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tv   Asia Edge  Bloomberg  September 14, 2014 11:00pm-12:01am EDT

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crucial independents 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. sinopec, therefore, is the
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biggest declining stock, and there it is. >> right, and in a little over roadshowthe alibaba kicks off after meetings in the u.s., and they already have interest, but they may stop taking offers for the early sell. lulu, tell me something. what is the atmosphere like? calm?just reasonably >> definitely. one of the key questions that investors will be asking today will beer alibaba issuing more shares or bumping up the price, and they managed to attract enough orders, so they might be closing their ordertaking process early for the ipo. one of the key questions for because the ipo is so
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high profile, and there is so much demand, some might be insulating their demand, so that is something they should take care of -- and might be insulating their demand, so that is something they should take care of. -- might be inflati ng their demand, so that is something they should take care of. the company is still looking at september 18. starting trading the next day. what are the fundamental is most concerned about when it comes to what could be the biggest ipo to take place ever -- what are the fundamentalists ?ost concerned about >> how they will sustain growth,
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especially when it comes to mobile. even though they have a great mobile, how are they going to sustain this growth? also, with instant messaging and also chat. margins have come down a bit, so how are they going to boost that metric? roadshow has hit. the company that handles lions share of e-commerce traffic, but not easy for investors to buy shares. what are the roadblocks? consumers are really driving it, but the problem is, it can be very difficult for them to buy outside of china, not just alibaba, but there are
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rules imposed by the chinese government. usingctually can buy funds of qualified investors, are the veryally wealthy, because often they will, with a minimum investment u.s., and the000 problem is also with these investment funds is they have tended to perform quite poorly, to be honest. alternatively, investors in hong kong could open an account at a brokerage here. but it is not that easy. you have to come to hong kong to open the account. it will stop the mom and pop investor from investing in alibaba. butctually drive alibaba,
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we cannot invest in the company, which is expected to do well. >> there are all of these capital controls and rules that restrict it, but what about investors outside of china? can they find their way to a alibaba ipo? yes, they have been advertising to them, the chinese in singapore, taiwan, also in hong kong, taking out advertisements in buses and cabs. there is something like 15 million chinese outside of china. the languagete to and cultural issues, as well, saying that alibaba is a chinese company that is expected to do well. come and invest. >> all right, rosalind chin,
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thank you for that. >> sinopec getting rid of their fuel station business. some 25 investors paying $17.5 billion in total. beijing wanting them to open up to more market forces. sinopec is the biggest mover on the hang seng. decline, 4.5% at last check. is that right, john? >> yes. there it is. sinopec now down, falling as i speak, and they are going to sell their stake, and that will weigh on the valuation of the share price. looking at my wonderful tumbler, here it is, coming up. selling about 30% of
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its retail business, petrol stations, 30 thousand stations, which also have thousands of convenience stores. now, 25 investors. this includes china life. you have got haier. icbc. 25 investors. there is only one foreign investor from malaysia who is domiciled in china. that is the reaction.
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and sinopec, there you can see, five point 5%, and the share price, after about two hours of , and the share price after about two hours of trading, it has been trading in that range, so the platform it is just waiting for some change of action. 7.47 fornt price sinopec. growth target is once again under threat, with data showing a slowdown. let's head over to stephen engle in beijing with the latest. the numbersare telling us? >> well, they are telling us just what you said. the monthly numbers for august 's 7.5% that li keqiang
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growth target is in jeopardy. his options have narrowed. stimulate, or miss that target. is missing that bad? we will have more. weekend.ased over the fixed asset investment, retail sales, they also moderated, and we saw a second straight decline in imports and a 40% drop in the broadest measure of new credit, and that is aggregate financing. person thatm one the august activity was sharply lower than expected and that the government policy resolve is being tested. she expects an interest rate cut within the next one to two quarters, quite a long time friend, so possibly by the end of the year, but nothing eminent, she says, given the policy rhetoric of selected stimulus. at goldman sachs, one person said the likelihood of further monetary easing, such as
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interest rates, or reserve ratio now increased significantly, and that being said, they clearly do not want a repeat of the asset bubbles and bad debt they had after the situation in 2000 nine, but now, how slow will they let this , but now, -- in 2009 how slow will they let this ?conomy go its ownmberg has monthly gdp tracker, and it shows growth did, indeed, slow last month, down from 7.4% in july, so the numbers are telling us definitely slowing growth cemented. angie? >> it is causing people to revise their outlook on growth
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in china. what would it mean if china missed the growth target here? yes, those revisions are coming, and one just revised is getting%, and it further below that 7.5% target, but how significant is it missing? well, there is a precedent. sets a number, they always hit that, so are they willing to lose some face and miss that number? formerople, like the deputy governor at the pboc, now with the imf, he told me last week, he said china really needs to set a target range, not a hard and fast number. that would give the government some wiggle room in times of slowdown or in up times. angie?
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>> all right, stephen engle, we will leave it there with that. >> the picture could get even more bleak. ♪
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china's growth target is under threat. next guest has been investing in greater china for over two decades. and when is liu yang, she speaks, we listen, because you have been making money in the face of china's growth, and now in the face of china's slowdown, are you still making money? >> after losing money last year, i became a little bit smarter.
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i had the wrong buy on the traditional factors. internet, high-tech, biotech, anything with tech, i have got to be there. >> i have got to ask you, when you get industrial production data like this, people get excited. if there would be and easing of monetary policy, that would give people a bit of a rise. not today so much. >> you are right. monetary policy changing. but i do not believe it will be the case this year, because our central government, our new leaders are very busy doing something else. >> exactly. >> anti-drug investigations.
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>> yes, and reforms. that is why the sentiment was leaked, and h shares, the chinese -- moving forward. move, tos the right focus on reform instead of stimulus? >> they are linked to each other. your market is going to be rated. you have got to be visible enough and confident. we did have stable earnings growth. the deleveraging is going off. this rating has to come through. we have to recover on the economy front. shares have yes, h
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been depressing for so long, and i do believe that everything has a price, so they are going to move up. they did move up, but not enough. next year,s year or the earnings, we can see for the first year after many years, growth, so i believe the value investors are moving, and that is why i benefited a little bit more. -- you mentioned the anticorruption. how deep does this go? is it a genuine drive to get rid of corruption in china, or is it wine again based on favor? i don't know. i am asking you the question. >> you should be asking the question of many beautiful minds, smart people. i think it is deep rooted in the ,hinese communist party system
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and they will be removed forever, for good. how can you have a for thence driver economic quality? so this is the essential for the new leaders. they want to make sure, one thing, they have to put the right people, the people they trust in the right place to drive the quality of growth, so we will see maybe double the number of people thrown in jail. we are in the middle of a serious anticorruption cleanup campaign. this allows the reform to, -- to come to real terms.
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there are speculations about whether or not this time the government is really seriously doing something. it doesn't matter. going to comere up. that is what the market will start to pay attention to. >> we have another discussion coming up in about 20 minutes' time. thank you. >> absolutely. we will see you a little bit later. still do, though, -- still to co me though, what can happen to iftland's biggest export they leave the u.k.?
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♪ let's just check some of these stories making headlines around the world, and the killing of a u.k. aid worker by islamic state militants has been condemned after a video claiming to show his death. the man was beheaded on saturday. prime minister david cameron described it as an act of pure evil and said he will do everything he can to hunt down the murderers. he is the third westerner to be killed in recent weeks. relief supplies going to villagers stranded after 17 people died over the weekend when a boat carrying a wedding party sank, and more than 300
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people have been killed since the flooding began with more than 2 million affected. an american citizen has been sentenced to six years of hard labor in north korea. the court said the man from california and toured the country illegally and try to commit an act of espionage. they say he intended to investigate the human rights situation, and he has been denied any appeal. hundreds of pro-democracy protesters are protesting china's decision to vet candidates in the 2017 election. no date has been announced for the occupy sit-in. goes on.ation process now, amsterdam's square was inned red, as many took part a tomato throwing fight in
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response to the boycott by of products. tickets cost the equivalent of $18, and they say about 1000 were sold, and the proceeds will go to those affected. the scottish referendum this week, and questions still remain about what independence will mean. ♪ if scottish residents vote to leave the u.k. kingdom, the energy industry will be one powerful element in that economy. in u.k. oil and gas reserves the north sea will be split up, with 47% of the last and a percentage of the oil going to scotland. future revenues may struggle.
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shellants like bp and have stated they prefer the u.k. stay united. employ thousands of people and generate more than $10 billion every year for the scottish economy. and some of the oldest finance firms in edinburg include rbs and others. they have said they will move the south of the border if separatism becomes a reality. and perhaps the most famous export is whiskey. theke its banks, distilleries cannot pick up and move south. who wants to drink english whiskey? and the currency could impact costs and supply chains. last year, the distilleries sold
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the $7 billion of whiskey overseas. on average, that is 40 bottles of scotch shifted per second, and that makes it the second largest scottish exports after -- that is 40 bottles of scotch second, and that makes it the second largest scottish export after oil. canceled.ights were hong kong looks like this. there we go, down by nearly 9/10 of 1%. ♪
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♪ >> a working visit for xi jinping. concerns over a slowdown in china sends stocks and commodities lower, and beijing plays host. hasese president xi jinping kicked off his tour in the maladies, and he is the first leader visiting the island nation. davis.joined by andrew
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andrew, he is going to the malvinas. maldives. why? >> they are investing in infrastructure. he is just stamping his presence there. >> but it is significant, as well, because it is a first. ves, it and for the maldi puts them on the map, and their discusst wanted to global warming, and being an island nation, they are really on the front lines. move thatce having to entire population off the island once it comes to the sea waters. >> and, obviously, china has a big role in finding a solution to global warming, so it will be interesting to see if they really discuss it or how much of that comes out. >> of course, you mentioned it
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is just a stop to india and premier modi. modi'scially so close on japan, and they talked about the expansionist attitude, and that seemed to be a real swipe. some real talke about improving the borders. there is a lot of tension there still, but, china, again, is investing a lot of india, and japan making an effort to get in their increases tensions, and we have heard china talk about very similar types of investments that japan was talking about. japan is going to build a bullet china is going to make some investments. they seem to have a good relationship, but when you compare it to modi and abe --
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follow on twitter. isyes, and this time, modi going to be showing someone around on his birthday. xi around on his birthday. xi is not in all that long. they are both relatively new leaders. and i think they are finding their way. >> yes, and we are watching. andrew, thanks so much for that. >> we have got all the attention on china, and is appointing industrial production data, perhaps a further slowdown -- and disappointing industrial aoduction data, perhaps
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further slowdown. >> japan is shut today for respect of the aged day, and we are seeing some significant declines. australia falling about three and china's1%, effects on australia. sinopec is selling its retail business or at least a stake of its retail business to 25 investors. that, therefore, is the map. clearly very defined by the dramatic amount of red right across the board, and it is markets.out the fx the australian dollar. what is interesting is that the range has not really shifted out of that, but what is interesting is this level of 90.
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900. -- .900. the reaction was quite severe. kiwi in new zealand, that tracks the aussie. kiwi, looking at the chart, that range again, you can see there it is. that is the driving force, if you like, with the currency's. -- currencies. the australian benchmark. you can see from this, there is only one area, and that is the mining stocks. there it is.
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they are sensitive to news out of china. and the composite, where is that? there it is. it comes up with the china composite right about now. there it is. a mixed picture. havehen, of course, you got oil and gas, but overall, australia feeling the brunt a lot more than china itself. >> right, and there is the challenge of cleaning up china with their push out of coal and into more renewable energy, and 2020 is the date. what is the significance of that? >> it is pretty significant. right is they are discussing what will happen between 2016 and 2020. last year, two years into the plan, they were still making targets. xi jinping and the government
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and all of the rest are taking this very, very seriously. >> years ago, no one was admitting to a pollution problem. [lauaghs] [laughs] >> yes, and now we all know there is an issue. this is one of the key sources, coal, so they are doing two thanks. one if they are pushing renewables as fast as they can. they may push the target for wind to over 200 gigawatts or gigawatts, which is enormous. and more solar. rish, the same time, making sure the coal-fired power plants are more efficient. >> they could be cleaning up these older coal-fired plants,
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as well. >> it is easier to give up smoking than it is to give up coal in china, because you're talking about pulling the plug on about 80% of the power. >> it is going to take time. >> it is going to take decades. if you look at the numbers for the first seven or eight months, --ewable energy,, hyd dro, it wasnergy, hy anding, but it was only 5%, there are also costs. from hydro.t >> let's look at the opportunity with conventional plants. >> we cannot talk stock specific or stock recommendations, but what we can say is there is a concern out there about what is going to be the effect of
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putting a cost on coal for the coal-fired generators, and what we discussed before about the carbon emissions trading systems in different areas, including shenzhen, and will they put a r, or willt per hou the companies have to absorb that? >> joseph, thank you very much. joseph jacobelli there. firstl, the world's got off to ae start, and it wrapped up with a spectacular one or crash, and we spent the day with nathaniel bullard. ♪
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>> 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 from combustibles. ♪ it is more like the grand prix in monaco than it is any of the races you would see in shanghai or any other place in europe. this is 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. so that is a start, and then
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there are some other things that are different. there is also the design. there is this 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 this design that is right behind us, and everyone does the same thing. it is the same battery, the same battery management system. the same chassis. it all comes from one design. >> these cars are very picky to ride. they have quite a lot of acceleration. it goes from zero to 100 kilometers per hour in seconds. 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, you hit a wall. >> you have all the same suppliers that you see in formula 1.
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the chassis is built by a company that builds indycars, maybe not formula 1. you have the power train from williams. and the battery management system and the battery itself is 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. ♪ thaty is it significant this is in beijing? >> that is a very good question. i mean, china is the largest vehicle market in the world, so it stands 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 china likes its consumer 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
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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. >> the alibaba roadshow is kicking off in about an hour, and we will have more after this very short break. ♪
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♪ right, angie, we have got david tweed and our guest from atlantis investment management, liu yang. offalibaba roadshow kicking in less than an hour. i think it could be a done deal. >> they are going to close the deal.
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subscription. any time from now on. >> are you buying in? >> you have to. thereuld you be left without buying such a great name? it is fashionable. >> ok, it is fashionable. you dig deep. you do not just by on fashion. -- buy on fashion. are the numbers there? >> they became universal. priced, so itly is not expensive, and it is not, you know, not making money. and theshort term long-term holders, you have just got to be there. >> you have been covering it all morning.
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>> the government restrictions, you cannot do much about that right now, but how much of the growth has already been priced in? i think it sector, is 30% to 60%, because of the driving force of how big you are in the market. formality driver for the whole younger generation, consumption, so, basically, he is not a normal person. he is a genius. we are the same age three and i met him a few times, and he always gave you a lot of surprises, so this stock will you surprises. number one. number to, you do not find youhing else -- number two, do not find anything else. so many people made so much
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money already. think about this. here.tock could be >> the cost of governance. >> and people are questioning it as a result, our today? they?n't >> david tweed, jump in here, because a lot of large institutional investors -- let me say that again. large institutional investors are worried about the long-term play because about their exposure to political risk. , iscompanies like alibaba that a concern? >> political risk in china. >> economic risk. >> and economic risk. certainly, i think for alibaba, in the longer term, they are not going to be problems with
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economic risk, but short-term, everybody is looking at the chinese economy at the moment. we have an issue at the moment because we are seeing slowing growth and read it declining, -- we are seeing slowing growth and credit 40% in august. what they need to do without actually adding to monetary stimulus, which is what xi jinping has said they have not wanted to do, and then there is the huge amount of debt that has already been issued since 2008. this is a big issue for the chinese already, because if they see a slowdown, then you are probably going to have an increase in the instance of nonperforming loans, which will make the banks even more reluctant to loan, which will exacerbate all of the slowdown concerns that you have got going on in china at the moment, so i am interested in what exactly are the sorts of measures that they are going to be able to put in place in order to keep growth
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up at the target of 7.5%, and royal bank of scotland and barclays both cut them. what do you think they can do? >> for the longer-term already so who cares about the rate of 7.5%? nowadays, we have to look at where the growth is coming from, so we can make a little bit more returns. deserve a rating of becausee growth cycle, there are many sectors that have been supported by policy, and real money is coming through for sectors like alternative energy, nuclear power anytime soon, and
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also the health care sector, you know, 25% going forward, and also the high-end consumption, like alibaba, and there are younger consumers. this is a growth coming from the new drivers of the economy. on top of the national defense. you know, that is a sector coming through, and the consumption of brand names. and then the energy related. the big agriculture names are coming through, so you look at the sector, the earnings behavior. >> do you think we will see other opportunities with the state owned enterprises, as well? >> the state owned enterprises are a problem. we all know that. is why there are so many
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.oubts sinopec -- were you interested? but therenterested, are 25 organizations, and they are all there. i cannot wait that long. everything has a price. come on. so they pay the price to grow at this level, and they have to do something seriously to show the commercial terms, taking care of and this isders, about efficiency. and you will see earnings coming
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through. we all need earnings. some things are so depressed, and things are oversold for so long, and fundamentals are coming next year. it would be a very big year for china, because a shares are coming. 6000 points. >> yes. 6000. -- >> 6000. >> ok, we are going to mark your words and get you back when and if that happens. always good to hear from you and get some insights on china. with atlantis.g
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>> this is "asia edge," with more on the other side of this break. ♪
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♪ >> time to look at alternative investments. now, we all know about wine and stamps, but what about watches? building a portfolio of watches takes research and time. get a good return on your timepieces. >> we are central watch. we have the best equipment. we are the behind the scenes plays for a lot of major watch companies. become,today have especially on the secondhand market, a billion-dollar industry. watches a portfolio of is almost the same as getting into stocks and bonds.
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hot because it is the original look. it is the original design of the pilot's watch. you could really see a nice rate of return on that. this watch would be your apple stock. will continuously go up. you can sleep safe at night, knowing this is one of the things that is locked up in your fault that will grow in value no matter what. ofr major brand is your ibm stocks. it is a brand that has been growing a lot over the years. i would not be surprised if this was an $8,500 watch. this is the bond that you hold .orever even during the recession time, brand that youne did not see fall apart.
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a bigger return. on that zero collection. >> that is it
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