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tv   Asia Edge  Bloomberg  May 1, 2016 11:00pm-12:01am EDT

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reform or risk being left behind? singapore's prime minister says it is time for radical change as the city tackles a sluggish economy. >> this is the first trading day of may. japan is the big market story today not because of a lot of growth but because of the moves in the morning session. on the lunch break right now, tokyo wasn't the best start. fell 3.6% in the morning session. very heavy volume there. dollar/yen now looking at 106 levels. . 's been volatile all morning of course especially new york. taking their jabs at this. that is sending the nikkei surging by 16% we saw in the morning, the cost of protection there. now the demand for safety is sending bond prices high inner japan.
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this morning the 20-year note is back at a record yield at 24 basis points. 25 right now. if it is any consolation futures indicate we may actually have hit a floor today. nikkei, chicago futures last i checked were up 195, 200 points above the actual index level at the moment. s&p futures slashed to negative not by a lot. elsewhere sharp drop in banks leading australian stocks lower. you put this together, it actually looks bullish, what's happening there. now a reminder markets in china, hong kong, singapore, malaysia, vietnam. and thailand are actually shut which means this one market opens this hour, india, and judging by the futures can we 710, 81, ended up, yeah,
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flat, just negative open there for the market in india which opened up toward the latter part of the hour. but of course the big story nikkei 225 and what's happening or not happening today. >> big move there. the japanese government says it is ready to act if the yen world beating rally continues. this comes as the u.s. adds japan to the watch list for foreign exchange practices. we are looking into this inaugural list from the u.s. but still including japan. >> also taiwan, south korea, china, and germany. coming out minister saying it's extremely concerning so he will be carefully watching the currency markets and will take action if needed. but of course this is not the first time we're hearing from japanese policy makers trying to talk down the yen. some analysts saying that it's not the right time for the finance ministry to make a move. still, we have to consider the
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yen's strength, adding to this yen gaining here is dollar weakness after the fed reiterate thad it's in no rush to raise interest rates. not to mention that we're seeing a narrowing gap in real yields with pressures building in the u.s. but then dissipating in japan so the yen climbing more than 10% this year already and credit suisse coming back already this morning and warning that the fed and the boj just sit on the sidelines and do not act we could see the yen break through the 90 level. >> there is growing criticism that they have to act. >> yes, there is. because we are seeing these growing pressures on the japanese yen. however, there is criticism out there and as we mentioned the u.s. just putting japan on that watch list for its foreign exchange practices. gauging whether their practices there could give them an unfair
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advantage in trade over the u.s. still, aso's comments, he reit rates even though the treasury has put japan on that list that will not affect or constrain japan's ability to respond should any action be needed. the treasury, though, on the other hand saying it is increasingly important that japan use all policy leverage including fiscal as well as structural reform to lift growth and of course this has een a key criticism of abe-nomics because this is the very point that they failed to do. >> right. >> we are seeing japan's opposition, coming out and saying abe-nomics is failing because abe relies heavily on monetary and fiscal policy but not structural reforms. >> all right. shery, thanks for that. we've been talking about the yen's rally with our guests all morning on bloomberg television. westpac says the boj's timing would be unusual if it chooses
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to intervene now. >> drawing a line in the sand is very difficult particularly given the last surge, the totally logical response to what the boj did on thursday. so it would be a very strange place to intervene but, clearly, they are worried about the one sided moves. be don't think there would many in the global financial community that would be welcoming renewed intervention by the bank of japan to push the yen down. it is difficult to know what level exactly is going to be the red line for the government but certainly at the 106 level we are coming close to it but i would imagine it's somewhere around the 100 level where i think the government really starts to signal that they're ready to intervene again. >> that's a word from asia on
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the yen. we have breaking news for you right now crossing the bloomberg terminal. sharp saying it is not the source of the report on job cuts and earnings. earlier this morning the newspaper reported or actually sunday rather that sharp is considering restructuring its solar battery and head office management operations cutting as much as 2,000 jobs. sharp coming now and saying it is not the source of that news. still calculating apparent losses due to restructuring according to sharp, also saying it is not a position, in a position to disclose the full year 2015 net at this time. it is also considering fixed cost cuts but no decisions once again made on jobs. that is the latest headlines coming out on sharp. halliburton and hughes have called off the merger citing regulatory issues.
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they had met antitrust resistance in the u.s. and europe and they say they could ease the concerns but halliburton must now pay a termination fee of $3.5 million by wednesday. air bag makers plunging again as the stock is falling as much as 16% in tokyo. that's after the nikkei said that u.s. regulators plan to push for an expansion of recalls that are already the biggest in automotive history. new reports of recalls were widened to all vehicles with air bags with the substance in order to stop deterioration. it would impact 100 million vehicles worldwide. a u.s. justice department criminal investigation into jpmorgan's hiring practices in asia. the bank admitted it is facing inquiry by the boj and fcc in a regulatory filing on friday. resources said in 2013 regulators were looking at
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whether jpmorgan violated antibribery laws in china. the bank hadn't named the agency until now. it is cooperating it says with the investigation. well, more stability has been seen at chinese factories. that implies further stimulus may not be needed at least for the time being. what do the latest pmi numbers tell sinus >> not exciting. 50.1. better than contraction. it shows the conditions or the sentiment is improving or is above 50. that means improving. below 50 more pessimistic. it had been for seven straight months pretty pessimistic until the march numbers. february they tend to get more orders and more optimism and when the national peoples congress happens and the government this year talking up the economy or stablization. the sentiment came up a little
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bit. what is interesting is not 50.1 but the fact that it is staying in positive territory. so we're starting to see a trend. i've been reluctant going before this to say things really bottomed out but it is starting to reform now that we have the new year lunar aberrations out of the way. you mentioned possible easing. it looks as though, yeah. they can possibly pause for a while right now given that they don't want to stoke what is already happening. property prices are running up. you also have steel prices ing up, and steel and coal getting liquidity in. you could exacerbate the problem. >> it could pause for stimulus but nobody is saying it is completely off the table. there is a sense that at least there is a little bit of a reprieve but at some point it has to happen. >> there are still some
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problems. yes the index of new orders showed stability at 51. however, new exports and new imports declined. employment also showing signs of weakness. more factories are cutting workers. while we might have a pause now after six interest rate cuts most expect if we're going to get another cut it would be in he fourth quarter perhaps from 4.35 down to 4.1. that is a big if though. again, conditions are deteriorating. >> we'll be right here when it happens if it happens. thank you, steve. still to come, showing no signs of losing its shine we'll take a look at how gold is continuing its tear a little later this hour. also coming up, currency conundrum. how will the boj respond to the yen's latest rally? hear from our guest next on "asia edge."
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>> it is 11:12 here in hong kong. in tokyo these are the stories making headlines around the world. china says there is room for improvement in its relations with japan but there is still a lack of trust. two countries showed trade relations worth more than $340 billion but ties have been strained by territorial disputes and by japan's decision to beef up its military and allow them to serve overseas. expected to be expelled from parliament today for leaving the country and not paying his debt, said to owe money for his defunct airlines. he is living in the uk and has offered various sums to prove he will pay up. he already lost his diplomatic passport and delhi has asked them to send him back to india. there is an extended ban on the
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registration of vehicles as part of the city's attempt to deal with pollution. the ban was imposed in december and will be reviewed on may 9. it lifts demand for smaller engines for gasoline powered models. sales of the more powerful diesels in india fell 41% in march. delhi rivals beijing for the level of air pollution. 2400 journalists at 150 bureau around the world, this is bloomberg. with the yen trading near an 18 yoy high, is it now time for the boj to intervene? let's ask the chairman and becoming a he yen one way bet? >> it certainly looks that way right now. everyone who follows the yen knows these are the moves it makes. most of what is going on is dollar driven in my opinion. everyone is calling for intervention. it's pretty tough to intervene
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in this market, a very big market. and the world has seen these boj actions before. >> even at 10 trillion. some of the calculations, even at 10 trillion increasing would not be enough to bring down the yen. >> no. the yen is trading on something really out of hand. the dollar has been driving it so the strong dollar for a period of time on the back of the fed which they were doing which weakened the yen. the u.s. economy probably looks like it is not primed for any rate rises right now and the yen is the other way. these are things that are very hard for someone to control. >> why did everybody, almost everybody at least get it wrong on thursday? >> i think the way everyone looks at the trade is there is a stablizing force and this is good for the japanese economy, good for the marx, good for abe. i think there's kind of more of
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a want than really the trade that was put on. the want was to weakten from 108 to 110 back to 120. a huge move. this move has started four years, three years ago at 75. there is going to be some replacements along the line. it puts a lot of pressure on abe right now. >> everybody is off that bet now. now the directional call is it is going to strengthen past 90 and possibly beyond a hundred. that's the thing. what could intervene here? could it be the bank of japan? could it be the government? >> look, i think the one thing on the table that is still out there and we've spoken about his before on the show is that the 2017 consumption tax i think is really important. abe says he is not going back on it. they will institute it next april. i think that is something that has some play. i don't necessarily think it's warranted right now. i think it gets a lot of
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mileage out of the political side to say maybe it will be paused or pushed out. it's 2%. i think the market is looking for some real talk around that point i think even though it is a year out but it kind of shows where they stand and the confidence they have. >> does it also show the precariousness of the japanese government in abe-nomics? if you look at the last time they hyped the sales tax and triggered the cpi number to go down again, taking a look at that and moving it forward, they must see something about set ratios that really concern them. >> i think those end up being secondary things. monetary policy is ruling the world right now. there is a bet against central banks, there's even terms coming out for it. the bottom line is you cannot continue to run an economy or a government or a nation with just monetary policy. it doesn't work. monetary policy is there as a
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by product as you stand next to structural reform or infrastructure bills. >> have they not done enough of either? >> i don't think they have. i think there's ban lot of talk but i don't think nigella has really happened. you have this vacuum of capital that keeps getting pushed into the market and there's really, not really changing anything. there is no inflation. and there is no structural reform. the structural reform i think that we're seeing is more in china than anywhere else. the u.s. is doing the same thing, just dumping scheep money into the market. now you have this, you're in this position where people say you're out of ammo. i don't think that's true. they can do a lot of different things. hopefully they don't. but the boj just intervening in the currency market, you're going to get massive spike and it's just going to be sold off because the sustainable nature of investing into a market as government is it takes too much money. >> are you in or out of japan? >> right now i think a pause definitely. you need to figure out two things. one, what the fed is doing
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because it is driving the dollar hence the yen. i think there is a lot of stuff going on in japan that is just negative headliners. mitsubishi. takeda is back in the news again. it just seems like there are so many things, so many moving parts. you know, corporate governance looks like it is going the right way. the activists have been involved. they're pushing things through. but there is still some of the legacy issues that seem to just not be able to be pulled out of the market. that is a political thing. predominantly fed action, where do you think, fourth quarter? >> i think june is off the cart. you already have some people talking about it but the numbers don't suggest it. september is the really the last chance but then you get the election so i don't really -- look. we've been saying all along we didn't think they'd do more than one or two max but i think that the market just, the economy is not there right now and i don't see the summer heating up. you've got other issues going on right now dragging the
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indexes, apple has been a big problem in the u.s. for the last week or two. people forget how big a wait apple is so once they start to get pulled down you get the sentiment drain it's hard for the fed to raise into negative sentiment. i think that's being created right now. >> there is one country where i do know you're very bullish about but we'll get to that in the all in, 20 minutes from now. thanks. >> thank you. >> coming up, singapore's prime minister plans to future proof the nation. we'll take a look at his plans up next on "asia edge."
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>> welcome back. you're watching "asia edge." singapore has been told it must urgently transform its economy to ensure job creation and growth. the prime minister says globalization and technology are forcing the country to change to remain relevant. let's go right now to singapore to our correspondent.
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how is singapore responding to these challenges? >> well, it is really about getting workers to have the right skills for the jobs being created and jobs to be created key to transforming things for the economy and is becoming more urgent because growth is slowing. the labor market is tightening. competition in the region is intensifying. singapore is in the midst of this transformation and has set up a committee for the future economy to look at how this can be achieved. there is a sense of urmingensy. here is what the prime minister had to say in his may day rally speech. >> the only way to do that is ransform the economy, create new opportunities, and opportunities not just to earn the pay but to upgrade ourselves. do the jobs. that means restructuring our industries. that means reshaping our jobs.
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>> and government programs have been put in place. adapt ves like skills, and grow all for singaporians and retrenched workers. we're seeing a lot of disruption and no longer business as usual. others, of uber, and have shown how business and business operations have changed with the advancement of technology, reel bith creating jobs for the future economy. future proofing as you said earlier. >> yeah. future proofing but you got to reposition yourself. right? where are the opportunities right now in singapore? >> well, we're seeing opportunities in sectors like technology, apple, all expanding in singapore looking for more programmers, coders. singapore will have to build a pool of talent. the thing is this. it takes time. essentially it will be difficult to address immediate
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concerns of a slowdown plus some say it is no longer just about identifying growth sectors like finance or wealth management or technology for that mat birr really about creating an innovative and productive work force at a time when business conditions are difficult and uncertain. they are deep, structural challenges at the same time. >> thanks for that. checking other headlines for 1.4% ht now, a narrow gain in first quarter profits despite a rising level of bad loans. net income rose to 10.5 billion dollars while nonperforming loans jumped more than 27 billion. the lender is the only one of china's big five banks to raise its bad loan coverage ratio during the period. the bank of china and ccb both fell below the regulatory minimum of 150%. warren buffet says he refuses to invest in most major financial firms because of their holding derivatives are
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"a potential time bomb" and made the remark saturday at the annual meeting of berkshire hathaway in omaha and said he wouldn't even consider investing in 45 out of the 50 biggest banks in the world. meanwhile berkshire hathaway's . ofit rose more than 8% gains in its manufacturing unit and investment portfolio offset a slump in insurance and the railroad. let's check in on sydney. ahead of the decision coming through tomorrow. expect it to remain unchanged at 2% but here is where equities in australia are right now. half a percent down. we are seeing markets in china to vietnam, malaysia close this had day for the may day holiday but not in korea. markets there are open. let's check it out right now. south korea's kospi is really falling with 3/4 of 1% down as we also see oil retreat go for the second day but the big story of course is what's happening in japan. we are looking forward to the
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afternoon's business in tokyo. this is the first chance the equity market got to react to the boj decision on thursday of last week. we'll get the latest on japan's reopening after this very short break. show me top new artist.
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>> the top stories this hour asian stocks are falling again today for the sixth time in seven sessions. led down by the sharp losses we're seeing in japan. the yen has strengthened past 107 the biggest two-day gain against the dollar since 2008 and weighing on the earnings outlook for exporters. the finance minister taro aso has said the government will intervene if the currency continues to rise. air bag maker takeda is plunging again falling as much as 16% in tokyo after the nikkei said u.s. regulators plan to push for an expansion of recalls that are already the biggest in automotive history. reports of recalls will widen to all vehicles fitted with air
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bags with the moisture absorbing substance in order to stop deterioration. that would affect more than 100 million vehicles worldwide. halliburton and baker hughes have called off their planned $28 billion merger. the proposed union between the second and third largest oil service firm, that stiff antitrust resistance in both the u.s. and europe. the u.s. attorney general loretta lynch has called the termination a victory saying it shows that no merger is too big or too complex to challenge. and those are the headlines from bloomberg news powered by over 2400 journalists in 150 bureaus around the world. let's get the latest from the markets. we've got david for that. > thanks, angie. the markets in tokyo reopen for the afternoon session, before i give awe snap shot of what is happening on the broader picture, have a look at some of the big moves because of earnings. murata and nipon electric both
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down with disinterpog earnings issue., separate well, completely the opposite. they're coming out and saying they're going to make more money. they raised their dividends a little higher than forecast and also a share buyback all announced on thursday. the first time japanese investors have a chance to react to all the earnings which came out thursday into this morning. other things, sharp just coming out with a denial about a 30 minutes back on this report that it was the source. saying it's not the source thaff report on job cuts. the newspaper reporting on the weekend that sharp plans to cut 2,000 jobs roughly. at its solar battery and head office management operations according to the newspaper roughly about 10% of the 20,000 omestic personnel that are
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affected. a lot of markets are closed of course and the big question is can the nikkei 225 hold on to 16,000 today? a lot of pressure on the stock. let's see what happens. >> checking shares, westpac tumbling today after the lender posted slightly weaker than expected first half results. taking a look at the bottom third of your screen close to 4% down right now. paul allen joins us from sydney. run us through the numbers here. >> angie, the market always expects great things when it comes to the banks and the cash profit was actually up 3% of westpac although there was still a miss albeit a narrow one. 3.9 billion where profit of 4 billion had been expected. but it's really the bad debts that were dragging westpac down. 667 million dollars worlt. that is the highest level of bad debts in six years. there were four offenders in particular who between them
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contributed $252 million in impairments to westpac's bottom line although the bank declined to identify them. besides all that the banks all of them boosting their capital. westpac raised 6 billion in the period. the equity ratio now 10.5%. but if we take a look at this chart you'll see that the markets are none too impressed by the banks at the moment. bearish bit up 41% since the start of the year and have proved to be a wise bid indeed if we look at today westpac now up about 4% although that is an improvement on earlier losses, angie. >> let's move on to tomorrow. big day on tuesday in australia. not only is opinion split on whether the bavenlg will ease or not. the treasurer going to hand down his first budget did you he doesn't have much to offer in the way of election sweeteners. >> no he doesn't. in fact quite the opposite. the real question is how big is that dead layne going to be?
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right now the expectation is around about $35 billion worth. if you remember two years ago, having done his first budget joe was using words like budget emergency and budget repair and came down with a very tough document. a couple years later he was gone. we have the opposite situation now where if you're going to label any criticism at the government perhaps they're being too meek. he came in promising reform and hasn't really delivered it. shyed away from the chance to reform the negative taxing session, shyed away from the chance to increase the gst as well. that doesn't really leave a lot. we expect some tinkering around middle income tax brackets and perhaps a small cut to the corporate tax rate as well. scott morrison saying ahead of his budget this is not the time to be throwing money around or to put it another way if they don't have any money to throw around. so the budget is twofold really. preserve the triple-a credit
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rating and preserve as small a target as possible likely ahead of july, angie. >> tough job. thank you, paul. checking other headlines this morning virgin us an trail's warning investors to expect a loss in the current quarter and the airline says it plans to reduce capacity by 5%. the main cuts focused on regional routes. shares have fallen by almost a quarter since the beginning of the year compared to a decline of less than 1% with the benchmark. the casinos are showing increased signs of stability. revenue in april fell less than estimates as operators shift their focus from vips to attracting more casual gambler and tourists. the gaming revenue dropped only 9.9% to $2.2 billion. it comes as casino operators have been encouraged to diversify amid the slowdown. standard chartered is said to be investigating its bankers. sources told bloomberg several employees in dubai including
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three managing directors have left the bank over the past six months as a result of the probe. the c.e.o. bill winters said last week standard chartered needs to tighten up fing around risk management, expenses, and compliance. well, nothing seems to be able to dull gold's current shine. it is at an 18-month high having had its biggest advance in two months. yvonne is taking a look at this for us. gold is on something of a tear. what's -- >> we see a lot of momentum behind gold these days thanks to the weakening dollar. you look at the dollar index and track it with the gold price we have seen this divergence between the dollar and the metal widen in just the last couple days. we track it by a week before and this the time that we've seen that the paths have crossed. this was april 28 which was last thursday and we saw a double whammy on the dollar. so we saw the fed and the boj both did nothing so we saw softer u.s. data. that made the fed even more cautious about that second rate
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hike and the boj really markets with doing nothing and the yen spiked, dollar, the added pressure on the currency. we are continuing to see it fall around this 11-month low right now and gold actually hitting around 1299 an ounce on friday. slightly below now. we are seeing gold on a tear. this is a huge issue when it comes to the price of gold and supporting it as well as silver and the alternative. take a look at the raw materials space. we see silver actually beating gold when it comes to the past month. 15% spike in the silver prices the past month. we are at levels now not seeing this since last year back to may of 2015. and we're seeing the best months in 2013 for silver. what is fueling this? well china. you see the data stabilized a bit and there is some optimism that this industrial use of the metal is going to increase and be used when it comes to making
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everything from electronics as well as solar panels. march imports of silver into the mainland climbed 39% from a month ago. and the silver price now at 1783. now as we see hedge funds really piling into silver. when it comes to gold, however, it could be another story. you look at last week the net holdings of gold actually trimmed about a 2% drop here, the biggest drop we have seen since hedge funds became bullish on metal starting in january. that is about 184,000 net holdings on gold right now. what is going on? traders are cashing in on recent profits of course so the long-ranges have fallen. on the flip side the short bet has also fallen as well. still a safe bet out there, angie. >> thanks.
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let's move on to our next story. delta airlines has a new boss today. he takes over as c.e.o. after eight years as the carrier's president and told bloomberg he plans to make delta much more global airlines. >> there are two things. one, we're going to continue to do what we do running the best airline on the planet. we can do better at that. we'll continue to invest in the operation, invest in the product to make certain the reliability and service levels don't, you know, they continue to grow while we set records three years in a row with respect to our operating performance 2015 will be another record-breaking year and there is more we can do because our customer expectations are rising and we're getting paid for it as a premium. that is one thing. inc. the other thing you'll see me focus on heavily is the continued international expansion of our business. we've been active the last five years and made a number of investments, in the process of doing a deal with air mexico. the u.s. industry is largely
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mature. there is growth in this industry but not new cities, not new markets. not new airports really being constructed. so if you're going to look to grow for the future it has to be outside of the u.s. in terms of where we can go. i think there are still great opportunities to be had. >> where? >> latin america. brazil. a tough place to be right now. but long term a lot of growth and opportunity right up through central america into me cowhich is the deal we hope to close before the end of the year. an economy that's growing, multiple of the u.s. economy, very young population. the largest city in the world mexico city just across our border. china is an opportunity. the u.s.-to-china traffic next year likely will be the largest international traffic flow in the world. we've made an investment in china eastern our partner in shanghai. i think shanghai is going to continue to become not just the commercial capital of china but long term the commercial capital of asia. >> a lot of capacity has been added between the u.s. and china. >> there has been. >> are you making money on
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those routes right now? >> we are. not as much as we'd like to given the startup nature of the investment but there are also restrictions about how much capacity can be added going forward. the u.s. and china, chinese airlines are running up against their capacity caps with respect to the bilateral so i think you'll see the capacity start to moderate in the next couple years and will allow both the chinese and u.s. care dwrorse mature and harvest a little more the investments they've made. >> that was delta's incoming c.e.o. ed bastian. up next new data suggests china's economy is stabilizing so is it a good time to invest in the country? we'll address that in our group discussion coming up next on asia edge.
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>> 1:43 in sydney. these are the stories making headlines around the world. malaysia has received an official protest from taiwan
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after deporting 32 of the island's nationals to china to face charges. beijing claims jurisdiction over them as mainland chinese people are reported to have been the victims of scams that may have been worth more than a billion dollars a year. the group is part of a hundred suspects from the weekend. state media says the others are all chinese nationals. puerto rico on a $420 million bond payment later today will default a clear indication it can't pay its debt. it was warned they would miss the obligation and called on washington for help. last week moody said any nonpayment even if agreed to by creditors constitutes a default. s&p global ratings says that withholding interest even temporarily is synonymous with default. japan has decided to abandon a satellite that was designed to study black holes. he $270 million device was launched in february to
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observe. contact was lost in march and scientists now think faulty software caused it to spin out of control breaking off the two solar rays. it was a joint effort between the japanese aerospace agency, nasa, and other groups. over 2400 journalists and 150 bureaus around the world, this is bloomberg news. welcome back. joining me now, the chairman and c.e.o. of capital link international. you know, last time we talked, you're very positive on china. you've predicated your entire career really like most recently on being bullish on china. but why did so many people disagree with you? >> we only have 10 minutes. so i think the first part is that people are not really understanding the transformation. the thing i'm bullish on and i'd like to say not blindly bullish, there is a real change that's gone on. a back drop of moving 400
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million people from farming to cities to making them consumers. a change going from old industry to new, a service driven. these are things i think no one really gives any support to and understands the gravity of what's happened. that also i think has another point to it which is that there -- they're managing this transition in quite an incredible fashion i believe. it is being missed in the market and people are saying there are all these other problems and yes there are problems. there are structural problems, debt, but no different problems than anyone else is facing in the world and i think manageable at this point. now you have the stablization in the market. everybody asks, the market is so volatile. how could you trade this market? like a casino. then all after sudden it stabilizes and no one says anything. >> you're talking about the stable ayesation but does it worry you at least recently when we saw the rebounding in china especially with the economic indicators a lot of that was based on the fact that they had to go back to the growth drivers such as infrastructure, lending,
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construction and so on? >> right. it's concerning in the sense that you can't just kill off a whole industry. right? the thing is this's two chinese, the old smoke stack export, you know, cheap labor which doesn't exist anymore and this new i.t. tech service. so you can't just kill the other industry off. i think they saw an opportunity to actually, you know, in the process of winding it down or changing it to still extract some value. >> so you thought it was managed. >> i think you're going to have these bumps in the road and the real driving force for me being positive is i think they're the only country in the world that's actually using monetary policy properly meaning that sitting next to structural reform, infrastructure build. that's why i think that's how it works. plus they have 350 basis points to get to normalized global rates. >> wouldn't you agree though they need to improve their communication skills? >> i do. yeah. i think that, look. the issue comes down to one thing. when you do something and say
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nothing, it leaves speculation open forever. right? the markets don't understand or don't like uncertainty. they discount uncertainty. if you articulate what you're doing whether people like it or not there is a way to price it in. i think it is starting to get better. you're starting to see unit among all the moving different parts and i think trying to get the story out in better fashion. >> it helps that china is so centralized because what is happening with a lot of the economies like we talked about japan is we see monetary policy nothing else. in that sense centralized government -- >> they are kind of a step ahead of everybody else in terms of how they actually manage the government so i think these are things that people need to see as drivers. as positives. >> when it comes to the yen as well which is something they were trying to promote, what do you think is going to be the one that really drives the moves in the currency?
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is it going to be the u.s. dollar or more about the domestic policies? >> look. i think the yen has its own problems. i think the u.s. dollar has been the driver but i think it's been a false driver. i think the fed has created the u.s. economy that doesn't exist and they were hopeful and this is a whole, you could talk about the economists' view on the world and then the main street view. i don't see anything in the u.s. economy now that portends a huge amount of rate increases. i think it takes the dollar play down a little bit and the dollar should come back into normalized levels. that then will i think be the reason why the yuan starts to take off and the yen will be the counterbalance of that i think in the long run but this move to a basket of currencies is a very big move in december. right? what you have a really hard time doing as a central bank you have a hard time managing your own economy and currency let alone trying to counteract what somebody else is doing because you are a defacto -- so
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getting away from that has given the autonomy to actually control their own currency. it is only four months post that so people are still trying to figure out how that works. so if you don't see significant dollar strength you don't see significant yuan weakness then. >> no i don't. and i think this bet against the central banks, i don't necessarily agree with that theory but everyone is saying everyone is out of ammo. the chinese central bank is not out of ammo. if you want to use that as the proxy and say that is the game being played and everyone's got relatively no room on monetary policy, then why wouldn't you like the prospect of where the chinese sit there because there are 350 basis points above it and they're doing things that are positive, which is structural reform. and now you're going to have this infrastructure built. >> what excites you? in your view where should the smart money be going in china? >> i think the banks are completely under valued. i think by historic standards there are a lot that people
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can't get their heads around and the chinese government has restructured their banks many times before. when 2008 hit everyone was looking for someone to be able to plug a hole. >> are you worried about liquidity con teenagean if the banks go under because of npl? >> i don't shall the four banks are state owned. 80 some odd% of the four big banks. i don't think that is a risk on any level. what i think needs to be sped up or actually articulated better is the move of provincial debt into a municipal bond market. the whole idea with the u.s. savings & loan crisis in the 1990's is happening in china where they'll take provincial, nonperforming scary debt and move it into some asset. so the risk in china right now is that they don't produce a yielding asset onshore and money keeps looking abroad. >> capital control is done. all right. thank you so much for that. we got to go. all right. our brand new show "bloomberg markets middle east" is coming
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up at the top of the hour. what do you have for us today? >> angie, very good day to you. we have got an action packed show. we'll kick it off with a conversation. i had a discussion about oil, the region where he sees the best investment. side by side with that we'll break it down. what is the bigger conversation in terms of emerging markets? where are the biggest opportunities? will oil make it back to 60 dollars a barrel? that is the question. our top corporate story in the region is emar properties and of course they've had great numbers. they're able to bring that rent in nice and early. we'll pivot and talk a little bit about iraq as well and what is going on there. we have one of our editors here in the region to talk us through the economic ramifications of what's happening in iraq. and of course our special guest at the end is jared lawless the head of tourism and hospitality. what is happening in the region? can you do dubai on a shoe
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string? i certainly haven't been able to. that's for sure. rock on those expenses i say. with that, i'll hand it back to you. full feast on day two in the bloomberg dubai. >> i suspect you haven't traveled on a shoe string budget for a very long time. thanks so much. looking forward to it. coming up next vietnam's new government faces its biggest test yet as millions of dead fish wash up on the country's beaches. details coming up next.
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>> welcome back. you're watching "asia edge." vietnam's government is facing widespread criticism on social media after millions of dead fish washed up along 200 kilometers of coast line. what happened here? >> as we head into labor day
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week, you know, golden week holidays, vietnam being a prime tourism destination, this is not a good look. 200 kilometers stretch across four provinces and these wild and farm fish washing up dead. the government says it doesn't know how or why they came to be there. it is causing economic and environmental damage. really bad for fisheries in particular and also that it is resulting in puddled sentiment among statements which is perhaps an under statement because you have vietnamese citizens and ex-pats suggesting there's been a coverup, that the government hasn't responded quickly enough. these are pictures from the weekend on sunday. does er, this certainly demonstrate how angry people have been saying things like please give us back our clean oceans. protests are rare in vietnam. they've even petitioned the white house for something like 140,000 signatures or to ask ts wanting
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president obama about this. >> they still don't know the cause. >> look at the reaction on social media, people are not very subtle in what they're calling for. we've had a look on facebook. formosa is a taiwanese steel company that has come out and apologized for the fish incident but says there is no direct link to the company so that is a little strange. but the vietnamese people do not want companies like th they want a clean ocean instead. and certainly this highlights the balancing act that vietnam has had to play in terms of still appealing to foreign investment but also appealing to keeping domestic sentiment positive as well. >> absolutely. thank you for that. all right. welsh the jungle book has kept top spot at the north american box office. giving disney the number one prize for the third straight weekend the film raking in over $42 million nearly five times more than the second place the
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huntsman. it underscores disney's decision to announce nine new adaptations of family film classics. that's it for us on this edition of "asia
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♪ how much oil will be too much? $47 as production nears a record high. finance japan's minister is concerned about the yen's rapid rally, but it keeps on climbing. manus: a jump in profit for the builder of dubai's tallest tower.


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