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tv   Trending Business  Bloomberg  September 22, 2016 9:00pm-10:01pm EDT

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♪ it is friday, the 23rd of september. i am haidi lun. this is "trending business". ♪ haidi: we will be live in sydney and singapore later this hour. , warnings of government intervention after the yen's rise, some say the currency is out of control. oil on the slide ahead of next week's opec talks. chinese billionaire wang jianlin
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taking on disney. sony moviesing in and opening his second theme park. of me know what you think today's stories by following me on twitter. don't forget to include #trendingbusiness. china and hong kong online in 30 minutes. we have a look at what is happening. it is mixed after that exuberant rally. >> the nikkei is not playing along. the holiday just ending in into negative territory, down .2%. still, emerging markets across the world are seeing huge inflows. than $20 billion of inflows in the last 16 weeks. on a tear.os
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take a look at this chart. couldiwan stock exchange pass its $1 trillion mark for the first time since june last year. taiwan semiconductor leading those gains. taiwan semiconductor is an apple supplier. record highs on the new sales of iphone models beat estimates. company has an 18% weighting in taiwan. a big gain for the taiwanese market there, helped by taiwan semiconductor. 30 minutes before the open and china and hong kong. we are expecting the markets to gain slightly.
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the shanghai composite has gained in the last two sessions. haidi: japan missing out. markets are calling the boj's bluff. are going in the opposite direction from what policymakers wanted. david, what is happening now? opposite ofomplete what they wanted. have a look at the yield curve. between comparison september 19, meeting on wednesday, wrapping up, and this is where we are at the moment. the longer end is falling more than the short end. at the leftmost side of your screens, we are inverted again on the short end, which speaks to this note coming to control the yield curve is an error for the boj.
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can control -- p contro they are looking at the wrong thing, at least pulling on the wrong levers. i mentioned, we are looking at the complete opposite of what the boj wanted to see. haidi: the yen looking to retest 100. officials say they are ready to act, and were talking about intervention again. every time we get near 100, we will get these verbal warnings. level,ested the 100 there was an emergency meeting the financeboj, ministry, and the securities regulator on the japanese yen. they are ready to act. they stop short of coming out with a specific level at which
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time they were jump in. at fundamental and technical analysis, and this is a note out of our bloomberg strategist, and he is saying these two things are aligned. can we get my bloomberg chart up here? essentially dollar-yen and some key levels you might want to watch. 100 is psychologically important. 97.28, the green line you see right there, that is your standard deviation support. we are basically headed there. all of those efforts and monetary policy, very little returns when it comes to what the boj governor is getting. let's get more from our energy
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reporter on the opec meeting in out years. -- in algiers. we will see more high leading up to that meeting. one of the key challenges is supplied. supply. the market has dynamically changed since the meeting was called. recently, even opec itself saying the glut will be here for much longer. the challenge is trying to balance and meet that. you have team members from the group saying production needs to be cut. algerian oil minister saying one million barrels a day needs to be cut from the market. that unlessying there is a cut, prices would not climb over $50 a barrel. haidi: are you betting on any outcome next week? are, there iss
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not going to be a change. if there is something, it may be token. domestichave the teletext within opec that are playing out. libya and nigeria want to ramp up production. saudi arabia and iran are trying to work through their differences. on thee is anything upside, it is a bonus for markets. haidi: thank you. let's take a look at some other stories we are watching today. a 2014 hackevealed involving 500 million users. juliette: yes, half a billion yahoo! users, the biggest data breach in history. 2014ack took place in revealing names, passwords, phone numbers, birth dates, and in some crisis security -- cases
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security questions and answers. yahoo! says it was a state-sponsored actor. one billion users are being urged to change their passwords. ae disclosure comes at significant time for yahoo! as marissa mayer navigates the country towards a plan for $.8 billion takeover by the horizon. yahoo! needs users to keep logging in to draw traffic and advertisers. people familiar with the investigation said the link to a nationstate is not ironclad. they are blaming the hack on a government,a former seen as a get out of jail free card. invested $7 billion in its india unit. we understand vodafone india will use the funds to expand its network and participate in an
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auction for 4g spectrum. threef the investment, billion dollars, was conversion of debt into equity. it gives vodafone india more firepower in a crowded market and comes weeks after india's riches man began operating his mobile phone carrier by offering free calls. indicatedndia has not when it will go public, but we hear it helps to raise as much as $3 billion. andts, camera, action, sony dalian wanda have reached an agreement. 's production group will invest in sony pictures. largest owner of movie theaters, continues its expansion. it snapped up legendary entertainment for $3.5 billion.
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it is a huge win for the japanese company, winning the backing of wanda will help sony gain greater access to china's restricted movie market. thanks for that. coming up later, policing social media. we look at china's latest attempt to rein in online discussion. our next guest says he is taking with his position that the fed will move before the year is out. this is bloomberg. ♪
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haidi: u.s. markets is seeing a rally overnight. n/a asia, we are starting to lose steam. let's get more on the market dynamics.
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happy friday. indication of the anemic tapering of the rally in asia, does this adjust that investors have reached the point where they realize central banks have lost credibility? think they have quite lost credibility yet, but they are on the brink and in a because ifsition they don't do anything, then that credibility will be lost, but i think central banks have the power and markets. when it comes to the fed, we think the fed will move in the fourth quarter this year. it is a view we have had since the beginning of the year, and that is because the situation allows them to. there is a lot of market noise from time to time, but if you take a pragmatic view, we think the fourth quarter is still on the table and pricing in the market will start to change over the next few weeks to reflect that.
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haidi: we saw volatility get crushed again in the wake of the decision. does this mean we will see further buying into australia? >> australia is an interesting the composition of the asx 200 index is skewed towards the top 10 names. resources have been lagging for such a long time, and now there is some value buying, particular from international capital flows, bhp , other iron ore producers, coming off record lows, silvio strahan market is looking quite good. -- the asx0 has some 200 has some good support, but lacks the catalyst to break out. thatd not necessarily see this reporting season, so we think the band on the asx 200 is a nice band to trade. we don't see it breaking out
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either way, but markets can move on fear as there could be some downside potential, but were saying 5200 looking quite good. not seeming to move much more, and if they do, the boj running out of options. the fed sitting where it is. is it a situation where long yield is where you have to be? i think you have to be long earnings growth. we are in an environment where we have record low interest rates and high quality corporate's are using that to their advantage. the really good been is this is -- good businesses will be able to grow and generate high returns on investor capital. while everyone is chasing short-term yield and playing that differential, we think the
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businesses to be investing in are those that can create earnings growth potential at a time when interest rates are low. the realhere generational wealth is created in stock markets and equities, so the part of the market we like in australia is the small-cap space, anything from $100 million to three hundred million dollars of market cap with a clean balance sheet really has a once-in-a-lifetime to use cheap debt, grow business, and generate returns. haidi: you said there are some bargains to be found in commodities, although the recovery is just beginning. the term commodities is very broad, so you have metals, energy, agricultural space. we think the agricultural commodities and businesses in that space are looking prices havebecause come off in line with oil
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prices, but the dynamics are very different. oil can be substituted for an energy source, but food cap. the dynamics for food are still very federal -- very favorable. pureld not be going into metal-based explores or anything like that. you want something with a diverse range of revenue and something that has been sold off that you are buying it with a large margin of error factored in. into the you go commodities themselves or proxy that in equities? >> i would rather go into the equities. let me give you an example. gnc, a very strong grain handling and marketing business. prices have come off in line with oil prices. a business subject to a takeover because it was so attractive, and the government blocked it.
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ever since then, it has been looking for a catalyst to re-rate. in that myth cap space, emerging midcap stays, and that is something you can take a 1-3-year view. andan use cheap debt, grow, if commodity prices do improve, it will have a big impact on earnings. that is an example of something that slips through the cracks. it is leverage to commodity prices. haidi: very interesting pick up there. thank you so much for joining us. >> thank you. haidi: let's get a quick check on the latest business flash headlines. black rock says markets could fall 15% if governments don't take what he calls necessary and aggressive fiscal policy action. he is more pessimistic on the markets at the moment, but also governments act,
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markets could rise 10%. he says the uncertainty around the brexit decision is worsening. >> what i hear talking to ceos in the uk, they are not incrementally hiring. they are not incrementally planning to invest in the uk until there is more certainty. i do believe brexit will be a big deal with big consequences in the uk, depending on how the negotiation goes. cut interestsia rates for the fifth time this year to boost growth. the central bank lowered its rate by 25 basis points to 5%. the decision comes as indonesia's growth rate remains low, below the 7% target. in contrast, the philippines decided to hold rates at a record low 3% again.
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central banks last cut in may as part of a policy overhaul. the president is increasing government spending on infrastructure and social programs to strengthen growth. he hopes to see the economy expanded by 7% this year and 20 17, 7 .5%. coming up, hanjin thrown another -- lifeline, but with conditions. we will be in seoul, korea next. this is bloomberg. ♪
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shipping has been thrown another lifeline, a conditional credit line to recover its stranded ships. how will this help hanjin? provided by the biggest
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shareholder korean air and the chairman of hanjin group and the former chairman of hanjin shipping is not enough, then the credit will be used. this will help bringing vessel stranded at port in various parts of the world to unload cargo. that is the biggest issue right now. the longer those ships that hanjin doesn't own are within the fleet, it means more costs. it is the last thing they want at the moment. haidi: is this an indication that creditors are largely supporting the company? kdb said this is not to support hanjin, but the money is to be used to unload the cargo. they said this is the last they will hanjin give to.
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they made itnjin clear that it will not be working capital for hanjin shipping. thank you for the latest bankruptcy.in with corporate bond defaults in china rising, credit default swaps have been approved for the first time. how much demand is there if they're going to default anyway? >> there is demand because it spreads the risk. it is not necessarily very government as creditor of last default that comes in and bails out. we are seeing rising bond defaults in china. 18 local bonds have missed payments so far this year. there were seven for all of last year. tentativelybank has approved the trading of credit default swaps by financial institutions. it would be the first time.
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this is what an analyst said about this. to have credit default swaps is a good thing because so far there are no meaningful hedging tools in the market yet. the market has high demand for such instruments. haidi: is this a direct correlation to the number of missed payments we have seen this year? defaults, basically this is a transfer of the credit risks. to a buyer,l sell an investor who will take regular payments up to maturity and less there is a credit event or default, then they get a pay out. that takes the responsibility off the government to bail out a failed bond. analyst here in hong kong is saying, banks are the main players in the credit market so it is likely the risks will still be within the banking
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system. it's not like you transfer the risks outside. thegood thing is that government will now allow more corporate failures perhaps. haidi: perhaps. is still within the financial system, but this is the first step to spread the risk. you talk about find and still institutions, state and banks, brokerages, funds may be taking this on. >> that's right. who will be the buyers, sellers, and issuers? probably the state owned bank themselves. we will be getting you more once we have confirmation. there minutes away from start of trading in china, shanghai, shenzhen, and hang kong. -- hong kong. we are indicating a little upside, which would be a nice
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positive sentiment when it comes to the broadly lower asian markets. coming up next, assessing china's recent reshuffling of provincial leaders. this is bloomberg. ♪
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♪ trendinge top stories this hour. the more that boj does, the more traders become convinced at yen is out of control. this week's policy decision was the fifth straight meeting that saw the currency gained by the end of the day. the currency has gained 20% this year. it is set for the biggest annual advance and eight years. have failed toks produce an agreement on an oil freeze. opec's two leading members met
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ahead of the and formal discussions with russia next week. retreated this month amid concerns that there is no serious commitment to curb supply. all but two of 23 analysts we surveyed addicting no deal. predict no deal. wang jianlin expanding, his dalian wanda group will collaborate with sony, giving -- sony greater access to the chinese market. thean wanda operates world's largest number of cinema screens. we are monitoring the market open and shanghai and hong kong. hopefully we are seeing a bit of diversions. are seeing asian stocks falling for the first time in six days, from the highest close in more than a year, the nikkei
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dragging down the index after coming back from its holiday. shanghaiee if the index brings more positive sentiment into the region. gainhanghai composite, .1% , rising for a third consecutive session. same thing for the hang seng. stocks you need to keep an eye on in the hang seng index. we have some new analyst ratings. in the telecom industry, china , a changeina unicom in their rating. mobile cut to neutral. china unicom was upgraded to a by. it is now surging 6%. cut to neutral,
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down .6%. isi said, the nikkei dragging the index and sentiment here and asia after coming back from its holiday. they missed out on that global stock rally. the red. in they are recouping some losses, but still unable to turn green. falling .2%, that is despite the .4anese yen weakening percent and holding at 101.17. we had some volatile movements in the yen, and top officials in japan have warned they will act if needed. , different story for the kospi which has been searching for six days. it is now gaining .2%, helped by a weaker korean won after
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strengthening immensely the previous session. winners out of what has been quite a week when it comes to central-bank policy decisions. to be a year of policy diversions, but banks seem to be doing the exact opposite. year, the of last word and every research note was diversions, decoupling, so what is behind this re-convergence? >> we are still on different paths, but they're getting closer again. to increaseexpected rates four times at the end of last year. it has not done it once this year. rate --r, no, we will wait. maybe december is on the cards, but who knows. on the other hand, the ecb and boj are expressing some
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recognition about the downside to monetary stimulus. the boj this month took a new look, tightening the yield curve, so maybe they are not easing as much as some thought. haidi: the question has to be asked, where is this coming from? is the data really that bad? the boj, you wonder if there is anything else they can really do. >> unifying central banks, inflation, low inflationary environment is proving tough to budge. there are a couple of things at work, aging society, technological change. this liquidity-driven
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rally we have seen, what is the problem? >> that is one camp. the problem is we have this massive bonds market, $100 trillion, and every time we see this low rate environment perpetuated longer, bond yields , andwn, bond prices go up the bond bubble keeps swelling. come of this is going to turn. then what happens? is going tobble unravel, and i could really hurt stocks. haidi: we don't know what happens when this finally unwinds. reconvergencethe in a year that was meant to be diversions and monetary policy. stories we are following, and oklahoma police
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officer has been charged with the fatal shooting of an unarmed black man last week. that the shelby is charged with first-degree manslaughter for the death of the man standing by his broken down car. shelby claims he did not obey her commands and fired when he reached into the car. police footage and shows him walking away with his hands in the air. police in charlotte, north carolina are refusing to release video they could set the wildly different accounts of the fatal shooting of a black man earlier this week. footagelooking at live coming from charlotte, north carolina at the moment. camcials say releasing dash and body cam pictures could inhibit the official investigation into his death. the national guard has been called in following three nights of angry protests. north korea has threatened to if ak u.s. forces on guam
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nuclear capable b-1 bomber continues to fly over the peninsula. north korea recently tested ballistic missiles and a nuclear device and claimed it can hit targets as far away as guam. tokyo and washington have called for tougher sanctions. thing --xil asian of the took charge communist party four years ago and is looking to move supporters into more influential positions. reshuffle tell us about the continued consolidation of power. >> consolidation of power, and also his willingness to break the party conventions. 31ce april, 17 out of provinces have changed top leadership. promoteseen xi jinping former colleagues to key positions, so they will be well
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positioned to advance to senior party ranks at next year's party congress. for example, the top leader of number twoe, china's provincial economy, and he took charge and is not even a full member of the central committee. now because he is the party chief of this important province, he will begin her teed seat at next year's party congress. retiringme time, he is senior officials ahead of their retirement age, which is 65 for ministry level officials. we have seen three top provincial leaders retiring at 53. : these bold moves, this is not what we are used to seeing
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from his predecessor. he is very reluctant to use this power base. probably because he does not want to reinforce the public perception in china. as a result, he is willing to promote people he worked with and went to school with or people from his hometown. he promotes lots of people from three provinces in particular. haidi: all this power comes to a head in the national people's party congress. oft are the implications these moves he is making now? willobably, xi jinping
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continue to revise. point -- a will point more of his associates to the key positions at the party congress next year because 11 out of 25 politburo seats will be up for grabs, so we will see about that. haidi: thank you for covering that for us. talking about the extraordinary consolidation of power in the chinese leadership. with china and social media, users in the country beware. law enforcement agencies are stepping up their monitoring of public opinion by reining in online discourse. it sounds alarming. what do we know? ,uliette: starting next month authorities in china investigating criminal cases have the right to access information posted on social media, including china's answer
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to twitter. all content can be secretly gained and submitted as evidence in court. since 20 12, authorities have had the right to access online logs or text messages if applicable, but these new rules rafted on wednesday are part of china's efforts to widen its access to the data of hundreds of millions of social media users. we chat has more than 800 million daily users alone. the information must be cap secret to present the leak of personal data. authorities also want to crack down on other content deemed politically or socially unacceptable from pornography to criticism of the party. not surprisingly, some concern.
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haidi: the question is, is it to the requests that the fbi have made from apple, for example? >> i guess it is a little different, we have always seen that authorities have the ability to seek information from companies through court subpoenas, which they can then appeal. refused tomously back down on an fbi request to unlock a iphone. chinese citizens are less likely to resist. authorities won't have to ask, like in the apple case, they will be able to access this information. thanks so much for that. coming up, the pressure to act,
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opec members prepare, what are the audits of an output freeze? this is bloomberg. ♪
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quick check of the latest business flash headlines. maersk ins shipbuilding era. no longer makes sense to build new vessels when there are too many out there. in china, talks about acquiring a stake in one of the largest
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copper-cobalt mines. linkedin is revamping its lineup ahead of its $26 billion acquisition by microsoft. the company is redesigning its desk top products and adding messenger bot's. -- bots. being one ofts of those larger companies that is involved in more businesses is they will have far greater scale and far more resources to continue to invest and innovate. one example of that would be artificial intelligence. increasing concerns that
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weakness across commodities, energy and mining, could lead to more defaults on the corporate bond market. our next guest says that the bond markets have then generating greater returns than u.s. indices. great to have you and welcome to the region. on all thatew change given the events of this week? our view on oil and other commodity bonds did not change from the view we had before. do think there are significant opportunities in oil company bonds, and we own quite a few of them at the moment. you concerned about the level of risk building up in global high-yield? is it time for a timeout, if you will? >> we don't think so. we think this expansion has been fairly conservative, and we think the market has further to
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go. seei: in terms of what you or what many see as risky, perhaps also compelling, do you have any thoughts about the chinese bond markets as authorities are trying to open up to foreign investors? yes, we are invested in some bonds that trade offshore of chinese companies. seen the prices appreciate steadily over the last year as many of these are ones have been refinanced with onshore debt. we do believe there are opportunities. we don't think it is all that cheap compared to other regions at the moment. is the preference for investing in commodity, bonds, energy, oil bonds as proxyd to -- is there a for equities instead? that there are some energy company bonds that are
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priced very well against the value of the assets. many of these companies own very strong properties in the shale regions, and these companies have been doing a great job bringing their costs down, so we do find a lot of gems out there. the equity seem to be discounting ohio oil price and banking on a recovery. we are seeing companies trading to discounts -- a discounts compared to the current value of assets. your view is that if global growth continues, we will start seeing the excess oil situation be absorbed. is that regardless of whether we see any agreement on a supply opecoming through out of next week or from there on? >> yes, actually it is. we see global oil demand groping
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-- growing at a steady pace as long as there is no recession. oil demand has been growing a little over 1% a year, and by late 2017, supply and demand in oil should the in balance and there should be large inventories that have been worked through, so we do see an improvement coming, and it is not predicated on whether there is a production freeze out of those. haidi: i want to shift to the u.s. outlook that is reliant on what happens in the next month or so. to theews when it comes two potential outcomes, neither particularly positive. is there one that you rather prefer? case think the majority remains that hillary clinton wins the presidency, but we also think she is going to be not have a clean sweep. the democrats are unlikely to
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win the house of representatives in particular, so we think we will have divided government going toward, which is result in gridlock. fortunately, the market likes gridlock. to market likes the parties be unable to pursue the broader policies which they have been talking about in the primary election. if they had for control of the government, would do things like raise the minimum wage to $15 an hour. the republicans would probably do tax cuts. would havese resulted in more treasuries over the next few years, and we think the market is very focused on , whichelds and stocks are proxies for bond yields, so both could come under pressure if either party gets a clean sweep. optimistic view on what happens next week. we have to leave it there.
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coming up next, that's entertainment. dalian wanda invest in sony pictures and a theme park. that is up next. this is bloomberg. ♪
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billionaire wang jianlin ramping up his challenge his secondopening theme park. it is all steam ahead when it comes to these projects. opening the second one after they opened the first 13 months ago.
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they spent 35 million yuan to build the park. it is a huge project. tomorrow, it will be a grand will beand wang jianlin there to give a speech. they: it's interesting pick the cities, because they are not first tier cities. the whole point for them is to build 16 by 2020. 's is part of wang jianlin entertainment push. by 2020, they want to see 50 billion yuan in revenue. he has been vocal about
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how he wants to take down disney , very colorful language. shanghai disney opening june. how do you perceive the so-called competition? they tried to open these parks in different locations. at the same time, he has a different approach. parks,only opens theme but has shopping malls, theaters, and apartments. to generate different sources of income from this project. at this stage, it is hard to see who is winning. haidi: the competition is certainly on from wang jianlin's perspective. thank you so much. coming up next, as the bitter
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campaign continues for the white jobs, what is the issue of and the impact on voters? this is bloomberg. ♪
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>> from our studios in new york city, this is "charlie rose." jake: i'm jake cap are filling in for charlie rose on assignment. we begin with a conversation about diplomacy and national security. in his you and address, president obama called the refugee crisis one of the urgent tasks of our time and a test of our common humanity. secretary of state john kerry says the cease-fire in syria is not dead. efforts to resume peace talks have been subverted i the bombing of an aid convoy that killed at least 12 people near aleppo.

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