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tv   Asia Edge  Bloomberg  September 15, 2016 12:00am-1:01am EDT

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♪ >> central banks are back in the headlines as the most prominent prepare their latest crucial statements. long running pursuit. it creates a giant in the world of seeds and pesticides. oil's oversupply is set to deepen as nigeria and others prepared to and more crude in the coming weeks.
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rexit u.s. launches its as china joinss its maritime drills. europeanour headquarters. angie: it is half noon. welcome to bloomberg markets. we are working -- looking toward central banks and a possible the virgins but really expected to stand fast on rates, right? decision dost rate later on today. having said that of course the expectation of all economists surveyed by bloomberg is there is no change. we have them -- seen them do a lot already. some have suggested they have done too much. we will get a gauge of how the
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economy has been affected. let's go to the corporate news. we're going to get some analysis now of this buyer monsanto story. you can tell us where we are going next. have andrew standing by talking about that buyer deal with my center. it has been years in the making but what about the $66 billion deal that could be hung up in regular -- regulatory issues. there is some investors that are kind of concerned about that. andrew: there are regulators concerned. the companies concerned it will require approval from 30 jurisdictions and that is including europe, brazil, the u.s., canada, to name a few.
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and it is going to have two sell some assets. likely acids are going to be cottonseed, some of its herbicide efforts and also some canola seed acids. the logic behind the combination here? andrew: the logic is size. this deal will make them world's biggest supplier of crop chemicals, seeds, basically everything agricultural. it is essentially a one-stop shop that will have 26 billion a year in sales alone. before the deal goes through. the other thing about the logic at this time is monsanto shares were beaten down a fair amount last year coming into this year. and this deal is done in a time when they can take advantage of cheap debt and it will be eps accreted as soon as the deal is done.
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how will regulators look at this deal? they will examine this closely. the reason is that there is -- if this goes through as it is there's going to be three chemical -- crop chemical companies from six just a year ago. in dupont willw merge. thanks for joining us. andrew hauled joining us with the later asked the latest on the buy it monsanto. and the first of three crucial policy decisions in the next few days. the bank is expected to hold that markets will be looking for any clues as to what may lie ahead. david joins us now. they are in the unenviable position of trying to figure out how the uk's economy will look in the month had and we have not
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even had a brexit yet. we have had a vote but nobody really knows what the conditions of the uk's economy will be at the relevant policy timeline the boe has to do with. david: that is a good point. that has led to this unexpected sweep -- sweet spot. go with the economic reality that he will likely have to deal with one or two years down the road. let's start with what we expect for tonight. we're not expecting anything. , that basically shows the probability which is virtually 100% that rates are at .2 5%.nt -- we talk about the unexpected sweet spot, there is a great preview piece on the website that takes us through this positive reality that the uk's economy will ask -- has been experiencing the last two months
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or so. one of the things that has happened is the week current, it has provided some kind of temporary soothing in terms of the brexit vote pain. it is down against every single major currency. and this bounceback that we are seeing across these different economic metrics in the u.k., a lot of that has to do with the weak currency. whether that is the flow of tourists coming in, whether that is the composite pmi, let me bring up that chart. i think this gives us a very it is a bloomberg chart and what it will show you is this bounceback that a lot of people have been talking about and what it tells you about where growth is at the moment. we're looking at .3%. full frame.his what it shows you, and is a bounceback and at that level that suggests .2% growth.
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if we can get to the next graphic which shows how these growth forecast have been revised higher now from the likes of goldman sachs, bank of america, merrill lynch. mark carney himself said there is upside risk to this .1% growth forecast for the third quarter. quite a contrast from what is expected from the bank of japan next week. david: in terms of difficulty in the , boe,on it is almost fed and boj. they might tweak, we do not know which among the policy tools they will tweak. this gives you a good idea of the market -- what the market is trying to price in. falling, these is only part that is left untouched so far are your short and medium-term jgb's. this graphic.
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let's bring it up for our viewers and that shows you that everyone is scratching their heads and trying to position themselves not to lose money next week. the other thing i want to bring up is this another chart which shows volatility in the banking index. this index has not gone anywhere. it has gone up and down. we will bring it up later on. you get the idea. no one knows where it will go next year. anna: thank you. checking in on first word headlines. let's go to rosalind chin. : he said it is the right thing and press the country's transition to democracy as a vote a good income myanmar's economy will expand this year in toys 17 making the
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best performer in asia. i visited as the first u.s. president ever to travel, i could see the enormous potential that was about to be unleashed. represented it better than aung san suu kyi. hillary clinton has released a comprehensive disclosure about her health. she is recovering from pneumonia and all her vital signs are normal. it became an issue when she appeared to need help entering a car on sunday. her physician wrote that she is in excellent condition physically and mentally. investigating a crash in china which killed the 23-year-old driver in january. lawsuit filed against the carmaker by the drivers family.
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had no way of knowing if its autopilot system was involved in the crash because the car was to damage to transmit data. is considering a european asset. is maker of snow beer speaking with advisers. they are investing some of sab miller assets as it prepares to take over $100 billion. global news wife hours a day. this is bloomberg, thank you very much. let's get the latest on the markets. for a sixth day. japanese stocks on the way once again. a lot of concerns for financials about what the boj might do.
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>> that is right. we met -- remain on central bank watch. we're seeing losses leading the region by did -- japan down by 1.2%. reports that the boj might push further into negative interest rate territory. we had the one from the nikkei news, also morgan stanley has that view as well. which is coming through in the equity market and also the yen stronger having an impact there is well. the regional index is on the track for a sixth session of losses. it is the longest leading -- losing streak we have seen. the regional benchmark index also trading below its 50 day moving average for the second time in a row. the second session in a row. that is showing strong technical signals. generally markets are lower but we are seeing some upside here in hong kong. the hang seng is a .61%.
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you can see some good moves coming through from those casino plays. also the gain from jakarta and thailand. a lot of markets are closed today. china is closed and korea remained closed as well. taiwan also closed for the midautumn festival. in austria they are seeing a bit of a turnaround. we were off i more than .1 of 1%. jobless rates coming through. not because of the fact that more jobs were created. it was due to the fact that less people were looking for work. at 3900 jobs lost, the unemployment rate at 5.6%. new zealand continuing its losing streak gdp for the second quarter also in the news today. anna: thank you. later, viet jets spreads its wings. ambitiouslk about its
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for growth. asian markets sliding for the sixth day in a row. what will it take to turn around -- that slide? that is next. this is bloomberg. ♪
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angie: welcome back. you are watching bloomberg. anna: i am anna edwards right in early in london. the headlines for you. recallingamsung is smartphones in china. none of the handsets sold their. faulty battery that can overheat and catch fire. 1858 phones are being called back. it adds weight to the crisis. samsung is recalling 2.5 million phones from other markets mainly in korea and the u.s. preorders for the new iphone seven are up at all the major u.s. mobile carriers except
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number one verizon. at&t was the last of the big four to give details saying it has seen demand above lester's level. verizon said it is business as usual for an iphone upgrade rate. apple is looking to the new version of its flagship device to and two quarters of sales declines. the iphone is being released this friday. the bank of japan has gained an influential ally. ofckrock says investor fears being crowded out by the boj is etf purchases are "overblown." only 3% of the $5 trillion market -- the boj's 58 billion dollar bond buying program could make some stocks harder to treat. let's check in on the market action because global selloff we're seeing is continuing right here in asia with stocks falling
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first -- for the sex the day. --looks like volunteer volatility is back. it was triggered when the fed governor found a little -- sounded a little more hawkish. where do we go to next ahead of next week's decision? guest: it is a very tricky situation as you said. the fed would like to some point move away from 50 basis points, maybe raise another 25 but every time they have a window of opportunity to do it you get a tantrum from equity markets or bond markets that make their job difficult. bothou notice this week bonds and equities have sold off so it will make their job on the september of difficult. i think they will go 25 basis points. what: if that is the case
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are you doing when it comes to investment strategy? right now we're seeing the dollar go all of the place and yields as well. guest: the market is pricing added 25% chance the fed will go in september. maybe a 50% chance they raise twice five basis points by december. just because they did 25 this year if they do it does not mean that in 2017 you're going to get a series of rate hikes from the fed. at the most next year you will get another 25 or 50 and 2017. the. plot from the fed is a lot higher. rangexed income market is bound. low rates are done because the fed does not want to get to zero or negative i do not see a big air market in bonds. it will be a slow gradual grind higher up and yields as long as we have had. anna: i was looking at the treasuries earlier and those
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interested in what that tells you about inflation and citations. you have a preference for low interest duration. not necessarily in the u.s.. explain your fixed income strategy to us then. guest: what happens is that the tells youf the market that the market expects inflation to be very low. it said that the fed is not going to raise rates anytime soon. if they do they are preempted and you do not see inflation running away. generally what happens is when the central bank starts to normalize interest rates at the short end, it is up to maybe the five-year part of the curve that sells of because that is the part that watches with the fed does. the long and has some inflation him.um and term pretty the curve will flatten if the market thinks this set is ahead of the curve. over time it starts to flatten as well.
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there is no inflation. it is all about inflation and we do not see inflation much around the world. anna: leaving the u.s. to one side, we have the bank of england rate decision. the boe has done a lot to get ahead of any brexit weekend -- weakness. give us an international investors perspective away see happening in the u.k. right now. the: if you think about four central bank meetings that are coming up, you have got the bank of england, their job is a little bit easier because the currency has done all the work. the pound has fallen quite a bit against most major currencies. so generally when the currency falls it makes your exports a little bit cheaper and kickstarter economy. that is as similar to easing monetary policy and the bank of england rate is twice five basis points. i do not think we will change those rates. the bond markets have rallied quite a bit. i do not see any change
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immediately from the bank of england because they have to work through brexit. no tightening of monetary policy at all outside the u.s. is anticipated in any of the economies so it comes down to the fed and even the fed is a very slow rise in rates. otherwise easy monetary policy supports risk assets or should support equity markets. about in your neck of the woods, what is the rv expected to do is to mark we have a new central bank governor and we are looking at the aussie dollar, is it at fair value? -- theaustralia is economy slowing down because of the economy boom bust cycle. are countries that pay you money to buy the bonds. today's employment numbers, they were week that on average in 2016 on a monthly basis this trillion economy has created
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8000 jobs compared to 25,000 jobs in 2015. you are feeling the impact of the slowdown. the rba is in tough spot. .ut they will be on hold 1.5% seems a fair value for the rba. he aussie dollar as well as -- at $.74. anything in the low 60's is cheap. anything higher is expensive. i do not see the rba moving anytime soon. they are worried about the bubble in the housing market if there is such a thing angie: you still have to look at the domestic issues. we will leave it there. thank you for joining us. coming up, japan's biggest trading houses shifting away from commodities and into services. this is bloomberg. ♪
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you
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anna: welcome back. shares are soaring after mitsubishi corporation said it is considering increasing its share in the convenience store operator. it may increase this to more than 50%. .e have all the details why would mitsubishi do this now, is this part of a bigger strategy? guest: that is exactly what it is. this is part of their grand master plan. to get away from commodities company'sbrought the profits down to its first net loss in the previous fiscal year. the cfo told berg news last that going forward the company well at least for the next three years shift away from commodities. andcompany -- the bread
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butter of the company has been commodities. it has invested heavily in lng projects. oil projects and copper, different kind of metals. they have been a major player in that field and almost every region. but because the price slump of the last two years has hurt them and so they are diversifying away and that is why they decided to take or they are considering to take a bigger stake and loss and make it a subsidiary of the country as company. mean, whatdoes this this that due to their business? guest: the big thing for lawson is it helps them diversify or build out their business around the world. mitsubishi is huge. it is the biggest trading company in japan and they have people everywhere. what lawson gets is they are
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able to expand their operations and they can go outside of japan. japan's population is shrinking. 1004want to build -- have offices, stores. mitsubishi allowed them to build out and expand. their entires network. so mitsubishi has connections with companies that make foodstuff and services. things that can help loss and bring things to their stores, coordinate the distribution of goods. that is the big thing that they are getting. the reason why the stock is soaring today is local media is reporting that lawson will be bought from 5% to a 10% premium from yesterday's closing price. that is giving up bit of a boost today. analysisnks for the giving us a report on that move in tokyo.
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say goodbye to the physical world. we are embracing a virtual reality at the tokyo game show. coming up next. you're watching bloomberg markets. this is bloomberg.
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angie: yet another date -- day of losses as we see a lot of expectation that with boj driving negative rates deeper into the negative territory, financials could get hit. we are entering the last 90 minutes of trading there. in japan. the top stories on bloomberg markets middle east. investors are watching three crucial central-bank decisions over the next week with
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diverting houses at play. the bank of england is first cap off the rank when it meets later today. policymakers are expected to hold rates at 0.25%. energy and the fomc hold their meetings next week. the odds of a fed height slimming while investors and analysts expect the bank of japan to fire another blast of stimulus. oil supply is expected to worsen as the beer and nigeria -- no be -- 3000 barrels a day. tesla is facing a lawsuit in china over a crash which killed the 23-year-old driver in january. the court in beijing has accepted a lawsuit filed against the electric carmaker by the
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drivers family. that according to state-run cctv. footage. tesla says it has no way is knowing the autopilot system was engaged since car was to engage -- to damage to transmit data. is 5:30 a.m. here. to starting to cut you down to the start of the european trading day. let's start with the big story around consolidation in the crop sciences space. bayer.l watch buyer -- ma the managing editor spoke to the ceo and asked what they thought about the outcome. it's the way i look at this is we're going to unlock additional yield for growth around the world.
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they're starving for innovation. they're looking for answers and the combination of the two companies unlocks that potential going forward. i think this is a great deal. you feel like the regulators are going to make ?ife difficult for you too where at $20center below. do you feel confident that you are going to be able to do whatever is needed to get this deal through? especially assume regulatory challenges have been discussed very intensively as part of our negotiations but also beyond. we have both had very large , the of our own people antitrust counsel looking at it jointly to assess how big the regulatory challenges might be. and in a way, we are really blessed because this commendation is one that is highly confluent jury and as for
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the size of this transaction it overhead.w that is what our assessment has yielded. we're looking forward to engaging with the regulatory agencies in all countries. where we are going to have to file. we're preparing ourselves to address regulatory concerns and so we can serve up to what is needed in order to get our transaction and the accommodation of our business to the finish line. anna: the management thought they thought through all the regulatory issues. managing editor jeffrey mccracken. checking in on the first word headlines here is rosalind chin. the next 12 months will be important to defining the eu's role after the u.k. leaves the block. -- jean-claude
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[inaudible] he called for resolve and said the eu must protect its joint interests. regret the u.k. decision and respected. but the eu as such is not at risk. thewe will be happy if request for brexit could happen as quickly as possible so that we could take the specific steps that need to be taken and so that relations with the u.k. which must remain on a friendly basis can take initiate. >> renting office space in singapore is getting cheaper. skyscrapers for the fell by 7% in the first half of this year to about $775 a square meter. upomparison hong kong rent to four times that and still rising. the biggest gains are in shanghai where rent is up 7.8%
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driven by demand by the technology and creative industries. the chinese consortium intending to buy [indiscernible] has been looking for investor since it agreed to the deal. is net -- little-known buyer sounding out interest for the deal and did not have all the funds in place. potential partners have been told they could earn outside returns if they seem a land -- ac milan is in china/ . angie: central banks are in the headlines again. look ahead to the boj and then of course the fed next week. both hands and can between one when they make their rate decision. that the virgins in policies one of their key issues in
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singapore. we have our southeast asian correspondent haslinda amin. what was the general consensus? after a quiet summer volatility is back in the markets in a big way. they suggest a 22% of the rate hike. investors back to mulling over possible move in september. the global equities selloff continues. some suggesting that perhaps markets have lost confidence, central bank still have ammunition to promote growth. there is a sense that markets are on edge. chairman of the milken institute said it should not matter whether the fed raises rates are not. rates are still very low. take a listen. manyr me it reminds me of
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-- 20 or 30 years ago when we used to wait for the money supply, is it up, is it down? whether it is 25 basis points are 50 or 75 for me, interest rates are still very low. low, yet rates are there is rising liquidated. what is happening? the pressure in the market comes mother factors as well like the uncertainty in the u.s. elections, rate decisions including the boj, boe, investors try to gauge what will be done. still there are opportunities. goldman says imagine -- emerging markets look attractive even if the fed decides to raise rates. here is sheila patel. sheila: when you look at emerging markets people rebalance their views of the rate hike and we believe 11 happen this year. people are not reacting as strongly as they did during the
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taper tantrum. if we try to diagnose bipolarism or any other mental disorder in the markets we would have another long conversation but importantly, i think people are looking at em at some of it key fundamentals and differences where markets have gotten. eyes glued onto central bank. the boj expected to defend its cut. the member what -- remember what kuroda said. negative rates have driven extremely powerful. thanks for that. annual tokyo game show begins today with virtual reality expected to dominate for second year. it is not just the big names getting in on the action. smaller companies are showing off their latest wares.
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get your vr set off. you are in some other world. tell us about it. avel: we are at a booth at company. some of the most interesting innovation happens in the periphery. in case you're wondering this is a haptics vest. allows hits to register. some of the most interesting innovation will come from companies you probably have never heard of. angie: i am glad you explained. what about sony playstation's
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headset. can they beat the competition? sony is one of the most that everyone is looking forward to. it goes on sale for only $400. with 40 million ps for users and support from companies l, sony is the one that takes vr mainstream. it is not something to look forward to over the next month. anna: thank you. privateetnam's only airline aims to go public and has other wide-ranging ideas. they growth expectations there. we assess its ambitious flight plan. that is next. this is bloomberg. ♪
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anna: welcome back. you are watching bloomberg. angie: i am angie lau in hong kong. the u.s. is holding it used yet.mes it involves thousands of personnel across all military services. it comes as china and russia continue to conduct joint drills and with north korea having tested a nuclear device. stephen engle is in guam. stephen: we are outside anderson air force base on the northern tip of guam. for the valiant shield were games. these are joint forces of the getting ally together. we are talking about the air force, navy, marine corps, and a few members of the u.s. army. they're coming here for a joint military exercises, about 18,000 personnel in total. it is against the backdrop of
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russia and china having their own joint war games in the south china sea and also some tension on the korean peninsula but according to the u.s. military this is more about showing unity among u.s. forces. this is what the u.s. marine corps, air guard commander had to say about that. >> we have got a lot of teams 30s and you will see a lot of aircraft out there. the tankers, the bombers. we all courtney a lot of planning to take off together and go into the huge airspace and the -- and simulate what it would be like to train tactically within each other, the different services and counter a see related force represented by our aircraft as well. valiant shield runs
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until september 23. we will have a front row seat. we are out on the uss ronald reagan, and nimitz class nuclear powered super aircraft carrier. will be up in a refueling jet. lots to come from guam. anna: reports from the usa wells fargo is being investigated after being fined $185 million for opening around 2 million unauthorized accounts. the wall street journal said federal prosecutors are looking into the banks practices which could lead to a criminal inquiry. last week the bank sold allegations that it opened credit cards and other accounts for customers without their approval. arriving soon, the biggest ipo from a train operator in more than 20 years area sources say the japanese government is planning to raise about $5 kyushu selling shares in
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rails. the company has benefited from the record number of tourists visiting japan. singapore airlines said it will not be extending the lease on the jet past october. demand is far short the original hopes as airlines prefer a more efficient when engine plane. qantas has deferred delivery of 8 a380's. sticking with the aviation sector. vietnam's only privately owned et, aims to ipo soon and has other equally ambitious plans. he wants to more than double its international routes by 2018 and is announcing its latest
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service, ho chi minh city to hong kong. joining us is the vice president. great to have you on the program. you have plans to grow, you have ordered a lot of aircraft. tell us how many passengers do you want to carry, how big do you want to be? guest: nice to be here. carriers of -- 13 million passengers already and we want to continue to grow the numbers in the future. we have a plan to increase this -- to 35wo 35 million 0 million passengers and we want network toore develop the economy in the region. are contravening to the network in the region.
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when are you going to ipo and will $200 million be enough to fuel the growth plans that you have? are assisting with her partner's advisor to [inaudible] for the plan. we are the first company in vietnam. confirmed -- not confirmed official information yet. we hope to bring this information sent to you. >> as we look at how asia-pacific airlines are performing you cannot hope -- help but note the overcapacity. there are a lot of rivals your challenging. what will set you apart? create a new to
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segment for domestic market. conjugated to 70% of the growth of all domestic air traffic. who have notlers flown before. we want to create more chances in vietnam for another market in the region to create more demand in the market. that is the reason we believe that we have more opportunities. a sense of the demographic explosion that we are really seeing in southeast asia. a lot of emerging middle class, young people getting those jobs, a lot of discretionary dollars and they want to travel. guest: of course. that is why even in our vietnam market we have so many young people want to spend more money for travel and for the trip. this is the chance for us to [inaudible]
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in the future. especially in vietnam we have the -- the geography is very good for us. nearly 100 million population in vietnam. is exciting to growing airline. it is not always possible. is vietjet making any money at the moment? making profit from the third year of our operations already and we continue to increase that profit ratio to more than 30% annually. >> you are buying a lot of planes. boeing, lost have for that from airbus. a lot of industry watchers are calling this very aggressive. are you going to use all of those planes or are you thinking about perhaps leasing them, getting into the leasing business?
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guest: before we made the decision we had a plan already for how to [indiscernible] tot is why we had the plan [indiscernible] with a very huge population in vietnam. created [indiscernible] chance for 100 million passengers and continue to expand internationally to asia and other asian countries. with this plan we can use our fleet. >> very quickly if you could answer because the thing is with asia airlines, asian airlines are looking at a slowdown in china. you have just launched in hong kong. are you worried about that? guest: when we made the decision to launch between ho chi minh
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city in hong kong, we can see that hong kong is very potentially hot in the airway. that we not only contribute to the connectivity between hong kong and vietnam, we can contribute to the -- to hong kong and other countries when they fly to hong kong. >> thank you for joining us, salking about vietjet' ambitions, ipo and more. joining us here in hong kong. guest: thank you so much. >> can inc. of england hold on post-brexit optimism longer? this is bloomberg. ♪
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angie: welcome back. you are watching bloomberg. anna: i am anna edwards in london. the bank of england is the first
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of three central banks to hand down crucial policy decisions over the next week or so. manus cranny is counting us down to that decision. it happens around lunchtime. good morning. what are we expecting, no change in the interest rate may be but lots talk about. -- to talk about. ofy: it will be the language minutes. is for a rate cut. i love the fact that three times i have been down here and it gets darker each time that i come. rney said i am serene in terms of my decision. amen accuses him of being trigger-happy but the data, that is the kernel. did he take a sledgehammer to get out ahead of the data? the last my was here it was 75 basis points. record levels of of employment. this is the essence of mark carney.
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he would maintain that and the data would maintain that unemployment would rise to 5.6%. this time nine years ago, northern rock went bust. it could -- took time for england to drop into recession and it took longer for the job losses to come hard and fast. some would say that what they have done is essentially trying to get out and get ahead. -- thesterling has had best performing in the bond market, can that continue? at whathen you look analysts are saying, expected to drop to another 13% by the middle of next year, it comes down to where we are with these global central banks, policy diversion but the cost of hedging is the lowest since january. there has been a retrieve from a
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-- a birthday from the market low. low.om the market
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♪ dollar wipeout, this week's equity slump continues in asia. brexit, the bank of england is set to release the latest date of the economy, amid reports it is holding up better than expected. campaign health check hillary clinton, releases details from her medical exam, while donald trump takes to daytime tv to discuss his physical condition. ♪ anna: a very warm welcome to countdown. i am anna edwards. manus: and i am

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