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tv   Asia Edge  Bloomberg  December 15, 2013 10:00pm-11:01pm EST

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qantas takes off after the government extends a helping hand in we will look at the options on the title live in sydney. and beijing agrees to work with its neighbors to clear the air, literally. we will the fight against illusion involving china, japan, and korea. run,old enjoyed a 12-year but all good things come to an end eventually. more on this morning's edition of "asia edge." >> it wasn't so bad. looking forward to the fed meeting tuesday and wednesday. will be tapering happening -- tapering happen or not? details on all of that next. closed for lunch time right now.
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no one seems that eager to put in trade, reluctant but nervous obviously. jakarta is lower by more than 1% and htc also down. we go across to singapore straits, malaysia and thailand, all down by .2%. -- also, newspi zealand is up currently by went one percent. the rest are booking the -- probably up by .1%. the rest are looking up. >> as john was mentioning, asia- pacific markets are being driven
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by pieces of data. signs of manufacturing slowing. stephen engle is in beijing for us. is there a danger that we read too much into it? mean, we are drawing a lot of conclusions from a slight dip down in the flash number. this is the preliminary number for manufacturing pmi for december from hsbc and economics again. remember, this is a private survey, not the official survey. private companies in the manufacturing space in china, about 400 or so companies, where the official pmi am leslie looks at-- pmi mostly looks manufacturing. but it did sink down to a three- month low with this flash number. if the .5 compared to 50.8 for the final reading we got last month -- 50.5 compared to 50.8
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for the final reading we got last month. it rants -- it represents about 80% of the final survey of couple of weeks ahead of the final result that we will get at the beginning of the month this time gender second. tenant -- this time january 2. january 1 is a holiday. it is the second month in a row where the month over month change fell. so this is why we are kind of reading into this. the government warned last week that the economy faces downward pressures amid a number of headwinds. we have overcapacity still at some manufacturers. local government debt is a rising concern. also, uncertainty in export markets abroad are always a concern for the chinese which is still a dominant export and manufacture for the export economy. this flash pmi suggests growth momentum has started to weaken, a trend that he says will continue in the first half of next year as market interest rates keep rising and pushing up
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financing costs for corporations. also, dara's culture concurs. he says gdp growth is already -- lchek thinkers. -- concurs. the december flash number, while below consensus estimates, is still higher than the average reading in the third quarter, implying that the recovering trend of the manufacturing july ands started in is still holding up. likelyat you want, but these culinary numbers are usually held up with that final number because it does represent about 90%. it looks as though we are looking at a slight deteriorating in manufacturing but not a huge drop-off.
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we are still in expansion territory. >> thank you very much. over in and japan -- apan, confidence climbing to high level in six years. a let me just give you first different shape of the pmi. tankancan -- the measures different things. they took this latest survey between november 13 a november 14 up until last friday. you have large manufacturers gauge up to 16. that has really improved significantly over the past quarters. if you look over the past five or six or it may be even 10 years, it it is in the negative urine -- in the negative. look at where the numbers actually come from when we get
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the financial crisis and where we are right now. industries,, including acrosss, they are -- industries, including services, they are expanding. >> they are saying, hey, we are not going to spend that much on future projects, etc. >> right. abouts well when you talk machine orders. is a measure on spending on these big-ticket items. it shows you whether or not, when the relationship between spending on things like machinery and hiring was more linear, you spend on a machine and you have to hire workers to operate them. >> thank you for that. we will stick with what is happening at hong kong -- at tankan. >> if there is anything that is
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figureinting, it is the can the fiscal 13 large firms was 16% year on year. the consensus is expecting a number of men. -- extendingment an improvement. actually, ramping up domestic investment, that remains a worry in an environment where consumption is going to weaken next year. so investment has to pick up some of that slack. >> a japanese senior center just will boosthe tankan confidence among investors. >> this confidence among investors, especially on the corporate outlook for this year. they are looking comparatively for the margins. but likely to move upward and more confident over that possibility.
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that japanesey stocks will continue to rise next year. we asked why. >> i think there's a good chance of the market topics up 13% in the coming year. 15%consensus is looking for to 17%. that is way too low, way too timid and will probably end up with earnings about 30% and the topics -- the topix will move in line with that. of a 31-multi. what we are seeing her profits -- 31-month high. what we are seeing in the profits, they are mending their balance sheets and they have got their costs right down to the breakeven point of ¥82 to the dollar urine but a lot of operationally gearing. >> that is the world on asia in
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japan. tet cho is saying it could see $19 billion coming its way see 19o says it could billion those coming its way. wanting to limit their risk of default. awe rejected an offer. awe says it has formally withdrawn its offer. singapore says it will continue to tighten regulation on foreign workers following last week's street clashes. 400 people were involved in the violence in little india. it has put a strain on infrastructure.
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workforce singapore's is made up of foreign workers. >> we are continuing to tighten our policies. we do recognize some of the strained infrastructure. that --r relations is is something that we are very mindful of. we don't take that for granted. a look at energy forecasts in china for 2014, beijing and its neighbors agreed to work together on pollution. but up next, a surprise drop in manufacturing in china, jp morgan's adrian malan joins us. stay with us.
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>> let's get a sense of how the markets are shaping up very --
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shaping up. a big rocket takeover story that you -- a big market takeover story that did not work out. >> that's right. awet of all, the story with was very bold and robust. indonesia [indiscernible] they actually say they will double their output and triple cast 2017. senex will try for -- will try to bid for it again. the bid says it is undervalued. can double output and triple cash. the answer is no thanks. and the biggest employer in
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rmers, a keyesfa mover today. salesfirst-quarter actually rose 5% on consumer confidence postelection. you saw people spending a lot more money. and interest rates are at a record low 1.2%. you can use credit cards at a lower rate. so consumer buying is clearly on the up. >> you are also following what is happening in japan. 20 minutes or so before they come back from the lunch break. what starks -- what stocks are you looking for? >> watch a for these again. tepco up by 2%. there is a story saying that the
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japanese government may double loans --erest-fre interest-free loans to tepco. -- they sold machine guns that have not met the configuration of the japanese defense ministry. in the world of tech, shares on a bit of a downgrade. pcs.rns about demand for electrodes is another part of that field. when japan reopens in about 50 minutes -- 15 minutes time from now. >> let's look at the prospects for next year when it comes to trading in this part of the world. adrian, think you for joining us.
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-- why steeple chasing and not a flat rate? >> steeplechase in a number of hurdles we have to jump, the most obvious near-term hurdles being tapering. we have uncertainty around china reform but also having a 7% growth for. and elections most notably in indonesia and india. main message we are try to get across is we will have a pretty good year in terms of absolute returns out of asia and emerging markets. after three years of very disappointing returns, one of the simpler stories is we are finally delivering earnings growth. we did not deliver any earnings growth in 2011 and 2012. >> it's been flat. it's not even zero percent. -- it's not even 0% the last two years.
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>> part of it is that companies have a lot less trust of policy and economic growth. if you think about how the u.s. market has performed over the australian -- how the australian , i think iterformed is very much that companies make their own earnings rather than relying on the top line to boost earnings. for this part of the world command it has some of the best earnings numbers despite having -- for this part of the world, india has some of the best earnings numbers. election thats could have policy paralysis after that. indiau saying upgrade when the elections are out of the way? >> no. we are out of -- we are up india
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for the long-term. got adian equity markets lot of export earnings which came through very strongly this year. >> especially on the likes of consulting and those types of companies. >> as well as some of the auto companies and steel companies. those are all names that we like. >> 6.6% since the start of the year. >> it looks ok in local currency terms, obviously, if you throw in [indiscernible] it is a pretty tough year for international investors. >>" word about -- a quick word about other ones you like. >> we are very bullish on career in taiwan. we like value and exposure to global worth. it is coming back and we will get tapering in january, but
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possibly next month. iniously, want to be countries that benefit from stronger u.s. growth yet have current account surpluses and overvalued currencies. >> hong kong downgraded. china, you have underweight, too. -- a storyabout that about asset deflation in hong kong to follow through. these places need to get more competitive. >> more realistic than anything us. >> area she with china is that china has said out some very good reform proposals. great. but they also have this 7% growth for. -- growth floor. when we had reform in the u.k., it was recession for some time as you reorganize your industrial base. >> especially from 1982 onwards. that was a shocker. thesena can pursue
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reforms, but acknowledge that growth will flow to -- will slow down. but slower growth is better for the capital markets. i think this 7% growth floor will dominate policy. once we see the pmi falling back below 50, you will get another mini stimulus similar to september 2012 or june 2013. >> stick around. we have our group discussion coming up. we will check in on aviation. australia giving qantas a helping hand. it won't be minoring -- it will be money that they are offering.
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x says that it will have a major airplane order with airbus. the announcement is to be made in paris on wednesday. last month, they said that they 330's -- eight that willcost carrier be based in taiwan to make the most of an increase travel demand in northeast asia.
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>> the australian government has marked its first one hundred days in august by announcing support for the national airline qantas. us go to sydney where paul allen joins us. -- let's go toh sydney where paul allen joins us. let's start with qantas. >> they won't be offering a large. suitcase of cash it expects it to stand on its own feet. but he can smooth the road a little. it will be meeting today to see what can be done, perhaps guaranteeing qantas's debt. own 39% ofn only qantas. by air new0% owned zealand. qantas is also struggling, as
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many airlines do, with rising fuel costs. to $300ld make up million. &p downgraded it to junk status. >> but not music to the ears of sir richard branson who has been very vocal about criticizing any foreign ownership that would help qantas. but talk about what they are the hp -- offering roundabout august 2012. bhp said that it would not pursue investment in this olympic dam expansion. uranium has been falling steadily.
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it would become the largest uranium mine in the world. the government is rather eager to see this go ahead. prime minister tony abbott says he wants the government to do everything humanly possible to ensure this iconic project receipts. ert -- project recedes. --f project proceeds. >> thanks, paul. >> up next, looking forward to the afternoon business in tokyo. they are back from lunch after a morning session that saw a drop- off of more than 1%.
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asian stocks fall again after back-to-back weekly declines. a cut down noncollusion, turn to take sanctions on fixing prices. and one of the most dependable investments in the past decade did not work well this year. we will look at what is next for gold. let's look at how markets are shaping up this morning. 1.2%,na is now at slightly higher since the pmi came out. that, the biggest
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decline, significant decline in the last half an hour. the stocks that have fallen the most, you have the financials there. 8.8%, big declines. , insurancehong kong and down 2%. me. areas that see impact on the pmi manufacturing figures. the biggest the claims of the day -- japan is close to opening after the lunch break. opening right now, in fact. look at that, china now, 1.5%. it has actually fallen. now. happening right
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middle of this nervous is, if you lay, there is these said meeting tomorrow -- if you like, there is the fed meeting tomorrow. the volumes are quite low but shares are really spinning off in hong kong and china and japan. of theour percent respondents in our recent survey expect the fed to do some tapering over the next two days or so. --said japan was up by 1.2%. was off by 1.2%. >> they will improve loans by the japanese government. the stocks that are performing the most in the nikkei, you have the best performance. tn. worst is n price target cuts, the biggest decline about 5.9%.
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niko concern about their electrode demand. electrodes for the world of pc's. tepco, what isep clearly a falling market. rising the government in japan may double their interest-free loans to ¥5 trillion. that could be a major lifeline in interest-rate loans. sumitomo heavy fell. it is not making the configurations of the japanese defense ministry. down because of
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the demand on pcs and electrodes. right now, china is down 1.5% as we speak. >> authorities in china are widening their drive against corruption. ist is the lie -- what behind the latest move? through exactly what is happening on this antitrust thing. >> it is all about the crackdown on corruption. that allis one thing chinese leaders are also afraid of is inflation. you have these two working in tandem. if there is price fixing going on, that could lead to inflation and unrest and that is what the government is concerned about. the and brc is out with a is outnt -- the nbrc with a statement saying that it will supervise certain
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industries had punish companies that break turn is antitrust rules. as part of this anticorruption ,rive by the man you see there this comes after a high-profile investigations on a number of companies, local and foreign. recently, qualcomm was named as being under investigation. the crackdown has also seen record fines on milk producers, such as dan and, and need johnson. , the government fined six dairy companies that combine $109 million for price-fixing, a record amount in china under its anti-monopoly laws. in its statement, it says that it will improve pricing subsidy megs in and -- subsidy mechanisms to mitigate the rising prices on the low income populations. that is the populist message coming from the new government but also they want to keep inflation in check.
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they want to keep corruption and check. and that is part of this drive. >> thanks, steve. >> corruption and dodgy business are the challenges facing the chinese president. and pollution coming from the fuel there. joseph, what is china doing to tackle this pollution? it has to make radical changes. absolutely. 80% comes from coal. unless you shut down 80% of the electric parties in china, you won't get that. and there are other pollution sources such as transportation the coal is a key culprit. in the short term come he can't do much about it. what is china doing about it? they are building nuclear as
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quick we as a can, wind, solar, as quickly as they can. right now, it doesn't really achieve the balance. price of the stuff is dictated by the chinese themselves. >> that's right. one of the key issues is the unique price reform. one of the key issues in 2014 is pressure form for electricity and gas in china as well as some other parts in asia. but in china, you need the cost --the goods sold to reflect the price of the goods sold to reflect it. >> prices remain stubbornly high. >> they remain stubbornly high. oil ands its index to the forecast for oil has been much flat year on year in 2014 versus 2013. companies with the
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utilities where they cannot automatically pass through their costs to the end-user. japan, on a quarterly basis, you can't pass on the cost to the end-user. in hong kong, you can. we can spend more in 2014. but in places like taiwan, korea, and china, they cannot automatically pass through those costs. >> what about what we are hearing overall? is there any linkage between energy policies in other parts of the world? thing that should happen but hasn't been happening is really for the japanese, the taiwanese, the koreans and the chinese to get together and form a syndicate and drive the price because it is a key market. but obviously, for a lot of geopolitical reasons, etc., that is very difficult to achieve so that will not happen anytime soon.
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>> joseph, think is a much for joining us. >> thank you. >> let's talk about gold. etp's reached a record last year and investors have been pulling out as the world loses faith in the precious metal. david has been following this story. we should probably remove the word "precious" from this category. corn --ave silver and not exactly a precious metal -- and gold. for gold, it really has been the worst year since 1981 in terms of the percentage drop of prices. you mentioned edp's earlier -- etp's earlier. it has made investment in gold easier and cheaper. but it also goes a other way around. it makes it easier for investors to pull out and create the
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exposure to gold. s are concerned, at 18 tonse looking less than this time last year. it is a drop of 31%. it is really a good indication of where the money is going. while it has gone into gold, it has gone into things like the s&p 500, which is generally an etf. >> the equity space. >> then you look at stocks of old miners. things have fallen off a cliff. that is a text book example. rexam think one has gained here today -- >> i don't think one has gained here today. >> right. prices of assets and whether there were previous mergers. >> double-digit losses.
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>> across the board. you look at listed in hong kong, australia, canada and you're looking at projects as well across the board. >> the australian one is the worst, right? so where are we headed from here? make a longown, to story short. >> ok, we are done. [laughter] that is a good point though. especially with the tapering on the horizon, what does that mean for gold going forward? >> one side of the argument is that you no longer have the economic force that really led to the bull rally. the 1216 is the average price for next year. , 311 tons will be withdrawn. whichnext on the program, asian countries are best to
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whether they pullback on the stimulus that could be on the thezon -- to weather pullback on the stimulus that could be on the horizon?
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ande have john and david adrian mowat. we were talking about the bifurcation of some of these parts of asia emma who will grow and who will not be that hard, whatever. signs are positive a looking like things on a recovery path, a solid recovery path. then you have the normalization of monetary policy around the corner. >> the big shock of this year was how much fiscal drag you have in the u.s. to you had sequestration, the government shut down. have a deal.
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it is not a great yield on the budget could but it will be able to travel through much of 2014 without fears on the budget. could easily be delivering around 3% growth. >> which economy in asia will suffer the most once the u.s. does embark on the tapering program? >> i think it is back to an age -- back to indonesia who is the most vulnerable. in india, we are seeing that the economy has slowed down. account deficit has narrowed to 1% of gdp. if china gets really serious on pollution, coal prices could go much lower. we have a boom in the indonesian property market. we think the central bank will probably have to continue tightening policy. they did not tighten policy in
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the most recent meeting. but indonesia looks simas vulnerable. >> -- but indonesia looks the most gullible. >> -- the most vulnerable. you have a banking system that benefits from higher interest rates. running your safest into tapering in taiwan. moste rupiah is one of the rollerball. how -- the most vulnerable. >> it is part of how you fixed the issue. you must allow currency to weaken. we saw a dramatic decline in the indian rupee. what happens in indonesia and also the case in brazil, the central bank came in and intervened. so they slowed the market, finding the right place. we are still in the process at this point.
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tankan, on the face of it, was pretty good. capex was down. four quarters in a row of a strong tankan survey reading. >> we believe japan will have a strong yen next year. the equity markets are coming through. it would be great to see a pickup in capex. but we like companies that are quite focused -- quite cautious as well and focused on the market. we had a very good rally from the lows we saw a few months ago. we are now moving into the part of the year were trading volumes come off. i think there is the temptation for people to be taking profits. >> and the fed, of course.
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>> tapering is a great procrastination reason. [laughter] >> what are the applications for sales tax in japan? >> what we saw the last on the sales tax was increased, people brought consumption and to the fore. a friend kettle of fish. -- is a different kettle of fish. it will be much talked about. >> i think there is an argument there. if you look at the j.p. morgan forecast, we have a strong quarter next year and then a technical recession the next quarter as you get the consumption impact. if the whole market is expecting that, then maybe we overreact and it will be all right. >> the flipside as well.
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itsubishi came out with description. japanese corporate star happy just because it is feeding into earnings. the flipside is they have to raise wages. that says ithing is perhaps time to get some exposure? >> we need household income to be rising long-term. that is the only way you will get a sustainable recovery. so losing a little bit of margin near term would be better. >> it is not even a question of if. householdalled -- income is rising but that is because bonus payments have gone up. the problem with bonus payments is that you can go to the bank and get a loan that. tankanou look at dave numbers and you look at -- if you look at the tankan numbers and employment, it is getting
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tighter and tighter. you don't want inflation coming through from import costs at the end of the day. >> that's true. >> so there: the bosses of these carmakers and telling them to give them -- so it is really calling the bosses of these carmakers and telling them, gives them a raise, william? -- will you? >> he has created inflation expectations. you had a revolution that the bank of japan. we haven't seen the third arrow yet. but it would make any sense to fire the other darrell at the moment because you want to make sure that inflation -- fire the third arrow at the moment because you want to make sure the at -- make sure that inflation is in place. maybe that is something that we see a year from now or two years from now. but it doesn't have to be next
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year. >> so give me a rating. >> i will give them a nine. that's ok. inflation. we have nominal growth. we have good market performance. it is would you like? guess what else would you like -- what else would you like? >> check out what has been making waves at the paris boat show? >> it is the longest-running such event in the world. >> all aboard when "asia edge" returns.
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with "asia edge" and these are images coming through from china as it releases its first moving pictures of its lunar rover on the surface of the moon. was carried to the
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moon by the lander. the firste it is landing on the moon's surface in something like four decades. to ambitious plan will be send a man or woman to the man. radar. what is on our on tuesday, nancy prices in new amc prices in new york, china's biggest entertainment company acquiring amc last year. it will retain an 18% stake. buying music at the world club cup in morocco.
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whoever wins that game moves on to the final on saturday. the head of india's central bank wednesday raises interest rates to curb inflation that is now something like 11% or does he keep interest rates on changed? problem because he also has to at the same time tried to boost tepid growth. expect him to stay pat as far as the cost of borrowing is concerned here in -- concerned. the bank is hoping to raise $3 billion to shore up its capital. this is the largest share sale of the year. now because the paris boat show is one of the law is running in the world. this year's edition draws to a close today. john farrell has been a long to see what they have to offer.
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>> these are the votes of the 2013 paris nordic -- these are the boats of the 2013 paris nordic roadshow. there is speculation that demand for luxury boats is shrinking. more are moving toward comfort on board and greater move ability. boats are getting bigger and bigger but clients are not looking for big cruise. >> so what is on offer? the presage 500 is 15 feet long and costs more than $500,000. bordeaux is 18 meters long but the extra size comes at an extra cost, $1.8 million. of course, it is not just what is on the outside that counts. tech is increasingly important.
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>> today, we use ipads to navigate. we can say charts, current, weather reports for the next two hours. there are a lot of things that have come progressively and often from competitive sailing. >> with the demand for motorboats and rowing growing in asia and the middle east, organizers say that, while the show may be taking up less space, the industry is still very buoyant. >> that is almost it did >> -- that is almost it. >> almost. "hobbit"ie news, moving across america this week. it took in nearly $74 million in the united states and canada. it's predecessor was an unexpected journey. that took in $84 million in its first weekend. seen "avatar" the
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first one. >> but jarrett -- the director james cameron says that he will make three sequels in new zealand. that is it for us here
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