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tv   Trending Business  Bloomberg  September 8, 2016 9:00pm-10:01pm EDT

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♪ rishaad: it's friday, the ninth of september. this is "trending business," and i'm rishaad salamat. ♪ going to be live in singapore and turkey this hour. this is a look at what we are watching. caution --tor urged urged caution when talking on the note seven -- or taking the note seven on a plane. china firing a warning shot at the u.n.
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china punishing five electric carmakers for skimming $150 million in subsidies. it was an idea of what you think about the top stories. follow me on twitter. getting to breaking news, the interest rate and south korea was one and one quarter half percent. it remains the record low 1.25%. what is the bank of korea saying? it is saying we have pretty much stable forecasts here, and this is probably lied with the economist we have been talking to. more breaking news coming in from the government there. they're suggesting there is an earthquake that could be an artificial one north of the border. sherry, what is going on market wise there?
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we are seeing asian stocks falling for the first time in four days. it is at the lowest level in almost two months. downealand being dragged by industrial, down 4/10 of 1%. the nikkei has started in positive territory and is negative now, declining for a third consecutive session. the yen is strengthening. 1% --is also down with an more than 1%. have china just opening and about half an hour. take a look at the futures right now because the last time i checked, they were in the positive. if we can bring up those chinese futures, you will see that the a 50 china is up almost 0.1%. it is now a naked -- negative territory.
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take a look at this chart. i want to tell you -- the volatility has been plunging, despite the fact that emerging volatility after falling has been climbing up. the shanghai composite's of volatility has been turning down, and is now dwindling to a two-year low. we will see how they trade in about half an hour, given that in the last 18 consecutive days, they have not moved within 1%, which is for the first time since 2001. rishaad: thanks for that. we're talking about this earthquake that has been detected with of the border in south korea -- so in north korea. they are suggesting this was an artificial earthquake, and they detected it at about 9:30 a.m. local time.
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with the recent tensions we have , it seeing on the peninsula has been suspected as a nuclear device or another nuclear test. let's tell you about the cost of borrowing in yuan and hong kong, surging to a seven-month high. our asia american -- emerging markets currency editors with us now. this was a bit strange compared to what has been happening in the last couple of weeks where it has been far more far as the speculation is concerned that it was on the market fairly regularly to ensure a steady currency. yesterday, we saw the overnight borrowing rate of the line surging.- the yuan had advancedyuan
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the past few days, so it is strange that it would come in and drive the cost of borrowing so far. it was really awkward, but it is a reminder that when the pboc wants to come into this, it can. rishaad: how long do we see the yuan being supported by the central bank? >> i would like to say forever. least until an cr entry. at least in the near future, they may not want to let the currency go in the next nine months or so. as the currency becomes far more offshoreonal, as the grows, the in london
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influence will be slightly dimmed. rate andight borrowing hong kong, what is happening is the opening up of the unsure market, with people being allowed to enter the market on the mainland. the role of the offshore market is shrinking and hong kong. it has become a slightly smaller market. sometimes not very excessive moves can show excessive results. to just remind ourselves of what has been happening with of the border in north korea. north korea perhaps has tested a nuclear device, this according to a south korea official -- actually, cited by a newsagency here. it has been detected as an artificial earthquake. china'sdicting that
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prices may have eased slightly in august. the inflation data released in about 20 minutes -- and fact, 23 minutes time. in a way, ppi is more interesting. >> it is a much bigger story today. the factories have been stuck with a record streak of deflation. that put a curb in so many expansion plans. vi eye is inching towards positive territory. rishaad: every month, it gets less negative. >> it doesn't necessarily indicate that demand is taking off. this could also reflect the prices slowly coming off. it's been negative for four years.
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it doesn't necessarily signal a turn in the demand. the reason it is so important is because as long as ppi is a negative territory, no one expands. rishaad: that is one of the reasons we are watching ppi. -- what about excess capacity? >> it is one of the critical issues in the chinese economy, how to get a circuit breaker on the deflation on the ppi side of things. that has been holding back so much company expansion, holding back there profit levels, and playing is wrong the excess capacity. it doesn't necessarily mean that will have a swell of demand
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on the ground in china. it is a positive that is heading this direction. rishaad: let's have a look at some of the other stories. we have juliette with our roundup. the president has been dialing down the drama, while at the same time building up the effectiveness of the banks stimulus policies. wrapup fresh asset buying soon. he declined to say what comes next after the $1.9 trillion stimulus program runs out in about six months time. >> we work on the supplementation and the changes that are needed to ensure smooth implementation of our progress. as we discussed the assessment of the economy and the
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projections, but we did not discuss anything else. juliette: china has opened up a new channel for insurers to invest in hong kong stock. insurance funds canal by hong kong equities through a link with shanghai. says theance regulator increased access will help companies boost investment return. the move comes less them one month after officials dropped the overall quota for mainland investors to buy stocks and hong kong, and improve the opening of a second link by shenzhen. move is, "unexpected and positive for the hong kong equity market." he is noting their equity caps on how much money insurance companies can allocate to hong kong equity. since and has been dealt a new blow amid the global recall of its new smartphones. u.s. aviation regulators say
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owners of the note seven should exercise caution when taking the device on a plane. the device was launched three weeks ago, but all 2.5 million recalledve now been because of fears the battery can catch fire and exploded. the fund must not be turned on or charged on a plane and should not be left in checked baggage. shares of samsung in seoul are down. the recall was a major blow for samsung. it was trying to be ahead of the curve and launch its product before apple. rishaad: looking ahead on the show, we will get over to the commerce in china. it is going to be time to discuss the progress made in beijing. ♪
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rishaad: there's breaking news concerning north korea. apparently, there has been an artificial earthquake. that has been detected by the center. we have the south korea foreign ministry holding emergency talks. the united states geological survey cannot determine the type of explosion. they are suggesting the location for this earthquake, which is suspected to be a nuclear device, which is near where they have done tests before. the japanese minister is saying there is a possibility the north korean quake was a nuclear test. there is an emergency meeting taking place in south korea at 11:00 a.m. seoul time.
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the asf is one of the largest foreign investors in the chinese chemical industry. the president of basf joins us. thank you for joining us. how are you finding in china these days, and how is the economic slowdown affecting your business? >> good morning. it is a very exciting time. i have been working on the ground in china for five years now. first heading are major joint venture with sinopec, and more recently with responsibility for china.basf's business in the chinese economy is going through a transformation into a
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more sustainable course model. there is a lot of emphasis by the leadership to sustainability . this poses enormous possibility , andpportunities for us particular for the chemical industry, and for us at basf. quite confident that embarking on innovation and leveraging our strengths, are strong footprint with the sales that we can make use of these opportunities and grow in the future in china. rishaad: i want to pick up on what you were talking about. big emphasis by the leadership in china about sustainability. how real is this move towards greennability, and policies. how much of this is hype, how much is reality?
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definitely a reality. what i experienced during my time here is that leadership is paying highest attention to environmental protection. what we see is that legislation, law enforcement is becoming stricter, and also the way it is implemented. how companies are requested to live up to higher standards. we at basf are being perceived as a role model by authorities because we operate our sites with the same high standard as you would in the united states or in germany. you have to understand, the reality in china is now that consumers are requesting a better quality of life. the request fresh air mother request clean water. it want safe food, and they deserve it. all this is something we understand. we have products to cater to
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these needs. i will give you one example. recently, we partnered with a local chinese firm. they are supplier of fertilizer. based on our technology, together, we launched a new type of fertilizer in china that helps to reduce nitrogen losses. meaning, there is less soil pollution for one away of fertilizer in the ground. it is a challenge in chinese agriculture to make sure they can reduce more quality food, and at the same time, we have to reduce the environmental impact. this is a good example of how basf can help to bring solutions to challenges in the area of sustainability to china. where is the real growth for you, coming from in china now? is coming inrowth
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many industries. it is still growing at a very high pace. the economy,w down but just compare the chinese economy to the more established economies. we still see a much higher growth. there is a quality of growth, which we believe is most relevant to us. i will give you one example in the automotive industry. we see the trends with lightweight materials, which help to reduce the fuel consumption of cars. we need catalysts to reduce the pollutants in car exhausts. we need waterborne coatings that are more environmentally friendly for the car production in china. all these products we have in our portfolio. this is a fantastic growth opportunity. nationalccessful with companies, and we are also very
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successful with the rising star companies in china. example,ive you one one of the vehicle producers in -- in order to meet the highest standard for light-duty vehicles, they are buying our catalyst. rishaad: we have seen all the volatility in the price falls when it comes to commodities, how does that play out in your business, and how do you manage that risk? markets are very volatile. we have two different kinds of answers to these challenges. the first one is innovation. we have been heavily investing into r&d abilities on the ground in china. last year, we inaugurated and r&d center. it is an innovation campus and
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shanghai. it is a 135 million euro investment. now we can collaborate with local chinese customers to bring new innovative products to the market. this is one of the answers. when you talk about are more upstream businesses, we can make a difference. we can stay ahead of the curve in the way we operate our plants. integrationificant between plans and terms of the raw material of one plant is provided because it is a byproduct of a neighboring plants. you can save primary energies through integrating the energy flows of different plants. we have an excellent team in place. off is that basf has been doing business in china for 130 years. we have a strong understanding
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of what is going on is a country , and we have invested heavily over the past two decades. we have invested 6 billion euros. that is also into people development, into training, into innovation capabilities, so we have a great platform to go. rishaad: great talking to you. still ahead, samsung sales. we will get the latest from the chinese investigation.
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rishaad: we have a look at china punishing five manufacturers of electric vehicles for scamming millions of dollars in official subsidies. the government revoking the license of the companies, and
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ordering them to pay back the money they received last year. what did they actually find here? >> this is something that was unearthed late last year by cctv. particular company, which as you mentioned, it -- it's production licenses being revoked as a report of -- result of these findings. given out subsidies for unsold vehicles, or other cases where subsidies were handed out for vehicles that were sold, but would sit idle. they wouldn't actually be used. inis a case of dishonesty that situation, where the company was able to technically claim on paper that is what a vehicle, it was really for
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purposes of getting a handout from the government. rishaad: what kind of punishment are these guys facing here? they are a bus maker. the production license has been revoked. has been a lot of attention recently on these production licenses because we have been hearing so much about startup companies, particularly tech looking to get, into the electric vehicle space. we also will see them have to pay back all the subsidies that they received last year, and four other companies that were implicated in the investigation will have to pay back 50% of the subsidies they received. pretty heavy-handed punishment being headed down to these companies that were found to be implicated in this sort of action. rishaad: thank you very much for that. up, we are expecting the
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latest inflation numbers out of china. thought to have eased in august. up, rightl coming after this short break.
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♪ rishaad: they are suspected of intervening in the officer currency market to make it more expensive to shorten the yuan. the central bank is signaling that it will not allow one-way bets, and will prevent the currency from weakening behind -- beyond 6.7 to the dollar anytime soon. the note seven was launched three weeks ago, but it is being recalled because it's battery
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can catch fire, and even explode. the faa says the phone must not be turned on or charged on a plane, and should not be left in check baggage. an earthquake has been detected in north korea's nuclear site. magnitudey the 5.2 tremor was artificial in nature. a tremor of similar magnitude was detected in a -- the same location. today is the 60th anniversary of north korea's founding. rosalind is monitoring the bloomberg terminal. rosalind: consumer prices rose 1.3% in the month of august. let's start with consumer prices. that rise was less than economists had been estimating.
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prices had risen by 1.8%. consumer prices had been holding fairly steady throughout this year. remainedes have moderate. this is less otherwise than economists expected. on the producer price index front, that fall of 0.8% is less of a fall that economists have been predicting. they are projecting a fall of 0.9%, it less than july's fall of 1.7%. that fall of 0.8% is probably one of the smallest declines in about two years. producer prices have been easing since the beginning of the year. economists are watching very keenly to see whether those prices can slip into the
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positive sometime this year. bloomberg intelligence is saying they can return to increasing prices. that would make it easier to pay down debt. producer prices falling 0.8% in the month of august. that is less than economists had forecast. , but that gain is less them what the economists had been forecasting. rishaad: we seeing declines across the asia-pacific when it comes to the equity trading day. we have a couple of green spots, hong kong and manila. shery: we seeing hensing in a positive territory, but the cause of that -- but because of that price data, we were not expecting much movement in china. going to see much
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movement in chinese stocks at the open just because people were waiting for the trade date. hensing, the beginning to dense of 1% because we have big news out of china, with authorities say they will open up a new channel for insurers to buy hong kong stocks through an exchange trading language shanghai. take a look at these stocks right now. these are insurers in china and they are all getting ground. china life insurance has been gaining all week. we're seeing technical signals. take a look at the rest of my markets right now. and investors are not seeing much from the ecb. investors are now looking forward to the fed decision, as well as the decision from the bank of japan. take a look at the asf falling sick sense of 1% at the lowest level in a most two months. new zealand stocks being write-down by industrial.
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we're seeing the cost be down more than 1% after the bank of down more than 1%. afterkkei is down starting in positive territory. not surprising, given that we saw that boost at the start because we had a beginning yen, but now -- a weakening yen, but now it is strengthening. that may be playing into the markets right now. take a look at the aussie dollar. australia is china's biggest trading partner. right now the aussie dollar is unchanged. rishaad: just getting to this developing story. we have a magnitude five earthquake been detected in north korea. let's get over to the south korean capital.
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how likely is it that this quake was caused by an atomic test? bri that is a good question. an: there is no question that there was an explosion. it was detected in the same area where the test in january was detected. jong-unat test, kim came out and said that had been a hydrogen bomb test. i think there is a lot of skepticism in the international community whether that was truly a hydrogen bomb. in this case, we expect north korea to come out sometime later today and make some declaration about a successful nuclear test. we won't know for certain whether it was nuclear, or just some huge bomb, but there was no question that there was an explosion out there. rishaad: the timing is interesting, isn't it? brian: it is. as you mentioned earlier, this is the anniversary of the founding of the north korean
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government. we had the missile test earlier this week. theree don't know is if is some kind of domestic turbulence that kim jong-un is trying to go with this demonstration, or if it is a very big birthday celebration for the government. rishaad: what is the mood in south korea? is there a sense of rising tensions, because quite often they seem to carry on as normal. brian: if you look at the market reaction, the one as come off a little bit. having said that, there's certainly a lot of scrambling in terms of government response. the security council was holding a meeting from the top of the hour. the weather agency will also hold a meeting and follow-up with a press conference. president park is out of the country, so the prime minister will oversee the reaction. you could say there is a lot of action, a lot of response, but something short of panic.
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rishaad: thank you for that. let's move to some other stories. the hong kong property developments reporting a 22% , sayingfor your profits underlying profit increased to 3.1 billion u.s. dollars. that was ahead of the analysts calculations. some companies are finally enjoying some relief. sending a ship to los angeles hensing -- hanjin vessels were denied entry there. apple announced the iphone seven with much fanfare, but says it will not be doing the same with
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opening weekend sales numbers. it says supply, not demand, will govern the result. by not releasing the numbers, apple is holding back a key metric used by some investors to gauge success. let's talk about one of the chief suppliers, foxconn, has invested into a chinese wife yelling at. -- ride hailing app. apparently now, they have a market value of just under $34 billion. -- one billion i should say. is $119.9 million investment is coming through in foxconn's high precision unit. s totalings didi'
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valuation $234 billion. foxconn has really been trying to move away from its reliance on smartphones, as we see a dwindling smartphone market. it is securing its dominance, getting another big name on board. it had that deal for over in china. another big win for them. ashaad: does this move to possible tie up between these two? there is a lot of speculation. there is speculation that apple wants to build a car. look at happen is that foxconn could supply the parts for the apple car, then all three companies could come together and use didi's huge database to roll out. foxconn says this is a strategic investment, and it is in keeping with their focus on building an internet ecosystem. are saying both companies
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focused on innovation and execution. they are export possibilities, but they did reiterate, there are no hungry plans for cooperation just yet. if you put these two companies together, phil: in the mix, a world of possibilities. ahead, the u.s. relationship with china is one of the key issues in the presidential election campaign taking place. what is the view on that from the asia-pacific? that is next. this is bloomberg. ♪
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rishaad: korea has been making all the headlines today. inc. of korea has said that the consumer pricing indexes approaching the target. they kept rates on hold at one
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and one quarter 1%. suggesting that inflation will remain low, and gradually rise. policies are there to ensure economic growth. out just a few seconds before we had these reports of a shallow earthquake been detected near north korea's normal nuclear testing sites. the 5.3 magnitude tremor was artificial in nature, and north korea may have conducted a nuclear test. a tremor of similar magnitude was detected at the same location. context,ut this in today is the 68th anniversary of north korea's founding. let's have a look at somebody who has been watching this part of the world for many years. joining us now is christopher johnson. he was a china analyst at the
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cia for nearly two decades. i do for joining us. we have got these reports of this possible nuclear test. if it is a nuclear test, what is the message they are sending out? christopher: i think it is very clearly a message of whatever the leadership in north korea feels like it is being ignored, it tends to stamp its feet in this manner. we've been waiting for them to enter another of what we call these provocations cycles. this would suggest they are added again. there's been a lot of attention in the global context on syria, on other problems. north korea has been largely allowed to fester in the background, but the reality is, they are making progress other program, on their ability to have nuclear weapons. i think this is going to be a prime issue that will face the new u.s. president in the
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beginning of next year. rishaad: it will be a headache not just for washington, it will be a headache for beijing too, right? think so.r: i china's relationship with north korea is arguably the worst it has been in several years. the chinese ability to squeeze the regime, and get them to be more in line, or at least not make trouble for china has been strained. china has ultimate leverage in terms of the eight it supplies, but they are ultimately unwilling to use it because they still feel more comfortable having a buffer zone called north korea between themselves and the south. this is great to get your reaction with this news coming through. obama visitingt the g-20 summit, and the snow which took place by beijing
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authorities. was it a snub? if it was, what would they hope to gain? sense is thaty this is being overplayed in the media. these events are very complicated. they are difficult to pull off. oftentimes, there are difficulties and screw ups. i'm reminded of a visit by the former chinese president to washington, where they mistakenly announced him as the president of the republic of china, mistakenly played the taiwan national anthem. these things happen. there are not used to welcoming these kind of visitors. it was a typical snafu that happened. president obama handled it very well by downplaying any significance. rishaad: president obama went to .he house -- to laos
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they didn't mention china. is this a sign of growing timidity and china's hegemony in the region? i don't think that's a sign of greater timidity. it was more of an effort to not single out china. the u.s. has been doing quite a bit with regard to singling out china with its activities in the south china sea. we have recently had the icj ruling, which went against china. i think the u.s. largely views that as a victory, but has been keen not to suggest it is somehow trying to push the advantage coming out of that ruling with china. my own view is that the chinese were effective at the laos summit, in terms of showing solidarity, and painting the u.s. and japan as the odd man out. mind, wewith that in
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have the south china sea being the big issue, not even mentioning china. is a row between all of these countries. these are simmering tensions. some have likened it to a slow burning fuse. what is the endgame? as a possible there could be a war over this part of the world? i think the prospect of a war is pretty unlikely. in terms of the game plan, i think the chinese have been very clear in signaling their president since the arrived in office, which is that china is a maritime power and has maritime interests. they have interests abroad to protect in ways they haven't for a very long time. the message they are sending to the region is we intend to operate in these areas with our forces, commercially, etc. at times of our choosing, and perhaps with impunity.
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the message to the united states is, you will have to accept this new approach by us, and if you don't want to, this area means more to us than it does to you. it is a real dilemma for u.s. policymakers because how do you persuade china to change its behavior, when the only answer is there with a film or nuclear power -- a thermonuclear power? it is a real challenging situation. a new administration in january. how is china receiving the presidential election right now? they are just as confused as a lot of americans as to what is happening in the u.s. political system. my sense is they don't really understand mr. john particularly well. what has been striking to me is the sense that you get that they
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see him as someone they can do business with, and i think that has a lot more to say about their worries with mrs. clinton. when she was secretary of state, they perceived as being somewhat anti-china. they are very concerned about how the relationship will evolve . there is a general sense among chinese leadership that is -- that whoever is elected u.s. president, the policy toward china will be tougher in the next administration. we see them trying to consolidate gains and the remaining time of the obama administration. have had some pretty wild and negative rhetoric coming out in this campaign about china. when you get to office, this tone is gone. there is only this disconnect between what candidate say on the campaign thel with regard to
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relationship with china. this goes back to bill clinton calling them butchers of beijing. it has been a repeated feature. something that has been interesting about the obama administration, typically with a new administration, the relationship with china starts off rocky. it smooths out over the course of the administration. in this case, the obama administration made some moves to china happy early in the administration. found at the end of the day, they didn't get the cooperation they expected. it will be interesting to see if things revert to course. is an opportunity with a change in administration for a fresh start. rishaad: thank you for joining us. we have more coming through on the suspected nuclear test taking place in the north of north korea.
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the white house says it is where seismic activity on the peninsula, saying they are monitoring the situation. it is in the vicinity of known cleared -- nuclear testing sites. nuclear of there that -- the possibility is there a north korea conducted a test. two kilos new governor aiming to/the city's ballooning cost, including the bill of the 2020 olympics. this is bloomberg.
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rishaad: tokyo's governor may be new to the job, but she has already proved she will not shy away from difficult decisions. after running against her own party, she is now making it her mission to cut costs as of the
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2020 olympics. we can cut costs by building temporary facilities for the olympics, and still leave a legacy. the material build to -- used to build a temporary structures can be used in other ways. through herk us plans to shake things up. she took part in this election without permission from the ruling party, even though she is a member of it. she has the prime minister campaigning against her over the summer. she has managed to make friends with him again, but when she is doing now is taking on the tokyo assembly, which is perhaps much more difficult and conservative. the first thing she will be
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battling them on is the cost of the olympics. she has just under four years until the olympics take place in tokyo. she says she has about 18 months left to rethink the plans that were already in place, and try to cut the costs. what theows for sure costs are estimated to be at this point, but she said in a press conference in july that they are said to have ballooned by sixfold already at this stage , so there is already some cutting that could be done. rishaad: very briefly, what would a cheap olympics look like? >> she is in favor of the temporary facilities we have seen it the london olympics, and venue in the swimming rio. something you could put together cheaply and take apart. she wants to use those materials again. rishaad: thank you so much for
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that. coming up, north korea erasing south korea's suspicions following a minor earthquake that is suspected to be a nuclear test. we will have the latest out of saul -- seoul.
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>> from our studios in new york city, this is "charlie rose." charlie: john micklethwait is here. he is the editor in chief of bloomberg. he sat down for a two hour interview with president putin. parts of the interview rp featured in "bloomberg businessweek." congratulations. john: i was largely being a poor's man for charlie rose


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