tv On the Move With Rishaad Salamat Bloomberg September 14, 2014 9:00pm-11:01pm EDT
>> good morning. we are live in hong kong. i'm her. this is "on the move." ♪ >> growth target under threat. china's weakest factory output in years. the aussie dollar falling. a journey of 1000 miles and then some. alibaba taking the roadshow to hong kong. with china's for your growth target once again under threat, we got new data over the weekend
showing a continued slowdown. of it over to stephen engle in beijing with the latest. a very good morning to you. what are the numbers telling us? >> you said it. the economic indicators from the weekend and generally from the that 7.5%ths, missing growth target for the full year. does that really matter? i will get into it. his options have definitely narrowed, stimulate, or you are probably going to miss that target. we have the weakest growth since the global financial crisis and the data released over the weekend. fixed assets investment, retail sales also moderated. we saw the second straight decline in imports, a 40% drop in the aggregate financing. the numbers are not necessarily looking good for the program of cap. helen xiao at morgan stanley -- this isimportant
an apartment wake-up call. slowdown, engineered or is this happening a bit faster than they wanted? will they stimulate more? will they ease policy? those are the big questions. they have done so with targeted measures. nothing massive like what we saw in the aftermath of the outbreak of the global financial crisis. in 2009. authorities do not want a repeat of the asset bubbles and bad debt, and at the same time, trying to work through. you are trying to work those problems and at the same time stimulate growth. they are kind of contradictory. the likelihood now a further monetary easing, such as interest rates or reserve ratio requirements, has now increased significantly. >> the thing is, they've got a lot of levers, as you are alluding to, but there is the
one where they would end up with eggs on their face, but how significant would it be for china to miss that growth target? think a hard landing perhaps is more significant than them missing that target. nomura -- a note from one third of all the property developers in china are going to miss their sales targets. of course, the bankruptcies going on. target, there the is a president -- when the premiere sets the target, that is what they are going to get. generally, every year, that has been the case. through the miracle or some smoke and mirrors or some fudging the numbers, but basically, they always hit that number. the imf deputy managing director, the former deputy governor of the people's bank of china, he told the world economic forum, he said, the
government should start setting a targeted range rather than a hard number. that would give the non--- the government some wiggle room. an artificial target really. for that,a lot stephen engle, our china correspondent joining us. we will get reaction to that in about 25 minutes when we get the chinese and hong kong opens. singapore, let's have a look at what is going on. oil prices headed south. asia-pacific stocks going insane direction. say, good morning to you first of all -- japan is closed for respect the aged day. china and hong kong will open in a half an hours time. taiwan, with that, and the industrial production is weak at
his -- as weak as it has been, clearly concern for taiwan. australia, you can see they are very closely linked to what happens in china. big declines today for australia. also the queue we -- qe. i will discuss the fx report for the day coming up. the aussie and kiwi reacting to this week in maine data from china. malaysia, little bit lower this morning. off their highs. australia is really feeling the brunt today. can see from this -- look at that -- significant declines. as soon as the market opened, down it went. look at that. that was the opening price, significantly lower. that shows you the concern. clearly financials, miners, all of these look for china for their direction.
today being hit pretty hard. >> we are going to look at sinopec. it is selling about one third of its fuel station business. they're among 25 investors paying $17.5 billion. the deal is coming amid a push by beijing to restructure the company and really open them up to greater market forces. look at hsbc. things will get underway in hong kong about 22 minutes away. pay $550agreed to million to settle mortgage claims in the u.s. much lower than those levied on jpmorgan, bank of america, for goldman sachs. gopro may have some competition from asia. according to a person familiar with the plan, htc is developing
its first waterproof camera for extreme sports. its 12thh is forecast straight quarter of falling sales, is searching for new forces of revenue -- sources of revenue. if declined to comment on this story. alibaba's ipo was taking place later this week, but today, the roadshow rolls into hong kong. rose luncheon has more with us. -- rosalind shannon has more with us. >> alibaba has enough demand at share, and iter could actually close early. >> already? >> already. this is one of the things. it could be tempting to think about raising the share price range to see if they can get an increase, but this is something that they should consider carefully. for example, facebook, it came back to bite them. more comes from
mutual funds, they have a longer-term view, a 3-5-year horizon, they might place orders, and that made it ali baba the confidence to raise the price range. these mutual funds could be worried. of the company has been following ali baba around, and also, the political risks, investing in chinese company. >> is that we have in terms of the questions being asked? >> it's possibly one of the concerns. there are other concerns that come back to corporate governance. also alipay. be able to profit from alipay? alipay was separated from ali baba four years ago.
some worries about the valuation. is it a bubble? visit overvalued? baidu, theare it to price-to-earnings ratio is something like over 35 times. estimate the analyst is only for about 29. >> that is a pretty fair value in many ways. this point, maybe. next days, alibaba will take a look at the kind of investors that house and whether it can take a risk in terms of raising the range is going to set for its share price. it is going to set its price on the 18th of september. looking to trade the following day. >> thanks a lot for that. the latest on alibaba. coming up next, our next guest says the rising dollar and falling commodity prices signal trouble for one particular asset class. we've got details on that when "on the move" returns.
>> you are back with "on the move." we are waiting for the fed's latest monetary policy decision and the impact that could have on global markets. we are joined by russell napier, a strategist. you're here for the clsa investor for him. you're talking about the dearth of dollars. >> i'm talking about america's current account deficit. that is where our liquidity is driven, america running bigger deficits. something structural is happening with the deficit to do with shale oil and gas, a lack of consumption by the baby boom generation, new competitiveness, and this creates huge problems for emerging markets going forward. >> how? >> when you link yourself to the
dollar, the amount of liquidity you can create domestically is based on the surplus you run. outside of any surplus, there has to be a deficit. we could rely on america for that for two decades. this is particularly important for china. when china reflects, its exchange rate will decline. >> let's talk about the dollar itself and how it has been rallying. you are a big bowl when it comes to the dollar index. >> everything is relative when it comes to currencies. it is relative again something else. it is fairly clear that across the developed world, europe and japan, we've been looking at loser monetary policy. the great irony maybe that janet yellen prevails as the first woman governor with a strong u.s. dollar. >> they've talked about a strong dollar policy. it's just than lip service, half the time. when you talk about a weak
dollar, and you want to change that policy, you've got to do something. i don't want to be in a situation where they put interest rates up to get the dollar up. you say you are in favor of a strong dollar. when we've had crises in the past, the fed has had -- tried to stop it by cutting interest rates. one of the crucial problems may be, how do you stop it if it begins to go up? >> sterling, and massive move to the downside for that currency. the yen, 107.30 this morning. how much of that is done to the possibility of there being a yes vote on of scotland, or is it just onto a strong dollar? >> i would say half of it is associated with scotland. if we get a no vote, you probably get half of it back. we are looking at the dollar rising against everything. there will be a no vote. i think we are really looking at
a strong dollar. >> are you confident in there being a no vote? if there were a yes vote, what would happen then? >> i live in scotland. i get a strong feeling that despite what people say to the polls there will be a no vote. if it is a yes, we have some particular problems for banks. thanks, there will be a drain of deposits from scotland. there is no premium on holding a scottish deposit over an english deposit. in extreme situations, the bank of england may have to withhold or go to the government and say, we shouldn't be taking anymore scottish collateral. >> how does this work? they can't share the pound as suggested by london. what do they do? >> is going to be probably a three-year negotiating period of massive uncertainty. you and i have been doing this long enough. up --er we end
>> in other words, it wouldn't function. the financial sector make more money from uncertainty than others. think that is the great shame of what is going on in scotland. the main beneficiaries of any major economic uncertainty would be people from outside scotland. they are the ones who are in the situation to benefit and buy assets cheaply. it's very difficult to be independent on this particular issue. i'm not a yes voter. >> what is the mood like? ofe been hearing stories neighbors talking to each other and people being polarized. >> i think that is a small percentage. i have lots of friends in the yes camp. i have a lot more friends in the. think most of the general view is they have to be engaged. i don't think this is the most toortant thing that is going drive scotland over the next two decades. i've been all over scotland, and i don't see the fervor that the media is reporting.
this will be a constitutional revolution. you would see it in posters and badges. that is one thing percent of the population -- 1% of the population. >> which way is it going to go? when the scottish voice phones is scott and asks them over how they are going to vote, most scots will say yes. what they do in the privacy of the polling box is different. this is not a vote about kicking the tories. this is a vote about changing forever. people realize in the polling box that they do want to express disgust and what they are against. this is more than that. it is changing the constitution. >> russell, have a great forum. slowdown in china waiting on the aussie dollar.
that crucial 90-mark. the kiwi is following the aussie lower. inis at its lowest level seven months. the currencies being influenced by the central banks rhetoric. the rbn signaling it would not raise rates until march of next year. we have the nation's elections this coming weekend. the scottish hotel is driven the pound traded below 50 pence against the u.s. currency. that is as weak polls favored scotland staying in the u.k. 4.3 million registering to vote. the keyow you also market played today is the aussie dollar. that is the reaction to chinese weekend the data. that is the stock markets. the australian dollar, differences. -- there it is. close to that crucial
technical trading level. certainly watch out for that. .89, a bigto breakthrough, and it could go lower. .90 is the all-important mark, at least in the asian fx trade. those are the stories driving our forex markets today. let's stay with currencies. westpac bank saying city could become the next room in the trading hub -- rmb trading hub. global markets could be headed for a significant correction. governments are talking really constructively. think there is goodwill and good intent to make sydney the next hub. it would be great for our customers.
deposits, loan, trade finance without having to go through a third-party. it really saves some money. it is much more effective. it simplifies the process. we are assuming that sydney will be announced as a renminbi trading hub. lockstepes it go in with the potential free-trade agreement? do you think that would've happened before? they want that done by the g20, november. >> 2014 has been a very for ftaul year australia. the australian government announcing the japan free-trade meant, the korean trade afraid -- free-trade agreement. in theorking diligently negotiations of the australia-china free trade agreement. novembers g-20 is absolutely an incentive. i would prefer that at any price. i think free-trade agreements with china are particularly complex.
it may take a little bit longer, although the intent from both sides is absolutely there. if we don't get it announced, i'm sure the renminbi hub will be. ishow exposed his westpac -- westpac to a slowdown in the chinese economy? >> don't think it would hurt, but it would certainly slow down the australian economy. we are the second largest bank in australia. it will certainly affect our performance. >> people are streaming in here, coming to listen to you. she will be on a panel about the financial crisis. visiting other one inevitable? -- is another one inevitable? >> i think there has been so much fun to strengthen new regulations, new liquidity rules. i do think we might see quite correction. i think it's going to feel like 1994. i think you are going to see a meaningful price correction coming up. going to see are an asset price correction is
very meaningful. let's check on some other stories making headlines around the world. the killing of the u.k. aid worker by islamic state militants has been internationally condemned after a video was released claiming to show his death. onid haines was beheaded saturday. from mr. david cameron described it as an act of pure evil and said he would do everything he can to hunt down the murderers. american citizen has been sentenced to six years of hard labor in north korea. the country's supreme court said that matthew miller entered the country illegally and tried to commit an act of espionage. prosecutors claim the 24-year-old intended to so you couldison investigate human rights abuses. the pakistani army dropped relief supplies to people stranded in punjab.
than 300 people have been killed since the flooding began with more than 2 million others affected. amsterdam's central square was turned red yesterday. to mark the fight against russia's boycott of european -- the idea was taken from spain's annual festival. tickets cost the equivalent of $18, and organizers say around 1000 were sold. coming up on bloomberg, we've got the market open taking place in china and here in hong kong. reaction to the weaker than expected industrial production data expected, as well. ♪
>> growing pains. weak data serves up another setback for china. sinopec chairs were set to tumble after the company offloads one third of its retail business. racing onto the world stage. formula e making a debut in beijing. we do have the open upon us in hong kong. no trading in japan. it is a holiday for the aged. clearly,c shares, and
they are selling part of their stake in the retail business, which means petrol stations. off by 4.5%. the first unraveling, if you like, of the state-owned enterprises across asia, the government trying to reform that. 20 -- investors have bought into this. overall, that is the share price right now. the reaction is down 4.5%. those are the sinopec shares at the moment. if i can go to the opening prices for the map, and this on the day where clearly chinese production,ustry have impacted the market significantly. taiwan was way down before. australia off by almost 1%. closely linked to china. that is the concern for that.
shanghai opening off by 1/5 of 1%. falling seng finding -- half of 1%. sinopec falling 4.5%. the biggest companies are the resource companies. clearly down to the one individual story about the company itself, the biggest energy company in china, selling off a stake in the retail business to begin that development. games but nothing dramatic. in australia, the biggest recliners are all china-related. tas is down. last group, tied to china. sinopec is down 4.5%. >> declining fortunes over there. that is how your money is doing at the moment. let's tell you about china's full-year growth target.
new data showing a continued slowdown. let's get the details from the chinese economist joining us from beijing. the data is the weakest since 2008. what is the story? >> some very weak data coming out of china over the weekend. -- wevernment had already can is had already been signaled. we had some fairly low reasoning -- greetings from the pmi data for august, but the extent of the slowdown showed industrial output data was really quite surprising. growth inon year industrial output. that is the lowest since the financial crisis. even more troubling, electricity output, which many people look at as the true gauge of what is going on in china's industrial sector, contracting 2.2% year on year. fairly difficult to digest it out of china over the weekend suggesting that the 7.5% target for full-year gdp growth might
be out of reach. to read theomething national bureau of stats putting out a statement explaining their interpretation of these numbers, and what did they have to say about it? >> that was a bit of a surprise. normallyovernment is quite tightlipped, but in the last couple of months, we have had two separate government departments who felt moved to send out notes explaining weakness in the data, first and july when the people's bank of china put out a note explaining why total social finance had plummeted so far, and over the weekend, the national bureau of statistics felt moved to explain why the electricity numbers were so low. they had a couple of interesting things to say. on electricity, they noted that august this year have been cooler than last year. people turned their air-conditioning off. that contributed to a decline in electricity output. august last year was a little
bit stronger. that meant a higher base for comparison. the focus for the market is going to be on what these numbers say about the declining chinese real estate sector, weakness in the banks, and about the inability of the traditional drivers, investment and exports, to pull the economy forward. where does all of this leave, as you've been talking about the 7.5% growth target, and what does it mean for monetary policy? think we heard lita chang keqiang weekend -- li calm tone.fairly around 7.4%,ng 7.3% is within beijing's comfort zone. on monetary policy, under the old regime, if we still had hu
jintao, this data would be a signal for some kind of full on stimulus. the new guys seem determined to take a more measured approach. that has partly been forced on them. by the corporate sector is already very high. what that means is that even though they are concerned by growth, the approach going forward is really going to be a noteted one, cutting rates, for the economy as a whole, but for specific sectors with specific objectives. >> great to see you. let's take a look at some other headlines be made. we are going to do that in the company of haslinda amin. >> to home prices lifted profit. discounts and below-market rates have lured buyers in hong kong despite government calls to cool the market. home sales are expected to hit a record this year, up from a five-year low in 2013.
air france is bracing for its most disruptive strike since 1998. it may have to cancel 50% of its flights and stance lose more than $20 million a day if pilots go ahead with a planned walkout. they are protesting against the carriers plan to expand low-cost operations by using lower paid flight crews. heineken wants to stay family controlled. people familiar say sab miller made an offer but was rebuffed. they say the high -- the takeover would help heineken defend itself from another potential purchase, this one inbev. in the -- ab keepcompany trying to business solely in the family, a company called german cool. it's blend of east and west may just give it an extra edge. john dawson reports. design,n by name and by
yet german cool is hong kong-born and run. edward chan founded the water heater maker in 1982, and his vision was global. when a german engineering company came to hong kong looking for chinese partner, chan spoke little english and no d shookshorthand -- an hands. >> how do you feel? >> i love my business. >> were you ever sell? >> i wouldn't sell. >> ever? >> never. >> galvanized by the motto, life made simpler, german cool has expanded from water heaters to taking on the likes of whirlpool in home appliances. stirfry, juicers. chan began the company in kowloon.
space has given way to the showroom. chan's time is divided between the business, academia, and overseeing a number of charities, though his priority is always looking after the family. work withs daughters him. >> my father is always a professional. of course, you like to get approval from your father at times, but a traditional father never says, you do good. if he's not saying that, it's a compliment already. >> there are many privately held businesses that are growing as fast as this. the big question for the market in hong kong were going to market with an ipo is a much
talked about thing -- is that a consideration? [laughter] >> secrets. [laughter] german pool, a recipe built on water heaters, with a very strong portion of appliances, and of course, flavored by the lifestyle experience in the company motto of "life made simpler," all of that wash down in what could be a very imminent ipo. john dawson, bloomberg. >> up next, how low can it go? the aussie dollar tumbling after a week of -- after week chinese production details. the details coming up next. ♪
of fx sales at new edge. greg, thanks for coming in. the big question is on the equity side, alibaba, but otherwise, the scottish vote on independence. what is your view? event on massive thursday. the independence vote in scotland. the polling shows that the vote is extremely close between the yes and no, but the bookmakers with blac they are nearly -- the bookmakers, generally, they are right on the money. i would actually look at the bookmakers. they are saying there is an 80% chance of the no vote being realized. i'm going to go with the bookmakers, not the pulling. we are going to see a no vote in real life percent -- real-life on thursday. a lot of the uncertainty has been priced in.
i doubt we are going to see the sterling sub-1.63. about half an hour and a dash for half an hour ago, -- about a half an hour ago, our guest said about half of the movement is already priced in. believe we have started your multi-year bull trend for the u.s. dollar. >> seven years, he said. isit is how long that it hard to time how long this will be. that wee a lot of signs have started a seachange towards the u.s. dollar. >> it has been a long time coming. people have been predicting this. what has been behind it? >> there are a number of things behind it. what is the fact that obviously -- the u.s.ening
and a lot of the rest of the world --, month, we're looking at october four tapering. the fed raising rates sooner than the markets have been pricing in. you have a lot of ugly ducklings out there -- the fact that the ecb has run the kitchen sink at the euro, and this is the most meaningful currencies. the euro basically is selling off aggressively, and now, another big currency like sterling -- it filters through. >> tell me something. you wrote a piece today, which is saying that the fmoc, the horse has already bolted. >> what i'm saying is this move , more fmoc on thursday risk, a lot of the move has been pricing in the short term. we see a lot of dollar buying across the board.
you are starting to see markets sell u.s. treasuries and equities. the horse has bolted. a lot of the market is expecting on thursday from the fmoc, they are expecting a little word considerable time -- >> if that is in there, they are going to start throwing their toys out. >> the market will not be happy, no doubt. we have the san francisco fed research paper that open-market, this is what to expect. if janet yellen comes out and doesn't deliver this, yes, i think the market would feel very disappointed. >> and further dollar strength? >> regardless of what happens, even if yellen doesn't come out and change the wording, we will see some give back in the dollar
move. it will be a great buying opportunity to get back in. this move is real. it is a matter of maybe taking some off the table three fmoc -- pre=fmoc. >> great to have you on the program. come, off electrifying start. riceorld's first formula e making its debut in beijing. we take a look after the break. ♪
what have we got? >> it is quite interesting. i'm an old dinosaur. i've been around a while. the last time they discussed the five-year plan, two years into the plan, they were still discussing numbers. a plan, they are really trying to solidify the 2020 targets. if we are seeing in the chinese that thee talk is numbers are going to go up, and the solar numbers are going to go up. >> the goal have been shifting little bit. >> we've talked about this before. you want to fix china's pollution problem. getting 80% down very gradually, that is feasible. you just need to inject a lot of other stuff, like nuclear, for example. the other thing you need to do is make coal-fired power plants more efficient. in the next few years, you are going to see two things -- clean energy numbers going up, and a
lot more restrictions and on --d fire power plants restrictions and regulations on coal iron powerplants. >it is very hard to give up smoking. again,son is because, you've got number one 80% of your power system is from coal-fired generation. apart from hydro, which can't really control that much, it is the lowest form of power generation to the cost, much cheaper. even today on average, you are looking at about $.50 per kilowatt hour for coal, whereas solar is a. how does that work. ? >> what is not from an investor's perspective? twitter we talking about -- what are we talking about? there is an,
uncertainty factor. the uncertainty factor is, how will china trade carbon emissions? will they analyze the company's? how will they execute on that? if costs are passed through, margins could be hit. >> thank you very much indeed for that, joseph. a look at how china is trying to wean itself off of coal and looking at targets in his head in place. let's have a look at something green, the world's first formula e race getting off to an electrifying start over the weekend. up with alap wrapped spectacular sight. ♪
>> that is the sound of the electric racing car. >> you don't hear that much, do you? an -- anmembers-- unearthly whir. will be going 80 decibels. it will still be cooking. it's just very different. it is more like the grand prix of monaco than it is any track races you with in shanghai or anywhere else in europe. is a real clear thing, which is the tires. they are running on treaded tires, which you don't usually see for anything besides a race like monaco. that is a start. there are some other things that
are different with the cars themselves. in addition to it is all electric, they're all the same design. you go about deciding on all the standard that will go into the chases, the drivetrain, will that. -- all of that. everyone else has the same thing, the same battery, all of that coming from one single design. >> these cards are very tricky to drive. they have quite a lot of acceleration. it go 0-100 kilometers per hour in less than three seconds. to handle it closed the walls, it is very difficult and -- very difficult. and basically one hour on the track, you have to learn the track, the car, set up the car for the track. it is tricky to do all of the things. in formula one, if you do a mistake, you go out of the truck. here if you do one mistake, you will. -- you will hit the wall. you've got power train
management that comes from williams, and the battery itself and thenilliams, mclaren makes the actual engine. these are familiar names from the supercars you see on the road in hong kong or in monte carlo. they are also familiar names on the racetrack. why is this significant that it is in beijing? >> china is the largest vehicle market in the entire world. it stands to reason that in the future it should be the largest electric vehicle market. >> how much is this event going to help beijing become the world's biggest e-car market? >> a car is a fundamentally consumer product. china likes its consumer products. a lot of young people who might be buying their first car ever.
you are adding people to the car system. in so doing, a lot of people are going to look at the electric car as the first choice. i really think this is the start of something that has quite a lot of legs on it. >> to get more of that,, the bloomberg's at to your mobile or ablet -- the bloomberg plus to your mobile or tablet. pp i you use twitter, a disease or to stay in touch with us to -- if you use twitter, it is easier to stay in touch with us. that is what we have. the top spot for the last four weekends in a row, "guardians of the galaxy" has lost its lead in the box office. "no good deed" first place for the weekend, collecting $24.5 million. the movie's about an escaped convict who is played by idris
it has received another interest that it will stop taking orders. the ipo on thursday. the level of interest, where does it leave us? to sell enough interest all and to be high end of the $66 hirsch air. very strong interest. could alibaba consider selling the price range and selling more shares perhaps? it depends on whether it will have more funds or smaller ones, like hedge funds. it will be very difficult depending on what type of investor. they can place larger orders or more stability for alibaba. a are concerned about government issues and political risk for investing in a chinese company. hedge funds looking for a
quicker profit. the storyk at -- at of facebook. it to them a while to recover after the ipo. -- it took them a while to recover after the ipo. quite a long time to get their share price back up. you find out about the questions being asked about the investors? >> there are concerned. one of them, the relationship with alipay. alibaba continues to get a some relationship with alipay. and also overvaluing. is alibaba working that much money? think $66 makes it looks like it is 29 times the estimated earnings. that remains to be seen.
or similar companies listed in hong kong. those actually have earnings of about 35 times or more. it could be aa, relatively good value if you get the numbers. right now, what alibaba is saying is [indiscernible] they continue to see they will be pricing on a september 18. >> thank you very much. let's turn to a the stories we are following. fund from get some asia all of this according to a person familiar. htc will be development it suffers underwater camera. sourcesarching for new of revenue after losing smartphone assails. ofy are selling about 1/3
their fuel services. [indiscernible] among a push from beijing to restructure state-owned companies. hsbc has agreed to pay $550 billion. the bank along with 17 others was accused of selling faulty bonds. is much less than those levied against j.p. morgan and bank of america. hsbc shares are down about 0.5%. isna's of growth target under threat. we have a new data showing it is continuing a slow down. our correspondent is stephen engle. give us a read through a what are the numbers are telling us. >> it tells us that the growth target set up by li is in jeopardy.
his options have narrowed given in the latest data we got from the weekend. options are to stimulate a more or miss the target basically. we had the week is output since the crisis. moderating last month as well. we sighed a second straight decline in imports. a 20's and percent drop. we saw a second straight decline in imports and a 20% drop. one person said it is an important wake-up call to do more. i just got a phone call and the note was that the economy is hacked and interesting note. they are deep -- and they are decreasing their forecast. she is saying the government's policy resolve is being tested. they expect an interest rate cut in one or two quarters. the policyat a
rhetoric coming from the like of said they are sticking to targeted policy measures. is saying that perhaps we could get a mortgage cut as well before in interest rate cut. she said and interest rate cut most likely within the next one or two quarters. by the end of the year. again, the big question, will they stimulate or ease the policies? they have done so with the targeted measures but nothing massive like we saw in 2009. >> how significant would it be for the government and indeed china to miss the growth target? yeah, it is simply a target. the economy -- they are trying to match the growth of this economy and wean them off all of
the investment led growth that led to nonperforming asset bubbles and unworldly and deadness. basically, a target does not mean and the other than the government has set a target and has always hit the target. i spoke to the former deputy governor of the bank of china and now the managing director of international and he says the government should set a range, a target range next year instead of a hard and fast number. we are not a short of stellar growth rates and we are not in the double digits. because we are trying to manage expectations. set the range and you have will wrong. it is yet to see if it will happen. -- a set the range and you will have wiggle room. >> thank you for that. what about when it plays out to the markets?
let's see if there's further reaction. the aussie dollar is the most impacted, right? >> most indeed. off of the 90 level. so close. off of it. the support has broken and that is the concern for further weakness. the lowest level in six months. the dollar and clearly concerns not only about china's lack but also about the central-bank and going forward with the mining industry. that is really the fx story of asia of the day. the pound and the yuan. i.so, the kiw the kiwi is down. a seven-month low. as a thekind of path aussie dollar. that is in reaction to china and
the manufacturing data. the day so far. china is up zero point 3%. hong kong is falling. a big declines. -- china is up 0.3%. and that is the galaxy casinos. a big the climb for only one a gamer out of all of these stocks. big declines. let's talk about petco. they sold over the weekend. they sold a stake in of the retail business. the petrol stations. 23 convenience stores -- 2300 convenience stores. they sold their stake to 25 investors. china is one of them. they bought 10 billion you one of those. of those. you have the high electronic.
icbc also bought stakes. [indiscernible] it is the one falling of the most. the biggest energy company in china, breaking it down. also china and hong kong. >> thanks for that. presidentthe chinese kicking off the tour of south asia. the first time visiting the island nation. we'll get more from our correspondent. how are you doing? tell me more about this. a bit of an audit way to start. of the most popular tourist destinations. china is doing good all over the world. they are spending a lot a money all over the world's on infrastructure from the main islands to another island. there is chinese money flowing
all over the world. he?e moves on, doesn't >> he will be in sri lanka and india. and lots of anticipation but cause on the heels of modi's trip. comment about a shift in attitude which people thought was a swipe at the chinese at a time when everyone thought he is also having [indiscernible] we are going to have to see how that visits ago. the chinese will do a lot of money india's away. looking to spend a minor money building -- spend a lot of money building up the rail system. >> and out lie in the area and it was seen as a snub. >> hume supposed to go into pakistan. in the area and it seen as a snub. and he was supposed to go
data. how does it impact the markets? >> indeed, the set of data is not strong, basically we saw credit growth, even though better than july, the lowest pace since 2005 and if you look at retail sales and industrial production has all missed expectations. i think this is in line with our view that the momentum in china is quite mixed. we are less convinced you can see a further rally of the chinese market. at the same time, we do not think it will be a significant policy coming out even though the will be policy support. we are beginning to see payback downe strong market reader in and the summer months. in the next six months, and asia , with if you can see -- we see
you can see some upside. ge letter, youst are sayingo bad news is good news. tell me more. overweight in risk assets. we are overweight in assets. , our favorites market is the u.s. where we see momentum. andof the economic recovery earnings continue to surprise on the upside. the good news and bad news angle is the economic recovery while happening is not a very robust globally. anyefore, we do believe control of liquidity by central banks will be gradual going forward. asset on theisk six month view. >> many people are looking at the possibility of stimulus
coming from the respective central banks. a large amount say hold your horses and do not do it this year. what is your view? there will is that be at withdrawal of liquidity by the fed. if you look at the most important central-bank and of the world -- >> i am talking about japan and china. >> adjust china and japan? we think there will be policy support. liquidity conditions must remain quite easy in order for the close tot to maintain 7.5%. they may miss a bit. with the new that will do several .2%. probability of the possibility of raising the value. -- we think it will be 7.2%. prime minister shinzo abe will
have to look at the september quarter gdp which will be due out in december before deciding whether or not to raise the tax. if growth continues to be where it is today, you will see the fed put stimulus in order to support growth in japan. let's gold to the most important central-bank in the world. nothing is most likely to happen. we are looking for a language to come out and dropping the phrase of related to current monetary policy, "considerable time" may be dropped. >> it is a possibility. our view is clearly what will happen. cut by another $10 billion and prepare the market for the end of q3 and a raise in -- we think it will happen by
2015. you should expect the fed to be an or mentally and the language. incrementally to the language. guidance ofe median where rates should be going forward in the next six or 12 months. >> what at the moment is being factored into the yield? inon what is being factored is beset fund futures which was pricing in a lower yield compared to guidance. but because of the market is very much focused on the low end of the fed's guidance. dutch the sign time, over and at the same time, negative about geopolitical risk. about over time, negative geopolitical risk. the u.s. said the guy news and we think it is likely to continue forward.
the moment across of the asian pacific. ,t is down at the moment generally speaking. shanghai up. weaker data out of china affecting the things and shanghai. a 0.3% decline. no trading in a japan. it is asian day today. looking at the the index in singapore. following what is going on in the rest of the asian pacific. let's turn to the top corporate stories. linda has the details. >> rising home prices left a profit. discount in a low mortgage rates. citywide home sales are expected to hit a record of this year up from a five year low in 2013. and france is bracing for its
mostly disruptive strike since 50% and they have to cancel of its flights and lose $20 million a day if pilots go ahead with a plant walkout. they are protesting against expanding low-cost operations by using lower paid flight crews. stay familyts to controlled. people familiar said anthony deal to buy. it will help to defend themselves from on another purchase. those are the top corporate stories this hour. well, another company keeps business solely in the family. they are facing stiff competition of but a blend of east and west. john dawson reports. designan abide name and
yet it is hong kong born and built and run system edward -- built and run. founded it.ang chan," little english and no german, shook hands. >> [indiscernible] feel? do you >> i love it. chris would you ever sell the business? >> i would not ever sell my business. >> never? >> never. making lifed by simpler, they are taking on the likes of whirlpool. numeral makers, stirfry, massagers and diamond encrusted juicers. the oldest son of eight, he began it in a small office. today that space is given way to
a showroom. between the divided business, academia, and overseeing a number of charities. his priority is always the family. both the daughters work for him. karen had to earn her place. she has been named young industrialists of hong kong. is credited to her father. >> he is a perfectionist. too good to be approval from your father. -- you like to get the approval from your father. you like to hear you do good. is notoes not say it, it a compliment. >> there are not many privately held businesses ground as fast. to market is a much talked about subject. is that a consideration? [laughter]
>> secret. [laughter] a recipe built on water heaters with a strong fortune of appliances and an ind eed the motto of life made simpler. all of that washed down by well could be an imminent ipo. john dawson, bloomberg. next, a hong kong gamer. topic inro-democracy the city. more coming up after this very short break. ♪
♪ >> the indonesian president-elect gets set to shake up the structure of the cabinet. another set of disappointing numbers, industrial output coming up shy in china, and up 25% this year. we will be asking a saigon-based investor what is driving that rally in vietnam. now, he has not been sworn in yet, but the indonesian president elect is already shaking things up. have quite ad to
few changes in store in his cabinet, and we go over to jakarta index. -- now. a very good morning to you. >> hi, rish. is nowsident elect thinking of a more moderate adjustment for his cabinet. let's see what he said on this. >> the problem is not what the ministries are called or about the size of the cabinet. what matters is the strength of the cabinet and how fast it can work to implement the policy. will look at the values of effectiveness and efficiency. therefore, he is considering eliminating the deputy minister position in almost all positions. he is also committed to appoint a minister who has not held any
significant position in any who originatedne from a professional background, but he still welcomes proposals of figures to fill his cabinet from any groups or political is lookingd jokowi at having the same number as the previous administration. jokowi is also thinking of a possibility of establishing a new one. for example, agriculture, of whichfarming, all would be considered to be run by a minister of security. back to you. >> thanks for that. let's find out what is happening in the wider asia pacific, market action, a down day. really, what is behind it? a really rough start, and
what is driving it is clearly ed figures out of china. more on that in a moment, but i can tell you that is the reason, why, particularly, hong kong is down. sinopec selling a stake in its retail business, the petrol stations, gas stations, 220 five investors, and that is crucial. that makes it the biggest declining stock today, being the biggest energy producer in china. sinopec off by currently 5%. and you also have the casino companies, off by 3.5%. also, taiwan, down by 1/10 of 1%, and japan and malaysia. china, meanwhile, you can see is
up by one quarter of 1%, and the biggest decliners are these. all of these are in declines. three gainers. going back to the hang seng, only three gainers, and all the rest are down. is leading one of the groups of investors that bought the sinopec stake. and alibaba. the industry is being dragged down. lynas corporation, down. fx story ofthe asia. the dollar, you can see, is holding above that mark, which is crucial. that, it will go
down weaker. that is the call. that is how tight it is. nervousnessou the of the market today. if you like, of all of the different areas, and australia, only one area seeing gains. the rest are seeing declines. mainly, financial stocks. you see the financial data coming out from china. this is all down to the reaction to china. six banks, all of them are down. westpac is down, anz, these.ealth, all of they are down, because they are waiting. china is the answer to your question, rish, the china figures disappointing.
china, hong kong, and australia. >> the full-year growth target is under threat. john was just mentioning, pointing to a continued slowdown. an economist is in beijing. it is pretty weak. could it be seasonal? or does it run deeper than that? >> no, i do not think this is seasonal, rish. we have already had signs that pmi numbers,eak signaling that the factory sector had slowed down a bit, that the industrial output dropping 6.9% year on year, the slowest since the financial crisis, was a real surprise pre-and electricity output -- was a real surprise. electricity output is seen as a real gauge of what is going on, and it actually contracted year
on year, a shocking number, and what it seems to the signal is -stimulus, which the government issued, is slowing. and this is slipping out of reach. is, they did something rather strange. >> and they do not normally do they? they put out a statement. that is sending out another message, isn't it? china's government is fairly tightlipped and does not share when it is thinking, but we have had two explanatory notes from the government. back in july, we had some very put out a and china note saying that that was seasonal, nothing to worry about, and now the data is weak,
and they acknowledged the role weakak real estate and a commentn but adding about august of last year and also slightly cooler weather also impacting the numbers. you,l right, we will ask as well, what about expectations about growth and policy? do we expect more? >> so under the old guys, if wen jiabao or hu jintao were in aarge, it would trigger fairly wholesale mood into stimulus mood. xi new guys, li keqiang and hading, instead, we have these careful, targeted moves, aimed at boosting growth is
significant parts of the economy, helping small affordable homes, trying to deliver that stimulus benefit without worsening china's structural problems without adding too much to the debt overhang, and the signals from the data seem to be that that targeted stimulus is not giving the economy the boost that it needs. if we see a continued slide in the growth base in the months ahead, we're going to see growing pressure to move beyond that targeted approach to something which is more like a full-blown stimulus, with cuts in the interest rate and reserve requirement ratio. bloombergharry at our -- thanks. our bloomberg economist joining us there. challenge cleaning up the country, trying to get the country out of oil and into more renewable energy sources, and
they want to do this by 2020, so where are we with this? question, where are we with this? targetsare going to up by 2020. looking at wind, solar, etc., but as we talked about before, that is not really going to coal addiction, and the way to do that is two ways. the gradual shift away from hydro and whatever else, and then you want to make sure they are the most efficient and least polluting as can be, and, of course, you cannot have nonpolluting coal plants right now. it is very expensive. >> it is going to take a while, but we do have moving goalposts, don't we, in all of this?
>> two things over the last couple of days, as tom mentioned earlier, a little bit of a slowdown, in terms of the next five years, bringing down some of the long-term electric power generation target down a little bit, which, given, is good, because you can deemphasize coal, and then you have the other good stuff happening, which is the nuclear powered plants coming online in a big, big way in the next years. >> the utilities. an opportunity for the investors? >> yes, we cannot talk about but here,e, per se, the challenge to them is really will china put in a price for coal omissions, and if so -- -trading scheme.
>> exactly, and how it will impact utilities. -- moressions fine emission fines. there.ph jacobelli and relief supplies dropped into those suffering you to flooding. a boat carrying a wedding party sank, and more than 300 people have been killed since the flooding began. hundreds of pro-democracy activists have marched through the streets of hong kong. they are protesting against china's decision to vet candidates. occupy is planning a sit in. they are calling for good sense
as the debate over the nomination process goes on. and the killing of a british aid worker by islam it militants has been condemned after a video was wasased after the man, who abducted in serious, was beheaded, and prime minister david cameron called it an act of pure evil, and he said he would do whatever it takes to hunt down the murderers. person beheaded in recent weeks. at a supreme court said that matthew miller, from california, entered north korea illegally and try to commit an act of and he has been denied any appeal. and onto something more cheery. amsterdam, -- in amsterdam, the court was turned red, in -- due to the russian
♪ reporting onen this rally that we have been witnessing in vietnam. let's have a look at some of the investment opportunities and bring in a chief executive of vietnam investment management. he is normally in ho chi minh city. is drivingwhat things? where is this coming from? and does this rally have legs? >> we have seen a huge increase in turnover, and that is, to a
great extent, it has been funded by margin finance from the brokers and the banks. comeositivity has initially, i think, from the fact that the improvements in the macroeconomic picture over the last three years or so, with inflation having come down -- gdp, as well. >> yes, and this is low for vietnam with a historic view, but it is still better than most places. as aople look at vietnam garment making area, but it is really more than that, and they have gone up the value chain, haven't they? yes, there is an export menu and someelectronics, were responsible for 16% of the vietnam exports. so, definitely, electronics is
the coming area of export growth. industriesut nascent ? going up that value chain, as i mentioned, does that produce opportunities? >> as an investor in the vietnam stock market, not so much. it is mainly foreign-directed investment that is creating these new industries. factory, and there are several factories already, but , and ane in infrastructure built up around them and supports industries, and so on, and as vietnam becomes more successful, producing electronics, attracts more investment, and, hopefully, we get a virtuous cycle. >> let's look at the government's plans, and vietnam there.s, an ipo plan what do you make of the privatization? >> there is certainly the
liquidity if the pricing is right. basically. >> not cheap, but relative to the stock market. of 100 times earnings, it should be 15 times earnings. that is more interesting. there is the information as well as the pricing, but i am sure itt over time, we will get right. >> kevin, there is a problem investing in vietnam, with the foreign ownership rules. tell us about that. foreigners aret, restricted, unless they own 49% restricted, and foreigners can own up to one hundred percent of companies in non-sensitive sectors, so it is fairly counterintuitive, if you like.
is to develop your public markets that you have more restrictive rules -- see aalready starting to number of occasions where people are finding ways around those rules, and if they are not enforced, then that becomes more common, and then eventually, the rule becomes unenforceable, and hopefully before that point, they will realize it is something that just didn't make any sense -- just doesn't make any sense. rather thanc market being restricted or restraint. >> kevin, thank you very much. the opportunities in vietnam. a grand prix, but not as we know it. petrol replaced by batteries this week in beijing. we have a special report, coming up. ♪
♪ >> the world the very first got off to an electrifying start in beijing over the weekend. with aal lap wrapped up spectacular corner crash. have nathaniel bullard. ♪ >> so that is the sound of an electric racing car. >> you don't hear that much, do you? you have got a really kind of unearthly whirr, rather than that real screaming sound that comes out of 130 decibels of a formula 1 car. sound is another character at the racetrack. here, not so much, but that does not mean it is silent. i mean, when it is going it will , be 80 decibels. it is still cooking. but it is very, very different.
♪ it is more like the grand prix in monaco than it is any of the races you would see in shanghai or anywhere else in europe. this is actually on the street. it changes how the cars are set up. >> in what way? tell me. >> there is one real clear thing, which is the tires. they are not running on racing tires. they are running on treaded tires, which you do not see in monaco. that is a start. then there are some other things that are different than what you would see with formula 1. in addition to the fact that they are all electric, there is a lengthy process, which is how you go about deciding on all of the standards, and in this case, there is only one design from renault, and it is behind us, and it is otherwise the same thing. the same chassis. it is all coming from one single design. and everyone else has the same thing, the same battery, the same battery management system.
>> they have quite a lot of acceleration. it goes from zero to 100 kilometers per hour in seconds. everything is compressed in one day. so basically, one hour on the , track, and you have to learn the track and the car, and you have to set up the car for the track, so it is actually very tricky to do all of those things without doing mistakes, and here, if you do one small mistake, it is the wall. >> you have all the same suppliers you have with formula 1. the chassis is built by a company that builds indycars, not formula 1. you have the power train from williams. the battery management system and the battery itself from williams, and then mclaren makes the engines. so these are names you see on supercars on the road in hong kong or monte carlo and also familiar names from the racetrack. ♪ >> why is this in beijing? >> that is a very good question. i mean, china is the largest
vehicle market in the world, so it would stand to reason that in the future, it would be the largest electric vehicle market. >> how much is an event like this going to help beijing become the world's biggest e-car market? >> look at the buzz this year. a car is a consumer product, and s consumers it products. this is a place where you have a lot of young people who may be buying their first car ever. you are still adding people to the electricity system and the car system, and in so doing, a lot of people are going to look at the electric car as their first choice, not an option. but the first thing that they go for, so i think this is the start of something that has quite a lot of legs to it. aniellking to nath bullard. get more bloomberg by
vote is coming up this week, but what effect will it have on industry? island,w-laying talking tourism and trade. and the world's first ever green in beijing. >> and i am john dawson dawson. markets very much driven by weak numbers from china. some declines are significant. australia, and these are very d to china, and the first is china, and the other is sinopec selling a stake. op