more, so, further volatility is a potential downside. day. sure and have a great right. we are going to get you the latest business flash headlines. [indiscernible] sources telling us executives to not think they are going to get a good price. say take has struggled to integrate its new companies. has struggled to integrate its new companies. tencent becoming asia's most valuable company. nearly to enter 57 -- the move and jean tencent past china mobile putting it [indiscernible]
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shares are fourfold in as many years. on spicing up the claim from -- [indiscernible] company filing an application to set aside a london court order same it is not permitted to pay the sum as the r.b.i. has denied approval there. tata says [indiscernible] seeking compensation after tata fiat to find a buyer. hanjin steering ships to stop them from being seized. we have the latest on the high seas drama. ♪
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hanjin shipping shares
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on a flyer today. it could seek help from the south korean government and its parent company. shipso we know apart from stationary as they await instruction? >> we are seeing the news is reporting that the south korean government and the ruling party have agreed to offer over 100 billion yuan. hope to hanjin shipping but that comes in the form of an emergency loan, low interest loan. thatis on the condition they provide collateral. asian business daily reports they are in talks with its main creditor in terms of providing financial aid and collateral to logistics. group said they
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should take responsibility for the chaos caused to the shipping industry. hanjin shipping would apply for staying orders protect vessels are being seized by creditors. 10 countries will it .pplications this week >> some poets not accepting hanjin ships anymore. of shipsare dozens around the world. 7000 bishops including 61 containers -- >>[speaking simultaneously] [indiscernible] >> there are several in some of these areas. there are some points where some of these ships -- they include singapore, hamburg, and buasn. next, our japanese bonds
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heading for a repeat of the carnage of 2013? we will look at what the yield curve tells us. ♪
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♪ look at our top stories. stocks rising on lingering expectations that the american stock market isn't strong enough to trigger a rate hike. [inaudible] meanwhile, had, the highest within three months. president obama has canceled a meeting with the philippine president after roderigo duterte cursed him and demanded respect.
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like 2400thing more lightinglled since of -- since duterte was elected to office. obama did not say why he was canceling the meeting. right. the german chemicals giant is prepared to offer $127.50 per with monsanto. the deal would create the largest merger of pesticides. monsanto had previously rejected the bid. and just looking at the moment if we have got any news coming through. the second quarter current to -- [indiscernible] narrowed,tually
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looking for a deficit. so, that is what we have at the moment. having a look at, of course, the opening of -- david: right, so, the australian dollar, so, -- have a look at equity markets. you have hong kong, china, and you have the philippines. i mean, it is mixed, really. you look at how everything sort of aggregates up. unsurprisingly, because, you know what? in terms of data, you have to bang so far that have come out -- a lot of this comes ahead of the r.b.i. later on. now, currencies -- quick check -- not -- [indiscernible] let's look at how we are trading
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here. dollar/you want, you see, is yuan, you see,rs/ is still strengthening. after a short strengthening -- not the biggest -- most in a few weeks. now, the market story today is in japan. japan.e a look at what stands out to you here? right? this month right here. i mean, the rally so far has been over 20%. a lot of this comes down to -- we will talk more about this -- but, -- ok essentially, what you are seeing is an effect in the yields
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curve. ideally, the higher this net interest margin and, in fact, we have a graphic of this yields curve. can we get this up so our viewers can see? there we go. eyeing the day curious to see what the demand is going to be like -- i am curious to see what the demand is going to be like. rishaad: well, absolutely, just picking up on what we had packed david strategist joins us now from support. mark, what is going on here, exactly? guest: well, people are getting bojied about the nikkei meeting. there has been a hint that there
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may be a shift in japanese bonds . so, they ignore the longer-term bonds and focus on the shorter term. why, you have been seeing, in the last few days, yields has been shifting up. well, what about -- what are we expecting him to do? we have got that policy meeting coming up. want -- what are the options well,pen to him? guest: he could reduce short-term interest rates even further into negative territory. that is one of the things that he could do. he would come up with some measures that people haven't really thought of that all. his ultimate goal is to try to achieve 2% inflation.
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they may help that is if they can steep in the curve, longer-term rates going willnd then, people actually see that the cost of barney for brokerages in that kind of thing is actually rising, so, this may, eventually, filter into the real cost of money in japan. rishaad: [indiscernible] now, talking of japan, we have nippon airways said to be claimed damages by rolls-royce. why? sources say that the compensation has hit be decided ont maybe for discounts future purchases or three parts rather than cash. me somethingell here, because, what is actually wrong with these engines? reporter: on the -- they have three different types of coding
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on them and there has been some cracking in the coating and he goes back to february when there was a flight from kuala lumpur -- they had to shut and when is the engines because parts flew off and they went back to the airport on one engine and then a month later they had another problem with a plane in hanoi and so they have been talking to rolls-royce about this. rolls-royce has said they are going to rework the design of they are going to come up with new blades in january but families a lot of time in between where ana has these plans and they are swapping out the faulty blades on them with a regular blades which are not the advanced ones. rishaad: right, so, if that is what they are going to do to fix in the time being, right. [indiscernible] well, if you look back, it is not the first time ana has
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had a problem with the 787. they were the launch customer with the plan and it was more than three years late in delivery. then we had the lithium batteries that started melting had toplanes and ana cancel a flight -- they had to have an emergency landing and had to cancel 787 flights for three months. now, they have claimed compensation for these in the past and these want to arbitration. is goingime, what ana to look for is compensation for the blades. they have and cancellations with these plans but for this month they have been able to keep out -- and they have done that by putting on bigger planes , bigger planes suck up more fuel and that as to the cost. so, that is something they are going to have to factor into their claims to rolls-royce.
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rishaad: chris, thank you very much, indeed. right, let's just check on some of the other stories we are following for you. this is after their two-day summit in hangzhou. they said that members -- [indiscernible] increasing threat of protectionism in the accompanying popular backlash against trade. >> all that meeting took place against the landscape of a growth that has been too low for to long and 42 few. -- and for too fedw. there must be more growth and growth must be more inclusive. rishaad: barack obama says it is in everybody's interest to have an accord and it on tax policies to avoid issues such as apple's dispute with a european
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commission paradox of otis was part of discussion in the g-20 in hangzhou. obama did not name the eu said there are risks to acting unilaterally and that some decisions may leave the u.s. treasury shortchanged. right. we have a crop of younger, more radical lawmakers critical of beijing's influence elected to the hong kong legislator and a record number of people turned out to vote on sunday. how has beijing responded? evening, yesterday hong kong and macau issued a statement warning any hong kong independence activities. basically showing beijing that beijing is highly worried and set this type of activity would endanger national authority and hong kong -- harm hong kong's
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prosperity. rishaad: [indiscernible] what does beijing, now, -- reporter: it is. ,ompared to the previous makeup which you have the very traditional pro-beijing camp and the pro-democracy camp. radicalhave this young, platform advocating for greater autonomy and also greater self-determination. so, this is something that beijing is not very familiar with. rishaad: record voter turnout is a good thing here. how is beijing going to handle cross-border relations in the future? thatter: you can argue there are increased after pro-democracy blocks because you
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have got from that, you know, 27 seats to the now 30 seats. if any of the previous, you know, kind of, indications, is any indication for beijing to sees,-- because, beijing you know, any unproductive element is some kind of danger to control so beijing might ramp-up, you know, -- [indiscernible] we have another line as well saying he was a welcoming -- so there we have it, at the moment. thank you very much, indeed. ,oming up, eyes and those rebalancing -- highs and lows. ♪
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let's have a quick look at what is going on at the oil market. $1.50 a barrel. let's talk about this. we have the senior vice insident of statoil singapore. just characterize what is going on for you right now in the oil market. guest: i think we are still in a situation of oversupply. there is no immediate claim that the market is rebalancing. opecyes are trained on the or the unofficial opec meeting later on in september and, indeed, the latest news about saudi and russia basically need
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to see actual facts. >> throughout this year, we have had contradictory signals. some saying that the supply chain is way off kilter at the moment. how big is the difference in giveview? >> i cannot specific numbers but what we see floatinghere is still storage and from that we deduce that at least not imminent, the rebalancing, or whether that means later run year or next year -- probably, increasingly, think it is for next year. sentw, in the research you to us, you said the market structures are better indicated in the fundamentals -- can you tell us what that means? >>
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well, there is a lot of interest in getting the future oil market right and you'll see a lot of investments going into or out of the oil market when you look at the curve. ishink the longer term view better reflected their. >> ok, well, so, where do we -- [indiscernible] yourselvesbudget right now, at all? expect that in the future project we will have to be robust at much lower oil prices than what we historically saw. indeed, we are now delivering on that and you might have heard of our very big new oilfield called -- which will be up
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and running in 2019 and 2022 which now has a breakeven of $25 per barrel which has come down firsterably from rejections. so, we are maturing and we are improving our portfolio, upstream portfolio. you know, with that in mind, you, $25 is the break evening, but, looking ahead, will we see, you know, -- might very well, but, if point one, i do not think it is sustainable, and, in the long version, i am not sure it is good for the oil market, either. that? because, that doesn't gender -- that does engender -- also mean that oil
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would increasingly come under competition from other sources of energy at those levels. if we see the price is going to high, we will they are easily also see a new crash in prices and we would also undermined the longevity of our industry, per se, with the massive influx of capital now going into renewable and, indeed, as a consequence of 21 -- rishaad: absolutely. know, opec, of course, meeting soon in algiers. it is taking on all the trappings of a formal meeting right now. even if they had about the freeze, would it make any difference? coordinated, it would probably make a difference
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. i think with the market is kind of skeptical about now is whether they are able to align all the different the is and actually come out and speak with one voice and, even more importantly, to put action behind any statement that they make. rishaad: right. many people talking about peak oil and they keep on reiterating when it is going to be -- hasn't happened already? there is always -- sometime in the future. an ephemeralf question, i know. what is your view? guest: peak oil is not on our agenda. is not something that we are discussing good rishaad: so, great talking to you. get up tot to just speed with some of the business flash headlines here. general orders -- general motors
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sit in the president on how others should receive one of the -- well -- [indiscernible] with religious agreements, three have actually been settled. they are still facing hundreds of claims related to the 2014 recall. ui trust liquidating a hedge fund after investors with true money following poor performance. of $100from a peak million in 2012. investors are pushing back with anpoor performers estimated $25 million pulled from hedge funds in july. everybody setting up expansion in hong kong with several hires from their competitors. they have also recently attracted people from boj and china construction bank. they have added 10 executives since may.
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it is about to hire 10 more by the end of the year. right, let's have a look at what -- setting toning be cutting 100 jobs from singapore. some of the positions will be moved to india. barclays did not confirm the number of people which are likely to be affected. barclays and it cash equity operations earlier this year, part of global layoffs of 1200 positions. up next, rooms to let, singapore's hotels are facing a slump despite a tour is in rush. -- tourism rush. ♪
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♪ now, we are taking a
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look at what has been going on in hotels and support. the operators saying that room revenue is at a six-year low tourismrising tides of coming to visit the city state. our bloomberg real estate reporter is here. why are the rates falling if singapore's welcoming more visitors? reporter: we are seeing quite a divergence here as you mentioned . rising tourism from china coming to singapore, but at the same time, room rates are falling. basically, we are seeing a too much supply of hotel rooms in singapore. almost 3000 rooms will be added this year. that is kind of putting pressure on rates. other factor that is affecting hotel occupancy in singapore is at the tour is coming in are these chinese tortoises who are more like --
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they come in for the day and then they cross over to malaysia so they are spending less time in singapore. what are people saying about what happens when it comes to singapore's hotel industry? it is not looking too bright right now. down in see a slowing the supply of the rooms, we are going to constantly see pressure on rates. the profile of the tourists also need to change. we need to see higher in people spending money and staying in singapore for us to see a rise in rates and occupancy. singapore for in the weekend but i did think twice about going because of the zika virus. has there been any impact on tourism because of that? reporter: we have not seen any .igns it
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we are speaking to people in the hotel industry and they are saying nothing happened yet the we have seen travel advisories from five countries including the united states and australia. so, i think that is definitely a concern. that whene signs of we have the formula one event later this month. that will give us an idea of whether to -- are they going to just still come in? that is going to be the first test. rishaad: thank you very much, indeed. a quick check on the trading day so far. this is what it comes to hong kong and shanghai. if we have a look at what is going on elsewhere, we have asian stocks holding near one-year highs. the nikkei to 25 is up. weaker.the asx a bit
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coming up, full steam ahead, hanjin shipping jumping on reports it may be thrown a financial lifeline. ♪
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follow me on twitter. and use the hash tagged. let's have a look at what is going on because i think we're just tutoring out at the moment, losing a bit of that umph. david: we're coming off a fairly solid day. you obviously going to get a bit of a mix, which is the case. let's have a look at what is happening in south korea. we will be talking more about that. this market just opening up at the moment, we are looking forward to two things. we're looking for to the 30 year bond in japan in the -- and the rba rate decision.
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we had inflation coming out of taiwan earlier this morning and that is really playing out when it comes to the currency markets. have a look at these two currencies where you didn't have inflation for august, both missing estimates. for taiwan, .5%. for the philippines, 1.8%. 2.8% is below her end of the target. -- is the lower end of the target. it has been below that target for 15 or 16 straight months. both currencies are down against the u.s. dollar. the current account deficit there, a little narrower than expected. we got the number $15 billion, looking for $20 billion.
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look at how things you did the up when you look at the equity markets in japan. financials are up again .8%. it is the banks. a lot of this comes down to the steepening in the yield curve. in tokyo, you have about 10, 20, 30 on the way up. you're seeing a rally. rishaad: president obama has canceled the planned meeting with his counterpart in laos today. he angrily criticized the president for interfering in the controversial war on drugs. what happened? and off-the-cuff comments were made by the caddy. was asked by a reporter how
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he would explain to obama his war on drugs which has left thousands dead. he replied with a string. >> ima president of a sovereign state. ceased exceptt have any master the filipino people. must be respectful. do not just throw away questions and statements. >> you can see why obama is skipping the meeting with d uterte today. rare that obama scraps a meeting with a world leader. here is what obama himself had to say. >> i just heard about some of this but i have seen some of those colorful statements in the
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past. so, clearly he is a colorful guy. terte hasing is, du always been a tough talking person. what is obama's legacy in the asia-pacific? as he bids farewell to this part of the world, will you go down to that pivot that we talked about? a lot of people said it won't make a difference, it's just bluster. >> is legacy here would be closer relations with south east asia. some say under obama, the u.s. has a seen the most sustained engagement with the region since the vietnam war. laos is the smallest nation, obama's finalists -- final stop of his asia trip as president. that underlies the importance of
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the nation to the administration. rishaad: more on that story later on the program. we want your opinion. do tweet us your thoughts. at the end of an era when it comes to australia. we go to glenn stevens hosting his final policy meeting. everyone expects the bank to leave the cash rate unchanged at a record low. paul allen is in sydney. we can inflation, underemployment, no changes expected. the last time us joy was in jason donovan was number one in the u.k. back.s all come flooding thank you for that. a whole generation in all straw you that has never had any
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experience of a recession so if one does come about, god forbid there will be a nasty shock in australia but as you say, everyone thinks there will be no change to the cash rate today and it will stay at a record low 1.5%. the consensus remains through the october meeting as well. the two cuts that were seen so far this year had both in in response to weak inflation data. the next bit of inflation data isn't out until after the october meeting. here is what he had to say. >> the past three years or so, every rate cut has followed an inflation rating and an all-star you, we only see inflation once a quarter so the next reading is not delayed. that is why the november meeting is far more the focus. i think what we will be looking for today with a steady hand, is about 98%, which is probably
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fair. we see perhaps a little more language around the rebound in the housing market. likely the reserve bank of australia will be waiting around to see what the u.s. federal reserve does because it he said raises rates, that will ease the upward pressure we have seen on the aussie dollar this year. leastd moving would at take one problem away. there will be problems aplenty for the incoming governor phillip low with a cash rate of 1.5%. he is very low on ammunition. and let us never speak of jason donovan again. rishaad: [laughter] i promise we won't. paul allen in sydney. got ross starting things off with a look at this massive deal.
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one of the suitors trying to raise the ante in the field of agrochemicals. increasing its offer a second time to $56 billion for that willing to pay $127, $.50 a share. that is 19% more than most and toes last closing price, providing a tough negotiated transaction. on santa is the world you just feed supplier. >> sources say in china's pharmaceutical group is funding approval in the next several days. if it does get the green light, it aims to start gauging investor interest as soon as next week. this was the second largest drug
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maker by revenue last year. it plans to use proceeds from the listing to fund acquisitions, expand manufacturing and distribution, build warehouses, and invest in research. shares currently up more than now saying the korean government and ruling party have under to offer loans conditions the container lines or its parent company provides collateral. is the parent group discussing financial aid with korean development banks. show, theater on the comments to pay compensation. the next company used to be seen. now they are getting recognition of beingobal stages
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inhibited. we will have a look at what has changed. ♪
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rishaad: let's get to the business has lines -- headlines. the brokerage edge the company for $2 billion for years ago. it stopped searching for a buyer because investors didn't think they would get a good price. -- brokeragesst have been struggling over the past two years.
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investors pushing back against poor performers amid volatile markets with an estimate in 25 billion dollars pulled from hedge funds globally in july. word from japan. has -- nd company tata says it plans to pay out within the confines of the law. shane jinping has said he wants the company to become an innovation driven economy by 2020 but with well known restrictions like internet censorship, can china really achieve this? our next guest advises various organizations including the u.n.. he has been associate dean at test university. -- tufts university.
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an economic driven economy like 2020. >> not too far away. as we have seen in the past when china mobilizes around some kind begoal or target, whether it a combination of this date and variety of other access connected to the state can be orchestrated quickly. i don't think china can be faulted for setting bold aspirations and they have done it in the past and quite often have met or exceeded them. to make china an innovation driven economy, technology --ven economy, they are already have exceeded several.ons of the general concern china is an innovation absorber. rishaad: this is the criticism, that the country is a sort of a
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copycat and this is a charge the .eeps being leveled maybe that was true a few years ago but how are people's perceptions moving with reality? >> the reality is china has moved on from being an imitator to a leader in innovation, particularly in the area of digital services, transactions, e-commerce. china is definitely leading the chart and, most recently, the whole story of uber's unceremonious withdrawal from the market is one signal of what is about to come in china. rishaad: look at tencent. not the most viable company in china but in the -- the most valuable company in the asia-pacific. up there with the amazons of this world.
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rishaad: as we continue to roll the tape forward, we will see commercialre transactions and other forms of transactions happening over the mobile platform because that is becoming the magic wand that both consumers and business people are using for so much of what they do. china is definitely leading the field in terms of our ability to do all kind of transactions letter there is communications are buying things are making payments. developed countries in the west have halve the hole pc revolution. slow.sort of china and some other countries have gone straight from zero to themobile device as standardbearer of what they do. it leaves them with perhaps more to teach the west about that sort of technology. teach andomething to they also don't have a legacy to
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overcome. people in the west started getting onto the internet on and the chinese consumer or chinese business person, the first interaction with the internet quite often was on the palm of the hand. that is one area and another area where china will lead is in automation. with wages going up, china continuing to be a manufacturing led economy, it will be for a while. a lot of the innovation will happen in that country. rishaad: the danger is inherent because you have all this automation and underemployment and you talk about 1.4 billion people here. one of the key things the communist train has looked at to keep them happy. >> that is a balancing act the communist party has to walk this narrow line here, keeping unemployment down, being able to pivot from an investment led
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economy to a consumption led economy, manage automation, age w rishaad: a lot of competition. >> a lot of competition for manufacturing. a number of other asia countries beginning to see many factoring moving back to the west. but china will be the big one to beat in the coming decade. rishaad: please stick around with us. continue our chat with him right after this. ♪
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rishaad: we will continue our conversation with the senior associate dean at test university -- tufts university. i'm going to bring in a standby
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we had of christine lagarde talking about what happens in a global context of growth. >> that meeting took place against the landscape of growth that has been too low for too long and for too few. there must be more growth and growth must be more inclusive. comments,ith those low growth and inclusion really should be what we are looking at right now. that is a challenge of china more than anybody else. >> it is a challenge for china. because you have this anonymous population that has gotten used to fast growth and
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now with growth slowing down, the opportunities for a lot of manufacturing jobs potentially getting eroded. china will lead to occupations for people. comesast growth noninclusive growth. there are some parts of society getting extremely rich as we know in china. there is a vast underclass that lives cheek by jowl with these extremely rich people. we are seeing that all over the world. donald trump is probably the single biggest red light flashing across the globe right now. >> what should china policymakers do? what kind of policy steps do they need to take? >> part of the policy change that needs to happen is taking a ofused look at which parts
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the manufacturing sector can china continue to retain. the same time, with the wages going up in china, there is an increasing trend toward automation. the people who will be displaced, how do they find productive employment? they could be in biopharmaceuticals, in tech, they could be in services. with the population getting older, there is an enormous need for services. a service driven economy will be something relatively new for china and that could be a big absorber. >> is that transition still on track, this consumption driven economy? do they need to do much more? given the size of the chinese economy, one can never say that it's on track because it was an
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investment led economy a few years back and anytime an elephant makes a small turn, you trample on a lot of the undergrowth so that is really what will happen. is uncharted waters. we have never been in a situation like this for any country to try to do this with the sheer size, it's hard to get your head around it. visityou but -- >> you certain parts of china and there are entire cities largely uninhabited. rishaad: ghost cities we talk about quite often. >> there is a so much capital that needs to be deployed. china is trying to move some of that capital abroad, trying to take that investment capacity abroad. it's never easy to make that kind of pivot. they are on track and pretty scary even if they are on track because it's not an easy line to walk.
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>> people are blocking innovation and enterprise. is that an area they really need to take by the horn or is it exaggerated? enterprises run have been trying to inject more negation but has been doing it in a different approach. i really think the private sector is the future of chinese entrepreneurship and innovation. they are going to be the leaders and eventually will pull the innovation out of the chinese economy as it were. the state will only continue to feed the universities, the scientific system, pour money into filing patents. ultimately, innovation is about output, creating value as opposed to pumping money into projects. rishaad: when you lecture at tufts, how much interest is
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there among u.s. students in what is going on in china? >> there is an enormous amount of interest. i think there is an anonymous amount of interest generally. rishaad: is it fear? >> there isn't fear. there is fear in terms of jobs going to china and there still is that concern. regarding innovation, i think people who have traveled to china, asia are beginning to see things that are happening over here such as mobile gaming, which simply doesn't exist in america in any form that is meaningful. people are beginning to respect what is happening in this part of the world. we're talking about a thin sliver of the well traveled and well read people. rishaad: thank you so much. arabia sayingdi
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deals to create oil output may be coming but just not right now. ♪
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>> shares on -- there is speculation the u.s. jobs market is not strong enough to igger a rate hike from the fed. japanese shares meanwhile at the highest in three months. the highest since july in 2015. president obama has canceled a eeting in the philippines. washington is concerned about
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human rights abuses in the philippines' war on drugs with more than 2400 people killed since duterte took office. obama described him as a colorful guy but didn't say why he was canceling the meeting. well, the german chemical giant says it is offering a 19% premium since monsanto's last close in new york. if the deal goes through it would create the biggest producer of seeds and pesticides. in july monday sabato rejected bayer's bid saying it was inadequate. talking about a close up for the morning session definitely off the highs i was just talking about. >> we'll flesh out things in tokyo in a moment. financials really at the moment
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keeping the markets supported if you will. let's look at the perfect split. really pushing this index to the down side. i want to focus on what is happening in the mining space. basic materials. you look at industrial metals. when you have iron ore prices for example and look at the contrast being traded in china, one of the futures exchanges we're headed to the highest close. since august 26. not a lot but certainly we've seen a slight trend start to form when it comes to iron ore prices. now, as promised, let's see. bring up the topix index. there you go. a lot of this comes down to the yields are really steepening as well. moving the outlook for net interest margins when it comes from the banks and banks from
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the start of july are up 30%. you can't deny the rally that's happened. have a look at what else is happening in japan. a few other things we're following. a few other names. this is the company that comes -- th digitized content they'll come up with something. not very clear. but they have hello kitty and they're going to digitize that content and come up with a product with that leading to a surge in the stock, 14%. this other company, tokyo kikai, i'll try it. it is a company that makes these big machines that basically print newspapers like rooms big. that's how big these things are. one analyst putting the surge down to a surge in demand for the company's machines ahead of the tokyo olympics. now, it is a bit of a stretch but what the analyst is saying
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is in tokyo the machines allow you to have capacity usage increased by 20%. shares are up by 12%. in hong kong, a look at the big movers here. 2.3%, hsbc pulling back. the momentum indicator reaching the highest level since 1997. 85 was the one in 1997. we are roughly at 84 right now. and tencent has become china's largest company private and public of course. rishaad: breaking news, shinzo abe, one of his economic advisers here. we talked to him in an interview and he has been saying, this is what the reaction has been, fairly significant, that the bank of japan should actually wait for the fed before deciding to do anything. that is impossible because we have the meetings going roughly
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the same date and time so it may be possible for them to do exactly that. bank of japan should wait for the fed from hamada. the advice of shinzo abe -- let's look at what is going on with the oil market. you see the bit of strength again. we saw saudi arabia say that no need or no current need for production freeze. having a look at the ups and downs of the oil jumping up, the significant announcement. >> the market fell for it. particularly in the breverage contract during monday's session it rallied by more than 5% on the so-called significant announcement from saudi and also russia. then you can see the big drop and that's after saudi's energy minister said there is no need to cap production right now. he actually said the markets are improving day by day. the russian energy minister is backing this up saying that they have a number of thoughts
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at their joint disposal to try and stabilize markets. it has started to rally during asian trade. several opec countries really voicing support for russia and saudi who are going to continue to hold talks meeting at the international energy forum in algiers later this month and of course november's opec summit in vienna. ubs is saying talk is cheap. to really try and stop the oil price from falling further, algiers energy minister saying they have to have a freeze because oil below $50 a barrel is unacceptable. morgan stanley saying any cap on production is probably not going to do anything to help the oil supply anyway. rishaad: we get these freeze talks mentioned here and with the backdrop of rorne getting ready to pump -- backdrop of iran getting ready to pump more
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oil here. >> absolutely. iran's international sanctions lifted. now it wants to ramp up production again and is wanting to pump 4 million barrels a day up from 3.8. we have graph on the bloomberg and you can see that iran has really been pumping oil. that very thin sort of orange line there at the same time that the brent price has been falling. so this is just further exacerbating that supply and demand issue that we havement iran's comments signaling any deal between oil producers in ail jeers later this month may have to accommodate more supplies and most analysts saying nothing can happen to really stabilize this oil market until russia and saudi do agree on some kind of output freeze. rishaad: thank you very much indeed. a look at other stories we're keeping tabs on for you here as well. companies with fewer stocks may .enefit from the boj decision
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among the six that would beat -- the company says as many to , traded daiwa saying the add the benefit of which should take six to 12 months. the price of iron ore has risen by more than 30% this year but india's still feeling the freeze and cutting prices by 6% this year the company seeing challenges in domestic supplies. while moderating local steel demand and transport costs there as well. the 6 million tons of supplies adding to the overall stockpile in india. now a budget carrier has agreed to a deal with airbus ordering 28 single aisle planes a fraction under $3 billion at list price. quite often they get discounts on those which are rarely reported. viet jet looking to expand in the low cost market that's grown 20% annually in the last
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three years. last year agrade to buy 13 more planes during president barack obama's visit in may. to ould take 100 boeing 737 match the 200. damages are claimed from rolls royce for disruptions caused by faulty engines on some of its dream liners. could it be discounts for future purchases or free parts rather than cash itself? what is wrong with these engines? >> there is a problem with the blades on these engines. it all started back in february when a & a was flying a plane from kuala luem purr to canada and part way through the journey had a problem in an engine and had to shut it down and returned on just one engine. they had a similar problem a was later and found there
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corrosion and three flights have had cracked blades where parts have fallen off. now they've discussed this with rolls royce. rolls royce is coming up with a solution but in the meantime last month ana had to cancel over a dozen flights and they say it's going to take them up until the end of 2019 to fix all their planes. >> all right. what are they doing then to fix this issue here, more specifically, chris? >> well, that's the thing. at the moment rolls royce has got a new blade that it's going to bring out the start of next year. in the meantime, ana is replacing blades on engines where they've had them for more than a couple years with the current type. so they'll replace it once and then have to replace it again next year when they get new blades. and, remember, a.n.a. is the
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biggest operator of 787's. they have 50 in their fleet. that's 100 engines they have to work on. rishaad: what about precedence? has this happened before? what are are the chances of compensation? >> there is always a problem with new airplanes. the 787 is no exception. they got the plane more than three years late. and within just a year of flying it they had a problem with the lithium batteries and had to have an emergency landing. their total fleet, all 787's around the world were grounded. a.n.a. didn't fly their dreamliners for more than four months. so they claim compensation in the past and the issue has been decided between the two parties. they have a confidentiality agreement so usually we don't get to hear the figures. every now and again, quite a
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while back there was an announcement of a cash payment due to this. so there is compensation and it will get decided at some point. rishaad: thank you for joining us there from tokyo. have a look at this. 20% up, jumping on news of financial help from the korean government and its parent responsible for this. we've been all over this one. no such thing as a free lunch though is there? >> no there isn't. we can confirm from a statement from the ruling party in south korea that hanjin shipping can get about a hundred billion yuans in low interest loans from the south korean government. that's more than 90 million u.s. dollars but that is dependent on collateral being provided by the parent company which is hanjin group. it is estimated hanjin needs a
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hundred billion to keep it going for the time be bug can include other costs like fuel and actually needs more than 6 billion yuan more than 540 million u.s. dollars. we can also confirm separately hanjin group is going to provide 100 billion yuan including 40 billion yuan according to the statement. has sterday the chairman said the parent company should take responsibility for what it called the chaos caused to the shipping industry and take more actions if perhaps this is what we're seeing today. more action on the financial side of things to help hanjin shipping. rishaad: right. some forces don't accept their ships at the moment so where do they go? >> what is happening is hanjin will apply in 43 countries to protect its vessels from being seized by creditors.
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there are applications in 10 countries going in this week and others will happen fairly soon but they have something like 79 vessels with operations disrupted. can look at the map you actually see all of the ships which hanjin has for shipping ut to sea. look more closely at exactly where the vessels are located. now, there are some places where the ships are less likely to get -- they include singapore, south korea, and also hamburg. so it could be possible for the ships to go to those areas to help off load some of that cargo ahead of the very busy holiday season upcoming. rishaad: thank you very much indeed. p next, causing concern, hitting companies in china. this is bloomberg. ♪
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rishaad: this is trending business the aussie dollar losing ground, and this news comes less than a month before it's added to the reserve basket. are the aussies' days over as a proxy currency? >> yes and no. it's a finely balanced question there. one of the reasons why is because the nation is a major commodity producer and closely aligned to asia growth especially china's growth. now with the yuan opening up the asian economies, still, the aussie is a free float currency
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backed by liquidity and the bonds are offered for the highest use which all means the aussie is important in global currency trade. interest hat is the of the aussie dollar -- >> one of the major influences for the aussie is the yield offered by the nation's bonds. that changed and is coming down in recent months especially with the u.s. fed likely to raise rates. the premium the nation's bonds over the u.s. bonds will clearly determine the attractiveness of the currency as you go forward. rishaad: thanks very much
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indeed. we've got the u.n. grappling with challenges as well as risk from it's making it more expensive for chinese companies to service more than half a trillion dollars worth of debt. we have a look now at how big this >> is this a threat that can affect the financial stability of china? >> half a trillion dollars, that is pretty serious. rishaad: it is rather. >> absolutely. rishaad: it is 500 billion. >> so to put things into perspective, $508 billion is what, more than three times the size of mexico's f exree serves, the same as russia's foreign exchange reserves. yes. it is serious. as we are saying, the pressures remain unabated now that the g20 is over we could see a decline as well. so as the yuan declines further it creates this vicious circle where it drives up the cost of
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ser dollar debt -- rishaad: but that is crucial when we look at this, three-month libor and the beginning of the year how it has gone up so much, there we go. that tells the story doesn't it? >> yes. absolutely. it is going to go up further. predictions are that it'll get worse. and apart from libor you add the possibility of the fed raising the rate at the end of the year, still 59% despite the kind of wishy washy jobs figure we saw last week. so as the yuan declines the dollar goes up and to make things worse --. >> this libor surge is down due to antimarket reforms coming into effect in the next few weeks and actually the ones sticking to the liquid can i. this is actually a credit crunch we saw in 2007 and 2008, is it, this is actually something just market reform driven but maybe the question is, how long does it last? that's the thing. >> so this is, i mean, estimates are for the decline
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at least, it'll go up at least till the end of the year early next year. but, however, for chinese companies that kind of complicates the whole set because they borrow at libor plus whatever. so as far as they are concerned it is more of a currency player for the chinese companies. rishaad: you're getting whip sawed in all sorts of directions. >> this comes years and years after chinese companies building up huge dollar debt with appreciates -- appreciation bets on the currency which made borrowing in dollars a bit more sense but that is becoming a bit strained so to speak. rishaad: now to the business headlines. general motors hoping the last two cases set for trial over -- ty g.m. switches, gm with the latest agreement three have now been settled.
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g.m. still facing hundreds of cases related to the 2014 recall. stepping up in hong kong with several -- they include the head of banking from d.b.s. now also attracting people from bank of china, and china construction. the company added some, 10 senior executives since may and would like to hire 10 more by the end of the year. barclays set to add a hundred jobs to its i.t. operations in singapore. all a picture of cutting costs. some of the positions will be moved to india. though the bank did confirm its cuts it did not speak of the number people to be affected. this is all part of a theme of global layoffs of some 1200
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positions. still ahead the new faces of hong kong's elected government. what they mean for relations with beijing. looking at that in depth. this is bloomberg.
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rishaad: u.s. trending business. younger, more radical lawmakers have been elected to hong kong after record numbers turned out
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to vote sunday. it is the city's first election since the pro democracy protests some two years ago. our bloomberg reporter at large has more on this. i guess everybody is closely listening for any disdain or otherwise out of beijing. >> yes indeed. yesterday evening around 7:30 beijing's affairs office issued a statement warning any type of hong kong independence activities both inside and outside and saying this type of activity would endanger national security and also harm hong kong's long-term prosperity. from that message beijing is slightly wore antidepressant they probably think they have good reason to be because compared to the previous structure where you see this very traditional camp, now you've got this third cause, this younger, more radical type of lawmakers.
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they're running and winning on the platform which is more pro, greater autonomy and greater self-determination and they won a lot of support. for beijing this is bad news. rishaad: something here, how does beijing view this? do they see it as more of a challenge? >> yes. this is seen as generational, structural change which beijing has never dealt with before. the old pandem, pro democracy lawmakers, beijing is less familiar with them. actually in the inner circle they are known as sort of like not even paper tiger. now the new type of young lawmakers, it is a new variable, something totally unpredictable for beijing. so beijing would be coming up with ways to deal with this. rishaad: how does the
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relationship between beijing and hong kong alter? how does beijing handle this cross border relation? >> for any authoritarian regime the first instinct is to control something they cannot -- they cannot see themselves control in the immediate sense. so beijing sees that as sort of an element in the new makeup so it might ramp up efforts to improve. rishaad: that's it for trending business. stay tuned. it's asia edge with the big stories of the day so far. ♪
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>> it is the middle of the asian trading day. we're live in hong kong. this is "asia edge" looking at a very cloudy, dreary day here n hong kong. >> your top story this hour. asia pacific stocks hitting a one-year high on speculation the u.s. economy isn't strong enough to warrant a fed rate hike this month. and full steam ahead, soaring on news of a financial life line from the government and from the parent company.
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and the end of an era. planning to hold his final policy meeting after 10 years at the helm. also coming up this hour, diplomatic language at play. president obama canceled talks with his philippine counterpart after dutarte unleashes a rant against the u.s. >> something not fit for tv. well, okay. have a look at what's happening across markets right now. a bit of a short attention span for me today. things did pick up mid morning. as you can see we're heading toward midday right now most looking at gains across the asia pacific. still not good though. this monday session, parts of asia still a little sluggish especially when you look at volumes here although overall a an stocks are now at


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