Skip to main content

tv   Trending Business  Bloomberg  September 18, 2016 9:00pm-11:01pm EDT

9:00 pm
♪ it is monday, the 19th of september. this is "trending business" with me, rishaad salamat. ♪ rishaad: we will be in the, singapore, and sydney this hour. alarm bells ringing in china, banking stress hitting a record. three times higher than the accepted danger level. listed noble group looking for investors, saying profit could be two years away, the stock has lost 90% since 2011.
9:01 pm
samsung selling assets to fund the note seven recall. right. you can let us know what you think of our top stories. follow me on twitter at @rishaadtvand include #trendingbusiness. playing catch up when it comes to hong kong and shanghai. markets closed on friday. singapore, taiwan, malaysia coming online. had a dramatic morning with the technical issues plaguing the asx. in anession was placed enquire state. the technical issues have been resolved, and we are expecting an open at half past the hour. we will be watching that.
9:02 pm
taiwan,e, the open in up by 1.5%. the straight times opening flat, malaysian stocks up by .5%. seeing modest gains. the new zealand market not moving much. but really the focus for global markets is the central bank bonanza happening this week, the fed, the boj, a plethora of regional central banks. on thursday, rbnz. there is an outside chance we will be getting a move from the rbnz given inflation expectations are week. bank of the philippines and the central bank of indonesia meeting as well.
9:03 pm
inflation is nowhere near that 3% to 5% set by the bank of indonesia. in terms of commodities and currencies, dollar-yen. japan is closed today for a public holiday. an aging population, one of the biggest issues plaguing the japanese economy. iss is what dollar-yen doing, holding steady ahead of the central bank meetings. the aussie doing this, coming off losses, strengthening. china property data coming out at the bottom of this hour. we will see what impact that has. oil is the other major story. oil is rebounding off that one low we had on friday. news out of opec, the secretary could be aing there formal session that comes after
9:04 pm
this meeting in out jeers -- in algiers. rishaad: thanks a lot for that. right. the alarm bell sounding in china, warning indicator of banking shares, highlighting the risks from ballooning corporate debt. tom mackenzie is looking into this. welcome back. kick things off with a look at what this indicator is telling us. another warning, this time from the bank of international settlements. they have been looking at the credit to gdp cap in china. -- gap in china. that is the credit to gdp ratio. the number they are pointing to in the first corner 30.1%. that is a record, the highest seen in china since data started to be collected in 1995. higher than 41 other countries,
9:05 pm
including the euro area. anything about 10% says bis suggests there are risks in the banking sector. this kind of numbers suggests that a bank crisis could possibly be looming for china, at least according to this indicator. this meank, but does a crisis when it comes to chinese banks? is it all but inevitable? well, analysts have been saying for some time now that they are concerned and that there is a strong case to be made that into-three years, china's banks will need to be recapitalized. the debate is over how much that will be, whether in the billions. one estimate put it at $1.2 trillion. a lot of analysts are concerned that the bad loan ratio is being downplayed.
9:06 pm
is 1.75cial number percent. some analysts say it could be closer to 20%. the secondt in quarter, nonperforming loans increased by $6.8 billion, so there is a lot of concern as to whether or not a bank a lot will be needed. of course, it should be highlighted that for the large part, the majority, china's banking system is controlled by the state, giving them some leverage to mitigate those risks. the levels of overseas debt held by china's banks is relatively low. said that when it comes to capital ratios of china's banks, that even under a severe shock scenario, those capital levels will be adequate. it should be pointed out that has above 10% level the bis highlighted for the credit to gdp ratio, china has been at or
9:07 pm
above that level since 2009 without yet having a crisis, but yes, this will be for some more whot for the mill for some say there needs to be a 1990's style recapitalization of chinese banks. rishaad: thanks. right, let's have a look at bomb sniffing -- before we come to that, quick reminder of a big guest, joseph stiglitz talking about the detergents and central bank policy and his outlook. that is 9:40 a.m. hong kong time. we are talking indeed about what is going on in new york at the moment. we have that story and some others. >> bomb sniffing dogs and teams of police officers combed the streets of manhattan as the
9:08 pm
search for those responsible intensifies. 1000 new york state officers and troopers have helped to ramp up security after 29 people were injured in the blast. the increased presence comes ahead of the united nations general assembly, which starts later on monday. the new york mayor bill de blasio said the city would have an even greater police preference than initially arranged for the event. governor andrew cuomo said the attack was intentional, but also aat there is no sign of foreign terrorist connection. a second potentially explosive device was discovered nearby, and a pipe bomb blew up earlier in new jersey, but please say there are no obvious links. we are hearing samsung's latest woes could be the result of putting speed first. it is understood the production of the note seven was rushed to take advantage of an underwhelming new iphone. sources told bloomberg the
9:09 pm
company decided to accelerate the launched and that that a have played a part in its battery problem. the plan appears to have backfired for samsung, which as had to recall and replace all phones. samsung announced it had sold stakes in several companies to free up cash flow and focus on its main business. of selling its shares in various companies came out to just over $890 million. the $1 billion scene as the total bill for the recall. takataing airbag maker moving ahead to find a buyer. the japanese firm had put itself up for sale as it tries to deal with the alto industry's biggest ever recall. bidderssay it has ask to submit process by this week. kkr, the carlyle group, said to be among the suitors.
9:10 pm
shares have slumped as the company faces aliens and potential recall costs. is plunged him is 90% since january 2014. over $330ued at just million. rishaad: noble is seeking a strategic investor. it may take as much two years to get back into the black. let's find out the details and get out over to our southeast asia correspondent. they are out there trying to get some new capital. haslinda: that's right. up itsl needs to prop finances, even though it is on track to raise $2 billion by cutting jobs, selling shares and assets. it is holding back cash on businesses which are profitable. a strategic partner? possible. according to the founder of noble, it has to be at the right
9:11 pm
time and it has to be the right candidate. it has been difficult for the company, losing 90% of its market value. its largest investment grade rating has been weighed down by debt and slumping commodity prices. the worst isn't over. some say the biggest challenge may come between april and may next year, when noble has to refinance millions and credit lines. of q2.creased at the end time thatle says with number will fall and profit will return. we shall see. the commodity side of things has recovered somewhat this year, but i don't think it has been reflected when it comes to noble shares. haslinda: the short answer is no. noble shares have extended
9:12 pm
declines because of liquidity concerns, debt burden, and progress and asset sales. year alone, it spiraled down almost 60%, at one point reaching the lowest level since 2003. all analysts we talked to have a buy or hold rating on the company. rishaad: nice one. thank you for that. troubled times continuing at noble group. still ahead, days away from governor kuroda's latest call. what is in store for stimulus later in the program. plus, hear from one guest who is sounding a negative note when it comes to u.s. growth. this is bloomberg. ♪
9:13 pm
9:14 pm
rishaad: right. we have glitches ironed out on the australian market.
9:15 pm
the asx premarket just started. no change right now. it has moved to pre-open as of 11:10 a.m. there. right. a look at business flash headlines. china postal bank becoming the biggest share sale, attracting huge interest. sharesan 12.4 billion are set aside for international institutions, five times oversubscribed. investors took 80% of shares set aside for institutions. of u.s. debtngs have fallen to a three-year low as it continues to shore up the yuan. beijing treasury holdings decline, a drop of $22 billion on the month. suggestschinese data fx reserves are little changed.
9:16 pm
china is the biggest foreign creditor for the u.s.. bonuses steadily rising in japan , now hitting a nine-year high. major companies got a boost of more than a thousand energy producers saw a 15% increase. let's get back to that investors forum in hong kong. our next guest is grim about growth prospects in the u.s.. ask him why the long face. >> you would think so by the title of his latest book, the rise and fall of american growth. it sounds pessimistic, but perhaps a surprise from macroeconomic -- macro economist professor at northwestern university.
9:17 pm
the real about concerns about the american economy, especially as we look ahead to the fed decision this week. it really does feel like the rules of the game of globalization have changed. let's be surel, we understand the american economy is actually doing great by the standards of the rest of the world. jobs, thesemillion people with the new jobs are spending, consumer spending is continuing to go up. i see year after year of this continuing job growth feeding consumer spending. what the fed is talking about way too much is a quarter-point interest in the federal funds rate. it will have virtually no impact on the economy. i think we haven't much too much -- my rise and fall of american growth is about the long run, why our productivity growth cannot be sustained at the rate
9:18 pm
of the late 1990's or more so at the rate at the middle part of the 20th century, the great old days of the so-called great inventions. >> isn't that a problem today? especially when you look at the political sentiment and the that the outside candidates, the anti-establishment candidates? feeding on the inequality of the growth occurring. we have a lot of people who because of globalization and autumn is asian have lost out on their chance for the rest of their life of getting good, middle-class, blue-collar jobs or middle-class clerical jobs, and they are rightfully resentful. they think wrongly that some new politician is going to be able to change this very long-term consequence. societies where
9:19 pm
the reins of power are given to the people, at the end of the day people are not happy and an economy that does not work for them, what does it say about the leadership? i would say it is an exaggeration to say the economy does not work. we have pockets where people cannot find jobs. week, the median incomes in the united states rose 5% last year, the most since they started keeping track of the numbers. >> but in which category? is the middle person. the lower you go, the bottom 10% , the african-american community, they gained more than the people at the top, so we do have a narrowing of these differences that has just emerged over the last year. the news is better than the politicians make out. long-term, what are the
9:20 pm
challenges? , thisk about innovation sounds really great until they take people's jobs away, and in what kind of productivity is left for the humans? >> we are having major developments in robotics and artificial intelligence. it is evolutionary, not revolutionary. it is occurring in french areas of the economy. boys recognition, language translation, reading radiology reports, legal searches. there are areas where the computer is taking over, but they are small and happening slowly. you walk around in your dail life, i challenge you to find a robot. >> in asia, they are here. in japan, they are there. they are in service jobs. >> they are just starting, and not in the united states. when people are
9:21 pm
displaced. what can countries and governments do? >> the most important thing we need is education, a channel of apprenticeships to teach people new blue-collar skills. we have too many people going to college, 40% of college graduates are not able to find a job that requires a college education, and yet we have shortages of skilled blue-collar people. we have shortages of construction workers, truck drivers, regional airline pilots, all sorts of areas where it does not require a college education, so we have an imbalance. i greatly admire the german system of apprenticeships, which creates a track run by companies and governments where these blue-collar jobs and skills are created. >> thank you. back to you. next, forced to
9:22 pm
sell, australia cracking down on illegal property ownership by foreigners. that is on the way. ♪
9:23 pm
9:24 pm
rishaad: you are back with "trending business" and me, rishaad salamat. the austrian government has announced a force sale of 16 properties. its crackdown on foreign investment in housing. let's have a look at all this. paul allen is in sydney. tell us about this latest round of sales and why these properties are actually illegal. a combined value of $14 million. from the united kingdom, malaysia, china, and canada. the reason this has become as an
9:25 pm
issue is that it was noted that the foreign investment review board had not brought a prosecution for any legally purchased property for something like eight years. foreign buyers are free to buy into new property developments, properties,xisting they do need approval from a foreign investment review board. since 2013, there have now been 46 sales with a total value of $92 million, including most notably a large property on sydney's waterfront, which alone was worth $39 million. rishaad: ok, the thing is it seems like they're getting more forceful about this. are we likely to see more of this happening in the future? >> there are a number of investigations underway, 2200 cases have and referred to the
9:26 pm
tax office, which is now overseeing all of this, and there are 400 cases under active investigation right now. there are some pretty stiff penalties. 100 $35,000 and or three years in prison. companies have to sign a $665,000 as a maximum, and the forfeiture of capital gains from those properties to be sold before the tax department finds out about them. mentioned, the property market in austria has been very hot, so cracking down on foreign buyers like this is politically popular for the government. rishaad: thanks a lot for that. before we get to -- let me tell you what we have coming up. china's property market, is it still overheating or our local governments curbing having the desired effect? that will be in a few minutes. , hong kong and
9:27 pm
china getting underway. that's what we have for you. the open proper is three minutes away from now. ♪
9:28 pm
9:29 pm
♪ rishaad: a look at our top stories. banking stress and china rising to a record, further concerns over ballooning corporate debt, credit to gdp gap, 15 year high, exceeding all other countries according to bis. it signals elevated risks of banking strain. noble group shares enjoying a lift after the troubled commodities trader is seeking an investor and on track to raise $2 billion. it warned it could be another
9:30 pm
two years before it returns to profit. factors all causing shares to slump over the past 19 months. and 90% trout. samsung said they rushed production of the note seven to gain advantage over what was seen as an underwhelming new iphone sources decided to accelerate the launch of the new device, and that decision may have played a part in its battery problems, samsung sang it is working to replace the defective phones and doing so as quickly as possible. market action now, hong kong on stream. sydni joining us now as well after a few technical gremlins. >> yes, nice of the australians to join us. the asx has like result the glitches that prevented the normal opening time. we are seeing a flat session for
9:31 pm
the asx. online, of these stocks so we will watch that as trading continues and gets under way and for force. elsewhere, the greater china shanghaig kong up .6%, .25%, china property numbers for august out in the next couple of minutes. up by .5%.the kospi by .25lippines higher percent. we have a central bank decision from the philippines this week, also rbnz as well. we are expecting them to stand pat. the kiwi session up by .25%. straight times index flat. malaysia up by .10% we are getting back into the swing of things.
9:32 pm
one notable absence, japan closed today. central bank activity dominating the agenda this week as traders try to work out whether there is a possibility of more action or whether these warnings that central bank monetary policy is losing potency and whether that will way. -- will wigh. eigh. rishaad: china property prices dropping now. >> it is a healthy pick up in the property prices in china. say they are going up too much. it is a strong pickup. this is from the national bureau of statistics in beijing. they look at prices of 70 cities
9:33 pm
and price rises in august, prices rose in 64 cities. that compares to 51 in july. we have seen a couple months where prices have been ebbing lower. this is a big pickup. we have breakdowns for top-tier cities like aging and shanghai. beijing and august new home prices up three point 8% month on month, shanghai new home prices up 5.2% month on month. on a year by year basis here in 25 point 8%,es up and year on year prices in a year onp 37.8% on year basis. is a big pickup. 61 cities -- 64 cities reporting prices rising, but 51 in july, and of course it comes after
9:34 pm
first-tier cities like shanghai and shenzhen, but also other have put in place practices or policies to bring in some high prices in these sought after cities, for example increasing the down payment to get a mortgage to buy an apartment in one of these cities. also, restricting purchases to people who have lived in those cities for a certain number of years and can show their tax receipts. diversion property sector in china where third and fourth tier cities have a different problem. they have a surplus of apartments and pressure on those cities to sell those off, but in the top first and second tier cities, prices have risen and measures have been put into place, but it looks like it has a temporary despite because prices have picked up
9:35 pm
significantly. we heard from the pboc saying they were concerned about the wobble in the property market. interesting to see how policymakers now reacted to this pickup. thank you very much indeed. let's have a look with property stocks as a result. the broader mainland markets pushing higher as the market digests the positive when it in particular comes to major cities continuing to see price gains when it comes to the property market. by .4%, hong kong giving back earlier gains. if you look at the breakdown, it is strength if you look at the financial subsector and go into real estate, up .6% there. we are seeing those gains accelerated. if you want to look at
9:36 pm
particular stocks, these are the big layers when it comes to china. these household names, some of the largest residential property developers up. just quickly, take a look at the recovery in the offshore yuan. that is when the data came out. clearly we has in his recovery correlated between china's economy and this property market we are seeing to continue gain strength to strength. rishaad: absolutely. thanks a lot for that. tuesday.meeting could be ating they complete overhaul of stimulus. at all this,ing and they are suggesting a further rate cut into negative terrain looks highly unlikely. we are on boj watch.
9:37 pm
anything we can say with confidence? david: we are looking at two things, the yield curve and comparing the slope between before the previous meeting in late july and where it is right now. we are also looking at ford rates in the currency. let me start off with the yield curve. have a look at this bloomberg chart. ,ou have yield curve and green and yellow is how it looked before the last meeting in july. you are looking at a steeper yield curve. that is happening more globally as well. in japan's case, you now have -- it used to be up to 15 years. to 10 moment, only up years. in japan's case as well, and what is unique about the country, is that you see the blue box bottom left corner. that was the distortion that was created when the boj took rates
9:38 pm
or implemented negative interest rate policy. what we have seen and you compare the blue box and the green box above it is that the markets have started to price out that distortion. we are now looking at a normal upward sloping curve. that's the curve you get. we annotated that so our viewers can see it more clearly. this showsrds, what you is market expectations are to reflect this weakening when it comes to monetary policy. awayad: we are 45 minutes from a conversation with a person who says that they are putting pressure on governor kuroda to not cut rates further. a forwardoking at indicator saying that is unlikely to happen anyway. weeks backas two when the boj governor said there will be side effects to any
9:39 pm
policy they will implement. what the net effect to the seen,y -- what we have and a lot of japanese banks have said can you look at the side effects. they are not saying don't do it, but they are saying it will have a side effect if you take rates further below zero. wirpually use the function. there is also the mipr. rate on theford japanese yen. green circles indicate when meetings took place. ward rate onhe for the japanese yen. green circles indicate when meetings took place. you had the big surprise. they didn't do anything, which is why you see this bike there. long story short, markets are still expecting to lift to the extent that the boj might cut
9:40 pm
rates, but not as much as they were in july. were talking about the fed as well moving markets this week here it any chance of a rate hike this month, the idea has been ruled out. he gave his view on the fed and when it is likely to do anything. >> i don't think any time soon. somewhat personal opinion, but also somewhat based on the economics of the situation and the measures she is looking at. my own senses that later this year december, i don't see it happening in september or november. i think central banks all around the world are being very dovish. that is causing each one of them
9:41 pm
concern as to when they try to do something. i think those are some of the factors holding them back. >> should she be moving now in your own personal opinion? they are saying 25 basis points won't make no difference. >> i happen to agree with you. i think low rates this longer detrimental to economic growth, killing these savers around the world. pension funds can't get the returns they are looking for. there is no spread in the interest rates for people to make money. long-term, it is very problematic. we would love to see not only the fed but other central banks around the world look at monetary policy. monetary policy in and of itself will not generate the kind of economic growth we are all looking for. theou have been hurt by persistent low-grade environment. your money market funds, the
9:42 pm
fees, how would you make money, grow your earnings, in such a low rate environment? >> it is a real challenge. we said to ourselves internally on rates tot rely move, so we have been reengineering our company and business model to not count on interest rates or foreign exchange volatility or other different market factors. we are attacking the cost structure of the company. >> how much clarity do you have in the next 12-24 months and what are the risks you see? is what isnty causing a lot of volatility in financial markets to begin with. creatingt is brexit, another level of uncertainty, interest rates and when they move, still another level of uncertainty, the pace of technological change is an uncertainty. ashink what we have to do
9:43 pm
leaders for companies is embrace that uncertainty and help our helpyees, help our staff, the markets understand how we will overcome those challenges, what is our path forward. rishaad: right. ata moment, we will be back the forum in hong kong. this is bloomberg. ♪ we have joseph stiglitz. this is bloomberg. ♪
9:44 pm
9:45 pm
rishaad: right. the story just crossing the , oneberg, korean airlines of the largest shareholders in shipping, the board has failed to reach a resolution package forion won hanjin to get back on the road to profitability. just seeing if there's anything else crossing, not at the moment.
9:46 pm
as soon as we have more, we will bring it to you. policy decisions from the federal reserve, boj, all dominating headlines this week. let's get back to the form here in hong kong. you have nobel prize-winning economist joseph stiglitz. yeah, you know, joseph stiglitz and i are hanging out at the investor form. it is the 23rd year in hong kong. angie: you are just inundated with fans. you first wrote about this, the price of inequality. inequality really has been the theing force behind criticisms we are hearing about globalization. >> that's right. it is the driving force in this electoral campaign. it was part of the driving force in the brexit vote.
9:47 pm
for too long, the political leaders on both sides thought that they could ignore what was to unbelievably a majority of their citizens. as long as the bankers are happy and their friends were doing well, and as long as that gdp thoughtooked good, they they were serving their country and doing well. the reality is you can't just look at gdp. what is to look at happening to the lives of the majority of your citizens. labor force is coming back and employment is close to full employment, where does this anger come from then? >> two points. first, when they say we are at full employment, that is a myth.
9:48 pm
it is the way we collect our statistics. part-time working even though you want to work full-time, you are employed. where look at the numbers you include those who are involuntarily working part time. haveu look at those who been discouraged from even searching, because if you're not actively searching, even though you have search for four years, you are not in the labor force. the unemployment in the united states is much more like 9% to 12%. that is not good. are absolutely correct. other nations calculated differently. >> the fact that our labor force participation, the ratio of those employed for the working aged, is dismal. angie: you talked about that, the youth unemployment.
9:49 pm
these are the problems we are facing not only in the americas, but also europe and japan. it is the young people who are disengaged here. people whoe young can't get a job, and that jeopardizes their future. it is the 50-year-olds in the united states who lost her job in 2008 and have no prospects of getting another one. it is those who have jobs, but their wages have been stagnant. the real wages, wages adjusted for price increases for inflation, today in the united states is approximately the same as it was 60 years ago. against this backdrop, are central banks working? we have the boj and fed meeting this week. are they going to be effective? >> they are trying hard. the fact is there is a limit to what monetary policy can do.
9:50 pm
they said that from the 2008 crisis. unfortunately, fiscal policy and other policies have not been there, so they have been the only game in town. ,hat we are now seeing particularly in japan, is that it is not enough. they will have to do something else. angie: tpp, is that a solution? >> no. that was foolish in my judgment. tpp is not really a trade agreement. the made a big deal, largest trade agreement, 40% of global trade. in order to vote on it in the u.s. congress, they have to send it to international trade commission that does a calculation about the value. ther numbers were that effect of this trade agreement
9:51 pm
on growth in the united states was a sickly negligible. -- was basically negligible. really, really small. says iteliable study will probably be negative, not even positive. so tpp is not the answer. tpp is a corporate agreement written by corporations for corporations to ensure big pharma has an advantage over generics, the battle between two corporate sectors, to make sure it was more difficult to pass regulations to protect the safety,ent, to tech our and even the soundness of our economy. it is a corporate agreement to do what they could not do through the legislative process. angie: first, we talked about the price of inequality and it leads to the euro and a threat
9:52 pm
to the future of europe. more on that after the break. this is bloomberg. ♪
9:53 pm
9:54 pm
angie: welcome back. at the 23rdau annual investor form in hong kong. with me right now is nobel laureate joseph stiglitz and author of his latest book, the euro and a threat to the future of europe. the brexit debate raging a couple weeks ago. >> that's right. they were right. forecasts,utral people not on one side or the other of the debate, are predicting the crisis will come
9:55 pm
chance of greece being out of the euro by 2020. i think the euro is leading to absolutely dismal performance in europe. what makes me concerned is that it is undermining the european bring europeng to together, and the ability of problems address including the migration crisis. what would you have done differently? >> i think they put the cart before the horse, grand ambitions i agree with, a vision . in order to make a single currency work, you have to create certain institutions. you have to have a common deposit insurance, common way of ,esolving a banking crisis
9:56 pm
common supervision. you have to have common unemployment insurance so that gets a problem, the others come to help. they did not do any of that. angie: no. so what can they do to address the current debt issue? i think they have to press the reset button. in other words, there are two ways they can go. more europe or less europe. what they need to do economically is very clear, but there just isn't the political will to do that, and so the other alternative is to get another framework to go forward. angie: joseph stiglitz, great to talk with you. rishaad: right. that's tell you what we have coming up. we will be back with the investors form, talking about
9:57 pm
market sentiment ahead of the fed september rate coal. -- rate call. that's in about 12 minutes from now. this is bloomberg. ♪ . .
9:58 pm
9:59 pm
rishaad: it is monday. it is september 19. i'm rishaad salamat. this is "trending business." beijing and sydni -- home prices are coming back to the boiler in china, suggesting attempts to cool the market there have only had a limited effect. oil is on the rise amid speculation opec and russia will agree to curb production at the
10:00 pm
end of the month. and there are claims that the rushed to come out ahead of the new iphone. out to us on twitter. right, getting to the market action, there is a trading day underway. they are playing catch-up. here is heidi. >> a lot of markets coming online after being on holiday friday. japan closed with the respect for the elderly day. a major market participant momentum.m the day's very little else is going on inside central banks. a plethora of other central bank decisions coming out, the central bank of news they are all expected
10:01 pm
to come out with their monetary policy -- new zealand, they are all expected to come out with a monetary policy decisions by wednesday. good momentum going on given that we have had that rebound in oil off the lows on friday driving risk appetite again in the agent sessions. asian sessions. certainly, it seems like these markets will not cool down despite the best efforts of the government. has had a pretty shaky start. sydney's falling into negative territory. lower byppines also 2/10 of 1% and the market open in jakarta, we are seeing gains just shy of half a percent there. take a look at what we are watching in the korean session. interesting movers.
10:02 pm
very much off the session highs. very volatile early session. korean air, which is the majority stakeholder in this company is facing bankruptcy proceedings. the board did meet and they have failed to come up with a resolution with regard to this 54 billion dollar lifeline, essentially, cash, but for some reason that stock is actually recovering a little at the moment. the other major headline in the korean session. this is seeing some downside, confirming the chairman will be summoned by south korean prosecutors in relation to the ongoing corruption bribery allegations that have plagued to the money. it laid the ipo. that is meant to be happening tomorrow. some pressure coming really stocks of that
10:03 pm
conglomerate, i should say. another thing we are seeing in cosmetics session, company is saying very, very strong gains. up close to 3%. we had one report out from kgb kpb securities and a last checked of property developers given that we had that better than expected property report from beijing. china also bucking the trend. gains of over they developed these luxury, i guess properties, seeing the upside of that, up 9/10 of 1%. mainland markets are really edging higher. rish? rishaad: thank you very much, haidi.
10:04 pm
jump 33% of home sales last month from a year ago in china. tom mackenzie has been following thisyear it if you look at annualized, 62.4% shanghai house prices on the way up. that is month on month -- that is -- well, that's more than a bubble. >> it is pretty staggering, isn't it? if you look across the board at the statistics euro here in beijing, of the 70, 64 saw price rises, that compares 251 and july. in july 16 cities saw prices fall. , just for cities saw prices fall. if you point to the really red-hot markets like beijing and shanghai, as you say, shanghai on a month-to-month basis, --ces up in august 5 .4
10:05 pm
5.42%. 2.8%.g, if you break it down, the best performances of some of the cities are you have seen policymakers put in place policies to try to cool those property figures -- for example, making it harder to put down -- you have to put down the deposit. theseg about cities like -- the best performing in terms of property prices despite those curves and then on the other conundrum, the third and fourth tier citizens where there is -- the cities where there is a surplus of apartments. prices remained flat if not falling. they are all seeing softer so thisn august,
10:06 pm
conundrum continues. and we have heard, of course, from the pboc, one of their chief economists that they will take action on bubbly property markets. whaty, the focus is on action that is going to be. the tailored approach that they does notould work appear to be working. this may be good news for china's developers in the .hort-term all likely to benefit from this in the short-term. the real estate market is so central. but longer term, we know that there are concerns about bubbles, but the focus is on healthy makers in any action to correct this.
10:07 pm
rishaad: staying with china -- a highlighted risk of ballooning corporate death. our finance editor is meeting with me now. ok, what is it telling us here first of all? >> this is the credit to gdp ratio and this is focusing our that credit is extending much faster in china. what they are flagging with this indicator is that credit growth may have been excessive and there is always a risk. history tells us what you end up with is a bust. that is the thing. people keep warning of a bust in china. it's always imminent. it never seems to happen.
10:08 pm
>> people saying too much credit is going into this economy and the inevitable result will be huge, bad loans and some kind of slowdown, whether or not that is eminent, all of the analysts on the sidelines say it is much higher, but i think a minority would say the crisis is going to happen shortly. could be bailed out, these banks. that's the thing, at the end of the day. they warn, is it really appropriate for china given the control that the government has over the banking system, the financial resources that china has and that it does not have the kind of overseas bid that is a terrible weakness. right, let's look at
10:09 pm
other stores. running high ahead of the general assembly meeting. newave a look at that in york. and how are they dealing with saturday fell bomb blast? to comb thecontinue streets of manhattan as the search for those responsible for the cluster bomb incidents of five. tote troopers have helped ramp up security after 29 people were injured in saturday's last. to the increased presence comes ahead of the united nations general assembly. new york mayor bill de blasio said that new york city would have an even greater police presence them was initially arranged for the event. and governor andrew cuomo said intentional, but so far there is no sign of a foreign terrorist connection.
10:10 pm
another potential explosive device was found nearby and a pipe bomb blew up in new jersey. police say there are no obvious links between the three incidents. struggling to find a buyer and expected to shortlist prospects for next month. the japanese firm has put itself up for sale as it tries to deal with the auto industry's biggest ever safety recall. kkr isvate equity firm said to be among suitors, along with the carlyle group. takata shares have slumped over the past few months as they face potentially billions in recall costs. takata is currently valued at just over $330 million. and we are hearing samsung's latest woes could be the result of putting speed first. it's production of the note 7
10:11 pm
was being rushed to take advantage of what was being seen as a rather underwhelming new iphone. the company decided to accelerate the launch of its new offering and that may have play to part in its battery problems. the plan appears to have backfired for samsung, which is had to recall and replace all s shift son note 7' far. the total value of selling shares in asml came out to just million, so very close to the $1 billion that is being seen as the total bill for the note 7 recall. rish? rishaad: we will be asking the taiwan stock exchange president about overseas interest. but still ahead -- we have to get back to our next guest who expects the fed do remain in a
10:12 pm
holding pattern for the rest of the year, and indeed, we will ask him more. that is next. ♪
10:13 pm
10:14 pm
rishaad: we have central banks in focus. of course we have the fed, the bank of japan, both of them having meetings. our next guest has a difference of opinion about what the boj may choose to do is unprecedented. things were joining us. well, the boj is probably one of the more them were once, when of the ones were something is likely to happen. now, what is going on with the thinking on the board there right now? think in terms of the bank of japan, i think the board is probably quite divided,
10:15 pm
but the sense i got last week is nobody is expecting a big decision by the boj this week. they are expecting them to use the excuse that they are waiting on the fed. if they don't do anything this week, sooner or later, they have to announce something, the cause -- because expectations are falling. that is a problem for the boj head. the embarrassing fact for him is the decline in inflation expectations accelerated when he announced the negative interest rate policy at the end of january. you callchristopher, kamikazei kuroda -- kuroda. why is that the case? chris: the policies under his
10:16 pm
regime about the precise opposite effect of what was intended. in my view, qe and negative rates are deflationary, not reflation harry. to give you an example, negative rates in the banking system, reducing margins, they encourage the sabres to save more and encourage people to take -- out of the banking system, as evidenced by the rise in sales in japan this year. they have caused the decline further. so, if these policies continue, they will end up blowing up the whole system. the irony is though actually be situation is not as bad as many people think. inflation, in my view, was in the process of ending before he started adopting his monetary policies. the labor market in japan continues to tighten. the aggregate concentration for
10:17 pm
people in the economy has grown and given the rising labor force purchase of patient rates that go into the labor force. there is also an interesting boj summerh paper over the that has a lot of data that suggests the japanese economy is bigger than estimated. the current estimates for income whereas using sampling, they have taken data from the tax office. my view is that deflation is not as bad as he thinks. he issk of the policies adopting made the situation worse, not better. so, christopher, do you think shinzo abe realizes some of what you are suggesting, if it is indeed true?
10:18 pm
chris: my guess is that mr. abe roda is doing. ku because he announced his intention to get the stock market up. the opposite happened. he yen went up, yields flattened like a pancake. a lot of elderly sabres in japan did not like the negative rate announcement, and most important i think the banking and insurance sectors were furious. i am not expecting him, however is ending it.y he that would be a loss of face. i just don't think he will do more negative rates. the next form will either go towards the monetization of infrastructure stimulus, as recommended in a paper earlier
10:19 pm
this year by former fed chairman mr. bernanke, and targeting yields further up the yield curve where the boj will guarantee yields at a certain level. that, to me, is where policy is likely to lead. both of those policies, in my view, will have the effect of steepening the yield curve. own stock that will do better with the yield curve. christopher, with negative yields in japan and the euro area, how much pressure does that put on the federal reserve? despite this debate which is raging whether they should go now or december or maybe next year?
10:20 pm
chris: my sense is the fed will not raise rates. clear the fed is internally divided. it is also pretty clear that if the chairman were running the fed he would have already raised rates. running theellen is fed, or official line is it is all data dependent. if it is data dependent, my judgment is the data is not sufficiently strong enough for mrs. yellen to raise rates. i think the key is that the pressures have not accelerated in the ways that economists are expecting. but if i'm wrong -- yes? rishaad: christopher, i think that is all we have time for, i'm afraid. but it has been good at talking to you, as ever. the global strategist on the bank of japan.
10:21 pm
always a pleasure having you on the program. in a moment, the benefits of bribes it. of course -- the benefits of brexit. that's next. ♪
10:22 pm
10:23 pm
rishaad: the mayor of london is trying to ease concerns of bre tours north america. he says that london will always be open for business despite the decision to leave the european union. >> my point is very simple. we have to use brexit as an opportunity. restructurety to our relationship, but also changes as well. shares are nearing
10:24 pm
all time highs, but can the momentum last? of course, that is on the heels of britain's decision to leave the european union. we caught up with their chief executive at the singapore summit. wpp, which has 86% of its business outside the u.k. instantly does not win in dollar terms, and in dollar terms, it's a bit better. about 22ng terms -- is billion -- >> you benefited. i'm loving the country benefited when i was a remainder -- little good it did me. it is too late to tell. >> can recession be avoided? martin: the rank of england has moved very smartly. mark carney has been criticized for moving it very smartly. we saw a little softening in april, may, june in front of the vote.
10:25 pm
there may have been other reasons. july was a recovery. august was ok, not quite as strong as july in britain, but ok, certainly a little bit better than we saw april 19. i think what is going to be happening, there will be a drip, drip. >> that is one uncertainty. another is the american election. what if trump wins? martin: is very difficult to figure out what happens with trump because you do not know what he stands for. look at the other alternative -- hillary wins -- i still think she will, although i think it will be tighter, obviously than people thought -- hillary moved to the left in order to counter the support in popularity of bernie sanders, particularly to get the nomination. the question is, will hillary move back to the center rather
10:26 pm
like her husband did in his administration, even more center or centerleft? thehe answer to question is uncertainties are going to be very significant, and i would elected there is will be rocky times for the dollar. at the economic club of new york he said he would lose corporate -- lower corporate taxation. he says economic growth will be, what? 3.5%. i think he went as far as to say he thinks it will be more than that. and everything will be terrific, right? if you believe that, you know, maybe in the medium to longer term, it will be better. we will have to see. you can't come to any judgment. ceo martinat was wpp sorrell talking to our very own haslinda amin. up next, we will look ahead to
10:27 pm
one of this week's big policy meetings. ♪
10:28 pm
hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business.
10:29 pm
you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. ♪ rishaad: the thames to cool china's hot property markets having limited impact, prices rising and all but six of the cities monitored. the value rising at the fastest 33% year on year basis. a warning indicator for banking stressant china raises
10:30 pm
concerns over ballooning corporate debt. at a 15 year gap high at 30%, exceeding all other nations, that according to the bis. noble group shares enjoying a lift in singapore today on the a statement that it is seeking an investor and attempting to raise $2 billion. it could be another two years before it returns to profit. the commodities route, a second-quarter loss, shares do that. dropping by 90% over the past 19 months. in's get to the lunch break tokyo -- we don't have tokyo trading today. my mistake. haidi.ere else, here is
10:31 pm
reduced by aims and momentum on the account of japan on holiday. seene shaping up to nice gains across the region. fed, ak of japan, the plethora of other central banks from new zealand to the philippines to indonesia, all due out with monetary policy decisions this week. a lot of caution, but we have t up buying.g -- pen strength ing some particular when it comes to h shares, gaining the most in two weeks. power companies coming off this back of gains we saw, the fromery for oil fo
10:32 pm
friday. bank of china rounding out the top three there. elsewhere, good gains when it comes to the kospi. taiwan outperforming the broader suppliers, stocks doing well today. higher, a little bit better than expected china for august.ber numbers the ramp-up has no end in sight despite the efforts of the government. buying coming through from jakarta as well, but the one lagging market is sydney. start, technical issues, the asx never found its footing.
10:33 pm
the aussie dollar leading some commodities and oil-related currencies higher, up by .5% at the moment. weakness when it comes to the althoughuan, al that has come off session lows. this is what is driving risk appl appetite. optimismtting some after comments from the opec secretary-general saying that the meeting in algiers in about eight days is an informal gathering, but he is optimistic some consensus might be able to be reached, yielding a formal meeting. that as markets are are hoping for some sort of agreement when it comes to a supply cap.
10:34 pm
have worries about oversupply added by the likes of libya and nigeria. quickly, the boj and the fed top of mind. a slightly stronger yen at this point, up by .25% at that 102.05 handle. not quite as clear cut when it comes to that central-bank in terms of what the markets are pricing in, but that is what we are seeing. japan on holiday today, the yen still trading. beginning a boj closely watched policy meeting on tuesday. observers can't agree as to what they may do. some predicting a complete overhaul of stimulus. analysis indicating a further rate cut is highly unlikely. david will be an tokyo when the decision is out. is there anything we can say with confidence, david?
10:35 pm
are so many things to look at when it comes to the boj. you have to throw in this policy review taking place. the results will be available on wednesday. on the question, will they take rates further below zero. we are first looking at the yield curve in japan. look at this chart. it compares the yield curve now and the yield curve x-men. -- curve back of then he for the the prior meeting in july. which isobvious of that it is steeper, and higher as well. belowe looking at yields zero. it used to be up until 15 years, now it is only 10, but that seems to be the case anyway. in japan's case, when you look at this right here, the blue circle, follow my mouse, that
10:36 pm
was the distortion created when -- boj to great and to took rates in tune the negative space. in other words, and plying interest rate cuts up until six or seven years -- implying interest rate cuts up until six or seven years. what we have seen recently is a more normalized curve. it tells us that the market is starting to price out this distortion that was created when they introduce negative interest rates in january, which some people basically saying they will not do it this time around. rishaad: there is another thought indicator showing cuts are very unlikely. david: right. it is the overnight forward rate on the yen. have a look at this.
10:37 pm
there we go. what this shows you is you have different interest rates, one rate here, but the different circles indicate different meetings. , the steve drop, is when they surprised everyone. look at the red one in blue one. back in july, expectations were hurdlefor the boj, the was higher, .2% was what the market was implying the boj would take rates to. that is scale back slightly at the moment, .16%. in simple english what this means is that while the market still expects the boj to take rates down at some point, it is not as much it was back then in july when they disappointed. .his is the function mipr you get that across central
10:38 pm
banks around the world. japan is right here. you're seeing rates at about the same level. much forthank you so that. right, the singapore listed commodity trader noble is sharply up in the singapore session, 4.7%, although it is a very low base. the company announced it is still seeking a strategic investor and the return to profit maybe two years away. let's get over to haslinda amin. noble is looking for this new capital, something like $2 billion. haslinda: that's right. a smaller looks to be trader with fewer assets, it is searching for a new strategic investor, capital, finances are not where they should be despite plans to raise $2 billion on track. shares,ut jobs, sold assets, even holding back cash
10:39 pm
from parts of businesses which are profitable, so, yes, the search for a strategic partner continues, but the founder of noble says it has to be at the right time and it has to be the right candidate. it has been difficult for the company the last one and a half years. havea look at how profits been a nightmare. of itslost almost 90% market value, lost its investment grade rating. nova, whathey say is may be the company's biggest challenge. year, nobley next has to refinance millions and credit lines, net debt, increase $4 billion at the end of q2 from 3.7 at the end of the quarter are on so all eyes whether noble can do it or not. we have seen the commodities side of things improve her and
10:40 pm
recover. you expect companies like noble to benefit from that. rishaad: but it hasn't happened. haslinda: the opposite is true. declinedares have because of concerns. take a look at this chart. spiraled alone, it down almost 90%. at one point, reaching the lowest level since 2003. having said that, all six analysts we talked to have a buy or hold rating on the company. nobles says it is on track to reposition itself as an asset light company with high returning businesses even though it has been a tumultuous 18 months. as the company sells parts of its business and shuts down others, it shrunk from $10.2 billion to a shadow of its former self with the current market value of $1.5 billion.
10:41 pm
rishaad: thank you a lot for that. haslinda amin in singapore. some other stories, president putin hailing the victory of his united russia party with p olls giving him half. his popularity remains high after a surge of patriotism. sanctionsming despite helping to push the economy into recession. turnout was 40%, down from 60% five years ago. postal bank of china on track to become the biggest share sale of the year this year. institutional sales attracted huge interests. more than 12.4 billion shares have been set aside for international institutions. they are five times oversubscribed.
10:42 pm
80% of shares are set aside for institutions. the head of the reserve bank of intralia, philip lowe joined 1980. deputy governor under glen seasons since 2012. -- glenn stevens since 2012. he is concentrating on asset bubbles and financial imbalances. staying with australia, the government has announced the sale of another 16 properties purchased illegally by foreign millionthe total to $92 worth of property and its crackdown on foreign investment in housing. let's have a closer look at this. paul allen is in sydney. those 16 properties you mentioned are worth between them $14 million, so a variety of properties at stake here between $200,000 and $2 million.
10:43 pm
the buyers came from four different countries, the u.k., china, malaysia, and canada. the rules in australia are that foreign buyers can buy into new developments, but foreign buyers who want to buy existing properties need foreign investment review board permission. it came to light a few years ago not wrought ahad single case for about eight years. since then, they have become more proactive and there have been 46 sales since this crack down, forced sales but it more than $90 million, the highest profile of which was a sydney waterfront property were $39 million. there are another 400 cases under investigation. in a hot property market, cracking down on foreign buyers is politically populist as far as the government is concerned. rishaad: thank you very much indeed. paul allen in sydney. we have to take a break.
10:44 pm
was one ofark market the best performers in the asia-pacific in the first eight months of this year, but it is the worst this month. what went wrong? what happened? we will ask the president of that stock exchange next. ♪
10:45 pm
10:46 pm
rishaad: this is "trending business". ihe tight index down 5% -- tha index down 5%. thank you for joining us. what has changed sentiment in your view and is it a blip more than anything else? >> actually, our fundamental factors have not changed.
10:47 pm
gdp growth remains that 3.2%. of our listede companies remain good at 12% growth this year. ,e are seeing the market possibly because of a technical correction. rishaad: what i want to get a handle on here is do you think the market went up too far, too fast? are they supportive of these levels when it comes to the benchmark at least? ratio evaluation, the p/e is about 16 times compared to what the offer is, 12% growth of earnings, and also we have seen a lot of companies have had a lot of potential growth. we may not be the cheapest, but i believe we offer good for you to customers. 3%.dividend yield is
10:48 pm
the earnings growth is 12%. we have the thing is been looking at what is going on with the american economy, how emerging-market exports to the united states are weakening quite rapidly. does this concern you about ford guidance from these companies looking ahead? company that lists on our exchange, one third, 192 companies, have a lot of diversification of business. that amounts to 100% of our revenue, 45% coming from foreign distances. the tile and economy has been growing at 3.2% -- thai economy has been growing 3.2%. that is why we have seen companies have earned quite high
10:49 pm
earnings growth this year. companies the listed have produced quite good things, and in terms of the tile and economics,- thailand but compared to other countries, declining, buthe we have about -5%. rishaad: when we look at this, , exports out of thailand, but what about foreigners in the market itself? , andre talking a year ago one of your stated elements was to try to get more foreigners involved in the stock exchange. how much has the grown in the timeframe? >> what we are seeing is to issues. net buys.eign
10:50 pm
this year, we have $4 billion of net lies compared to the last three years. what we are seeing is that participation in trading has been growing and continuing to be net buys. in terms of the products, the products that list on the change are mostly domestic listed companies. we are open for the foreign listing. we are not open only for the stock listings. we are also open for the foreign assets like investment trusts in real estate. we offer that foreign assets can list on our exchange. so far, we have been doing a lot of marketing to our neighboring countries or some other countries to list on the exchange. we are seeing -- but we have to
10:51 pm
admit because of the declining of the economy's in every country, the valuations of those sayers -- but what i could is that by next year, we would see all the foreign assets could to start to list on the thai exchange. rishaad: we will be talking to you as well. the president of the stock exchange of thailand. the united states is in the middle of its biggest ever wargames in the pacific. a special report from the skies above warm -- guam. ♪
10:52 pm
10:53 pm
rishaad: "trending business". i am rishaad salamat. the pivot to asia prompting conflict with china. china and russia holding john wargames that coincide with the biggest ever u.s. maritime drills in the pacific. we now report from guam. time,is simulated more the ta tarmac a traffic jam. we know who has the right away here.
10:54 pm
this is old-school military tech. this one was built in 1962, but is still a vital part of u.s. air superiority. is asia, where china strengthening its capabilities, north korea's sending nuclear weapons, extending flight and flight time is critical. >> without refueling, their time would be cut in half, spending half as much time in the air. they go and dog fight, they burn the feel quicker and we are allow them to continue to fight, allowing them to extend training time and maximize the time in the air. >> you have to go fill up some birds right now. >> yes, i do. >> it is cramped quarters. >> here she comes. the f-15. thehey call it parking as supersonic jet crawls up to the
10:55 pm
combat 360 miles per hour, that is practically stall speed for these birds, and they need to keep it steady, only 10 feet separate the two aircraft flying 25,000 feet over the pacific. if i had some weather and start of bounds, i have to focus with the receiver. our biggest threat is ourselves because of situational awareness and making sure we maintain that positive separation from the other tankers, the other receivers, and our receiver. >> i hope this never becomes routine for you. get their feel fast of 3000 pounds per minute. they latch on between 1-5 minutes before rejoining dogfights. ofoffloaded 88,000 pounds feel this day, but we got low on gas and had to skip a scheduled rendezvous with a b-1 bomber and head home. b-1id in fact intercept a
10:56 pm
in a traffic jam. ♪ that is it for this edition of "trending business". "asia edge"is coming up. get back to the investors forum. vice president of berkshire hathaway energy. -- we will speak to the vice president of berkshire hathaway energy. elsewhere, gains for the hong kong market up two thirds of 1%. the asx showing some weakness there. ♪
10:57 pm
10:58 pm
10:59 pm
♪ >> it is in the middle of the asian trading day. the hang seng coming back on firmer footing after the mid-autumn festival holiday. shares up .7%. we are live, and this is "asia edge". ♪ yvonne: i am yvonne man. home prices back to the boil in china, suggesting attempts to cool the market has had limited effect. singapore listed trader noble group looking for investment,
11:00 pm
but admits i returned to profit could be two years away. gold climbs from a two week low amid speculation the fed will indicate a rate hike is coming before the end of the year. also, the u.s. conducting its biggest ever wargames in the pacific. we have a special report. haidi: watching the markets on the central bank bonanza week. boj, a plethora of other banks due out with monetary policy decisions this week. this is the only story in town. you would expect some caution, particularly japanese markets. they are off on holidays today. we are shaping up to see some pretty good gains. bye a look at taiwan, up 2.4%. apple sie


info Stream Only

Uploaded by TV Archive on