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tv   Trending Business  Bloomberg  September 28, 2016 9:00pm-10:01pm EDT

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♪ it is thursday, the 29th of september. i am haidi lun. this is "trending business". ♪ angie: we will be live in melbourne, singapore, and taipei this hour. oil maintaining its post-opec rise. tte group companies on the rise after a court threw out an arrest warrant for the chairman. the imf hands a warning to
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japan, saying the balance of power has swung too far to the employer side. let us know what you think of our top stories by following me on twitter. don't forget to include #trendingbusiness. trade aftering being closed for two days. singapore and malaysia coming online. if these post-opec gains are being held across the region. juliette: we are hoping for that. malaysia is southeast asia's only net oil exporter. singapore joining in that buying party, up .4%. taiwan, a gain of .7%, taking that rallied from the u.s. and running with it. the kospi is higher by .1%. a slight dip in south korean consumer confidence, not impacting markets.
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the nikkei recouping what it lost yesterday, up by 1.3%. session, moreay's than half were trading without their dividend. the australian market is saying great gains, energy up over 10%. santos also leading gains. in new zealand, upside to .5%. this is moving into the energy sector of the australian energy market. it is the top performer, up by 4%. we are seeing a lot of these players take that rally in u.s. energy stocks. fact, all five moving higher today, so a strong rally in those key energy players. the oil rally has given a good news to commodity-based currency. forwards up byit
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.5%. the aussie dollar moving higher, 76.99. the kiwi with a bit of an upside as well. this oil-field rally helping markets today. angie: that's right. the one story moving markets in this asian session with opec members meeting and now jeers, having agreed -- algiers, having agreed to cut production to 33 million barrels a day. we have been tracking this story. it is very unexpected, especially given the signals from iran and saudi arabia before the meeting saying the agreement was unlikely. to agree on this production cut, you saw the reaction of the market, a 5% gain, the biggest to since april.
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the market likes it, and it is a opecive that shows is able to work together and come to some sort of agreement. >> what was the broader market reaction? >> the market is reacting positively to this. opec has a history of not eating able to work together. it is hard for them to agree to anything. there was a lot of diplomacy behind the scenes leading up to the meeting, talks, consultations, so this is a good deal for the market, and the market likes it. angie: this is something of a turning point. what are the longer term implications? >> these are the challenges now. compliance has always been a problem for opec. many produces were unable to stick to quotas, pumping more crude than what was allocated to them. u.s.does this mean for the
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producers? it does this open the door for u.s. producers? we will watch. we have to wait until november when they get together for their formal meeting to see more clarity on production limits and who will take the burden. certainly this has been a good starting point given that we had not expected much to be done. thank you for that. a surprising announcement from opec after their meeting to pledge to cut production. lotte groupme, companies moving higher after a court rejected an arrest for the chairman. thering some relief to conglomerate and its founding family. it has been embroiled in corruption allegations for more than a year. what was the judge's
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justification for throwing the worn out? did not find judge the need to issue an arrest warrant for the chairman. requested to arrest him on him does a man charges. a statement from the group says they support the ruling and want to normalize activities as soon as possible. 90te group has more than units generating $91 billion. free shopping,ty chemicals, a wide range of industries. his arrest would have left a leadership void. the court's rejection of the arrest warrant does not offer a everything isat over for the group. law, prosecutors can press ahead with indictments
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or gather more evidence to renew a request for an arrest warrant. of see that stocks in some their units are moving higher. some temporary risk bite for the stock price in the lotte group of companies. time when the family itself is struggling with something of a power struggle. last year, his elder brother led a boardroom coup that failed. week, the chairman was question for more than 18 hours. his brother and father have been question. his elder sister was arrested in ofy on separate charges bribery and embezzlement. she has been in jail since then. vicemonth, lotte group chairman was found dead hours before due to be questioned by
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prosecutors. all the scrutiny has impacted the business. potential $4.5 billion of its hotel unit was scrapped in june, and this had a knock on impact for overseas acquisitions and investment. is unclear how long these investigations will continue, but it is likely to go on for some time. angie: all right, the drama continues for the lotte group group of companies and south korea. here is sherry with the roundup. sherri: the rich and powerful underpaid,weekend that is how the imf sees japan's relationship between employers and workers. they say more needs to be done to address the problems in the country's labor market. to the imften mission chief of japan. the labor market reforms are very important, and abenomics
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needs to do more in the labor market if it wants to achieve its objective of higher growth and better labor force participation. the comments came after data on monday showed corporate cash and deposits rose to a record $2.4 trillion less quarter. it highlights employer's reluctance for stronger wage growth and capital invest meant -- investment. slow wage growth is slowing growth in japan. the fed says putting the pressure on banks, and janet yellen said her agency has theted to reveal "disturbing compliance failures." revelations that wells fargo had opened scores of fake customer accounts. janet yellen said the review will encompass a variety of compliance concerns, including mortgage abuses and banks manipulation of benchmark
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interest rates. she declined to respond to the most heated questions about well fargo that 12 fargo, including whether the fed should consider breaking it up. black berry will stop making its iconic devices after losing the battle to apple and samsung, and tois handing production over a partner to focus on its software business. take a listen. >> the smartphone of the future is about the smart, not the phone. if people focus on the phone, the physical phone itself, that in might be missing the whole equation. application, artificial personalization, decision-making, it is really about that, so we are doubling down on those. in my opinion, it is the start of a new chapter rather than the end of an era.
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>> getting the money-losing smartphone business off black aries books will make it easier for the company -- blackberry's books will make it easier for the company to remain profitable. angie: we talk about the outlook for real estate assets as investors globally continue to pile in. , how short or going long asset management is betting on gold. this is bloomberg. ♪
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angie: a quick check of the latest business flash headlines. shanghai development bank says the board has approved the right off of more than $1 billion in assets. the bank did not identify the assets. a spokeswoman declined to comment further. assumingy it will keep
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that where it has the right of recall. the risk of smartphones overheating if they are damaged by accident a fire broke out on a flight to new york when a device with a lithium battery was crushed inside a business class seat. there are concerns about lithium-based phones on aircraft. miller investors approved a $103 billion takeover by a binbev. abinbev will account for one of every three years sold worldwide. shares and both brewers rising in london trading. all right, rally on our hands, asian stocks surging with oil higher.
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the most since april since opec agreed to trim output for the first time in eight years. executive director at peak asset management is with us now. good time for you to roll. do you see this oil rally short-lived? >> thank you for having us. an oil-inspired rally on the fact that opec did cut production. from 34duction fell million barrels a day to 33 million barrels per day. it was not a huge cut, but the oil prices up five point 7% on anticipation that -- 5.7% on anticipation that will continue. that bodes well for the market overall. development,this ,hich was a bit of a surprise you take that in tandem with the recovery in commodities in general and the yield trait
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continue and given what the fed is doing, does this make australia ever more attractive right now? absolutely. we did see the federal reserve pushing back the interest rate expectations. u.s. fed see the raising rates at all in 2016. the last time that happened and an election year was a very long time. not raiseed will rates this year. that bodes very well for commodities. commodities are denominated in u.s. dollars. as u.s. interest rates remain low, we see a strong rebound in driving asset prices higher. low volatilitye environment, why are you long gold right now, especially given how much it has run up your today? view that u.s.e interest rates will not rise. that does bode well for
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commodities. investors are cautious. we are seeing flat top line growth in australia. the focus was a reduction in capital expenditure, and we did not necessarily see a growth and margin next tension, so gold is safety. we are seeing commodities as a whole pickup, and we do believe investors are looking for defensive assets and gold will be strongly represented. angie: you have turned bullish on australian property. strain property, yields are very low in australia. interest rates are at record lows, 1.5%. there is speculation that the reserve bank will have to cut the interest rate by 25 basis points. if they do that, that bodes well for properties. we are bullish on properties, but are expecting upside in some
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of the defensive stocks as well. angie: they could cut again, but if they do, there is not much further they can go. the issue is that bond yields are low in australia. we are sitting at record low interest rate environment, so caches cheap. are looking for additional yield and return having money in the bank earning basically 0% after-tax and inflation, they are looking for thoseort of return, so dividends are in strong demand. angie: given a potential turnaround in oil markets, how does that shape your view on the oil market? >> the aussie dollar is at the top in the of our forecast. to the fact down that whether u.s. interest rates will rise, we don't believe they will.
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u.s. dollarbout weakness, so we probably see the austrian dollar heading to the $.80 mark by the end of the year. that will be a big focus over the next couple of months. the biggestare event risks on the horizon, the u.s. election are the european banking sector? we have concerns over european -- italian lenders, i should say. the deutsche bank story is really blowing up. is obviously structural issues globally. there is not that much central banks can provide in terms of additional stimulus and less we announce another quantitative easing which is highly unlikely. we sought japanese retail sales were poor. u.s. consumer sales confidence over 104. macro economic data has been very positive.
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we are wary of deutsche bank and the structural implications. there is speculation the german government will even have to save deutsche bank and talking about taking 25% of the credit default swaps, so that is concerning. volatility is low, but we have been looking for those dividends, and given that global cash rates are at a record low, investors are looking for alpha and yield in sectors. operating -- trading environment at the moment. pmi tomorrow, are you expecting a reaction? what you looking for? >> china data has been mixed. industrial production and gdp at the lower end of guidance last month, so we are expecting in-line the pmi, and we do expect asset prices to rise on the back of additional stimulus in china. of pleasure to
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have those insights. executive director at peak asset management joining us there in melbourne. coming up next, is it time to hedgingup on bonds with ever more expensive? that story is next. this is bloomberg. ♪
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angie: this is "trending business". credi toxic mortgage bonds set off the financial crisis. the credit suisse deal could be announced within weeks. theu.s. wants to wrap up case before the new administration takes over. it has asked deutsche bank for $14 billion. unitberg has been told a
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will admit to bribing officials a complex five-year investigation by the u.s.. it could enter a guilty plea thursday. investors have reacted positively. shares closing up more than 5%. international canceled the release of report into torture in thailand after a threat of arrest. says beatings, suffocation, an electric socket are commonly used by the thai army and police. global investors are starting to throw in the tile when it comes to bonds and hedging against further declines in the chinese a he has become too expensive. how is this discouraging inflows? >> china's government wants to
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encourage more inflows. bet of the inclusion will part of this internationalization of the yuan . they have also expanded the investor scheme of 26% in the past year. will rising swap costs likely slow this process even if the inclusion longer-term encourages central banks or bond funds and institutional investors to buy domestically. here is why. we can see the cost of swapping dollars for yuan has risen above the yields on onshore sauber notes as the depreciation trend has extended into the third year. the top line is the swap rate. the bottom line is the yield on the three-year sovereign. that would discourage that kind of swap. daily trading in yuan derivatives have dropped 30%
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from three years ago. let's look at the vix -- yuan -dollar. strategist predict a continued depreciation. the worst performing asian currency, this'll exacerbate outflows. it has been summed up quite says singly, buying bonds and hedging currency using a cross currency swap is not attractive. foreign investors would rather not by chinese bonds. aberdeen says the situation is unlikely to change unless of course the yuan starts appreciating are the central bank tightens monetary policy. neither of those two things are likely to happen soon. angie: not what you want to hear a couple of days before that formal inclusion on saturday. thank you so much for that.
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coming up, raising the alarm, why the imf is warning japan its employers have too much power. we get the hong kong and shanghai open for you. this is bloomberg. ♪
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♪ angie: the top stories trending this hour, oil prices continuing gains after opec agreed to cut production. they will reduce out what -- with weak demand seen to be persisting through 2017. the algerian oil minister said the decision was a unanimous one. one of koreans largest corruption investigations is on the back foot after a court rejected a warrant. the chairman faced embezzlement
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charges. lotte group has been in turmoil for more than a year now. janet yellen has told lawmakers that it sees solid growth in the labor market, but declined to offer a timetable for a rate hike. if the labor market overheats, policymakers have to raise rates more rapidly than they would want to. indo have the market open shanghai and hong kong, joining in on this oil rally. they are. look at the hang seng popping by .8% on the open. it is allld expect, those energy players leading gains. by 4%, sinopec up 4% as well, so joining in the
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strong moves in other energy players in the region. only one stock is actually in the red, and that is hsbc. we saw quite a big rally in banking stocks yesterday. the shanghai market opening to .he upside, some positive moods korea, up .8%, holding on to gains. we did have a slight it been south korean consumer confidence. the nikkei has been the outperform her. theas the underperformer in wednesday session due to the fact that half the members on were tradingopix without rights to their dividends. some othera look at energy players in the region, particularly our stray you, very solid gains coming through. it was a surprise to many in the market that the members in opec did come to this agreement, so we have seen the big rally in crude in rent and u.s.
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contracts. we are seeing this continue into energy players as well. bhp billiton and oz minerals continue their run. takata, having the cos sold its unit. i was hoping we might see a jump ,rom the biggest ipo this year postal savings bank of china unchanged on the open. debut aftery muted such high expectations. the imf is raising the alarm on japan's labor market. employees have too much power when it comes to wage negotiations, and that the wider economy will suffer if corporations keep the cash
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instead of raising salaries. about why the imf is so concerned. >> one of the reasons they are concerned is the clear power balance shift to employers. what happened is that in japan, it unions tend to be company based, and those unions have compromised their ability to negotiate for higher wages at the expense of protecting lifetime employment for its members. what the companies did in response was they added it contracting and part-time and temporary workers. but have increased a lot, they are not represented by in the unions in most cases, so that is a clear shift of power in my opinion. angie: you say this is clear, have to evidence do we
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show that the power balance has shifted in the favor of employers? one indicator you can point to is the boj data, which came out this week. that shows that corporate cash on deposit has risen to an all-time high, ¥242 trillion, a lot of money, so you can see that companies are saving a lot, but meanwhile when you look at wages for workers, they have been steadily declining, see you can see companies are not willing to spend or invest as much of the money into the pockets of workers. says the answer lies in labor market reforms. what are they recommending? >> they are recommending that they see the need, japan needs to mobileye's its labor market
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two, meaning that they -- mobilize its labor market more. they also need to allow companies to the flexible with the labor force. iso, what is interesting that may be the government can't use the so-called name and shame tactics to companies that are profitable, but when they are not raising wages a lot. all right. naming and shaming. thank you for covering the story for us. taiwan is set to announce its latest decision later on its rate, and economists are split on whether the central bank will add to its easing cycle. differences in opinions
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this time? on the one hand, 14 out of 26 economists seeing a cold because of the iphone. recent sentiment suggests exporters are doing well because of the stronger than expected iphone 7 sales. andust saw a giant pop export orders for august, orders for the coming three months, jumping 8% when the consensus was only for a 0.5% gain. definitely a lot of positive surprises recently. economists are thinking why should the central bank waste one of their tools when exporters seem to be doing just fine. on the other hand, you have willmist saying that it not be topping 2% this year or next year, and with the u.s. holding off raising rates until december, it might create room
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for taiwan to cut now so that they don't have to worry about capital outflows. angie: front run the fed decision. we have heard from japan, south korea, talks about attentional currency intervention as their currency gains strength. -- bank notal brink tempted to nudge at lower to give the exporters more of a boost? >> this actually came up at the june meeting, the last quarterly policy meeting, where a lot of people were speculating that the had just been put on a u.s. watchlist for possible trade related and currency fiddling. thate were speculating intervention will not be an option for the central bank, maybe a rate decision was in the offing, and and we saw a rate
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cut in june. that is one of the reasons why a rate cut is on the cards. they do cut, then rates are at a wreck heard low for taiwan. are there any bright spots when it comes to the economy? unfortunately from a policy perspective, all of the measures that are being planned seem to long-term, so probably you won't see the effects in the coming quarters quite so much. all right. we will be waiting that decision and analysis of it once it comes out. a preview of the central bank in taiwan's rate decision. some other stories we are following, china says it may consider buying container assets from hanjin.
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they have operations at the port of long beach. cosco has no interest in buying hanjin ships. the korean court overseeing the company's bankruptcy protection says it prefers to sell the company as a whole entity. take a look at how hanjin shares are trading. we will try to get you an update on a stock price later. , the head of the national stock exchange says managing the needs of investors in different capabilities is a challenge. investigators are looking into claims that high-speed traders have an unfair advantage. they account for 40% of trading volume. india's global significance is rising. smallia is no longer a piece in the global market turnover. it is a significant piece. destination, but
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one of the problems was in the markets in the last year. indian markets continue to be a and ansource of interest attractive destination for institutional investors across the world. is hovering's debt around unprecedented levels, much of it from heavily leverage state owned enterprises. morgan stanley told bloomberg that speeding up reform of state owned enterprises is key to solving china's debt problem. >> the debt formation in china has been going on for the past 20 years. has reached the level of 260% of gdp. that is very high. theeneral, we think that rising leverage in china will have a less negative impact on a market than the market
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anticipates. the reason being is that first of all the chinese government has a strong balance sheet. to the common belief, the majority of financial institutions in china are very well-capitalized. debt, look at the total the largest contribution of that that comes from the corporate sector, amounting to roughly 112% of the total debt, very high. offer that, the majority of the debt comes from the state owned enterprises. this further underscores the need to really reform these state owned enterprises and make them more efficient and to stop the continued piling up a that from this sector. this has to be the focus of the
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chinese leadership. the progress has been slow. we like to see more actions taken on that front. angie: still ahead, how brexit and moderate european growth are making asia more attractive to international capital. that is up next. this is bloomberg. ♪
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angie: a quick check of the latest business flash headlines. the company that invented the smartphone admitting defeat. blackberry stopped to make handsets, having lost to apple and samsung long ago. it will concentrate on its growing software business. the move has been in the works since the ceo took over three years ago. india's flip car
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to take the e-commerce battle to amazon, sparking fears competition. says he is prepared to spend heavily to win customers. walmart will take a minority stake in india's largest online retailer. the most recent violation came in at $16 billion. spotify in talks to buy it ramps ups competition with apple music. the two companies are in advanced negotiations about a deal. in july, soundcloud was considering a sale that would value it at $1 billion. it has approximate 175 million users. equity and bond markets showing volatility this year. investors now turning their sites to property, and our next guest thinks the outlook remains positive.
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great to have you. we are talking about how it feels like there is not a week that goes by without a warning about china's epic property market and how it is building up to be the bubble to in the all how do you feel about that? on there focusing commercial property market. you can see some really strong investment fundamentals behind that. what i say is often that when you are investing in commercial property, you are investing into income streams. you can make a sound investment decision by his -- based upon proper fundamentals. means for us that we can actually invest far more securely into china. how much interest have you seen this year in asian
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property? properties, assets and a, becoming more attractive? >> absolutely. is with the more moderate economic forecasts in the u k and continental europe, we are seeing interest from our investors into asia, including china. are seeing some market such as japan and australia, where there is very much what we would say more for property, which is exhibiting signs of strong income streams. investors feel quite safe investing in those markets where there is more economic stability. economies around asia are starting to stabilize and we are seeing a stronger forecast of growth. angie: that increasing interest is coming through particularly
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in developed markets, australia to japan, as opposed emerging asian markets when it comes to property assets? it's not just japan and australia, hong kong, singapore, but we see that with china given the depth of the market, the different regions and cities offer great potential for investors. we are seeing interest in the tier one cities. ,hat is a natural phenomenon where you see international capital come into markets. based -- they tend to stick to those tier one cities. where there is liquidity in a concentration of capital. angie: stay with us. we will be getting back after the short break. you are watching "trending business". ♪
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angie: let's get back to our conversation with justin o'connor. thank you for staying with us. you touched on japan being an interesting market. when you see the unconventional monetary policy with the boj driving up prices and compare that to the underlying prices of japanese developers, it goes in an opposite direction, so is this a case of the central bank distorting violations on the property market? >> i don't think necessarily. one must remember with the japanese property market that we are talking about the second largest institutional property market after the u.s., which allowshere is depth that property investors to follow different strategies.
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angie: all right, we seem to have lost just in there. we will try to get back to him and a little bit. in the meantime, china seen by but as the promised land, we have tried to track the market with varying degrees of success. now the nfl is trying its luck. caught up with peyton manning in beijing and asked him about the sports attentional in china. >> it is always amazing to know you have fans of foot: china, and some real passionate fans. i met some folks in shanghai that knew more about statistics than even i knew, colts fans, broncos fans, and that's why i'm over here to get more of those
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fans and grow the game of football and create more interest and get more young people playing. committed you think the nfl is to this in the long run? >> i think there is a real mission to get that game over here. the 90'she games in kingdom, games being played in mexico city. tokyo, so thee in fact there has never been a game in china is just a no-brainer. the fact that beijing hosted the olympics, a major sporting event. >> for you, we have heard about the buzz. get more of an organized lead would be the next part of it, where it is established and young people are playing in some leagues, and like i said, who knows, maybe a player comes out of china.
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that would be the best way to create more interest. >> how far away do think we are from that? is one.t takes every year from the nfl, there's a player from a small college who makes it. i think we all know that anything is possible. >> some say it is a violent sport with lots of injuries. how much of a hurdle is that because the nba and soccer don't have that. there is the physical, speed, contact, but the real beauty of planning, thee executing, trying to outthink and outmaneuver your opponent, so the more people understand that that is part of football as well, that creates more interest. angie: let's rejoin our conversation with justin o'connor. great to get you back. apologies for those technical issues we were having earlier.
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after the brexit phot initially happened, we have this neat dark reaction and heard a lot about these inflows coming through, in particular from chinese investors picking up london property on the back of those declines in sterling. as we get more visibility about what briggs it means, do you expect to see more foreign inflows into that part of the world? we do. a lot of it has to do more about the currency. it is now a lot cheaper to buy u.k. property. it was a knee-jerk reaction. funds some of the retail which needed to sell assets to create liquidity. we have seen now that prices have come back to where they were before, and that's even the listed side. generally, we see there is still a strong property market. of course, it is now far more attractive to investors with
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currencies where you can now buy a much cheaper pound. just quickly, your three-year plan to grow assets under management fivefold. had you plan to do it and where? >> we were talking about japan before. we find japan an interesting market. japan is often about finding assets where we can add value. we can spend some capital expenditure refurbishing, redeveloping, leasing out vacant space. then we can generate very strong returns, so deftly japan is one of our targets throughout the region. that's where we see investors demanding more asian exposure. whether you are talking about australia, increased interest from china, some more in china, but most of what i call the more
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core markets in asia is what we are focusing on. angie: great to have you with this. next, opec leaders deciding to make the cut. we get reaction on what is in store. this is bloomberg. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin this evening with our continuing coverage of the u.s. presidential election. donald trump and hillary clinton squared authorized by in the first presidential debate. it was held at oxford university on long island. -- hofstra university on long island. the candidates sparred over the economy and other public criticisms. the general consensus was that clinton won. here as a look at some of the -- here is a look at some of the key moments. >> president obama and secretary clinton created a vacuum the way they got out of iraq. because they got out wrong.


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