tv Street Signs CNBC August 17, 2016 4:00am-5:01am EDT
welcome to "street signs." i'm julia chattily and these are your headlines. shares in karlsberg sink. leaving bitter taste in investors mouth. be speaking with the ceo in a half an hour. back in black. dividend bouncing back to post a slim profit. takes the place near the bottom of the stock 600. warns of impacts blaming first half weakness of brexit.
donald trump shakes up his staff. hiring a new chief cheexshektiv >> i've gone to sunshine yellow today. i'm not bringing sunshine to the markets. a bit of a soggy performance today. the tlans are off by more than 1%. not one sector, in fact, in positive territory. all across in red. we have the likes of the autos sown .60%. despite a better performance better than expected to i'll bring you details of that too. the financial services also off .60%.
admiral after their first half earnings one of the weakest on the stock 600. we are focusing on karlsberg. the danish posting a 4% drop in operating profit. carlsberg did maintain outlook of low profit growth this year, but warned of negative currency effects. let's discuss this. senior beverages analyst joins us now. great to have you on the show. >> good morning. >> what do you think of the numbers. >> well, as you were just saying on actual reported figures, they came in slightly below expectations. we have to say, though, that organically, they did represent a bit special operating profit. they reported 8% organic growth. i think the expectations were around 5%.
and to give credit though the new management, which has been, you know, fully in place for i would say well over -- around 12 months really. the results i think exemplify the focus. increased focus on getting a new balance in terms of market share and profitability. so i think what the market was a little bit disappointed was despite that strength in organic number in operating profits the guidance was not increased and there's a little bit of downgrade in guidance for the full year. >> do you think they're being cautious in not adjusting the guidance. >> >>le. >> yes, they're cautious. whether they're playing games is a different story.
to be fair, the comparative base in the second half is significantly more difficult than the first half. and they also don't have the benefit of the euro championship in france. i guess they are rightly being cautious for the full year. >> i see challenges. i see what they said about russia, which is 16% of their operating profit. they said, look, this is our biggest exposure. the macro heads remain. reno market share there is a concern, in a sense. do you expect to see some level of stabilization in year? i didn't really get that from these numbers. >> well, russia has been an incredibly difficult market for carlsberg. not just this year, but the past six years. it's been a combination of very punitive tax policies on beers and then combined with very, very difficult environment for the past 24 months. i don't think on the micro side
we can say we're out of the woods yet. so so, yes, i would agree there's a lot of challenges and uncertainties there. the management in the statement today also eludes to that. >> and china of course has been a drag on the business. we saw volumes down 8% there. i know they have been geographically shifting the focus of their operation and closing some breweries as well. also that's warning signs. >> that's a little bit of a delta for the business. china has been a fantastically performing business. the good part of the last five, six, years. unfortunately, chinese consumer is significantly less confident now than it was for instance two years ago. so we see volumes in negative territory and it's difficult to sigh when that will turn. having said that, karlsberg is mostly focused on the western
part of china. china is not really a country when you look at the beer market: it's a combination of provinces and they tended to have solid and mie market shares in the west. structurally good business, just going through a p difficult period, i would say. >> asia for me for these guys is really interesting. it's 40% of beer consumption. if i look at the breakdown of operating profits it's less than 10%. they can do more here, surely. >> again, i think china is tends to be listing consumer product industries. generally it's a very big market. high growth or has been high growth, but it's one where element a almost all companies struggle to generate high profitability. i think within that will
framework, carlsberg is no excepti exception. i would say in the case of carlsberg, they do have a pretty good structural position. the margins tnd to be relatively good. unfortunately the top line is not there. >> makes sense. what about share price then here. they've had a great run over the last 12 months. i know there's a mna factor in the sector as well. what do you think of value in the share. >> the share, as you point out, have been performing very well in the past 12 months. they are valuation-wise, we would see them as fairly valued. i mean, not at 20 times earnings for a yield of somewhere around 5, 5.5. dividend yield of 1.5. >> yes. >> it's hunches. we need more in terms of
earnings visibility to take the shares from here. and that's probably why the consensus out there was a little bit disappoint thad the earnings forecast was not raised for the year. >> great to chat with you. senior beverage analyst. lots of questions there for me to pose when i speak to it will carlsberg ceo president at 11 kr cet this morning. we'll be asking the questions of what more they can provide. ball four beatty back in the black. to soon to assess the direct impact of brexit. abn am row posted a rise. rebound in the dutch economy helped boost earnings. bank issued a dividend of .40 a
share. said it was on track to meet financial that is corrects. abn amro warned brexit would hurt. which could impact forward. >> two rate hikes before the tend of 2016 are conceivable. this according to atlanta fed president dennis lockhart. the u.s. economy is likely strong enough to handle one increase in interest rates. it could come as early at september. lockhart pointed to ongoing strength in the u.s. labor market and positive indications inflation may pick up. lockhart's counter part, the new york fed, has also suggested a rate hike could happen in september. he believed the u.s. economy would be stronger in the second half of the year than it was in the first and markets reacted immediately with the dollar ridesing and fed fund futures implying the chance of a
september rate hike jumping to 18% versus only 9% the previous day. still low, though. head of strategy at bank of america merrill lynch. great to have you on the show. just injecting a bit of 2 a risk until the market. >> yes, the dollar has been on a roller coaster in recent weeks. the dollar selloff that we had recently was in a way positive. it was a combination of good u.s. data with a market that has been complacent. plus a relatively short position, not long enough. despite equities at historically high levels. what we hear in recent days was the fed trying to fush against market expectations. trying to prepare the mart for hikes. we had an interview by the san
francisco a few days ago. yesterday locklockhart. all of them giving the same message. the fed is good enough to hike. most likely they will hike this year. >> do you think they will hike this september. >> i would say december is more likely scenario. fed has never hiked rates just ahead of u.s. elections. if we see just before the september meeting, they might. i think december is most likely. >> until then we're going to need growth to be stronger. we're going to need to see further gaining in wages surely and car markets because what they've prooved so far is the moment we get any kind of turbulence in the market, they back right off again. >> that's true. when they hiked last december, they wanted to hike this year as well, but there were a number of unexpected shocks that kept them on hold. however they want to normalize monetary policies.
however you see it, it's been better in the first half of the year. monetary policy effects the economy with a lot. inflation should be picking up. should hike this year in order to be able to normalize monetary policy before inflation overshoots. >> as you said the market is underpricing the probability they adjust rates this year. what does that mean for the dollar though? if i look at long dollar position, i kind of struggle to find something to sell against it. i mean, sterling, you could continue to sell sterling. >> that's a good point. when we started this year, the market was definitely long, the u.s. dollar. now we say it's neutral or against some process like the yen the market is short dollar at this point. positioning is not the issue here. the only stretch position is staling as you said. this is driven by completely different factors. if the market price is high probability for a fed hike this year, i would expect the dollar to strengthen against currencies
like aussie, new zealand dollar. i would also have yen, but the yen is affected by the boj. the boj market and strengthens credibility. >> do you think it will. >> it's a challenge. the market has run ahead of itself. expecting helicopter money for japan. the fact that the government has announced a fiscal stimulus complicates things for the boj even more. you can argue if you do more on fiscal, there is less need to deliver monetary policy. >> makes sense. i've got more questions. i want to talk about commodity currencies. sterling of course because we've got uk unemployment data coming up. he's going to stay with us. if you have any questions for him. get your e-mails into us.
we are though, going to take a quick break. coming up, back on track. reinstates dividend after returning to growth. right after this break, stay with us. ll test you. try to break your will. but however loud the loudness gets. however many cheese puffs may fly. you're the driver. the one in control. stand firm. just wait. [click] and move only when you hear the click that says they're buckled in for the drive. never give up till they buckle up.
however, the uk insurer has warned that market volatility in the wake of britain's vote to leave the eu has impacted its solvency ratio. earlier on cnbc, david steven spoke about how admiral business is performing relative to overseas s ops. >> the uk is still the driver of value in the business. it was great to see the uk growing strongly even though it's a mature business. it's the market leader in car insurance. we put on 11% more karns customers in the last 12 months. that's rapid growth. we're getting more rapid growth from the developing markets for us, which are the european markets and the usa. where we increase the number of policies by 20%. so we've got value at diving great dividends from the skpuk growth coming from our international operations and particularly our price comparison operations. >> rwe has agreed to raise
employee pay and talks with connect workers and minors unions. germany's second largest utility has reported to raise sallys in 2017. last we're rwe reported a slump in first halfrofit due to losses in the trading business. i'll give you a quick look at the shares today. this year as you can see, up more than 27%. slight down direction today. indivior drug positive. it will british pharmaceutical company says it's on track to complete analysis of the drug's long-term safety and tollerability early next year. bhp ended yesterday's
session higher. after impressing investors with cost cutting nichetives. also told cnbc that commodity prices have begun to stabilize. >> prices have been falling quicker than we've been able to cut our cost, but now we're finding our costs are coming up faster and prices are more stable. it's hard to know whether they'll stay that way, but we expect they'll trade pretty much in the range they've traded over the last six months and as markets start to come back into balance and we're seeing signs of that, they'll trade closer to the higher part of that range than the lower part of that range. with the strength of our balance sheet and continuation of productivity momentum, we can whether something that may turn out worse than that. >> let's get a wrap up on the asian session. >> reporter: great deal of conviction, i'm afraid. it's down to the fact that, yeah, the market seems to be pricing in that we could very
well see a september rate hike before the year is done e. and we heard as much by new york fed president bill dudly. so that seems to have undermined sentiment to a certain degree. interesting to see the price action with the dollar yen. despite the fact we saw the dip in dollar yen below the century mark, nikkei has done an admiral jobresilient. one of the outperformers today. up just 1%. >> let's take a quick look at the foreign exchange markets to give you a sense as you were talking about the dollar earlier on in the show. the dollar index at the lowest level since the brexit vote. i'll just give you've a look at dollar yen as well. 175 the level there f. we can get the board. sterling there versus the dollar, 1.3019. gdon't too excited abouthat,
but we did see a pop off the back of that inflation data. particularly the producer price index. we saw a significant shift higher. this is just the beginning. >> yes, inflation data particularly important in looking ahead because there are surprise effects in markets. the u.s. data yesterday were particularly interesting. cord inflation disappointed a bit, but remains above 2%. in the euro clearly missing inflation target which suggests they have to continue qe and ends up well beyond the inflation target and points to the challenges we were discussing earlier. i think the very strong consensus in the market is the low inflation environment will continue which is most likely the case, but this is where p surprises could come from. particularly in the u.s. and that's why we believe the fed is likely to hike this year. >> they've got to be individual lent on this clearly. one of the things that filters into this is the oil price.
i just wanted to go back to what you were saying about the commodity currencies. canada, how do they look at this moment relative to where we see oil prices. >> actually, this is a particularly interesting because this commodity are also affected by risk sentiment and one will argue given the risk value we have seen, this might be to the downside. however, oil prices are likely to rise in the months ahead, following weakness during the amateur season. number one we have to be cautious. i will look at relative value. we do like high inflammation and the bank will have to start cutting rates. cut there might beore balanced. other commodities like the new zealand dollar or aussie. >> tie this now to the exsub rens we're seeing in markets. there's a number of elements there. whether it's commodity related.
>> what do you think there and can the rally we've seen continue? >> without doubt the effects rate has been one of the most successful trades this year. we started with a sharp. >> you're so bearish. >> yes. >> that was a time to buy when everybody was bearish. i think it has gone too far and we have reached a stage in which is search for yield is forcing investors not to look at the fundamentals at all. given that volatility has declined at very low levels. perhaps the risk might be more balanced for emerging markets moving forward. if the fed starts hiking, i would advice investors to be more on emerging market. >> perhaps look at em options. that's expensivexpensive. >> i would buy vol. euro dollar is at historically
low levels. six month euro dollar vol which capture the next hike. that might be the best trafd at this point. >> what's your biggest concern as we push throughout the back end of this year. >> there are many concerns. i would say asset valuations are stretched both in the bond market and equities. it would be very difficult for the fed to normalize monetary policies without getting volatility spikes. that's the biggest concern. >> we keep talking about valuations whether it's in the bond markets as you said or whether it's the u.s. or elsewhere. after brexit, a lot of the conversations i was having was in a battle of the uglies. actually the u.s. wins here. and investors see or perceive the u.s. as the safest place to go. i feel with can continue to make the arguments about valuations and continue to watch asset prices rise. >> that's a good point. the way the market reacted to brexit was bad news is good
news. provided central banks to stay on hold longer and ease further. as i said earlier, positioning is not actually straight. cash assets are still high. asset managers are not afford to miss a market rally. this is why the market has been a self fulfilling prophesy, but looking to the medium term, that's not a sustainable situation. >> great points. watch the cash balances. global head of strategy at bank of america merrill lynch. american gymnast, simone biles became the first woman in 32 years just the fifth overall to win four gold at the single olympics as she sored to the top spot in tuesday floor routine. how do they do that? now biles teammate alley raisman
took second. laura trot became the first british women to win four gold medals after retaining her title in velodrome last night. edged out american cyclist sara hammer by 26 points to win the event and seal her place among testimony olympic greats. she looked happy there. meanwhile. two athletes in the women's 5,000 gave a lesson in true spirit. got tangled up with america's runner causing both to fall during the race. then picked up ham lynn urging her competitor to keep going. ham lynn returned the favor after she appeared to have injured herself during the initial fall. despite both finishing last. organizers have granted the athletes a pass to the final. as they should. >> here's an update on the medal
beatty post as slim profit. weiener berks rge. donald trump shakes up staff hiring a new chief executive and campaign manager with only 82 days left before the election. so we're just getting a look at the uk unemployment data for the month of june. the iol reading coming in at 4.9%. that's flat. this data didn't include collected data after brexit so i'm not surprised to see that holding flat here. more importantly, though is to see the claimant count.
that coming in on an adjusted basis down 8.6 so that's 2.2% of the workforce. significantly higher than we got last month, but better than most analysts were expecting here. if we look at earnings figures, the average weekly earnings coming in at 2.4%. that was also at 2.4%. just looking at now the lfs employment reading coming in at plus 172,000 on the three months to 31.7 million in the three months to june. anymore information i can give you here. average earnings for the three months to june at 2.3%, but overall they're unchanged at 3.2%. joining me now, sam, no change on the major all unemployment
rate because a lot of the data here was pre-brexit rather than after. >> yes. and i think one of the themes here has been that we've been pushing is the uk economy had been slowing before the referendum anyway and given the labor market dates with a lag, no surprise i don't think to see unchanged unemployment rate at 4.9% today. >> what we were looking at prior to brexit was wage gains. the employment rate was record high around 74%. what do you anticipate now as w in terms of a lift on unemployment rate and impact on wage gains. >> i think what we had seen even before the referendum and bev seen a continuation of it since is that the business surveys have indicated really stagnation in hiring so it seems unlikely we're going to get the sort of employment growth numbers that we've seen again today those
very strong numbers and therefore it does look probably as though at 4.9 this will be the trough in the unemployment rate and therefore also with some slack opening up in the labor market as firms are less inclined to hire new workers and probably the outlook for earnings will be softer too. so once again, we're going to go through another it ration of seemingly struggling to breakthrough the ceiling of average earnings much above 2.5%. >> we got the flash pmis on friday of course. as you pointed out shlgs if we look at the manufacturing sector, the employment component of those readings has been in contraction territory every year. what kind of impact do you expect to see and how quickly. >> it's definitely going to be differential across sectors. that's an important point you make. manufacturers might be amongst the first to feel the cost pressures in other areas of the inputs there. the production process from the
change in exchange rates so i think the exchange rate pressure likely to have the spillover effects into the labor market quicker. one area conversely where wage growth has been strong is the construction figure. i haven't had to chance to look at the breakdown figures. it may be the strong wage growth figures are upwards of 8% year on year and construction starts to fade as investment in real estate and other areas of the construction sector takes a bit of a stall after the referendum. >> all kind of going to feed into the inflammation numbers as well. i want to get your thoughts on what we got from the inflation numbers yesterday and i guess the bigger question here, how much does the bank of england really care at this stage because they said, look, we except that cpi is going to be above target for a certain period of time and that's the price you pay, pardon the pun. >> absolutely. what we saw yesterday with the
inflammation figures was more about the fading of the favorable efegts that have been lowering prices. as that effect fades and energy prices start to normalize, you're seeing inflation grind a bit higher. that's what you've seen so far. there were early indications from tin put price data that actually in the future the exchange rate effect might be the thing which drives inflation higher for the next few months and causings us to believe we could see inflation above the target by q2 of next year, earlier than the bank of england expects, but as you say, i don't see much read across from our perceived risk of inflation overshooting the bank's 2% target to a hawkish policy decision by the bank. they've set out very clearly they're pursuing an'sing strategy to stabilize output which will take many months to implement fully. >> one quick question, what is
your year end target for sterling here versus the dollar. >> i think there is the potential for a little bit of further weakness, but actually you know, i think a good deal of the move has happened for the time being over the next sort of weeks, months or so because really we're not going to learn that much more about the fundamentals of where the uk's future trading relationships with its major partners is going to be. it looks as though article 50 won't be until early next year. so without much new news, it may well be sterling struggles to rally, but it might have put in a good deal of the -- it might have registered a lot of the losses we would have anticipated against the dollar. >> interesting points. thanks for chatting to us. senior economist at rbc capital markets. i'll give you a quick look at european markets again this morning. you can see a weakness across
the board here. xetra dax lower. the underperformers as always the likes of the tlan and the spanish markets when we see risk. we're seeing oil under a pit of pressure, not helping in terms of the sectors. we've got oil prices off 1%. adding to the losses here. .# 50 lower of the basic resources keeping the ftse 100 in the red too. let me give you a look at u.s. futures. hit fresh record highs across the board on monday saw a bit of a dip. retracement in yesterday's trading session. half a percent in each case. a lot of reports saying this was the worst session in two weeks on half a percent losses. right now relatively unchanged. slight tilt to the topside. now, the fbi has handed over material from hillary clinton's e-mail probe to congress. the documents include summaries of interviews with the presidential candidate and her
aides as well as copies of key e-mails. clinton's team has criticized the move. said the material should have wider release so the public can judge it for themselves. now, meanwhile on the campaign trail in milwaukee, donald trump addressed by the fatal shooting of a black man. republican candidate said the initial evidence pointed to the shooting being justified and called for more support for the police. >> for law enforcement, more community engagement, more effective policing is what our country needs desperately. just like hillary clinton is against the minors, she is against the police. believe me. you know it and i know and it guess what, she knows it. those pedaling the narrative of cops for racist is our society a
narrative supported by a nod by my opponent shared directly in the responsibility for the unrest in milwaukee and many other places within our country. and with 82 days until election day, trump has announced another shakeup to his campaign. his second in two months. he's appointed steven bannen and kelen con way to campaign manager. campaign chair, paul manafort will keep his current roll. i wanted to talkle wha tackle w about the police force. this seems like the strongest call for him to get urban voters. >> reporter: he's trying and needs to go after by urban we mean primarily african voters
because the polls are showing he barely registers with them. the latest poll showing 1% support among african-americans so somewhere inside the campaign they've made a concerted effort to try to go after those voters and that's part of what we heard last night. >> the campaign team as well. yeah, the shakeup that's happening with the campaigno turn things around. he's been slipping in the polls. national pollsin, battleground state polls. we talk about there being a lot couple of months before the election, really early voting is huge in this country. up tow a third of americans vote early and some of those ballots are going out at the end of september. that's a lot less time than november to try to turn things around. so now, it looks like he's going to have someone new at the top to deal with the day-to-day operations. making decisions about things
like where they go to campaign, where they put their resources, what the message is and how they get that message out. >> tracie, great to chat with you. thank you for your wisdom. miff fantastic producer said it's like shuffling chairing on the titanic. i couldn't possibly comment. let's move on. the wind palace is set to open doors. the $4 billion casino. >> i have no intelligent answer for what's going on in the united states in the presidential election. i am beput ld. i'm surprised at the level of discourse. hopefully it's begun to get a little more specific. i saw trump gave an economic -- his information and mrs. clinton is doing it, but if you listen
carefully, you haven't heard anybody discuss entitlements or government spending yet. what we heard is promises to spend more money. give more things away. without any discussion about how they're to be paid for. >> you have a long history with donald trump. dates back to i believe -- >> i've known donald for 30 years. we were in the same business for a while, but you know, to say we have a long history, i've known him for 30 years, yes. >> are you a friend? >> i am a friend, yes. >> i've been reading that you potentially are also an adviser to his campaign, is tt right? >> no, i'm not an adviser. donald calls me to ask me what i think. very often i'll answer him. donald trump is his own adviser. i mean, it's really safe to say, he is his own campaign manager. he's his own adviser. >> who do you want to win the election. >> someone who will take responsibility for the reel
welfare of the american people. be honest with them, not insult their intelligence and i'd like to have an adult in the room. i'm waiting for that person to show up and emerge in this. >> what do you this this does in terms of the united states image from overseas and what does this do to united states economy. >> everybody worries about the united states's image. we're the united states of america. just like the people's republican of china. you think they worry about what people this? he's worried about doing his job. that's what the president of the united states is supposed to be worried about. we'll let the image and all that crap, we'll leave that to television commentators. because it means nothing. absolutely nothing. >> is it damaging to the economy? >> the presidential election can be damaging to the economy or
good for the economy. the problem that we are discussing here today is we don't know which way it's going. that's troubling. for me. >> so what needs to be done. >> the congress and the senate and whoever is president of the united states have to sit down and play the cards face up and tell the truth. and honestly intelligently without regard to next week's election come clean with the american people and what it takes to make the country healthy. is there inherently enough courage in the democratically ted government to do that? i think that question is open for discussion at the moment. so far they haven't done a very good let's move on, suspended
president has called for early elections in order to pacify the country. claims it would be a coup if attempts to impeach heecach her. authorized the opening of an investigation into the president and her predecessor. the news source says the inquiry has allegations of wide reaching corruption probe. now coming up on "street signs" the global revenue for video games approaches $100 billion. etf tells us why investors are betting big on augmented and virtual reality. totally. did you know that boys that play with dolls make better husbands? my son has lots of dolls. but did you know terry cloth diapers breathe better?
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intel has unvald a new wireless head set. cnbc tech reporter has the story. >> reporter: at intel big annual developer show in san francisco the focus was virtual reality. intel unveiled project alloy. a head set. users are going to be able to walk around in virtual world unwired by controllers. see and use hands to manipulate virtual objects. saying products should be in the market in the back half of 2017. also new partnerships talked about today between intel and microsoft to bring windows holographic to mainstream pcs. why all this focus on virtual reality because we know the pc market is still under pressure.
dr intel is looking for potential money market opportunities and, certainly, virtual reality is one of them. augmented reality and virtual reality revenue should it 162 billion in 2020. it's not just virtual reality. we know intel is working hard at sensors at service for chips and artificial intelligence. remember recently did buy ai startup. saying intel paid about $400 million for that ai startup which is a bet on the importance of ai in corporate data centers. the change hasn't been easy. the company is cutting 12,000 jobs. around 11% of work force, but recently investors have been able the bet on intel. that stock is up 15% in the past three months. about 20% in the past six. for cnbc, i'm josh lipton in san
francis francisco. amazon is expanding presence in egaming sector. curse is a service that allows gamers to talk to each other. some call it skype for gamers. the acquisition comes after amazon paid nearly $1 billion to buy twitch back in 2014. now the global video games market is now worth almost $100 billion. it's up 8.5% for last year. that's according to the 2016 kb games market report. first fund focused on the gaming center holding companies specializing in the gaming economy. andrew, chairman and founder, great to have you on the show. start by explaining what we mean by video gaming versus video games because for most people the perception is too nar owe.
>> absolutely. thank you. the video game tech etf and the technology can transcend more entertainment and games. you're looking at a fund that holds the software companies and the game developers, but the console makers, chip makers, companies looking to do things beyond entertainment such as using video games. you hear the word gamification. we're seeing it transcend into the classroom. >> i guess the use of augmented reality with the excitement around pokemon go. for me, actually makes a separate point. access. now if you have a smartphone, you have a games console which is shaking everything up too. >> you really do with the spread of broad band and mobile devices, we're seeing more people have access to games than ever before. now you don't need to necessarily spend several hundreds of dollars on a con ole
sole and constantly buy games for it. we're seeing more people identifying themselves as being gamers. >> talking this week about egaming and the fact in certain cases these have huge markets budgets. billion dollar budgets to produce similar to hollywood movies. have you encaps liulated the grh in the industry. >> will when you're looking at our fund, we're looking at the companies in the eco-system. it is a global industry. when you invest in something like gamer you get an international exposure to companies doing this around the world. it's a much larger industry than just in the u.s. alone. many different companies placing big bets in areas like egaming. augmented reality. we're not sure which will be the biggest driver, but something
like e-games has the ability to bring it to the next level. seeing what that can do to generational trends and what not and who this can bring nor individuals to the space should be really interesting for the overall industry. >> what the risk if you want the put your money out? actually it's difficult. >> well, many of the companies have been around for many years. this is an industry that goes back several decades. the fund has two levels of liquidity. you can see when you're buying individual stocks, but you have market makers there tightening the spreads based on what the underlying liquidity of these names. something the index provider does when building an index is looking at the liquidity parameters and takes it into consideration. there are market makers standing by looking at the fund constantly. they'll take noticen realtime. >> great to have you on: co-founder and ceo at pure funds
etf. i read this week there's more cash spent on gaming than there was on cyber security. quite interesting given the conversations we've had this week. china has given approval for strong trading between hong kong. give foreign investors better access to mainland markets. seems a bit of a muted reaction. i know it's four months until it kicks in, but what are we expecting here. >> that is the million did dollar question. are we going to see foreign investor participation? does this give portfolio managers overseas more conviction to invest in the mainland equities markets which remember you and i know have very, very volatile. where the flows going to head? are they going to go towards northbound, that side of the world, mainland equities or are
they going to continue to flow southbound towards hong kong and it will shares. that seems to be where the safer vet and where the value is as well. and especially if you want exposure with relatively limited risk into the china markets, you continue to do it through the share if you are a foreign investors. this is a market by no means. fully open to investors. still restrictions. it is moving in the right direction. it's baby steps though. it's a very gradual incremental pace and i think it really comes down to the valuations and you've seen the go go momentum stocks that have been exemplify and that has been the poster child for volatility. the bigger open-ended question and especially considering the authorities in beijing still
haven't really fully drawn a line under slower growth expectations so very much an unknown quantity interesting theme here is the market has run up in anticipation of the stock connect so we see the big move higher in the brokerages and in hong kong exchange in the runup to this announcement and a lot of give back today. hong kong exchange case in point was the rank under performer today on the hong kong market. the worst performing stock in other words, so big element of profit taking on that one. >> we'll see you tomorrow. let's take a look at today's top stories. carlsberg disappointed with first hafrl earnings. the danish bureau posted a 4% drop in operating profit as total beer volumes declined. carlsberg maintained outlook, but warned of negative currency effects.
we'll be speaking with the ceo and president in just a few moments time. balfour. the construction company also reinstated its dividend as it says it's too soon to assess the direct impact of brexit. abn am row beating expectations as a rebound helped boost earnings. the bank also announcing a dividend. that's it for today's show. i'm julia chattily. "world wide exchange" up next.
global market alert. the dollar rewounding as fed policymakers hint at a fed rate hike. jeb bush cob cuts. going for gold, but coming up short. a big upset in rio last night as brazil defeats women's u.s. beach volley ball. "world wide exchange" beginning right now. >> good morning and welcome to cnbc. i'ma