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tv   Trending Business  Bloomberg  May 17, 2016 9:00pm-10:01pm EDT

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wednesday, the 18th of may. i am rishaad salamat. this is "trending business". ♪ right, were visiting sydney and beijing this hour. japan dodging a technical recession last quarter. asia-pacific markets on the slide, the case for higher interest rates, struggling to
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hold onto gains after a four-month high on april 20. number three says he will listen to differing views as he prepares for a speech in hong kong. the most senior party leader to visit since street protests. do follow me on twitter, @rishaadtv. use #trendingbusiness as well. street,nd from wall china opening in 30 minutes. we are seeing losses flow through into the region. has to fed president signaling a rate hike in june. the firstling for
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time this week on the back of that weakness. all coming on line following that downward lead. interesting one, first-quarter gdp numbers beating expectations, avoiding that technical recession. japan switch in and out of positive and negative territory, but now with the wind strengthening -- yen strengthening, we are seeing some weakness. half of 1%. of all coming through in -- a fall coming through in australia as well. there is some downward pressure. this is what the regional index looks like, some support from oil and gas players, but most sec there's lower ahead of the
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open in china and hong kong, and we did see some strength in hong kong yesterday on that stimulus announced. a quick look at the japanese yen. that big strengthening, the dollar falling a quarter of 1% on the back of the gdp numbers. japan the managing to dodge a technical recession, growing at 1.7 percent annualized, beating estimates for a quarterly gain of 3/10 of 1%. let's have a look at what drove the positives here. let's start with the positives. part of this was down to japanese consumers, private spending can. it reversed that retraction at the end of last year.
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given that consumer spending is , that last sales hike pushed japan into a recession. the pickup in private and government spending down sing out the decline in business spending, giving up all of last quarter's gains. have a brutal selloff in equity markets. abenomics, years of japan incorporated reluctant to spend that cash. worth noting, a leap year, one is day of economic activity, also headwinds, building of theries, impact earthquake, strength of the yen, all factors coming into play.
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of one pointline 1% revised down to 1.7 percent, so the end of last year was uglier than we thought. to the yen, top of mine as japan hosts the g-7 meeting. the currency strength has sparked speculation of intervention. various japanese individuals warning excessive individual -- it is hitting corporate's very hard. , as well as other exporters. the problem is that you eject three for the yen. we have also expect haitians expectations that they
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will be raising. central bankers made some secret deal to weaken the dollar and the subsequent weakness we have seen in the u.s. currency, leaders will be a avoiding that speculation. it's not just the yen. it is also china in the spotlight as well. rishaad: we will have a detailed look at that. tweet us your thoughts @rishaadtv, include #trendingbusiness. how piracy is rearing its ugly head in china once more. we have that and some other stories for you today. yvonne: good morning. no-show for jack ma, canceling a keynote speech on fake goods with two days notice.
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alibaba members complained about fakes. alibaba says it is working to erratic kate -- eradicate counterfeit goods. accused alibaba of being too slow, difficult to use, and lacking transparency. for the white house reaches oregon and kentucky with every clinton trying to break bernie sanders winning streak and secure the democratic nomination. the race is said to be too close to call now, separated why only a few hundred votes. trying to geten it towards unexpected election contest towards donald trump, but sanders has vowed to stay in the race, forcing the democratic front runner to keep an i on the primary campaign. mored trump claims he made
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than $500 million over the last year, but not too many details on how. the republican presidential nominee says he filed his required annual financial disclosure with the federal election commission. mitsubishi motors were lower in tokyo, unchanged at the moment. president has decided to resign over the fuel economy scandal. have to take the blame for the falsified tests. he has been president and ceo oh of 2014. in june ore his post july when a third-party investigation is completed or near the stockholders meeting on june 24. thechairman will take on president's role and tell nissan acquires its 34% stake in mitsubishi motors. the company will submit it turn
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all findings related to the scandal to japan's transport ministry today. rishaad: thanks. ise analysts fear china experiencing a venture capitalist bubble i to the 1990's. to the 1990's. how real are these bubble concerns? pose that question to my next guest. i'm joined by one of the at one of the world's most prominent investment firms. people are worried about what we are seeing in china. we are seeing flashbacks of the 1990's in the u.s. before bubble. is that a fair assessment? >> good question.
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it is not a fair assessment. thereason why is that technology companies we see today in china, they have proven business models, generating significant revenue, tens of users, even the private ones not listed, so were talking about much more established companies today than the companies we were looking at in the u.s. in the late 1990's. >> there is an underlying economy that seems to support these companies, but valuations seem to be getting frothy. you have any concerns when it comes to the price you are paying for these companies? >> i think the companies that like alibaba,ic, very significant cash flows, and again, you see a company which is a category leader which has a
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significant market share and generates cash flows. that is what all of the other companies strive to get to, market leadership, so many of the companies we look at are not profitable because they know the price is so big that if you become a category leader, winner takes all markets, so you do everything as a founder and investor to get that market leadership. many companies we are looking at are still lossmaking. mostlk about some of your recent investments. for example, we were talking , markethe break leaders, maybe want to talk about that? >> absolutely. our investment strategy is about finding category leaders in consumer internet globally. we have invested $6 billion in the last six years globally. china is our biggest market, 40% of our investments. we invested in many of the leaders in china, like alibaba
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and others. >> what is the transmission from the chaost we saw in the stock market? it has become quiet, but the problems have not been solved. what is the transmission effect for the appetite? >> there is definitely a certain lag. the companies we look at are led by founders who are extremely ambitious, want to create big companies, always convinced they are running one of the best companies. everyone is. so if you have tough markets, it does not transmit to the founders ambition for high valuations, but for now it is clear that it is impacting the technology market as well. not only in china, but globally
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as well. that are not clear category leaders are finding it difficult to raise capital today than one year ago. >> on that point, over the past eight months or 10 months, we have seen some high profile names, without getting into specific ones, have seen their valuation taken down significantly. what does that tell you? we were in a bubble and it is slowly deflating real-time at the moment? >> what you are referring to is a specific case of u.s. mutual funds marking up and down investments based on public market comparables, so you have private companies and the mutual fund managers -- and by the way, when the market went up without a lot of attention, they were marking up these investments. down,th the market coming they have to correspondingly
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marked down those investments as well. the needre to do with to reflect market valuations in the private holdings you haven't port -- you have in portfolios. i don't think it affects the overall tide. you really try to do under analysis of the company you are looking at. the market has an impact, but i don't think it translates into valuation differences. analysispany specific that you have to do. >> that's all we have time here. thank you for your thoughts. good to know. >> thank you. >> we are not in a bubble. of course, and most of these cases, we usually recognize the bubble in hindsight. hopefully, we are not and one at the moment. -- not in one of the moment. rishaad: thanks, david.
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we will be back with david in the next hour. , thee joined by this man founder of india's largest mobile wallet company. we will also be looking at how satellite imagery is tracking some tough market intelligent problems. presidentsights vice will be with us 10:30 a.m. hong kong time. japan,finance meeting in why one of the most pressing issues is not on the discussion list. protestersg kong, and china's third-largest official. you are watching "trending business". ♪
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kong,is 9:17 a.m. in hong
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and these of the stories making headlines. canada's suncor energy has evacuated thousands of workers as wildfires shift. the wind change happened as the company was resuming work. destroyed onas tuesday. the fires have cut output i 1.2 million barrels a day. the u.s. has eased sanctions on myanmar as it makes progress towards democracy. on kenton lifted curbs state companies and banks. thailand has concern that it is
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barring all visitors to a popular island. it will be off-limits from october. the island has the common extremely popular. all of thailand's marine national parks are closed for the rainy season. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. china's third most important official said he listened to differing views on hong kong. he is due to begin speaking at now on aany minute trade network linking asia and europe. deploying thousands of police after opposition groups said they would protest.
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what message are protesters trying to get across here? we are just around the corner from the convention center. protestersdozens of standing for a while now. we had free tibet and some labor activists here. some of them have been protesting against the conference. things we might -- today from protesters
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there are some concerns about the increasing and hang kong. rishaad: what do we expect from the chairman today? what are we expecting him to say? ,hong kong's economy what thenot clear benefits of one belt, one road are to the average citizen of hong kong.
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the financing is also under question because it's about holding roads, pipelines, and railways. i'm sure there are many people are looking to hear what he might elaborate on. rishaad: thank you, indeed. just outside the hong kong convention center. athink we can have a look what is going on inside the convention center. this is the scene, the man himself, talking about this one belt, one road, a summit taking place. he is the highest ranking kongial to visit hong since the occupy protests two years ago. -- we will be monitoring what he has to say.
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coming up, a controversial tax on backpackers ahead of the australian elections. targetinghy a tax travelers could hurt the farming industry. ♪
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rishaad: you are back with "trending business". as the election season rolls on an australasian, a climb down on , aey revenue raising measure backpacker taxes being deferred. tax is not even attacks, is it? paul: it is not really. the name is misleading. it is the removal of a threshold backpackers being able to work in australia. that threshold is gone.
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$32 -- $.32paid from the first dollar. they are caring out a review. what forced the government into this climb down? it is an election year after all. pressure came from farmers, saying it is hard enough to attract margaret workers to do jobs like fruit picking that regular australians are not interested in doing. the youth hostel association pointed out that backpackers contribute $3.5 billion to the australian economy. working visa applications of decline for the first time in a decade. rishaad: thank you for that. look at theing a latest data out of china, the
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snapshot of what is going on when it comes to the housing market, a rule property prices. it is the open in hong kong and shanghai. ♪
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rishaad: a look at our top stories, asian pacific stocks thanng despite better expected gdp data from japan. the yen is higher and could weaken the case for further boj stemless. the fed may hike rates next month, generally weighing on investor sentiment. testers rallying in hong kong, where china's third-highest ranking official is talking.
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cap wells are being away from the venue by a heavy police presence. to claim anton look the kentuckyn in democratic primary, remaining on track to clinch the domination, but wants to avoid ending the primary season with losses. in well claiming he made $557 million over the last year in a disclosure to the federal election commission. his campaign provided few details on the sources of that money. kong and shanghai, following what has been going on elsewhere in the asia-pacific. that is: they are great after a pretty good session in hong kong yesterday. chinese stocks rose to a ---modify -- high on tuesday
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a one-month high on tuesday. the hang seng index down 1.3% on the opening. .nly one player is higher we are seeing a number of crawford he -- of property developers coming under pressure. the weakness we are seeing across the board is in response to falls on wall street. the possibility of a fed break -- rate hike from to fed presidents possible. the prospect of a june rate hike spooked investors. the nikkei 225 looking flat at the moment. futures in singapore climbed 1%, but the yen is coming back a
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little after strengthening on that first quarter gdp number. australia's market down 4/10 of 1%, and new zealand off by .25%. april's property prices crossing the bloomberg terminal out of china. like they are going great guns. tom: china's april new home prices up in 65 cities month on month. we break this down, top-tier cities, shanghai's rising 2.5% month on month. beijing home prices rose 3.7% month on month. beijingr by year basis, home prices are now up 18.3%.
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cities that the statistics bureau and china prices up andme 65 cities on the month. what we will be looking at is makersvision as policy try to tackle the high prices we have seen in cities like shanghai and shenzhen. cities have inventories where they need to selloff, policy makers trying to ease the process and make it easier to buy up some of those homes. bloomberg intelligence showing that is already feeding through in strong sales. but we are still seeing price rises in shanghai and chin jin after policy -- engine after put in somes policies to try to make it more
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difficult to clamp down a little bit on what we're seeing as red-hot prices in those cities, particular chin jim -- chin chin the pboc providing a lot of credit and liquidity to the system to encourage home buys , sixthe last 6-12 months rate cut since november 2014, and cuts to the rrr ratio. they are clearing some of the inventories in the third tear ubses, and banks like saying the property sector will underpin growth in china into the third quarter. the top line is that april new home prices in china excluding affordable homes, up and 65 cities month on month. rishaad: thanks for that. tom mackenzie in beijing. center, thenvention
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third-highest ranking chinese official addressing hong kong. the chairman speaking and mentioning this one belt, one road idea that they are trying to promulgate their. promulgate there. going on to say he would boost cultural exchange and booze connect to the between the regions and help give a boost to the global economy as well and help the global economic recovery take place here is well, which is something that he sees as lacking. talking about this one belt, one road initiative. we are listening for anything he has to say about the future of hong kong. with, japan out there forecast beating figures, avoiding sliding back into a technical recession, gdp numbers for the first quarter growing
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bigger than expected, one point 7%, and your allies, bit of relief for shinzo abe as he hosts the g-7 summit. we are in tokyo. let's kick things off with this latest read on the economy. >> good morning. , japany good headline has escaped recession, but there are reasons for caution. this is based on a preliminary reading, of course. consumer spending still pretty weak. that is important in the context of the sales tax debate going on in china at the moment. this is spending contracted again. it was the government spending that helped to get it across the line. hold,ion plans are put on wage increases go on the back
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corner, all of that happening when japan needs investment on the business side. it is a good headline out of japan today come escaping the fire of recession him of it plenty of weakness still out there. a look atet's have the g-7 summit, which shinzo abbé is hosting. is there something in the room that is not being addressed, a large object or a large animal? of thes the minor detail yen. the agenda talks about everything from the panama tax issue to what steps the g-7 can take to stabilize global growth. one of the biggest issues is the yoda, -- toyota, and it might get japan off the sidelines to intervene since 2011, but while the yen is not on the official jumper, they
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have made it clear that they will be discussing exchange rates. japan will is that be making it clear that they are still suffering from that exchange rate at the time our economy is in the pits and we are not interested in unilateral intervention of exporters him of the don't forget that the g-20 and g-7 can take action, so that might be the path that japan takes. about willt's talk tokyo get any sympathy on the yen cleare? the world has been lecturing china that you have to let the market have a greater say when setting currency. when china did move this year and last year, it caused ripples
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around the world. argument is how can the u.s. and others green light japan to intervene even if it is for disorderly market reasons when they are lecturing china not to do so, so when you take it all together, japan will not get much sympathy on the issue. they are not pushing intervention out there. they are debating the sales tax here. you thinkf japan -- japan would like to have a conference on that if they consider the markets to be disorderly that they could intervene and get the blessing of their g-7 peers to do so. very muchhank you indeed. let's look at some other stories. singapore airlines restructuring its budget unit to manage is to low-cost parents. budget aviation holdings will
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control the two airlines. says thisairlines will allow greater integration in sharing and planning. declined toecutive rule out a merger of is to budget carriers. the interbank messaging system is stepping up security after more banks could be exposed to cyber attacks. . the malware was used to delete alerts sent between vietnamese banks and partners. swift warned of what it called a wider and highly adaptive campaign targeting banks. 43utiny over china's planned billion dollars takeover extended by a month. antitrust authorities in europe and u.s. are reviewing what would be the biggest acquisition by a chinese company.
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it is state owned and has extended its offer to july 18 with possible further extensions to calm. at what isa look going on, seven-month highs, $50 a barrel not that far away. i was away for three days and could not believe the difference. fill me end. worke fundamentals that essentially on the supply side, disruptions from nigeria to theda taking barrels out of market. we are seeing the canadian wildfires shift back towards the operation, then u.s. supply, one constant that trends downwards. one thing we have not spoke about is demand. it is climbing, and you had the that the surplus is much more primarily because increased demand, and then goldman this week saying it has flipped from a surplus to a
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deficit because of higher demand. saying: what are people about the sustainability of the rally? ,> there are few reasons nigeria and canada, disruptions, so not go cuts. they are not cutting supply willingly. you're moving into a range where shale companies become profitable, and a lot of shale companies are in distress, some additional revenue is welcome. u.s. stockpile still remain high, 500 million barrels, so unless they cut considerably, it will not climb to much higher from here. looking at hedge funds now suffering the biggest outflows we have seen since 2009, but our next guest is bucking that trend. ♪ he's here right after this. ♪
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kong,is 9:44 a.m. in hong and these are the stories making headlines. the head of japan's olympic committee questioned over allegations of $2 million payment link to tokyo 2020 games bid. i told lawmakers that contract for payment to a singapore company is confidential. he described the money as legitimate consultancy fees. the u.s. government has reportedly started a criminal investigation into claims of g ine-sponsored dopin russian sports. that, saying it has zero tolerance when it comes to doping. international olympic committee says 31 athletes in 64's could
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be barred from rio this year after the retesting of samples in the 2008 beijing games. strays transport safety bureau says the missing malaysia airlines flight will be found is decreasing. five pieces of debris from the boeing triple seven have been found in southern africa and the seychelles. chinalia, malaysia, and have spent one and $50 million on the search so far and have agreed not to extend it. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. my next guest stands out in the hedge fund sector. the asia fun climbing for nine straight months, tripling its assets since last july. thank you for coming in.
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you are getting money in, and others are seeing out floors. whitey think that is? >> a couple of things. the bar has been raised in terms of infrastructure that you need to run these funds. 10 years ago, it was easier. what we have seen as the that it costres more money to run these businesses. rishaad: is that regulation? and investorstion who are much more cautious about every aspect of the noninvestment process, so that means that you have had this big thosel effect where of who have the resources to put the infrastructure in place have diverted a lot of the flows that would have gone to newer funds. we are one of the few funds locally that has been able to make it past that bar where you have the critical mass and you combine that with strong
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annualized returns for investors, and that -- rishaad: let's talk about how your approach differs from others. the key thing for us is we are targeting to make absolute returns. we are not overly focused on a given index or product, so we are scouring asia across credit, volatility, trading, and equity -- rishaad: not necessarily equities per se. >> you are right. we do very little in the fundamental equities based. percent are equity long and short, and were playing in a space where there is less competition because it takes more technical expertise. some of the products are fairly immature, are they not? >> it is mixed. i would say some markets tended
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to be less mature than they might be in the rest of the world. rishaad: the point presents itself -- the question presents itself, how do you spot value? question thatreat we could discuss in a couple of hours of conversation, but we there isng for where panic, hysteria, or the mass of the world is on one side of things. recent example, a lot of people looking for big devaluation and the chinese yuan . we are not saying it won't happen, but it became such a hysteria that everybody is x every day, china f so that causes investors to not want to be left out. bonds asso you bought the hysteria was manifesting? thehis is more around renminbi trade.
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hysteria, that provided opportunities for our traders to take advantage of business pricing's and volatility. pricing is another great example of where we sell panic last year. to 2015, people were worried about corruption investigations. those on sold off heavily because they were mired in one of dozen investigations, and once again you had a situation where the bonds got to a place that was inconsistent with what the fundamental value of the company was, so you just see these things repeat themselves across any number of situations, and we are trying to wait patiently for those opportunities to present themselves. do you think any part of the asia and this region is severely undervalued. i know you can't have a broad brush like that, but where are the pockets of value? there is still a lot of value
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in the commodity bond sector, another area where we have seen a lot of panic. if you go back to january, everyone thought oil would go to $12, and a double to $50, and i a lot ofre is still relative cheapness in the debt by these companies. rishaad: thank you, indeed. you, benjamin is one of the speakers at the conference here in hong kong kicking on june 1. on june him talking about the territory having maritime financial services as key advantages and does attach importantt china is
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to hong kong's prosperity and the territory should actively participate in china's development. this is all coming from the chairman there, bell road services and financing services in the creation of all this as well. they are planning to reinforce ang kong as a hub and having key role in this one belt, one road initiative. right, let's tell you what we have coming up on the other side of this break. india trying to boost apple's share of the smart phone market there. the details are coming up next right here on "trending business". ♪
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rishaad: the global demand for sliding, butmay be
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india remains a market with enormous process. tim cook starting his first trip there today. where having a look at all this. yvonne: he is scheduled to be meeting with the prime minister. he is flying in from beijing. tim cook is hoping that india could be like the success they have seen in china. unveil a lot of plans, in particular a development center for digital acceleratorl as an program when it comes to ios developers in bangalore. the softwareuild coding community, something he did and china. so these countries feel included in the process as well. the thing is that apple is going to find india a different kettle
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of fish compared to china. regulatory , so retail stores could be high on the priority list. they could see tough local competition as well. rishaad: not just the usual suspects. .vonne: some local names apple does not make the top 10. they take 2% of smart phone sales. when it comes to price, indian consumers are very sensitive and don't want to pay too much for the latest gadgets like we see in china. isparticular, the iphone se more than triple the cost they average consumer in india wants to pay. somebody is saying they
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may well be targeting the biggest market after china. looking ahead, china's number three setting out beijing's vision and a keynote speech right here in hong kong. ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: tom brokaw is here. he was the anchor for nbc nightly news for more than 20 years and he continues to report for nbc news as a special correspondent. this past weekend he spoke to the graduating class at ole miss. he was graduated -- diagnosed with cancer in 2013. his book on his struggle with cancer is now out on paperback. it is called "a lucky life interrupted, a memoir in hope." i am pleased to have you back at this table. you not only did that, you said


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