tv Trending Business Bloomberg September 21, 2016 9:00pm-10:01pm EDT
♪ is thursday, the 22nd of september. this is "trending business". ♪ we will be live in sydney, singapore, and beijing this hour. first, asia-pacific markets extending after the fed lowers the outlook for rate hikes. the dollar had its worst day in two weeks. hanjin soaring, but the company may be beyond saving.
policymakersold that -- you can follow me on twitter. don't forget to include #trendingbusiness. i divided federal reserve unshaved, but signaling a rate likely before the end of the year. straighte fed's sixth hold in the biggest sign yet. three out of 12 or four a quarter present policy increase. janet yellen downplayed the differences in opinions. >> we are trying to understand some difficult issues. there is less disagreement among participants in the committee's then you might think of to speeches and commentary.
a nice rally shaping up, chinese and hong kong underway in 30 minutes. singapore, taiwan, and malaysia coming online. let's have a look at how things are shaping up this morning. sherri: positive sentiment filtering through the markets. stocks, excluding japan, rowling for six consecutive sessions. given how surprising global equities have surged after the fed delayed rate hikes. the kospi up more than 1%. the sx gaining .8% for a third consecutive session. despiteand gaining .5% the fact that the rbnz left the rate unchanged. does this mean there are more rate cuts to come in the near future? .5%, the jobless
rate of 3.9 5%, slightly below estimates. of moves and all markets across asia because the fed is delaying goes rate hikes and delaying expectations of a rate hike, and how that is playing into the dollar. the dollar has taken a hit. itss now on course for worst annual performance and four years, and does the dollar loses ground, emerging-market currencies gaining. the south korean won up 1.5%. the japanese yen gaining for a fourth consecutive session. take a look at futures in the chinese market. futures unchanged in china. not a lot of movement up, .5%. h-shares losing ground a little bit. i will be back in half an hour with the chinese market open. you have the dollar
undoing all the good work of the boj yesterday. rba governor is taking his first public engagement this morning, speaking to the parliamentary economic committee. paul allen has been watching these proceedings. what did he have to say? inflation has been a major focus of this testimony. it is weak inflation that was the result of the two cuts to the cash right so far this year, taking it to that record low 1.5%. targetg to the inflation between 2% and 3%, currently inflation is well below that. ailip lowe said he is proponent of flexible targeting, not keeping it in that tight, narrow range. here is what he had to say. >> we have not been inflation
nutters. we have had a balanced perspective, recognizing some variability is inevitable and appropriate. the rba is not a bunch of inflation nutters. that is reassuring. they had some other things to say, particularly china, not sing a major interruption to growth there, but some concern over the quality of debt. if we look at the australian dollars since he started speaking, it is back to where it was really. he said a lower exchange rate would be helpful or australia, but in terms of broader policy options, even though the cash rate is 1.5 percent, he said the rba is not running out of policy options and we are unlikely to see unconventional measures. that testimony due to run for another 90 minutes yet. we appreciate you taking a look at that for us. paul allen in sydney.
let's look at some other stories. no surprise from the rbnz either. juliette: no, preparing the markets for further rate cuts despite leaving the cash rate on hold at 2%. governor graham willis says easing will be needed to boost inflation in new zealand even as the economy grows at one of the fastest paces in the developed world. record low borrowing costs have fueled a housing boom with growth rising 3.6% to june. the strong kiwi is keeping inflation at the bottom end of the rbnz target band. they key we fell flatly sense they announced they would leave a rates on hold, but has climbed steadily since january. speaking of the stubbornly high fronterra is patting
itself on the back with an earnings climb of 65%. revenue however was down by 9%. terra has cut jobs and sold assets to strengthen its balance sheet. shares down by .2% in wellington. the cheek executive told daybreak asia that he is proud of the overall numbers. >> looking at our results, looking back to 2016, extremely strong results in quite a difficult market environment with a geopolitical issues, lower commodity prices across the board, strong kiwi dollar, which is not in our favor, so really outstanding performance. juliette: china's dalian wanda
looks to team up with sony on movie projects. havereement could cooperation in other areas like marketing. wanda is controlled by wang jianlin and the world's largest movie theater owner and actively expanding its entertainment business this year. the deal would be a boost for sony, allowing it greater access to the lucrative china market. japan closed today, but sony shares up by 1.5% on wednesday. haidi: thank you. hanjin shares surging in the session today. 22% after its largest shareholder korean air on a loan of $50 million. how exactly does this funding help hanjin?
>> well, it will help because that money will be used to help unload cargo from ships that are stranded in various parts of the world right now. facesggest problem hanjin is that a lot of cargo is not able to unload because they don't have the money to pay the port operators. so this will help hanjin speed up some of the cargo that is stock imports around the world. this going to resolve the company's troubles that? -- troubles though? help the would just immediate problem of cargo unloading. the court told us earlier this week that those vessels that are stranded, most of them are actually chartered vessels, and to court had urged hanjin
return those vessels. as long as those vessels are within the operating area, it is costing them $2 million per day if those vessels are not return, so it will help to extinguish the immediate fire that they are facing, but whether we talk about the survival of the company, that is another matter. that's right. huge challenges ahead for hanjin despite today's rally. still ahead on "trending tourists, a chinese packing more than the essentials. why questions are being raised over the country's capital outflows. we will hear from the ceo and euronext.rom
haidi: a quick check of the latest headlines. stepping up its presence in the auto sector, looking for stakes in maclaren and an electric motorbike start up in san francisco. we are told that apple is more likely to make a large investment in maclaren rather than buy it outright. would likely release an autonomous car by 2020. the introduction of amazon's new photo printer service sent shutterfly falling 14%. it plans card and calendar option soon. that announcement triggering shutterfly's a good single day decline since 2000.
china's biggest coproducer set to raise output in a government effort coordinate production and stabilize prices. may increased output by 3 million metric tons this month. l is on the rebound with consumers concerned over the sharp increase in prices. uk's decision three months ago to leave the european union sparked a volatility of days in capital markets. things have settled down since then, but questions remain and a lot of uncertainty. largest of europe's financial groups says brexit makes your more relevant and grand scheme of things. joining me now is euronext's chairman and ceo. thank you for coming on. you think despite volatility and could turn theis
brexit situation into an advantage for european markets. brexit has fundamentally changed the big picture. we are in a situation where political risks and volatilities are on the side of the uk. europek-reward ratio for , continental europe in particular, is improving, so we are preserving a reallocation of assets, which exactly as you have said is making continental europe and the eurozone more relevant. , 71%e the brexit decision of the gdp of the european union was produced within the eurozone. 86 percent of the gdp of the european union is produced when the eurozone. becomingone is extremely relevant and one of the reasons here in hong kong in shenzhen is to entertain
discussions with various market participants. we are waiting their options about what is going forward the right gateway for the european market, continental european market, in a world where post-brexit there is more uncertainty about the future relationships between the uk and continental europe. uncertain whether it is the right time to start talks because it's not clear that the uk has a timeline. and german leaders jockeying for positions, saying euro-denominated assets should move to frankfurt or paris. >> the discussions will start whenever the uk government will initiate those discussions. will be a combination of forces, business forces and other forces.
in terms of the relationships between the uk and the rest of thate, what is clear is wherever you are on the planet today, you have to weigh your options carefully, because there are too many people who thought brexit would never happen. life going on as it was before and a post-brexit environment, any organization that wants to do business with the 450 million people with a high living standards and continental europe with a strong commercial companies in europe with a pool of savings, anybody who wants to touch that market and continue doing business with that market, has to carefully decide and weigh the options.
haidi: it is paris the best place in terms of maintaining that investor sentiment and investor trust and stability? believe we don't need one single financial center in europe. on the occasion of brexit, we can reactivate have very strong traditional financial centers in europe like amsterdam, paris in particular, frankfurt has some real strengths for sure. amsterdam are very strong international financial centers that can be the hope for many operations in the financial industry across segments, but one thing is clear, the pre-brexit world was a world where most of the commercial companies were on the continent, and most of the bankers were in london. most of the savings were generated from the continent. most of the asset managers were in monday -- in london.
continent,s in the and 30% to 40% in trading is still in london. this is all fine and a world financing is wall street, movie industry is in hollywood, cattle industry in chicago, that is fine. has decided unilaterally to leave the common project, to leave the common regulatory space, to take control, then we are in a completely different position. theme you seem to be supporting, diversification versus consolidation, leads me to my next question. you have been an opponent of the rse tire.bo his is a two big to fail type of situation? voices and many
stakeholders have expressed doubt and concerns about it, there are main areas of concern that explain why various regulators and supervisor authorities in brussels in germany and the uk has welker reviewing the deal. one is the strong risk of anti-competitive behavior when large company is consolidated. the governor of the french central bank, a member of the made public their concerns and many other people among the central banks have concerns in terms of what it means to get together a very large clearing houses, which can mean to a banking merger type of situation. haidi: thank you for coming on in talking about the various issues. onare announcing -- waiting
diversification helps every portfolio, and diversification helps singapore. australia has a strong exposure to global equity, and those are strategies which have not been doing too well this year. singapore has a much more diversified landscape and ecosystem of hedge funds. india's stock markets have done well this year, up 9%. , which are funds strong long equity bias, up 3.3% according to data provided this year. where we areegy seeing hedge funds in singapore is global macro, and this strategy has done pretty well this year, up 1.6%. us some perspective. what does the picture like if we look back a bit further? >> long term, the picture looks
completely different. by the way, singapore's hedge ,unds up compared to hong kong -2.3% this year. long-term, completely reversed, hong kong hedge funds since the 300 79%, versus singapore, up 253%, so singapore has performed much worse compared to hong kong. when reason is the long-term success story of china equity long-short. and smaller hedge funds, a lot of them start up, but after a while they realize they don't do well and shut down after a short time, so that is the reason while the long-term that singapore has not done as well as hong kong. haidi: a lot of shops have had a hard time of it lately, but what
is the outlook for asian hedge funds? not thenst months have good for asian hedge funds. we have seen the aum declined by 10%. that is a bleak figure. on the other hand, many experts diversification might help the hedge funds in the coming months. singaporeying with and the lion city has one another trophy, defending his title as ex-pats favorite place to live and work, taking the top spot for the second year. switzerlande first, winning and economic turns. new zealand took the honors when it comes to the experience category with australia rounding out the top 10. more than 27,000 ex-pats took part in the worldwide poll. up next, china's biggest coal producer begins to raise
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♪ the top stories this hour. the new rba governor philip lowe has made his first statement since taking over. he expects inflation to remain low, but will pick up as the labor market strengthens. he says it is in the public's best interest to deliver inflation of 2% or 3%. he also insisted policymakers aren't "inflation nutters." surging 25% after korean
air agreed to provide emergency funds. offering 50is million dollars immediately, although the government estimates the company will need 10 times that much. receivership court says hanjin may be beyond rescue. fonterra full-year earnings jumping as lower prices boosted income from cheese and baby pharma. 613 million dollars net income, earnings per share within estimates, $.51. the world's largest dairy producer has cut jobs and sold assets to improve efficiency and strengthen its balance sheet. a look at the to markets open when it comes to shanghai and hong kong. all markets across asia in the green right now. the shanghai composite gaining for a second consecutive day, a 5% at the open.
hang seng gaining almost 1%. asian stocks excluding japan on holiday now rallying for six consecutive days. the kospi gaining all week, 1%. asx 200 up .8%. stocks and is even a .5% after the rbnz left rates unchanged but said rate cuts could come later on. taiwan up .2%, the jobless rate at 3.95%, slightly below estimates. take a look at the chinese offshore yuan. it rose for the first time in four days, currently in change, but trading at this level. the fed pushed back expectations of a rate hike. plunging, the worst annual performance and almost four years. take a look at these tiny stocks. china railways is gaining more
than 2%. a plan to invest nearly $2 billion on an expressway project. petro china also gaining 1.8% after it was raised to outperform. ,ake a look at oil prices searching for a fifth consecutive session, up 1%. at $45.79. we have data out of the u.s. showing that inventories fell to their lowest since february. more than 6 million barrels last week. that's right. that rally continues ahead of the opec meeting. let's get over to china. nevermind china's overcapacity when it comes to coal mining, the largest producer is
set to increase production. what is going on. has been cutting capacity and: steele, but what has been happening is they cut the capacity and output, prices have gone up much more than expected. of coal, thena world's biggest consumer and producer, so what they do affects price globally, is down 10% the shoe. the chinese president has been telling miners to lower their output. they cut capacity through august this year equivalent to the output of columbia and south africa. it has driven up prices. cashelbring up the new -- newcastle benchmark, up 44% after falling for five straight years to the lowest level since 2008. when you reduce the capacity of output from china, it raises the prices.
spot prices for metallurgical cold to make steel have doubled since july, over 200 metric tons. people close to the situation in china say 14 chinese miners owned by the largest coal group, shanxi group, set to raise prices now. -- set to raise output because prices have gone up so much. this might be a short-term setback. analysts say right now it is probably in control of the government because the key customers of coal are large state-owned companies like power generators and steel companies. they have been complaining that the prices are too high. here is what i call analyst says , china's coal market is all about policy intervention now. they will probably keep a balance between what suppliers want and what consumers,
customers want. haidi: so many vested interests when it comes to china. >> power generation, to -- you bet. it is a dance. haidi: david ingles doing that dance on china today. some other stories, protesters on the streets of charlotte north carolina for a second night following the fatal police shooting of a black man on tuesday. the march has been angry but peaceful so far, with protesters shouting "hands up, don't shoot. matter." lives filings for some of the republican top donors ignoring donald trump and pouring money into keeping control of the senate. federal documents show one magnet gave 20 main dollars last month. sheldon adelson is said to be
giving the trunk campaign only $5 million. nation asia-pacific trade deal faces an uncertain future following november's presidential elections with hillary clinton and donald trump opposing it. of presidents one obama's landmark policies, one he wants to see ratified across the region before he leaves office. that is not actually as difficult as it sounds. >> we talked to members of congress and i am on capitol hill consulting with members of congress. there is much more supportive there than the headlines would have you believe. is a challenging political environment and nobody wants to focus on this prior to the election, but there is a lot of support up there. haidi: leading opec members saudi arabia and iran are said to have met days before the
cartel gathers in algiers. they met at opec's headquarters in vienna in the hope of securing a meaningful deal in oil production and prices. the two countries are rivals on several fronts. bilateral tensions have scouted agreements on output freezes this year. china's growing ranks of overseas tourists could be using their foreign trips to ship cash abroad, hoping to accelerate capital outflows from the country. that is according to a former u.s. treasury official. tom mackenzie has the details in beijing. what is the evidence to suggest this is happening right now? yes, the evidence comes from that former u.s. treasury was drawn to this when he saw the apparent discrepancy between this huge amount in spending of chinese tourists abroad versus the numbers of tourists going.
what he looked at was the tourism deficit. -- tradebout tread deficit, but the tourism deficit is the difference in the amount from foreign visitors to china, that amount minus the spending of chinese tourists abroad, and at the end of june, that number hit $315 billion. that is compared to $130 billion in 2013. the number of chinese tourists traveling abroad have increased hugely, and you look at the numbers for 2015, around 120 million visits by chinese tourists, comparing 298 million in 2013, but even that increased is not really account for the huge amount of spending we see from chinese tourists. he says tourists leaving from china going abroad must be packing more than travel guides and cameras in their suitcases
when they travel. know they are flush with cash as they head out. what are the tourists from china buying with all that cash? it won't, as a surprise to you, a lot of the money is spent typically hot spots for chinese when it comes to properties and the u.s., canada, australia, and the uk. also insurance products are fairly popular now. they are provided by financial bodies in hong kong. life insurance products, and also deposit accounts. people opening bank accounts and putting it in there to get it out of china as well. u.s. treasury official says this is bad for the global economy because we want the chinese to spend their money in china on goods and services. some of those goods and services
are provided by the west or the optic in the spending has been correlated with the depreciation , protect a mid-2014 and up to that peak. that's when the government started to put in tighter capital restrictions and made it more difficult for the chinese to get their money out. it is very difficult with the huge number of tourists leaving china every year to fat everyone in check all their bags and making sure they are not stashing bundles of cash with their son cream and sunglasses. there are always creative ways when it comes to capital flight. thanks for that. looking ahead to december, traders now see a 51% chance of a rate hike by the end of the year. we will be talking about that possibility and what it means for markets. that is up next. this is bloomberg. ♪
she is a delicate and conservative type of chairman and unwilling to make that step into real interest rate territory, which is normalizing. sad, ifes me as very you want to use that term. >> they are obviously not in much of a rush. third behavior has demonstrated that. there must be some angst or they would not have changed the language so much. they are looking at all the other measures of ventilation that have in taking up. 2%, 1.6, butlow the course of pi, the median cpi , all these have moved up above 2%. there is a risk of a mean reversion here. of a are only a few tenths
percentage point below the feds target inflation. the fed is almost there. haidi: some comments from money managers about the feds latest policy decision. global equities have rallied. the fed chose to keep interest rates on hold. thes talk about implications and what markets will be looking ahead to. guest joins us in the studio. , are we in any more of a better position in terms of what the market knows and can comfortably trade on
this time yesterday? the good news for the fed and the boj announcements is both have now started to set out roadmaps for the market. there is more clarity in terms of the policy direction for both, and so that reduces the risks of policy error in the markets and what they are pricing in. we are in a better position looking forward. haidi: what do you think the fed will do >>? we are seeing dissent mainly because the job market is quite good in the u.s. as chairman yellen pointed out. soft is within the u.s. economy, especially on the business investment side, but we think that has room to move in december and move gradually in 2017. haidi: if you look at what these two major central banks are doing, the fed's decision last night described as a hawkish hold with a long-term dovish bias.
you have the boj doing these acrobatics of monetary policy, torturous contortions on what they can do you. -- what they can do. the that suggest limitations of monetary policy are being hit here? i would characterize it as a transition of the policy regime. we have been meaning heavily on policy over the last years. as we go into 2017, we will pivot towards monetary supportive, but not incrementally more supportive than before, but relying heavily on the fiscal component almost everywhere in the world. haidi: what does that mean for equities? >> you will see volatility coming up because you don't have that persistent monetary support , but we do think you will get a tail wind as more fiscal policy comes into these economies, and that will shift of the leadership of equities from a lot of these dividend-yield oriented plays more towards the
cyclical place in the market. haidi: how do you feel about fixed income given what the boj is trying to do right now? yieldthink steepening the curve and giving guidance to the market from here is the right thing to do. we think risk reward is starting to tilt against investors. spreads are coming into or do not being paid to take that credit risk anymore. absolute yields are quite low, and we have been trying to manage risks with this -- with fixed income or aggressively than before. haidi: can they do that and maintain a target when it comes to the monetary base? bojhe announcement from the when you dig deep into it, you did not see a a lot of policy shift, but again, the key was they gave you a road map in terms of where they are going to go over the next few months and year, and that was the key. they will focus on the yield curve. we would suggest that means in
the future that they will be more flexible on the monetary base, and it is that pivot they are warning the markets about so they can accommodate that in terms of how they look at the markets going forward. how do you trade the last three months of the year going into next year? policy picture is one of the things we are looking at. the thing we are starting to pivot towards is the deep election calendars we have. thet of people focusing on u.s. elections, the italian referendum, 2017, the french and german elections. we think that has the prospect to bring a little bit more volatility in the markets, so we want to manage that as well as policy. haidi: it feels like a year where black swans are not black swans. what are you worried about in terms of the outcome of u.s. brexit spiraling out of control, or a risk we have not been paying attention to? when we look at the last few
years, what has characterize the markets has been the decline in volatility, the suppression of volatility by central banks. implicitly we think going for that volatility starts to rise, caused by political issues or elections, or scares like the banking system in italy or deutsche bank going forward. we will have pockets of volatility coming back up, and that is something participants will have manage aggressively going forward. haidi: on the currency front, had easy dollar-yen playing out? we have seen that reaction again. thegain, we don't think policy announcement from the boj was a major change, and so it is not a surprise the yen has given back some week is in the early time after the announcement. as they move for down this road map, we think that means yen weakness starts to come back into the picture, but probably not until they actually take action and gain a little bit
more credibility in the marketplace. we will have to leave it there. great to have you. let's get a quick check of the business/headlines. a $48 billion merger between -- may be in jeopardy. they accuse each other of breaching the terms of their agreement. that could help with an antitrust ruling to block the deal. a breakould have to pay of deal if the deal collapses. telling clients he will fight insider trading charges and has rejected a chance to settle the case. -- the sec says he used his status to gain access to confidential information. money itays he made
illegally the cost of stock to jump 31%. boeing has one u.s. approval to sell planes to our grand 40 years after the last order. says it has me gushing -- the gushing orders for $70 billion. boeing has been given -- airbus needed u.s. approval as 10% of its components are of american origin. caterpillar has reported the 40 finish straight month of falling machine sales, scaling back spending amid global growth. asian remains a bright spot. a 17% decline in the last quarter, latin american leading up for with the 35% drop in sales in august. asia was the only region to buck the trend, sales growing for the first time since november 2012.
haidi: you are watching "trending business" live from hong kong, also streaming on bloomberg.com in your mobile device. china's dalian wanda teaming up with sony on movie projects. the world's is largest movie theater owner. >> the talks are ongoing. according to sources, sony is looking for a strategic alliance with dalian wanda. this could mean financial cooperation. could finance sony films.
,t could also mean marketing sony would have a partner to help promote its movies further in china. on the other side, dalian wanda would have greater access in hollywood and get a steak in some of sony's hollywood movies. it has a spiderman movie coming out next year. these are the areas where both might benefit. hasi: we know dalian wanda ambitions of being a global player in cinema, but with the sony get out of the deal? >> sony is always looking for financing. it has yet to have a really big hit so far this year, so if it does team up with dalian wanda, it could get access to finances. a bigt team up with chinese company with deep
pockets? china is on track to become the world's biggest movie market next year. october movie ticket sales are $10 billion. sony get access to this biggert. foreign films are allowed into china each year, so it is common for hollywood companies to get together with a chinese company to circumvent and get into the marketing get around the limit. aso, it is partnering with company that is really active in trying to build out its entertainment. dalian wanda is already the world's biggest movie theater is theone of its units biggest movie theater operator in china as well. it bought legendary , owns amcent theaters, so all of this leading up to a partnership with a behemoth.