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tv   Trending Business  Bloomberg  September 25, 2016 9:00pm-11:01pm EDT

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♪ it is monday, the 26th of september. i am haidi lun. this is "trending business". ♪ we will be live in beijing, singapore, and melbourne this hour. the biggest drop in two months as saudi arabia opens the door to a production deal. in warnings of contagion china with smaller banks reliant on each other more than ever when it comes to funding. rolling stone magazine
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attracting overseas investors for the first time in history. a singaporean is buying a 49% stake. do let us know what you think of today's top stories. the china and hong kong markets get underway in 30 minutes, but singapore, taiwan, and malaysia coming online. how is the trading week shaping up so far? david: extending losses from friday. we went into the european session, more weakness came through. this is what we are waking up to. overall, the benchmarks down for a second straight day. not the declines, primes are not quite there as well. that eating said, we are watching a few things. singaporehailand and exports due out. south korea the only bright heaviest weighted
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stock of the index is up .5%. if you look at what samsung brings to the table. you take it out, that index will show declines. there is your price for samsung electronics. , weency markets, dollar-yen should be near session lows at the moment. we will be getting the speech at 2:30overnor kuroda p.m. local time. we are still close to a one-month low. i want to check out gold. have a look at where we are. 1338.
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we will talk about oil in a moment. dollar weakness broadly speaking helping to lift the overall price. you look at copper, on the way out. we will talk about oil in a moment. citibank coming out with their latest commodity report, basically saying that the chances of donald trump winning the presidential election are 40%. it donald trump does win, expect this to be very volatile. ounce is the three-month outlook. opec ministers meeting for talks this week amid claims there could be action on stabilizing the oil price. algeria's energy minister says saudi arabia is prepared to cut production by 500,000 barrels a day. >> saudi is a very important member of the organization, so
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saudi is ready to do the maximum for the success of this event. it is ready for any eventuality. it is ready for a freeze, to lower production, to make it a success. haidi: let's dig deeper. good morning. what does a potential saudi cut really signal? >> it signals a policy shift. the saudi's have had a hard line in terms of production. is tied tong, a cut iran doing something. iran has to cut for them to cut. it is a very clever move. sayconspiracy theorists saudi arabia has offered something, but iran doesn't want it, so they can shift the blame to iran. the view of policy does indicate willingness considering the market is in oversupply at the moment.
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the other thing the saudi arabians did say is that it is unlikely there is a deal that is going to happen on wednesday, so expect a lot more talk about what may or may not happen. this is leading up to the official november meeting. where does the market go from here? >> the market has been quite resilient in some respects. it has worked in the range of $40 to $50 a barrel. it has averaged about $44.80 a barrel. it is holding within a range of the moment. supply is still an issue. if oil holds within that range, and it should going out to november, it's a good thing for the market. haidi: watching that very keenly as i know you are. wti rebounding after that plunge on friday, the worst in just
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about two months. some other stories we are watching today. we have around up this morning. goldman sachs looking to slim down or take an ax to its banking division. >> that is right. a quarter of goldman sachs investment banking jobs may be cut in asia outside japan. in theounts to 75 jobs region, with the cuts to come as early as this week. a slump in deal making is behind the move as goldman faces its rating sincee asia 2008. it is underscore me for underwriting $6 billion in bond sales. employees and austria and new zealand will be spared, as well as japan. miner is's biggest facing a battle to hold on to
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its credit score despite the rebounding commodity prices. s&p global rankings and moody's put the hp billiton on notice, saying credit ratings will be below limits. that is partly due to further possible fallout from the dam disaster in brazil, as well as volatile metals and oil prices and uncertainties over bhp financial policies. the news comes as rivals including rio tinto and fortis q have had their outlooks posted thank to the rebound in oil prices. bhp sydni listed shares have performed well despite the brazilian mine disaster, post-tax charges of $2.2 billion. a rolling stone gathers no mosque, particularly when it has a buyer. a is selling a 49% stake to
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singaporean investor, the first time that jann wenner has allowed outside investment. jann wenner's brokered the deal. their mutual love of the guitar and bob dylan led to a discussion about investment in the celebrated magazine. will head rolling stone international, a company established in singapore. there are more fears over the financial health of china's banks. ratings agencies are warning that smaller lenders have never been more reliant on each other for funding. our china correspondent tom mackenzie has been looking into this story. another day, another warning of systemic risks in china. what is this one all about? come thick and fast,
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don't they? the latest evidence that china's smaller banks are turning to each other for liquidity comes when you look at the wholesale funding. that funding including interbank funding, and moody's has been looking at that. for funding now accounts 34% of the financing for china's small and medium-sized ranks. itt is a record level, and is up from 29% that we saw last year. case in point is shanghai development bank. in the last three years, it has raised his short term barring by 70 -- borrowing by 75%. customerher side, its deposits have increased just 24%. there. disparity the background to this is that china's authorities have cap rates at aepo relatively low 2.4 percent over
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the year to try to support the economy, but that has a flipside of course, which is that some of that liquidity ins up in dodgy loans and also in china's murky shadow banking system. thenat starts soon rabble, that is when the problems really start to be seen. you are saying, this is the latest in a long list of warning shots about china's banking system, the amount of leverage. how worried should we really be? absolutely. we only heard last week from the thank of international settlements that they are concerned about risks to china's banking system. we have heard from s&p. they say that contagion is now a risk, and that risk is rising. moody's saying there is a risk of a liquidity crunch. toen that context, i spoke someone who is from the institute of finance and banking
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at the chinese academy of social sciences. it has an advisory role to china's central government. i asked for his view. take a listen. >> the slowdown of our economic growth, the bigger downward pressure on the economy, this background is a macro trend. it will not change in the short-term, and amid the situation, our banking sector faces a lot of pressure. the bad loan rate is rising. profits are failing. this trend is very obvious. tom: it is worth noting as well that the people's bank of china are not blind to this problem. they said that curbing leverage is a short-term goal, and they have taken steps as well to start longer-term repo rates to ith up those rates, and should also be noted that in the context of china's financial system, china does have a huge savings of $22.3 trillion. out to bet could turn
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their saving grace. tom mackenzie on that story force in beijing. coming up, a global brights part. is standard chartered betting big on asia. we will ask our next guest why he is convinced of a rate rise in december. this is bloomberg. ♪
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haidi: a quick check of the latest business/headlines. china's biggest aluminum producer will pay shareholders a 32% premium to buy their stocks and its hong kong listed mining unit. it will make it easier for chalco to raise funds. revenue has been squeezed by falling prices and inefficient operations and worker strikes. shipping sinking amid reports that 40 of its 97 ships at sea have now unloaded.
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hyundai merchant looking at their assets with a look towards buying them. institutions that gave them money have asked hyundai if it wants to acquire them. hanjin declining to comment, while hyundai merchant is considering all measures it says. twitter said to be stepping up the search for a buyer. the company has held informal talks with several potential suitors after receiving interest from salesforce. they have hired goldman sachs to find other potential buyers. some stability returning to the markets. will it last? where do we go from here? great to have you. the dust has settled after a massive week of central bank action or in action last week.
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where do we go from here? >> it is a very good question. what we are watching closely is the inverse relationship to the vix index. bojaw the ecb and the somewhat underperforming market expectations. theaw a big shakedown in oil trade, the bond market, and equities. ,f you do look at the inverse the markets have higher levels of yield. particularly asx. hong kong is at 4.3%. stable, andlatility expectations are they will be, they are the ones that will try to leg of that up to be underperforming the rest of the world. looking at,we're
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the yield and the inverse correlation to volatility. haidi: it is really quite interesting. any particular sectors you are most keen on? >> i think you have to bring that back to what will give you that yield return. utility plays, infrastructure plays, and banks are clearly the ones. have a look at what happened japan, their banking sector exploded. in australia, our banking sector settled once the fed everybody down and choreographed expectations for a rate hike in december. anything with yields or eps growth in the low double digits has done incredibly well. , things thatviders are almost monolithic in their operations have done well. haidi: are you expecting much into they as we go
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first of the presidential debates in the u.s.? >> i think you have to. as reason is that tonight the markets and most pundits expect, if clinton comes out and perform strongly and puts trump on the back foot, it will justify the whole process. she is ahead in the polls. it also gets back to the fed. they clearly pointed to the election as something to be aware of. in the main, you can see the federal reserve expects the target rate to be .5% at the end of the year. transition a smooth through the presidential election. tonight, there might be a bit of volatility, but if she wins and wins well, it puts that calm through the end of the year.
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we will probably have eight rate rise in december. a couple of interesting events this week that is interested to the aussie. china pmi later this week, and also this oil story we are tracking. had you navigate that? do expected to move the all see? >> we do, in particular pmi. oil, no surprise that saudi arabia has come out and said we werey said, that is never expecting anything out of this meeting to have a material impact on supply. price has been ok for the aussie, but iron ore had its third consecutive day on the upside, and pmi's are showing that china will likely reach that 7% gdp.
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that's more of the aussie affect, exports out of australia into china on that commodity front clearly shows they are ahead of what market expectations and analyst expectations were. haidi: someone said approach this rally with caution because it is based on central bank failure. what you make of that? there you stay safe out given this environment? >> it's a good point. i understand that the market is betting against central banks. what i look at his if you have a look at what the market expects from a rate rise in the u.s., the boj, the ecb, they are very different. clearly the market does expect they will under deliver on their promises, and that's an interesting one. again, that's why you will continue to see capital growth
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in the yield space and the debt market continues to be an amazing inverse relation to what they taught us in university. watchis one i continue to , probably the only way you can save face over the next 3-4 months. haidi: uncharted territory again. we will have to leave it there. great to have those insights. coming up next, one of the everyone will be watching, clinton and trump occurring for the first of eight -- the first debate. the latest from the campaign trail up next. this is bloomberg. ♪
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haidi: this is "trending business". former thailand prime
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minister has been told she must pay $1 billion in fines for her controversial rice buying scheme. she says the program was intended to raise people out of poverty, but critics say huge amount of money disappeared. saudi arabia central-bank injecting $5.3 billion into the system as lender struggle with cheap oil. the saudi monetary authority will give the banks the funds in the form of time deposits and introduce seven and 28 day repo agreements. saudi arabia has been forced to draw down on deposits because of oil prices, putting the squeeze on domestic liquidity. the transpacific partnership is high on the agenda as shinzo abe remains a vocal supporter amid resistance at home and abroad. feels the tpp will
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benefit the japanese economy and will try to push it through. hillary clinton and donald trump are against the deal. the tpp will be under pressure no matter who wins the white house in november, both clinton and trump have opposed it. head-to-head later on monday in that first presidential debate. one of the big events kicking off the week on wall street is not on wall street. it is in the political sector, and that is the first of three live debates between the two political contenders, hillary clinton and donald trump. right now, heading into the debate, 14 states in the u.s. are regarded as tossups, unprecedented this late into a presidential election. two of the states, ohio and florida, are considered pivotal. ,n terms of electoral votes 198-165.eads with
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change.ld most polls are showing what is called a statistical dead heat. for that reason, many political watchers say that monday's debate could be huge, a huge event for either candidate, and it is likely that on tuesday, while straight will be calculating or recalculating the odds. some sad news to bring you from the world of golf. theld palmer has died at age of 87. he is generally regarded as one of the world greatest golf players. arnold palmer was a trailblazer. he 17 major titles, four masters, to opie and championships -- two open championships. originale of the 12 inductees at the world golf hall of fame in 1974.
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coming up, scaling back. why goldman sachs is set to cut a significant number of staff in a ship. the markets in hong kong and shanghai get underway. this is bloomberg. ♪
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♪ haidi: the top stories trending this hour, algeria says saudi arabia has offered to cut will output a head the informal opec meeting. would reduce production levels by 500,000 barrels fewer than august. opec and russia together with algeria calling for a collective cut of one million barrels a day. ratings companies warning about the contagion risks among asna's smaller lenders
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interbank support increases. moody's says also prices accounted for 34% of small and medium-sized bank financing. one lender has seen its short-term borrowing and repo agreements surge by 75% over the past three years. cut a quartermay of its investment banking jobs in asia outside japan. 75 jobs will cut because of a slump in deal making. it is the worst ranking since 2008. it is under scrutiny for its role in underwriting $6 billion to 1mdb. let's go to david who is monitoring market opens. it is a sea of red out there. markets opening up, shanghai and hong kong. we are watching the philippines. we have seen outflows, not a big amount.
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, it iss of the streak something that stands out, 22 straight days of net foreign and selling into friday, the longest 2007. going back to have a look at taiwan, down about .9%, pullback across apple suppliers. let me change my board. we will go back to shanghai in a moment. there we go. manufactures,part there we go, down about 1%. it is a very big index. a lot of stocks here. we are talking about 150 stocks. let's flip the board and get back to shanghai because we are watching any sort of reaction, property related stocks. shanghaiy right by announcing further home purchase
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restrictions effective today. breakdown roughly speaking, what are we doing now? limit majority down, 15 on the way out. credit suisse coming out with a on mgm on their ratings china. in gm, cut the rating, recommendation on valuation. nn macau saying you have to dial down your expectations for earnings for the new casino. o down about .3%. chalco taking this one private. there we go. 24%. let's see what happens. $1.30 a share. let's wrap rings up with the fast, some news out that
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is seeking financing. stop mr. earnings by ¥1 billion. earnings by ¥1 billion. that 1000ling saying stores outside japan within 10 years. there are only 10 stores right now. been a tough year for hedge funds globally. now, the $11 billion hedge fund tudor investment has quoted
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singapore trading desk. what is the background we have here? >> hello. the big story of downsizing and restructuring tudor, is one of the oldest, most respected, and biggest hedge fund with $11 billion. since been in existence 1980 and has had phenomenal returns during the first years after it started. however, the returns have been lackluster over the last year. sizableulted in pretty investor withdrawals this year. as a consequence, the founder cut 15%th said he will of the 400 plus workforce. on the other hand, they are hiring traders. they are cutting the trading
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activities and expanding on the quantitative activities. singapore as a whole is affected. haidi: that leads to my next question, this is a set back given that singapore has styled itself as a hope for hedge funds. yes, asia has about 1250 hedge funds as a total, 40% are in hong kong, 25% in singapore, so singapore is the number two hedge fund help in asia. on the other hand, quite a number of global hedge funds have recently said they were open an office in singapore. in simpler terms, singapore for quite a while will keep being the number two behind hong kong. that stacks up pretty well against the number one. my personal guess is the growth rate of the singapore hedge fund
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industry is at least as same as the hong kong industry. haidi: going forward, are we looking at the industry in asia downsizing. is this a signal of that happening? year fornot an easy the asia hedge fund industry. total assets under management are down 10%, so the decrease is much higher in asia than other regions of the world. on the other hand, this is mainly due to the negative returns of some strategies, among them china equity on shore. chinese equity markets have not done well over the past couple of years. experts say the asia markets in general are still less developed than other big liquid markets in the world. a lot ofs there are inefficiency steele. this is a great opportunity for hedge funds and specialists hedge funds.
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a rough patch is for ages hedge fund industry, but it is to early to sound the death knell for the industry. haidi: thank you so much for that great insight. goldman sachs is also said to be planning a number of job losses in asia. a quarter of its investment banking jobs across the region without japan will be cut. let's get over to our bloomberg asia finance editor. what are some of the questions that this raises? >> the main question is does this represent for goldman a long-term change in their view of the investment banking market here. other banks have said for quite a long time now that asian corporate's don't like paying fees, but that is going to change as the market matures. the question is goldman walking away from that view. that it ishing is
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coming as china is in the midst investmentbound boom, acquisitions overseas are at a record, and goldman is doing well in that business. they are still doing this. we don't know exactly what the breakup is between ecm and debt capital markets. how does this reflect goldman's view on the ongoing china soccer? is this a goldman story or industrywide story? >> it seems safe to say that it is going to be more cuts across industry. naturally when goldman does something like this, people start focusing on morgan stanley. morgan stanley being the one that has the most similar model to goldman. if you look at citigroup, j.p. morgan, they follow a more universal banking model so they can fall back on other parts of
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corporate banking in terms of cash management and things like that if investment banking fees are not keeping up. haidi: is there concern they are cutting two deep? that is always a concern. if you have a quick bounce back in equity capital markets and other areas in merger and acquisition, southeast asia has been week for quite some time, goldman could find themselves on the back foot of little bit. haidi: thank you so much for that. some breaking news, south korean prosecutors are seeking an arrest warrant for the chairman e group.of lott last week, he was questioned over falsified documents regarding his holdings and his family control over lotte. it comes after the south korea fair trade commission has asked prosecutors to investigate the group founder for falsified documents.
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this comes back on this expanded corruption and bribery probe that has had a number of ramifications, not the least of which is putting off the ipo of hotel lotte. we also have the regulators that it foundek , so it does appear to be part of a broader probe at the moment. that story just crossing the bloomberg now. some other stories we are following, hyundai's latest locking of horns gets underway with unionized workers staging a strike. staff will also take partial action for the rest of the week. last month, unions rejected a tentative wage deal. that was the first time that
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unionized workers had broken down and pay deal. u.s. regulators have released a a continuingg threat from faulty airbags. 660 out of 240 5000 recalled in slater's ruptured when tested. 15 deaths worldwide linked to takata airbags. 17 million airbags were scheduled to be replaced between now and 2019. takata faces billions of dollars in costs and finds. the founder of rolling stone a 49% stakeselling in the publication to an investor in singapore, the first time that jann wenner has allowed outside investment in the magazine's history. our tech reporter for the details. tell us more about this deal. >> yes, as you know, rolling stone has been an iconic magazine.
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it has been a platform for so many writers and artists over the past 50 years. peers, it has been witnessing steady slow down in advertising and revenue streams, so i think in 2014, jann wenner has put his son in charge of digital strategy to find different ways to find new revenue. and diversify the business. haidi: it is interesting how this deal came about, isn't it? that is an interesting story. >> yes, it is indeed. everything started with a casual meeting. bandlab wentder of to new york, he was introduced , so i son of jann wenner
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think they have a lot of things in common. they are in their 20's, passion about music, guitars, so they hit it off immediately, and their conversation evolved into business. haidi: as you said, the singaporean buyer is the founder and young ceo of bandlab technologies. what more do we know about him and his business? >> bandlab was founded by a singaporean entrepreneur. , son of aish educated billionaire tycoon in singapore. he returned to singapore, he has been steadily building his music business. he is on a mission to build a --bal is again prior, so
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music empire, so he has been steadily building up assets. one of his flagship companies is ndlab, a platform for musicians to create and share their music. bigas turned it into a retail business in southeast asia, so with this new deal, he is somebody to watch out for in this region. haidi: very interesting deal indeed. thank you so much for that. coming up next, standard chartered says growth in asia will outperform the rest of the world this year and next, although there are risks. we will hear from the banks achieve asia economist next. -- the banks chief asia economist next. this is bloomberg. ♪
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haidi: a quick check of the latest business/headlines. a decade after quitting saudi
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arabia, citigroup planning a comeback. the bank has set up a task forced to look at opportunities in the kingdom. they see a bonanza as saudi undergoes an economic shakeup. last month, the bank one a role as a lead advisor. japan's largest advertising agency due to refund $2.3 million to customers over charge for internet ads. transactions dating as far back as 2012, finding more than 100 clients affected. on friday as a hit reports of billing discrepancies first emerged. dentsu has issued an apology. an arrest warrant for alleged want toon, prosecutors .etain a deputy chairman
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malaysia is said to have refused to cooperate with india's efforts to question the pair. india says it may ask interpol for help. could face an uphill battle when it comes to facing holding on to his current credit score. s&p and moody say they will be below the threshold for an a rating. this latest news comes as a have had bhp's rivals their own outlooks upgraded as resource prices are making a comeback. what else a look at we will be watching in asia this week. we kick it off with nike reporting earnings on tuesday. we are watching how future orders perform. in the last quarter, they missed estimates, causing concerned that the world's largest sports brand is slowing.
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buck to thehey trend with future orders of 24%. that beat estimates. bank willstal savings make its trading debut on wednesday in hong kong. the beijing-based lender plans to raise $7.4 billion in the ipo. it wants to sell more than 12 .illion shares this is expected to be the world's biggest share of alibaba two years ago. friday is the last day of the month. the measurements of the boj september meeting when policy makers added what they call yield curve controls to their stimulus program. that will be interesting to read, the debate that went on during that meeting in the face of the yen's remorseless c limb.
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let's get a head start on all that economic data. joining us now is the chief asia economist at standard chartered. great to see you. the dust has settled somewhat after a massive week of central-bank action, in action, creativity last week. what do you make of it all and where do we go from here? iti think the way to look at is that there is every reason to believe that if you are looking for kerry, if you're looking to put risk on, you certainly do have some event risks to watch out for, most of which could be surrounding whether or not the fed is going to still deliver a another hike in december or not the u.s. presidential election opinion polls will be swinging even more in favor of being uncertain on who will be the next president. central-bank policy for now, we believe it is getting out of the way.
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in our view, the fed will be doing that, but that won't he be later that we get more confirmation of that. in the meantime, the markets will be able to climb the wall of worry in being able to do with a lot of those challenges. how big a challenge and even risk is the presidential election? you think it will have immediate volatility or will markets eventually digest and move on as they have with brexit? >> i would think it could be something similar to that. certainly i believe that in any case, even in the case of a president trump, where there is less certainty about what policy would be, certainly on the foreign-policy front, that markets would start to believe that what happens after the event once you are in office is different to what you are saying pre-election. i take the example of president obama, who was against even nafta pre--election. these are all things they will be able to take in stride, but
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of course they would prefer and those swing factors will make a different short-term. medium-term, it will be something that will be a focus for the markets, but not enough to stop them in a world where yield is in such supply for reaching out for it. at $75,il, the beauty i how do you justify that? , how do you justify that? >> the investment in future supply is so weak. it has collapsed since 2014. at some stage with a continuous, steady rise in demand, which is not ended, especially asia and china, there will be a mismatch in the other direction from what we have seen in the last couple of years where demand is outstripping supply and it will not be as easy as some of the markets thing to flip a switch and turn back on the output from the u.s. or indeed from other countries where expectations on
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rising supply are there. haidi: very interesting view there. we will have to leave it there. a look at howtake samsung should try to win back trust after its battery fiasco. this is bloomberg. ♪
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todi: samsung continuing limit the fallout from the note seven battery fiasco. the company relying on its telecoms unit for half of its revenue. cut the cost of handsets? how does the company moved pass something like this? have to do is focus on what they have done well in the past. is theyg samsung can do get a price premium. that is powerful and shows they
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have pricing power. most of their competitors have to cut prices. some sun managed to be the largest smartphone maker in the world, and they still managed to charge more. what they should do is keep that going. forhey start cutting prices operating profit, it will hurt. what they need to do is spend their money on marketing, research and development, so this never happens again, but they have to resist that temptation to cut prices to win back or buy back some kind of loyalty. that would be a mistake, i believe. they have keep going and spend money elsewhere. alllook at the shares since this has happened, it took a bit of it yet, but it has bounced back. investors don't seem to be concerned, betting that consumers will trust them again. haidi: up next, will opec reach a deal on curbing output?
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this is bloomberg. ♪
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haidi: it is monday, certificate six. this is trending business. -- september 26. this is trending business. will live this hour. monthsgest drop in two feels good.bia 100.en is edging back to
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you can follow me on twitter. trading in jakarta getting underway. it seems to be very downmarket on monday morning. >> it was better when things were boring. without learning prices, the most like don't come to me. we're basically saying an extension of the decline on wall street. 1%.o down a quarter of we will get that for you in just a moment. let's talk more about the fx market just a few moments. singapore, have experts out of
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thailand. this outflow story, in 22 straight days into friday, if we do get to 23 today of net outflows, that will be the .ongest stretch of when you look it up without japan, you have three months to go at this pace. very quickly, currencies. we're looking at dollar weakness. can we get the rupee up? a bit of weakness coming through. speech from the
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governor later on. heidi kretschmer -- haid? haidi: there could be action on stabilizing the oil price. saudi arabia is there to cut production. what would this kind of proposal from the saudi signify? the mostrst thing in important one is the saudi's talking about potentially cutting their output. they are willing to cut. be over 10ill million barrels a day, but it is a bit of a softening. they have thrown the ball into iran's court. it is unlikely there will be an agreement of any sort, anything tangible, on wednesday. expect a lot more talked to into november.
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it could be a busy time to chatter all the way into november. haidi: what about the markets? >> markets are quite resilient. at what it averages, it is resilient, it is holding in that range. we were getting to the stage where the market was looking like it would be balanced towards the end of the year, but there is more supply from non-opec members. if the price holds around in this range, it will probably do well. it could get below $40. the financial health of china's banks raises a warning
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that smaller lenders have been more reliant on each other when it comes to funding. that is wrapping up contagion risks. tom, another warning about systemic risk out of china. what do we know? the spotlight being shown this time by moody's on the wholesale funding. they have taken a look at wholesale funding, including funds raised on the wholesale -- on the interbank market. that counts for 34% of the financing of china's small and medium-sized banks. that compares to 29% at the end of last the spotlight being yeag of last year. that set a record. bank over thet last three years has relied on and increased its shorts on borrowing by 75%. deposits haveide,
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increased just 24%. an imbalance there is unhealthy, some would say. chinese authorities have kept the seven-day repo rates relatively low. that is around 2.4% over the year, trying to support the economy. the flipside of that is that the liquidity, some of those funds set up in bad loans, dodgy loans , and into china's shadow banking system. the bank said it is increasingly concerned about risks. the heart of china's banking system that -- system says that a liquidity crunch risk is coming. i talked to be in to do to of chance in banking at the time is it social sciences. advises central government. i asked his thoughts.
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>> the slowdown of our economic growth, the bigger downward pressure on the economy, this background is a macro trend. it will not change in the short-term, and amid this situation, our banking sector faces a lot of pressure. the bad loan rate is rising. profits are falling. this trend is very obvious. blind toboc are not this. they say a short-term goal of curb has $22.2 trillion worth of savings that provides some kind of cushion to their financial system. let's take a look at some of the other stories we are watching. taking an ax to its asia division. >> we are hearing about a quarter of golden -- of goldman
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banks should have an asia outside japan. the cuts will come as early as this week according to our source. worst rankingits in equity since 2008. scrutinyis also under for its role in underwriting $6 billion in bond sales for cycling -- were struggling malaysian funds. in place in australia and new zealand will be spared from the call -- the cull. hanjin shipping is sinking again. 40 of its 97 ships at sea have now unloaded. hyundai merchant is said to be looking with a view to buy.
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hanjin has declined to comment, while sunday says it is considering all measures. it has created a boost for hyundai's shareholders. at one point during a today trade, they were up 12%. in's creditors have been stepping up to ease cargo disruption. another big move. almost -- jellico hasrst time chinalco.- the move to private -- the move to privatize chincalco. the project has seen revenue
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squeezed by oil prices and workers strikes. and reports from korea as state bresky's -- state prosecutors say it is concerned that emma's mother is going on. rankingis the highest executive to be questioned. in july, prosecutors arrested his sister for bribery and investment. she denies taking kickbacks from as well asmaker, stealing a most $4 million from a company owned by her son. still ahead, why cutting the price of the note seven , but notice customers -- but might not be an entirely winning plan for samsung. -- he yen
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this is bloomberg. ♪
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haidi: the bank of japan maybe -- may be preparing to strike it could be getting ready to wave goodbye -- still digesting the yield curve. will it work? i think most economists at this point think that the bank of japan has already done pretty much all it can to get inflation to 2%, to get japan's economy out of this. -- out of this
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parabola of contraction that this been for quite some time. that this newink strategy by governor kuroda will move the needle much. what about governor grote's leadership? he is a more than halfway through his turn. where does that leave his legacy, and also his successor? >> what many observers are saying is that what he did last monetaryto shift stimulus to a much more sustainable basis. from presetway government bond purchases, which at some point would run into a shortage of bonds, by shifting to this yield curve targeting approach, he has made policies framework much more sustainable. it is something that his successor could take over and tweaked very easily. haidi: thank you for that
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analysis. former --uest is the is a professor. he is well known in market tocles for his efforts influence the yen's exchange rate when he was finance minister. your reactions to what governor corona and the doj -- the boj did. will it work? i am not disappointed. he is going to continue on his current policies. that is reasonable. he has during the course of the last several years done a good job. you don't think his
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targeting of the yield curve is a reflection of previous boj policy? >> i don't think so. is an option. it feels he took over in 2013, and his easing of monetary policy has worked. it has led to the recirculation of the currency. easing coming to the final stage. so far, it has been quite good.
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haidi: what does the government need to do now? you're saying that the powers of boj easing have reached their limits. goal structural -- this goal structural reforms need to step up, yes? structural reforms need to step up. >> we need investment in the coming several years. the government, i think, could do that. for some time to come, fiscal policy will be quite active. government would probably respond to the expectation of governor corona. corona -- kuroda.
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>> d.c. it heading to 90 before the end of the year? do you see it heading to 90 before the end of the year? toit seems to have showed up 120. given the stance of monetary policy between the two countries, some appreciation of the kurds is only natural. i don't think governor kuroda thinks that it is a crisis. i could see it between 95 and 100 before. haidi: what would be a crisis situation? if you were finance minister now, what would compel you to act?
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let me put it -- let me put it to you this way. currency weakness is no longer the economic panacea that it used to be. if you have a weaker yen, it does not make as much of an impact on trade as it should. in that aspect, does it matter? >> yeah, sure. course, it could strengthen experts. many japanese corporations are now operating outside the .ountry that does not really help.
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in exchange rate on exports is quite different from 25 years ago. japanese corporations are operating quite extensively in foreign countries. haidi: what do you anticipate the yen will do next year? the yen would probably have a slow appreciation, so i would $1.90 surprised to see yen by the end of next year. ordi: there's inflation know to be found to your getting these inflationary forces that are really difficult to shake, which generally translates to a stronger currency. what can the bank of japan be
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doing? what can government policymakers be doing? japanese growth at this moment is at 1%. ison't think that problematic for the country. , japaneseay deflation price movement is a wreck. i don't see it in the -- i don't see any problem at this moment. it is growing at 1%. a 1% growth rate is sufficient. haidi: thank you so much for your time. former japanese finance minister joining us. prices may have
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rebounded, but the world's largest miner may struggle to hold onto its current credit rating. this is bloomberg.
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haidi: a quick check of the latest headlines. the rolling stone founder is selling 49% to singapore-based technology company. lb in the first -- it will be the first time that outside investors have been in vault. twitter is said to be searching -- stepping up its search for a buyer. it has held informal talks with several suitors. twitter has had goldman sachs
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and other potential buyers. havea merkel is said to rejected business with deutsche bank as germany moves ahead to national elections next september. the lender has lost half its market value this year. declined to support deutsche in its legal battle with the u.s., which may employs -- may impose $4 billion. despite an up -- new york -- not when it comes to bhp? in the last couple of weeks, we have seen the likes of some of the biggest miner's have a boost from ratings agencies,
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either with upgrades to their ratings, or a boost to the outlook on those ratings. not so for bhp. the outlook on them remains negative and the rating agencies of moody's and s&p. another couple of factors behind that are the volatility in energy prices, and of course bhp has a major oil division, unlike its mining rivals. there is also concern over bhp's financial policy. they are looking very closely to see whether there will be any additional returns to shareholders. perhaps most crucially, the continued uncertainty around --bilities from the so marco samarco well failing.
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still unsure what the final cost will be to bhp, and that is one of the factors that will weigh in on their rating. there is no guarantee that the rating will be downgraded, but what the agency is saying is that the mage -- the metrics are not fleshed out, and they will continue to scrutinize bhp's balance sheet. haidi: investors also shared the same kind of concern. concern is a little with the debt investors. it is never good when metrics breached those thresholds. they are still the best rated mining stock. investors will stick with them for the time being. ouri: coming to us from motto is report from melbourne. the future of tpp in jeopardy, japan is working to get it
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passed in its parliament. we talk about that next. this is bloomberg. ♪
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♪ haidi: the top stories trending this hour, gery is says saudi arabia has offered to cut oil output. the algerian energy minister says saudi arabia would reduce levels to january numbers. russia gathernd on wednesday with algeria calling for a collective cut of one million barrels a day. ratings companies are warning about contain general risks among china lenders.
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wholesale funds accounted for 34% of small and medium-sized bank financing at the end of june. one lender, shanghai development ort terms seen sh barring jumped 75% over the past three years. prosecutors are seeking an arrest warm and -- warrant for the lotte group chairman. he is the highest ranking executive to be questioned into corruption of the conglomerate. his father and older brother have also been questioned. in down start to the trading week here in the asia pacific. let's get over to david for the details. david: the more we push into the trading station, the more lows we hit. we are down .6% when you look at the regional benchmark it.
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-- benchmark. we just heard from mr. yan talking about the japanese currency. yen talking about the japanese currency. hits 80, that's when the bank has to start talking to the u.s. on possible intervention. 80, the world will look like a different place. what is moving each market. have a look at sydney, every single sector group falling in australia. you look deeper, sub index here, banks flat, real estate up, financial services helping to pull things lower. let's flip the boards and look at what is happening in hong kong. hang seng index, a sharp drop, .8%, every single sector group. when you look at property stocks
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and casinos, we are feeling the pain in hong kong. a downgrade from credit suisse, wynn macau getting the worst of it. to privatize mining, not seeing the reaction there. 33.7% compared to last the boards, and let me , thesehis, south korea two obviously related stories when you talk about this ongoing who gets what of hanjin shipping. saying 40 out of 97 ships have completed unloading. gets theomes to who
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ships, there is talk that hyundai merchant is considering buying up perhaps some of these container ships of hanjin shipping. banks approaching hyundai merchant here. a great story, on the website, recommended to read that. hyundai motors seeing the biggest decline in six weeks. perhaps reduction disruptions of 100,000 vehicles, shares down over 2%. haidi:'tis the season for their strikes. japanese parliament returns today after its summer recess with the tpp high on the agenda. supporter remains a of president obama's landmark trade deal despite resistance at home and abroad. 'brett millers
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joins us now. what is at stake for shinzo abe? p has been attached to his reform agenda. he has used it for leverage. it is starts to look like failing, he loses that leverage, so it is important to maintain the momentum. nowe takes it to parliament and keeps pushing, he can maintain the argument that the tpp would help japan overall, help the exporters in the manufacturing sector, and that is one of the key reasons why shinzo abe is doing this at at the moment. haidi: what does potential ratification mean for the region? in terms ofok at it strategic competition, not simply free trade. , china, the u.s., tpp fits in.
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japan wants the u.s. to maintain its presence in asia. china is pushing for greater recognition and greater power. china is outside the tpp, so that is where the key fits in here for the tpp and strategic competition. now that we see the u.s. presidential candidates voicing opposition, there is a lot of concern in asia about that. that is another reason why japan is pushing harder to keep the momentum. haidi: a lot of domestic opposition, in the u.s. as well. thank you so much for that. cureker currency was the all for ailing economies, but times have changed and it may no longer be the panacea it was. why is a weaker currency seen as desirable for a struggling economy. in reality, does it work that way now? >> well, there are a couple of
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reasons that a weaker economy can help economic output. , if youhat exporters are a manufacturing country, they can become more competitive because they can lower their prices in dollars and may get the same income in yen. if you are a commodity producing youtry like australia, then are a price taker, but goods are priced in dollars, so a weaker currency means more income for the same price. that is the theory, but it seems the world is changing. sachs,ording to goldman the impact of the appreciating currency is about half of what it was over the past two decades as it was in the previous two decades. say, just sort of a diminished effect of a cheaper currency, less bank for your .eaker bock, yen, euro
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what has caused this shift? >> some of it is the changing shape of world trade, so in fact exports or trade with the u.s. is lower than it used to be, even as overall trade has gone that theu could say currency impact is weaker because currencies are more diverse. electronicss with and those prices are always constantly coming down. with things like the effect of having computer speed go up and up. that means the currency part of the impact is lost along with the other inflationary impacts of more efficient manufacturing. if it is no longer as you say the economic panacea that it used to be, wide we still have central bankers and policymakers are strongly focused on how they can control where the yen is that?
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example, officials saying they are worried about the excessive moves in the yen as it looks to break 100 again. well, one thing is that it is certainly something companies go on a lot about. in japan, you will see the with the up and down yen going down and up, as it were, i weaker yen is seen as being good for japan inc. with its strong manufacturing base, so there is a traditional play there. an angle companies can pursue. in australia, company after company was dreaming at the reserve bank to get the currency down when the strain dollar was above the u.s. dollar, and it is not what companies are used to. is the perception thing as much as an actual value thing as well. joining usynolds
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there. checking in on other stories we are following. the former thailand prime minister has been told she must pay $1 billion in fines for her controversial rice buying scheme. wasring farmers the price an abuse of power. she says the program was to raise people out of poverty, but critics say a huge amount of money disappeared. saudi arabia central bank is injecting $5.3 billion into the system as lender struggle with cheap oil. the saudi monetary authority will give banks the funds in the form of time deposits and will introduce seven-day and 28 day repo rates. oils plunge has forced saudi arabia to draw down on deposits. that put the squeeze on domestic liquidity. hyundai motor is tumbling as workers staged their first full-scale strike for 12 years.
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last month, the unions rejected a tentative wage deal which might affect hyundai's efforts to reverse 10 consecutive quarters of falling profit. that was the first time that union workers have voted down a pay deal. goldman sachs will close at singapore trading desk. they still have staff focusing on research. dismiss 15% of its workforce last month as hedge funds have struggled. goldman sachs is also said to be planning a significant number of job losses in asia. a cut a quarter of its investment banking jobs in the region minus japan. these are very steep cuts we are talking about. how do you read into the situation? >> there is a fundamental
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question about how bad it has gotten. if you look at the competitive dynamics, the first thing it is happening in the midst of an unprecedented boom and overseas chinese takeovers. there is something clearly going on here with the market dynamics. if you look at hong kong, for instance, the ipo market and the wider ecm and debt capital markets, the chinese security firms are taking unprecedented market share. if you look at the data that , chinesee fee share firms have about double their overall investment banking fees share over the past five years. so there is certainly an element of competitive pressure. component is to what extent are asian companies willing to start paying fees along the lines of what european and u.s. companies are doing. might notsts that we be getting there anytime soon. you're talking about
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chinese banks taking a bigger piece of the pie, a goes to reason that they could be an industrywide trend. >> certainly industrywide. if you look at the hong kong ipo market, it is in the clutches of the chinese firms right now. they are taking a lot of state owned banks public in hong kong. you look at competitors like morgan stanley. they are obviously the most heavily involved in the business mix. some of the biggest universal banks like hsbc and city banks are somewhat shielded by the universal banking model, so they can lean on corporate banking relationships. in the case of hsbc, retail and such things. it is tougher times right now. haidi: these are significant cuts by goldman. too much, too soon? >> that is one very key question. if you look at asia as
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supposedly the growth story of global investment banking, then if you see a rebound in ipo's and a rebound in the southeast asian market, you could be left in the situation where goldman is not a sound. haidi: we will have to see how this plays out. a dire day around asia. some sad news to bring you from the world of golf. arnold palmer has died at the age of 87. regarded as one of golf's greatest players, on a palmer was a trailblazer and the first superstar of golf television age. the 17 major titles, four masters, to open championships, and one u.s. open. he won the pga achievement award in 1998 and had been one of the 12 original inductees in the world golf hall of fame in 1974. up next, citibank raises its odds on a donald trump victory and says it could take the shine off of gold for some investors.
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details are up next. this is bloomberg. ♪
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haidi: donald trump and hillary clinton face off in the first presidential debate on monday. a survey shows of ohio, florida and 12 other states are too close to call. electorals 100 98 college votes compared to donald trump's 165. 270 are needed to win. nationwide, the polls says clinton lead strap by 46% to 43%. themberg is broadcasting debate live on twitter at 9:00 p.m. eastern, 9:00 a.m. tuesday morning hong kong time. citigroup says gold may be in for a bumpy ride in the final quarter of the year as donald trump's chances are now at 40%.
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exactly is citibank saying? citigroup is seeing increased volatility in the cold and forex markets cousin of the u.s. presidential race, and because of the possibility that the u.s. fed may hike interest rates in december. the presidential race is tightening in the u.s., and outputs the probability of a donald trump victory at 40%, up from 35% a few weeks ago. we have thee televised debate this evening in the u.s.. haidi: where does that leave their price forecast? to best of all, it has put into the context that gold is up 26% this year already. citigroup have raised their base forecast for the fourth quarter , up from announced
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$1280 an ounce. under its most bullish case where it sees a trump victory, it sees worsening worries over and a dovishonomy fed. it sees prices going up to $1425 an ounce in the fourth quarter, and 1004 hundred $50 in the first quarter of 2017. that compares to the current price of $1335 an ounce. has been you say, it an extraordinary run up when it comes to gold this year. what does the consensus view look like now? >> there are a lot of gold bulls right now. you have flowed negative interest rates around the world, unprecedented monetary easing, and a lot of people are quite concerned that when these assets bubbles in various markets begin to unwind, it will be bullish theyold, and investors say
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are bullish about gold this year. on the other hand, there are other people who say rising u.s. bond yields, or strong dollar, and the possibility of fed hikes in 2017 could mean the bears could hold sway over the next year or so. it is all up for grabs. isjust don't know, but what for certain, is the presidential race and the possibility donald trump may be elected president of the united states is causing a lot of uncertainty in the gold market. then thery much so, rest is down to the fed. great to have you. let's get a quick check of the latest business/headlines. japan's largest advertising agency will refund $2.3 million to customers. investigated transactions dating back as far as 2012 and found hundreds of clients affected. shares were trending down today. they fell nearly 5%, but they're
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down 1% at the moment. that 5% decline on friday on those reports of billing discrepancies when they first emerged. dentsu has issued an apology. india has issued an arrest warrant for alleged corruption. maxistrols malaysia's group. to have refused to cooperate with india's efforts to question the pair. india may ask interpol for help. japan's much delayed passenger jet has made a fourth test flight. a mitsubishi spokesperson says with the operation lasting over two hours. the flight had to plan promotional trips curtailed by faulty air-conditioning. totomers are not expected receive the plane before 2018 at
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the earliest. that is two years late. fire,t, no smoke without how samsung can win trust after the note seven recall. this is bloomberg. ♪
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haidi: samsung has been called to a meeting in india after reports that one of its
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smartphones overheated and caught fire on a plane. the aviation regulator declined to name the airline or when it happened. overheadto was in an dan and started smoking. toy are now advising people not use samsung note phones on planes. this comes on the back of samsung continuing to manage the fallout from its note seven company nowco, the relying on its telecoms unit for half of its revenue. the question is whether it will be forced to reduce the cost of handsets to win back trust. let's bring in our bloomberg gadfly columnist. great to have you. our cost cuts the way to go? >> no, they will need to spend more money on marketing, research and development, to make sure this kind of fiasco never happens again, but if they go through the process of cutting the price of their phones, they are giving up the one area they have over everybody else.
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they have a certain amount of marketing muscle and power that allows them to charge a lot more. thancharge 30% to 40% more everyone else does in the android echo system. -- ecosystem. they trust the brand, the product, they believe it is worth more money. note seven fiasco, exploding phones, is something that will not build trust in the brand of the company, but we can believe certainly that people will get over it and forget about it and 6-12 months possibly, and so what samsung would need to do is hold onto that edge, and there is a financial reason for that. the fact that they can charge more for their phones. same, so are about the they have really good operating margins. if you look at the operating margins for the smartphone business, they have been growing , and operating income has been rising. they are getting really good money out of this. it is important that they do this, and so by cutting the
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price of their phones, they are giving up all the ground they have built up over the last few years. it does not necessarily mean they will win more audience. say users will get over it in a few months, a year, will investors get over it? >> if you look at some some stock price over the last few weeks, it did take a hit. it fell off for a while, then it rebounded. it seems to me that samsung investors have certainly forgiven samsung to a certain extent or are betting that consumers will forgive samsung. samsung has already said it will cost them as much as $2 billion. that is a big hit, 20% of the operating income for the smartphone business. certainly the way investors are looking at it now, judging by the stock price, they believe the company and consumers will get over it and they will return to normal at some point. haidi: probably should have bought the dip at this point.
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thank you for joining us. before you go, let's talk movies. toppedmagnificent seven the u.s. box office, taking in $35 million. the remake of the successful steve mcqueen western classic earned mostly positive reviews, beijing warner bros. stork. so far in 2016, sony ranks fifth among the six major film companies there. for "trending it business". angie will be updating the big stories on "asia edge" next. this is bloomberg. ♪
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♪ it is victoria harbour in hong kong, but a sea of red across asia today. we are live in hong kong, and this is "asia edge". ♪ angie: i am angie lau. the top stories, while paring its biggest drop in two months as saudi arabia opens the door to a production deal. opec meets this week. goldman sachs may be cutting jobs in asia. we are told a quarter of its investment banking staff without
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japan will go. a runaway housing market poses a challenge to china. the boom may push money overseas, putting pressure on the yuan. i bet on a dummy trump presidency. donald trump's presidency. why they could take the shine off gold. david: i'm watching what is happening in the markets. have a look at the asia-pacific. volumes are quite thin. some of these moves are getting exacerbated by what is not happening when it comes to that metric of the market. s&p futures just turned negative. 60% stocksoking at across the asia-pacific on the way down. 20% on the way up, the rest unchanged at the moment. as we move into midday, where looking at session lows right


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