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tv   On the Move With Rishaad Salamat  Bloomberg  November 2, 2014 8:00pm-10:01pm EST

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>> i and john dawson. we are "on the move." one day move. the yen is tumbling on the extra stimulus. so is the price of gold. not the goodyear blimp. the eye watching over singapore skies. good morning. china has just released its latest services gauge.
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let's get stephen engle invasion. what are they saying this time? >> it is coming in below the previous month for october. this is the services pmi which includes banking, telecommunications, and property, coming in at 53.8. the previous month was 54. -- me extrapolate this out previous month, 54.4. this is the weakest since january. 52.8 for the services pmi. obviously the property weakness is hurting the sentiment in this sector, despite the fact that authorities on a nationwide level have relaxed some of the property curbs. it is going to take some time to filter in. another sign of continued slowing pace of growth for the chinese economy. >> also manufacturing pmi out today in about 45 minutes.
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what are we expecting? this is the hsbc and the market surveys. >> i want to make one more note on the services pmi. 53.8 is still an extension. anything above 50 is an expansion. the number is decreasing, the lowest number since january. on saturday, manufacturing, we got the number for the official 50.8, just above expansion. it is the lowest level since may. expectations,rs, all slowing from september. later this hour, we are also going to get the hsbc pmi manufacturing, which is a that surveysy purchasing managers mostly in the private sector. the official one tends to be more bullish because it is state
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owned enterprises. the hsbc pmi manufacturing coming out at 8:45. the preliminary number, they release it a couple of weeks ahead of the official number, and we got 50 owing for. -- 50.4. if that is confirmed, the lowest reading since may. in that preliminary number, we had the weakest new orders in the month before. it is not looking great for the full-year growth target of 7.5% as we head into november. >> stephen engle joining us. breaking news on services. the big story in the market this morning continues to be the bank of japan's surprise move on friday. >> a shot in the arm. opinionwhat is common since lunchtime on friday when the doj did surprise everyone with that announcement was at
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least over the short to medium term, it is going to be a game changer, regardless of whether you're skeptical of the economics. it certainly changes the outlook for the currency and all of the complications, good and bad, that come from having a currency at an eight-year low. 112.77. he held that press conference following the announcement. let's listen into what he had to say. what was the reasoning behind this move from the japanese central bank? a decline in demand after the sales tax hike in april and drop in oil prices are putting downward pressure on prices, but the policy board members and myself discussed and came to a conclusion. as is the time to act. we will address our policy when necessary, but i think the additional measure is sufficient.
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>> we have to note it was expected at some point. the reason it also came at this point in time was he was the deciding vote. it was 5-4. if you look at the other side, there was some dissent. it wasn't unanimous. perhaps you look at the second round of the sales tax. this strengthens the case to do so. the net effect on the , yet to bes finances determined. obviously, they are still trying to figure out how much they will be cutting the corporate tax. >> i call you david. i'm one of the few. david inglis, thank you. , looking at the market reaction. there was a market reaction. the yen is crucial.
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a lot of change in forecast. morgan, chase. >> i don't think coleman has actually changed their forecast, 115 for the yen next year seems conservative at this point. not surprising. where are we now? 112.77. he see the big bump up. a seven-year low at this point in time. just to recap what jon mentioned, jpmorgan and mizuho seeing 117 by year-end. unicredit is also coming out with 140, 141. they are thinking it is 160. 160 by the end of next year. words, the currency would be weakened by ecb action, and the yen will, weaker. -- movers, bold getting hammered once again.
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11.65. all of the mining stocks in australia are also getting hammered. 16, $16 an ounce. hard to imagine a few months back we were north of $20 for this. you are seeing pronounced movement in the equity markets. h, let's wait for this to get underway. six markets are open. japan is closed today for culture day. just really aussie being dragged down by the minors. new zealand is hitting a record. south korea which saw a big bump up on friday his parent back some of those gains. taiwan, malaysia, singapore, just opening up over the past few minutes. i will leave it there for now. u.k. has confirmed that a 29-year-old british banker has been arrested in connection with
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the deaths of two women in hong kong. police were called to the man's apartment in hong kong. they found one woman unconscious with cuts to her neck and body. she was pronounced dead at the scene. the lease on the suitcase containing the body of another woman who sustained neck injuries. south korea is announcing a record trade surplus last month. the gap came in at $7.5 billion. companies shipping steel pipes and computers to the u.s., and the bank of japan's latest forulus, may hurt demand those made in korea goods. indonesia's new government is cutting fuel subsidies. the president made it the central part of his plan to rejuvenate the economy, using the savings to fund infrastructure. speaking exclusively to bloomberg, court 19 and economy justter says no timeline yet.
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>> the most critical issue we face in this country is that the is not -- [indiscernible] that is the most critical agenda for this government. >> singapore stepping up its surveillance operations after a and in piracy off its coast the disappearance of the malaysian airline plane. let's go to our correspondent haslinda amin. what is singapore doing to keep watch on this? >> singapore floated a giant balloon. it is no ordinary balloon. it is radar-equipped, the size of a swimming pool. it is the eye in the sky.
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above,loating 600 meters twice the height of the tallest building in the world three. the government says it operates around the clock. this blimp is singapore's early warning security. it says risks are as fluid as an increase in hijackings for oil .ankers in the region tobally, we have had close 180 piracy incidents a year. also, the missing mh 370. there has been no trace. it all shows the threat we face. singapore wants to better monitor its aviation and maritime space. this blimp builds on the country's tracking system. piracy andabout dealing with piracy, but what
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about the invasion into people's privacy? >> well, privacy was compromised blimp.efore this limp -- ml we have had google earth, security cameras. blimp is says the purely for surveillance. it has had to resort to it city doesn't have a mountain tall enough for a ground radar. and therefore is not alone in this. the same system has been used by the u.s. they have used it since the 1980's. blimps were deployed in iraq and afghanistan. it is a form of low-cost, round-the-clock surveillance. $29 million a year in operating costs. >> haslinda amin, thanks for that. indeed futures have just begun trading, looking like this.
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you can see gains on the future -- on the nifty. .on't forget, japan is closed the liquidity volume is quite low as a result of japan being shut down for culture day. bangkok airways begins trading today's. we are going to ask if it will be a good investment. this is "on the move." back in a moment. ♪
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>> oakland. some of the big stories and events we are following this week. a slump continued in the cow last month. casino revenues are due out on tuesday, and we are expecting a decline. preferably -- october is normally strong. on tuesday in the u.s., we will
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get alibaba's first report as it went public. analysts are forecasting profits to have risen 40% last quarter. on wednesday, indonesia's new leader will get a clear idea of the challenges that lie ahead for him with the release of gdp. jokowi wants to boost gdp to 7% over the next two years. we will see if beijing skies are clear as world leaders had to china for that aipac summit. apec summit. today, bangkok airways will make its trading debut in thailand. recent ipos have not been particularly smooth. it has been a pretty rough time, hasn't it? >> pretty turbulent, you could say. >> tell us about bangkok airways. >> right now, bangkok airways is
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debuting in the market. it had an ipo last month. $495 million. right now, as you said, the market has been turbulent. about a new dozen airlines popping up in the past decade, moving the industry towards overcapacity -- it hasn't been profitable for a lot of them. bangkok airways, on the other hand, they seem to have more solid earnings. analysts are saying it might be different for bangkok airways. it is the oldest private carrier. they have permits for 20 major domestic routes. it flies overseas, mainly to resort destinations, myanmar, malaysia, china, japan. the company received orders for more than 1.5 times the amount offered in its ipo. how does the company plan to
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use the money when it is raised? >> that money, according to a regulatory filing to the countries exchange commission, they say they will use it to buy 18 new planes from boeing, airbus until 2017. they will also spend on aircraft engines, new parts. to buildn will be used new maintenance facilities in bangkok and improve the company's airport on a resort island. the ceo has sounded a more optimistic tone when the company ipo'd last month. he said, earnings in the first half of the year worked great, because of political instability, but he expects better performance in the second half. >> also, to get the global markets involvement, it's pretty rough. they've got two currents to swim against.
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bangkok airways debuts today. how exciting. one of the questions for investors in thailand will be the outlook for bangkok airways, but warren buffett is quite clear on the subject of airlines. don't do it, he says. our correspondent joins us from singapore. why aren't airlines able to realize the gains from growing travel demand? >> it is because competition is really heating up. you have competition within this region with new companies popping up here and there. you have carriers like the middle east ones coming in and cutting prices. it is a very competitive market where there is limited infrastructure to really benefit and realize all of these gains from the number of potential travelers in this region. are airlines in asia not making the profits like some of their counterparts in the states? >> one of the biggest reasons is that the u.s. carriers, after
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they went through several chapter 11's, has been consolidating. it is something that a lot of people here in this industry want to see in this region, but it is not really going anywhere because a lot of these airlines are carriers for each country. for countries to do a meaningful consolidation will probably not really happened to the magnitude we have seen in the u.s. that is creating more problems with overcapacity, because everyone knows that this market is probably the biggest growing market in the next 20 years. a lot of people are investing money to set up new airlines here. up next, predictions on how much further the yen will decline. how far can it go? all of the fx headlines after this short break. ♪
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>> i'm david inglis. here are your fx headlines. the japanese yen continues to be the biggest story in the markets. drop,rrency continues to reaching 113 to the dollar. a 60% chance the yen will fall further to 115 by year-end. from justrtion is up 18% prior to the doj's announcement. two other currencies dropping are the aussie dollar and qb
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dollar. these moves follow a drop in chinese manufacturing. it showed a reading of 50.8 in october, missing forecasts and lower than the reading for september. in south korea, direct trading etween the chinese one hand -- won will begin next week. about 10 banks will be appointed. this follows an agreement between the presidents of both countries to deepen economic ties. i just wanted to mention a little bit of breaking news. comments coming from the bank of korea's governor, commenting on the need to watch the currency markets very closely, watching how rapidly the japanese yen is declining relative to their currency. 1076.llar-won, there we go.
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a spike in that exchange rate. still, look at it over the last two years. you understand why they have some concern. it is 30% cheaper right now to travel to japan if you're a south korean tourist. those are the stories driving your fx markets. >> the democracy protests in hong kong are into their sixth away as the standoff continues and grinds on. the government is calling for a second round of talks is leaders continue their next move. do you see at all any sort of exit strategy? good morning. we have seen some suggestions for an exit strategy, but i'm not sure if they will work. movement leaders want hong kong's leader to resign. what does that do? that triggers a city election, a de facto referendum on a like twhirl reform.
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be anay that this could impractical approach from the hong kong government. the city says there must be another way. they want to have government talks. the finance chief also mentioning he hopes students do not destroy first and rebuild later. they are they said the pro-democracy parties make up 27 seats out of the 70-member legislature, and they are saying the lawmakers to give up their spots in five of hong kong's electoral districts, but one lawmaker elected him on neighborhood counselors would quit. they said there would be a second round of talks, but the students have said they haven't heard anything from the government just yet. >> how our business is doing in businesses doing in the area? >> we have seen a couple more
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surveys come out. small business has been hurting the most. the bigger retailers, they have been able to weather some disruptions. they have been able to move some of those displaced customers to other parts of the city, other stores. tourism, up 11%. mainland tourists, up 31%. we are also seeing that the property, the investment side of hong kong really remains quite strong. >> up next, investing in distressed. year. of 17% this past howard marks joins us after the break. ♪
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day one japan's new policy reverberates. theuinness tabloid -- yen is tumbling. contrasting fortunes in australia. westpac enjoys a better than estimated profit. a very good day to you. seeing a mixed session. let me drag this thing along and take a look at what we are seeing across the region
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following the big policy move on friday. of course, the resident pop after lunch on friday. a big thing to note. japan is closed. new zealand up for 11 straight days. more or less a record high. looking at the longest streak of gains there and almost two years. it has not really brought the index into the overbought range. korea, down 6/10 of 1%. you had export numbers, up 2.5%. , $7.5rayed surplus billion. -- betrayed surplus, $7.5 billion. it does put this into context, the comments coming out of the south korea central-bank governor, that they are watching the rapid decline in the value of the japanese currency. depreciated 30%.
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certainly something to worry about. in australia, the story, metals prices -- you are looking at gold. at its lowest since 2010. it is a mixed session, but let's hope to get better as we move into the trading session. >> what china stocks are we watching? >> we are watching a few. i want to mention the developers and shanghai. -- out of shanghai. you had coal prices down a bit in october. those in beijing are little bit higher. if you look at the properties stock, up about .5%. let's bring it back to hong kong. .hina mobile
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china railway construction rates, cut it -- cut to neutral. sinopec, why are we watching the refiners? announcing that on the back of the drop in oil prices, you have china cutting gasoline prices. 245 yuan a ton. unsurprising given this announcement that it will be buying this unit from its parent company, china state shipbuilding. $741 million is the asset injection. -- a lot tolow to follow in china and hong kong. >> shares have fallen by the most in eight months after the australian -- retailer reported weaker than expected sales figures. how that exactly are these figures? mixed analysis on this is
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. some commentators are calling the selloff overblown. others are saying that it points to weakening momentum for woolworth's, and it will add pressure to the earnings expectations. you can make up your own mind. sales for the three months previous to october were up by 3%, $16.1 billion. that is the slowest rate of quarterly growth in five years. sales,take comparable which strips of the volatility of stores opening and closing, the growth was just 2.1%. petrol sales fell over the quarter by four or 5%. woolworth's got a warning from the competition regulator. the impact of all of this on woolworth's stock price has been performed. they are down just about 4.5% at the moment, their biggest drop in eight months. the woolworth's ceo grant
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o'brien is confident that momentum will improve with christmas around the corner. packed with the last of australia's big four banks to report earnings today. with sort of results have we seen from them? result indeedlid from westpac. 3.8 $6 billion, giving us a full-year cash profit of $7.6 billion. that was pretty much in line with estimates. they did it like many other banks have, by cutting costs. they had very strong growth in the mortgage portion. interest rates are very low. the housing market is running red hot. that is a situation that. -- the westpac ceo gil kerley expects to continue, but she
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notices improvement in business lending, particularly in the non-mining sector. despite that cheerful news, westpac shares are down about .5%, which does happen sometimes in the counterintuitive world of australian banking. westpac shareholders will be enjoying a $.92 per share dividend. >> many thanks indeed. a quick chance to look at some other stories making headlines. we have one of the banks that fail the ecb's stress tests. i can tell you one of those banks failed. haslinda amin has the story. over to you. >> one of the banks that fail the ecb's stress test has come up with a fund-raising plan. will sell assets to plug the $2.6 billion shortfall. has twice taken government money over the past few years but says it is not looking for another bailout.
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recalled many new airbag inflator is. u.s. regulators say more than 30,000 inflators were made with an incorrect part, which can lead to potentially fatal ruptures. the defective parts were found in cars made by nissan and general motors. sony has reported a quarterly loss seven times bigger than a year ago as it loses ground in the smartphone market to apple and chinese manufacturers. sony posted a net loss of $1.2 billion after write-downs in its smartphone business. it is cutting its a sales fair or at -- forecast for the second time this year because of poor performance in china. >> i understand china is a big smartphone market, and there are huge opportunities, but our priority is to turn around our overall business at this moment. we will definitely consider expanding in china in all possible segments in the future.
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the top corporate headlines this hour. i am his land on in. -- haslinda amin. managers, $93 billion in alternative assets, including private equity and high-yield bonds. howard marks joins us now. many thanks for coming. you haven't slept having just come in. thanks for coming in to talk today. --7% increase in a you and aum. earnings may have fallen 42%. is that right? how did you make that happen? >> i don't think we can talk about sustaining a 17% of -- rate of growth for the long-term. the point is, where are you going to invest nowadays? nobody wants to invest in quality bonds. most people are not excited about the stock market,
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especially institutional investors. that leads to the alternative sector. return it and managers are doing very well with cash inflows. -- alternative managers are doing very well with cash inflows. >> which assets have you seen the most interest? >> emerging-market equities. we are seeing a lot of demand for fixed income products, which are paying premium yields. >> overall, demand has been distressed. there was a short supply. we have a comment, aggressive extensions of credit. it has always been a precursor to new opportunities. >> it is the case. the question is when. to have a great opportunity to make money in distressed debt, you need two things to happen. one is checking the logs in the fireplace. you need the unwise extension of credit. you need banks to make loans
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that will not be paid if things get worse. then you need things to get a little worse, which i call the igniter. we have had plenty of unwise extension of credit, 20 of loans that wouldn't be made in more cautious times, but still, especially in the states -- the economy is pretty good and the capital markets are accommodating, and the default logs invery low -- the the fireplace have not been turned into a conflagration yet. someday, they will. >> move forward, but with caution. bear in mind, you have a new fund strategy. going to closed end funds with higher fees to read i do that -- higher fees. why do that? >> the biggest decision that an investor has to make at any point in time is whether to be aggressive or defensive, or how to balance between the two, and i think that at this point in
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time, it is extremely important to include a good dose of caution into the things you do. becausemum caution hengs aren't that bad -- ought to look isn't that bad, and asset prices aren't that bad. the closed end funds are roughly half our business, and they happen to be the way the stars are aligned the area that we will be raising money for in the coming months. >> what you do is you catch a falling knife. >> i think you have to catch falling knives. i think we are paid to catch falling knives. as our business. we are not paid to be chickens. when things are really cheap and other people won't buy them and panic, that is the time we want to be buying. if people shrink away and say, we are not going to catch a falling knife, they mean, i'm scared. that is not the way a
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professional manager behaves. we try to catch falling knives but carefully. >> howard, please don't go away. howard marks will stay with us. we will discuss a few more macro themes. japan's surprise policy. more with mark after the short break. ♪
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>> let's rejoin howard marks, cofounder and cochairman of oaktree capital. he joins us in the studio. let's talk about macro aims. the most important thing, you mentioned the bond market. bond market -- you are smart, and it's extraordinary -- you have filed registration with the ftc for two different funds.
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how do you view or perceive this bond market? it is quite extraordinary. >> it is. if you want to see unanimity, look back 12-15 months. everybody thought that rates would go up. what that proves to me is that nobody knows. it is hard to do good investing based on macro guesses. i don't know if rates are going to go up or down, but the point is we are going to provide our services to prospective clients in more ways in the future than we have in the past. >> the recent memo, what you are -- thefor, volatility most orton thing right now is how to deal with volatility. you say, investors don't fear volatility. they fear the possibility of permanent loss. >> that's right. >>people are preoccupied with volatility. will it go up tomorrow? filippo doug marrone?
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when paul volcker, he was asked, will rates go down? the answer was yes. i can't do anything about it. you should hold for the -- things for the long-term that are appropriate for your needs for the long-term. 6%, youike the sound of should buy and figure to hold them until maturity. volatility, you can look through. you shouldn't be able to expect to profit from it. services numbers just coming out, and stephen engle has the breaking news on china's latest reading. >> it came in just in line with the preliminary number of couple of weeks ago. hsbc pmi, 50.4. as i said, that was the flash
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number which represents about 85% of the final number. today, we got the final number, and it is the final number. 50.4. this is the fifth month in a row that it has been above 50, which means that manufacturing in the private sector is expanding. atever, it is fairly weak 50.4. if you look on top of that, as well, the official pmi that came out on saturday, it is becoming increasingly evident that china is having a very slow time of it with the economy, and they will likely not make that 7.5% gdp growth target set by the government. the official pmi came in at 50.8 for october. still expanding, but that is the lowest level since may. output, new orders, new export orders, stockpiles, and expectations, all slowed from september. i have been saying this just
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about every month -- this weakness in manufacturing is testing the authorities patience or determination to refrain from broad stimulus, which they have refrained to do. they have eased property measures, but it looks as though they are going to manage this slow down further. >> many thanks for that. i'm going to ask you about the overall picture for china. there is another reading from stephen. you do say that oaktree builds the belief that risk control is the most important thing, that china right now is the biggest risk. you can't exactly know where it is heading. how worried are you at oaktree about china? >> i think china has some challenges it has to surmount. andersonal belief has been continues to be that it will. it will have tough times from time to time as it tries to
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moderate the growth of its economy but still grow. i think the reasonably good prices on the security mean they are not something to be worried about. >> you made a call on chinese stocks at the beginning of the year. you got it right. 10%. are you still buying in china? >> if i got it right, i should probably stop. when you combine the long-term view for china and security prices, i think they are probably still reasonably attractive. lots of other things in the world aren't that attractive today. >> for example? >> i think stocks in japan are high even though the government hasn't been able to roof that it can reassert growth and inflation -- to prove that it can reassert growth and inflation. >> what about the bank of japan's surprise to raise the quantitative easing? is that the right direction?
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is that the answer, or is it a very large plaster over a big star? >> it is more of the latter, but you do need plaster. they have to take an economy which is slow-growing and low in energy and try to energize it. hey shock treatment like a big dose of qe is a way to try to do that. whether you can make a slow-growing economy return to growth through these kinds of measures is an open question. u.s., we hadn the a long bout of qe, and we still never got back to strong growth were strong inflation. i would say the jury is out. >> the u.s. itself, are you convinced by the recovery? know, there is a lot of on the one hand, on the other hand: on, but i think it is a great thing for the government to the out of the whole of setting interest rates and
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influencing markets. markets do a pretty good job on their own. i think that our economy is doing ok. i don't think it requires a good deal of stimulus. you balance those things out, and i think removing the stimulus is ok. >> what is the most important thing for investors right now? >> i think the most important thing right now is to include a healthy dose of caution in the things you do. the outlook is not so strong. security prices are not so low that you should buy aggressively or without mindfulness of the risks. move forward, but with caution. that has been my mantra. >> howard, thanks so much for coming in. oaktree has seen a 70% increase in aum. the jacksons in china on a talent hunt. much more "on the move" when we
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come back. ♪
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due you,rs after their the jacksons have played hong kong for the first time. the brothers say they are looking at opportunities in hong kong. our china correspondent stephen engle caught up with the jacksons at a children's home in hong kong. germane, jackie, marlon, and devo jackson weren't much older than these children when they started performing 50 years ago. >> i started at seven years old. to see the kids, it brings back memories. they are so happy here. >> you can see they get a lot of love, they are learning a lot. >> very outgoing. they are very outgoing kids. i'm sure they will do well in .ife
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michael would have loved to have been here with >> the kids. >> how is michael going to be on stage with you in hong kong? >> his spirit is always there. we do some of the hits he had, as well as the hits he did with us. his spirit is always with us. >> sometimes when people are crying, they are cheering at the same time. his spirit is always with us on stage. >> the jackson five was the foundation of the whole thing. when we are up on stage, it is like he is there with us. >> much has changed in the pop industry that the brothers helped create with 17 top 40 hits over the last century. jermaine jackson says one of the biggest chances in the industry is that labels are not as
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important as they were before. >> social media becomes the distributor and gets you the access to hundreds of millions of people. >> doesn't pay you? spotify and pandora aren't paying much. >> there is a way to get paid. the live performance, they'll come. >> the turin is the most profitable part of the business right now. >> profit and bloomberg go together. [laughter] >> ♪ abc >> on this charity night, the orphans and underprivileged kids were all made richer. stephen engle, bloomberg, hong kong. >> the reigning london marathon champion has added the new york race to his list of victories. he was among the 50,000 runners taking part in the blustery conditions. he pulled away in the final half-mile to win.
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, his lowest times since 1995. break,o come after the bangkok airways ipo's today. find out more after the break. ♪
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>> i am john dawson. we are "on the move." gold and minors are tumbling across the region with the metal at its lowest level in three years. another knock on effect from's -- from the surprising boj decision. good for passengers, bad for investors. the carrier debuting today. and running economic slowdown
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being signaled. stephen engle joins us. if you figures out of the the weekend, and just now, services, manufacturing. go for it. theet's start with the ages manufacturing pmi coming in at -- the hsbc manufacturing coming in at 50.4. it was the fifth month in a row of expansion. expansion,ove 50 is but it is barely above. 50.4. it did rise from the previous couple of months. we are seeing weakness in new orders month over month. pmiofficial manufacturing october came in at 50.8. also still expanding, but also the lowest level since may. the official pmi represents sentiment for state-owned enterprises. a smallerurvey is survey.
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stockpiles, expectations in the official pmi out on saturday, all slowed from september, further signs this economy is not necessarily rebounding, but it is kind of a managed slowdown. the weakness is testing the government's determination perhaps to continue to refrain from broad stimulus, which so far they have. they have resisted to do that even as the economy is headed for the slowest full year of growth since 1990. mizuho's security chief says the biggest drivers of growth such as fixed assets are slowing. steel and coal are contracting on lower prices. thing of impact -- the negative impact. you can see that the manufacturing pmi from hsbc did up, 50.2 toick
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50.4. that is this over lining in what is otherwise weakness in this economy. >> who needs math these days? what about the services sector? any silver linings there were mathematical equations? >> services obviously doing much better than manufacturing, but we are seeing weakness, as well. services includes banking and telecoms, but it also includes property. it is expanding quicker than the official manufacturing sector. october's reading was the lowest since january mostly because of that property sector weakness. newport or did increase from september, but so did in put prices, and expectations fell from the previous month. the services industry, while still strong, is weakening, the
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weakest reading since the beginning of the year. >> stephen engle joining us with those figures. .anufacturing and services david is here with the markets. trading, aan hour of reaction to those economic data. typically, we do get some movement at the very least when it comes to the key we and aussie dollar. lee, .7760.vicki the aussie dollar -- if i can just find the aussie dollar -- down a further 1%. that level right reacting to the weaker than expected manufacturing data coming out of china. that is also playing out in the markets. what we see across the region
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today, a fairly mixed picture. japan is closed. most markets are higher, the markets that matter are falling in terms of eight today -- weight today. australia, the pmi data playing out. new zealand, that is one of the strange ones you have today. it is at a record high. 11 straight days of gains, the longest streak since at least 2011. the cost the index, fairly important to note, exports coming out over the weekend blowing estimates, up 2.5%, taking the trade surplus to a record $7.5 billion. you had these comments coming out of the governor of bank of korea, they are keeping an i on the rapid decline of the japanese yen relative to their currency. that said, it is not really playing out as far as the
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exports were concerned. anyway, overall, the regional benchmark is down about .5% because of these three markets, but everywhere else, malaysia, shanghai, new zealand, all higher today. let's see which winds today, the bulls are the bears. next hour, bangkok airways will make its trading debut in thailand. recent airline ipos have not had --ecurely smooth flight particularly smooth flight. our correspondent joins us. what can we expect from this debut? how different is bangkok airways from the rest of the industry? >> it is a bit different in the sense that this is a full-service carrier that has already been established in thailand and to the rest of outside of thailand, as well.
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it operates both its airline but the airports, as well. it has a bit of a national market -- niche market in thailand. that is how it differentiates itself in this region. are the perils of investing in airlines that you have been hearing? howell, you hear people say asia is going to be growing, how demand and potential growth is going to be there, and it is going to continue to grow in high numbers for the next 20 years or so. because of that, we see so many new airlines popping up here and there. in asia, a lot of lcc's want a piece of that pie, and that has created competition. competition means you have to cut your fares. fares impact your earnings. >> the big question is why are airlines in asia not making
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their profits like some of their counterparts in the states? you would think maybe there would be a similar business model, but it is quite different, isn't it? >> it is. the last few years, the u.s. carriers have gone through several chapter 11's, and in doing so, they were able to go into very big consolidations. here is a different story. every region -- error line here is a flag carrier -- every airline here is a flag carrier for their country. we are seeing more airlines rather than consolidations going forward. >> many thanks indeed for joining us on that. hasther news, takata recalled several new airbag inflators. inflators were0 made with an incorrect part, which can lead to potentially fatal ruptures.
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sony has reported a quarterly loss seven times greater than a year ago as it loses ground in the smartphone market to apple and chinese manufacturers. sunday posting a net loss of $1.2 billion after write-downs. it is cutting its sales forecast for the second time this year. that is due to poor performance in china. china is a big smartphone market, and there are huge opportunities, but our priority is to turn around our overall business at this moment. we will definitely consider expanding in china if all -- in all possible segments in the future. >> australia's biggest grocery store has taken another tumble with will worst on the most in almost three years. this is after disappointing results. how bad were these sales figures? >> jon, the commentary is very mixed on this. some are calling it an
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overreaction. others say it is pointing to a loss of momentum for woolworth's. here are the numbers. quarterly sales for woolworth's grew by 3.1% in the three months leading up to october. when you look at that, it doesn't sound that bad. that was their slowest rate of quarterly growth in five years. it gets worse. sales,look at comparable which strips out the volatility of some stores opening and some closing, sales growth was 2.1%. 4.5%.sales fell by woolworth's itself admits that liquor sales have been luggage. all of this is -- has had an impact on the stock today. woolworth's shares, down 4.5%. ceo grant o'brien is looking to christmas, saying the group will
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regain momentum then. westpac was the last of australia's big four banks to report earnings. it seems a good set of results? >> yes, another record profit for westpac, their fifth in a row. the second half earnings were up of $3.68cash profit billion. very strong results for westpac. they have been cutting costs, growing their share of the mortgage market, as have many banks here. the mortgage pie is growing significantly with record low interest rates. bad debt charges were also down million. $197 ceo gail kelly sees housing credit continuing to grow in 2015, and she is noticing a pickup in business lending. you would think that the market would be impressed, but westpac
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shares are off about .4%. it is hard to impress the market when it comes to the big four banks. they are priced to perfection. you own the stocks for their dividend. westpac shareholders getting $.92 a share. >> paul allen from sydney. next, the outlook for the yen. how low will it go? aftere move" will be back a short break. ♪
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>> you are watching "on the move " coming to live from hong kong and streaming on
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and your mobile device. a look at the yen direction, where it is trading exactly. david has the answers. let's start with the dollar index. the reason we are doing that is because the yen is a big part of that basket. it is a reason of why we are seeing that bump up over the past few days. let me show you the yen's move. that is pushing the dollar index up. 112, 112.70. we are flat, but if you compare that to where we were on friday, fairly elevated levels for the dollar-yen. jpmorgan, mizuho see the japanese yen at 115 to the dollar. keep in mind, those were their forecasts for next year. what is happening for a lot of these brokering firms, it is because of those -- that announcement by the boj, they have brought their forecasts forward.
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unicredit is the one coming out with theirs. euro-yen, 140 by the end of this year. 160 by the end of 2015. ok governor commenting about this rapid decline in the japanese yen -- they are watching it closely. will they intervene? bove weaken their currency? 9.54 is where we are for that. let me just get back to the dollar-yen again. here we go. the two-year chart, just to show you how far it has weakened over off its few years, 40% mark since the boj announced. 69%. more or less a 60% chance that we will see 115 before we start
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popping open those bottles of champagne for the new year. back to you. >> joining us from citigroup is citigroup's head of fx strategy for asia. the yen.iscuss the reaction right across the trading floor -- the bank of japan surprise with an increase in stimulus -- how shocked were you? >> it certainly was a shock to most everyone in the market, and i don't think what is important was the actual decision they made. i think it was the timing. it came much, much sooner than most anticipated. it concurred with the announcements we saw from the gprs. it's going to feed the perception that there is a political push to weaken the yen. we do view that as a significant signal. i think the dollar-yen is headed higher. i don't think there's going to be much chance to fade the sharp move we've seen so far.
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the market was under positioned. any investor you have talked to over the past few years has been negative on the yen, but the ownership of the shore yen position has been much lower. i think people are going to be forced to change. >> we have chase and unicredit 120 fivee point -- yen of next year. do you think that is realistic? >> >> it is sort of tough that we are moving so quickly. the key is that the market just doesn't own this position. many external investors who grew frustrated with the pace of yen depreciation had taken off their shorts, and they are going to get forced to get back into those. i do think that means we are headed towards 115 in the short-term. over the longer term, i think we could have higher. you need to see higher levels in terms of the dollar-yen to provide a bit of a boost to the
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economy and health of boj in terms of its targets. asia.arly, you do cover the impact of this for south korea, the won, its biggest three-day lost since 2011. it is a big worry for the exporters. which currency suffers the most because of this move? >> you know, i think we are seeing a couple things:. you are right in that there is concern in the marketplace that we may see competitive valuation's from some of japan's a direct competition. i think we are seeing a broad push towards dollar buying that is giving it some extra momentum. i think those concerns are going to linger for some time. i think you would rather -- better placed to go along, risk trades that are not in direct competition with japan, that will benefit with expectations for a buildup in terms of the
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yen-funded carry trade, which -- producersonomy are probably more attractive than the koreans in the short term. in u.s., the dollar buying going on -- is this a case of dollar strength compared to anything else? >> i think it has been dollar strength compared to anything else so far, but the note of caution i would sound is i do think the bank of japan decision was an unambiguous positive signal for risk. it does imply we are going to see accelerator outflow from japan. we are going to see a pickup in terms of the yen-funded carry trade. i think that is good for risk. where i would look to go long on the dollar is where we are seeing the u.s. outperform cyclically, and i think that is against more of the majors than the smaller currencies. ioking at the ecb meeting,
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think the short euro-dollar is love the most attractive at this stage. ecb, the bankthe in australia, as well. what would you secure clients over the next month as to what is the best rate out there? any currency you like. >> we like the short euro-dollar. playing u.s. outperformance is going to be the most attractive way on capitalizing in an environment where the usaid is strong, the fed is more hawkish, the risk appetite is fairly buoyant. i think that is better currencies where we see a strong degree of economic underperformance. >> todd elmer, thank you for joining us. up next, alibaba prepares to release its first earnings report since its listing. we take a look at that and the other key events to look out for this week. you are watching "on the move." ♪
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>> some other big events we are following this week. the slump probably continuing in macau. casino revenues due on tuesday, and we are expecting another decline. october is normally strong because of china's golden week holiday. on tuesday, we will get ali baba's first report card since going public. analysts expect profits rose 40%
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last winter to $6.8 billion. on wednesday, indonesia's new leader will give a clear idea -- get a clear idea about the challenges ahead with the release of gdp. it is expected to pick up about 5%. wants to boost gdp to 7% over the next two years. on friday, world leaders will head for the apec summit in china. finance ministers on friday, and bosses me the following week. time to wrap up some big events of the u.s. su keenan has details for us. ahead on wall street, investors will be focused on the latest earnings, new rounds of economic data, and the all-important midterm elections. all 435 seats in the u.s. house of representatives and 36 of the 100 u.s. senate seats, more than
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are on the ballot. it may take days or weeks to figure out the outcome of the senate elections. as for the latest reports, on monday we will likely learn that u.s. manufacturing growth was little changed in october. payroll data out on friday will probably show that the u.s. employers added about 245,000 jobs in october. that is according to a bloomberg survey. it also shows that the unemployment rate will likely hold at a six-year low of 5.9%. aig, time warner, hsbc holdings, and tesla will be among the big companies reporting. in new york, su keenan, bloomberg. >> the reigning london marathon champion has added the new york list to his list of victories. he was among the estimated 50,000 runners taking part in
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truly blustery conditions. he pulled away in the final half to win with a time of 2:10:59. it was the slowest since 1995. it was a guy -- a double triumph for kenya as another canyon it took the women's race. you can follow us @bloombergtv. you can see it is the handle. i will reply to anything you write to me. i will retweet it, as well. the suspect in a hong kong double murder case is due in court. the latest on that after this quick break. ♪
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>> gold is near its lowest in four years. minors are tumbling. ready for takeoff. bangkok airways makes its debut today. singapore has an eye in the sky, taking surveillance to new heights. here is david with a look at the markets. after an hour of trading in hong kong and shanghai, japan is closed, but south korea is very much open -- over to you. >> it is a fairly uneventful session across markets. if you look at the shanghai composite, off barely by about
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1/10 of 1%. you see what is driving that market, the big industrials with pmi out, over 1%. banks, brokerages, property, insurers. it's mixed right now. look at real estate, up about 1%. china out with some october numbers, shanghai home prices down about 3/10 of 1%. if you go to the capital beijing, it is up by about 7/10 of 1%. watch out for that. what else are we watching? china mobile agrees to buy a soft drink, price target 111. that is a 12 month price target. everbright, the story, cash flow. 30 billion yuan .
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roughly $4.9 billion in the u.s. let's look at sinopec. problem may be facing a because gasoline prices in china are being cut. that is going to be a target -- a problem. that plays into perhaps autos. billion was net income for the first nine months of this year. guangzhou shipyard in shanghai resuming trade today. a big asset injection. story -- it will be buying a unit from its parent company, $741 million. most of that will be paid in stock. a small balance will be paid in -- $110 million.
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australia, henderson group. raised to a buy. if you look at the headline number, it did meet expectations. if you look beneath that, dividends, margins, the usual drivers that are supposed to be driving earnings, not quite there, and it does look a little bit rosier than it actually is, is what analysts are saying about the bank results that were just released. on that note, back to you. >> it has been confirmed that a 20 90 british thinker has been arrested in the connection -- in 829-year-oldth -- british banker has been arrested with the deaths of two women in hong kong. give us the background, if you can. yeah, we were just in that courtroom checking in, but he
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has not appeared just yet. there is a list of people set to appear first, but we will get back up there. so far, hong kong police have not identified the name of the suspect, but other media outlets including " the south china morning post" have identified the suspect as 29-year-old rorick adjusting. he apparently worked for bank of america-merrill lynch. saturday, andd on after someone called 911, that is when officers got there and found an unconscious woman between the ages of 25 and 30 years old lying inside the apartment, which is located in one shy. she was pronounced dead at the scene. it was during this investigation when authorities also found what appeared to be a suitcase on the balcony, and inside the bar -- was the body of another woman between the ages of 25 and 30.
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officers say it is believed the two deaths may have happened days apart. police have not identified the names of the victims. an extra shock because hong kong is not known for homicides of any kind. this one is really grabbing headlines across the world. it really is. it is quite rare. between14 homicides january and july of this year, but i think the thing that grabs a lot of people's attention is the fact that this man may be annexed patriots. he's not from here, and he may be a banker. compared to last year's figures, 62 homicides in 2013. were in the ferry incident. including that, the total homicide rate in 2013 was 23.
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not much more than what we saw this year. >> thank you very much indeed for that. singapore is stepping up a surveillance operation after a rise in piracy off its coast. of course, the vanishing of the malaysian airlines plane. let's head to haslinda amin. what is singapore doing to keep watch? >> it is relying on a floating giant balloon, a balloon that is radar-equipped, the size of a swimming pool. it will be singapore's eye in the sky. it is twice the height of the tallest building in the country. the government says it will operate around the clock, 24/7. it will track down within a distance of 200 kilometers. visible limp is singapore's early warning system -- this blimp is singapore's early warning system.
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we are seeing an increase in hijackings of oil tankers, for instance. seizedt of six vessels in quarter three, and those happened in southeast asia. locally, we have had 180 piracy incidents a year. the other point to note, the 0, it all shows the threat we face. not surprising that singapore wants to better monitor its aviation and monitor -- and maritime space. the blimp builds on the country's tracking system. >> that is, of course, the piracy issue. what about the invasion of people's privacy? that is a big concern, is it not? issue, as well, but privacy was compromised even before this blimp. we have had google earth, gps, even security cameras have invaded our privacy.
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theingapore's part, it says blimp is purely for surveillance. they have to resort to it because the city doesn't have a mountain tall enough for ground radar. you know as well that singapore isn't unique. the same system has been used by the u.s. since the 1980's at home as well as abroad. it has mobilized blimps in iran, afghanistan. it is a form of low-cost, round-the-clock surveillance. >> haslinda amin, many thanks for joining us. checking on some other stories making headlines, at least 49 have been killed in a suicide bombing at the busiest pakistan-india border crossing. police say the number of victims would have been far higher, but many people had just left the area. security has been tight on both ends of the border. a russian parts of eastern
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ukraine have held elections denounced by the international community as illegitimate. exit polls suggest separatist leaders have done well. ukraine, the u.s., and europe have refused to recognize the elections, but russia has given its full support. britain scrambled were plans for the second time in three days as a russian bomber approached u.k. airspace. sovietreleased show one era bomber being exported by typhoons. there has been a spike in over the baltic and atlantic. there have been 100 intercepts this year, three times more than the whole of 2013. the u.s. -- u.n. says climate change is happening. it is almost entirely the fault of mankind, and greenhouse gas emissions must be cut to zero by the end of the century. the new report underlines the scope of the impact in stark
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terms. it says we must stop burning fossil fuels completely if the world has a chance of keeping the temperatures below levels that scientists consider unsafe for humans and the earth. the new government in indonesia says cutting fuel subsidies is the most important thing on the agenda. the president made it a center part of his plan to rejuvenate the economy using the savings to fund infrastructure. our correspondent joins us from jakarta. when can we expect the government to act on this? hason, fuel subsidy removal been a contentious avenue -- a contentious issue for quite some time. the new presidency will surely make changes to the costly fuel subsidies. let's hear what the finance minister had to say on this.
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>> the most critical issue faced subsidycountry is the is not -- [indiscernible] we want to link productivity to the subsidy. it is the most critical area for this government. we should not increase the oil price. don't ask me when. he stated any money saved would be diverted for development of infrastructure, agriculture, education, and health projects. there is no schedule released. the government will provide social compensation for fuel price hikes for parts of the society hit hardest by the change. the amount is still being decided. cars to help,unch
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as well as free health care facilities. up next, bangkok airways starts trading today. the likes of recent asian airline performances -- we will ask whether it will be a good investment or not. this is "on the move." ♪
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first, here is a wrap of some of the stories we are tracking on bloomberg this monday. >> it is monday, november 3. these are the top stories. weakness all around. new data, the final read on manufacturing from hsbc showed slower growth in october. the latest read on the services
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sector came in at the weakest since the start of the year. westpac reported better-than-expected results for the year. a pickup in housing and business sentiment led to record earnings for a fifth consecutive year. following bad debt charges also helped. of $7.6our cash profit billion. bangkok airways makes its trading debut in a few minutes. six of the 10 industry ipos listing over the last five years are trading below their sell torres. bangkok airways raised nearly $500 million in its shared sale and plans to use the cash to buy more planes. those are the top stories at this hour. a quick glance, looking closely at that story, the chief analyst at the center for asia-pacific aviation joins us.
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brendan, thank you for joining us. before i go into the details, your first take on the overall aviation industry, ipos with a pretty bleak reading. 10 airlines have fallen 12% from -- on average. a combined $1.8 billion in losses last year. it is a pretty rough time to go to the market. >> this is a very challenging year particularly for the southeast asian airlines sectors. most of the airline ipos we have seen have been in southeast asia. the long-term fundamentals remain solid. there is good growth, and the overcapacity we have seen should correct itself out. hopefully, we will see more stability in markets like thailand, as well as indonesia, he markets that have been impacted economically and politically at a time when comcast -- capacity was being added to the market. >> you mentioned thailand.
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44%, offays is down its offer price. that is clearly a bad indicator for what bangkok airways could do. or are they very different airlines? >> they are very different airlines. bangkok airways is a full syria -- service carrier. they have heavy competition in that sector. is trading down -- it is reflecting a lot on the political instability. their ipo was last year. late last year, we have political instability in thailand. it created short-term issues. both of those airlines are in a pretty good position.
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different positions in the market, and as thailand recovers, all three of those airlines should see an upswing. >> bangkok airways is a very strong, dominant position. do you think it is strong enough to withstand any more pressures? carrier.a niche 30% of its capacity is where it owns the airport. has a virtual monopoly. it is also very strong in some other markets, myanmar and cambodia particularly. those two markets are smaller markets but very fast-growing. of the one of two largest carriers in miami are and cambodia. they fly to all three cities in myanmar. they provide connections to foreign carriers like the gulf carriers and european carriers
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that don't fly to myanmar or cambodia. these markets are smaller markets, and bangkok airways provides an important connection to these airlines. most of the revenue comes from co. shares -- co-shares. they don't necessarily compete with tie line. they do a little bit, but they're pretty much not exposed to that part of the market. they have a nice little niche. we will not see crazy growth, but there is some growth in the market. >> you mentioned crazy growth, low cost carriers. will that be sustained for the next year? >> we have seen some corrections already. and seen aircraft deferrals aircraft being subleased by groups like tiger. lion is losing some of their planes outside the group.
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air asia is selling some of their airplanes. the growth has slowed down. we will see some improvement in the market. however, all of these groups have very large order brooks -- books. there is always a chance that overcapacity can pop its ugly head back in the market, particularly as new airlines launch. for now, i think the market is improving slightly, at least, and hopefully, we will have further improvement over the next year based on the corrections we have seen to the overcapacity situation. >> final question for you -- warren buffett will not invest in airline stocks after his u.s. airways, what he calls, "mistake." is that fair? [laughter]
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>> that is certainly one strategy. >> he is the sage. [laughter] >> there is definitely concern and waning interest from some investment houses in the airline sector, and understandably so. the returns on investment have traditionally lagged behind, and other industries or suppliers that make most of the money in , not thene industry airlines themselves -- however, there is opportunity in the market. we have seen an improvement, a drastic improvement in the financial situation in the u.s. market. we have seen some improvement in europe. is the worstlly, performing of the markets because of the overcapacity, but asia is where the growth is. i think we will have an improvement over time. some airlines are still profitable. i think as we see some consolidation and some corrections in the capacity, as
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i mentioned before, there will be improvement. the fundamentals are pretty good , and there will be airlines where you can make money, you do have to look carefully and pick your bets wisely. joining us from the center for asia pacific aviation. up next, india's prime minister vows to track down black money and give it back to the nation's poor. we will be live in mumbai with the latest on that. ♪
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>> welcome back. india's government has pledged to bring back bonnie -- bring black money back to the country. how is this going about exactly? >> last wednesday, we saw the the supremeay -- court said the government
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peopleed names of 627 who have foreign bank accounts. those names were submitted in sealed envelopes. that is at the heart of the entire matter. the government saying that everyone holding these foreign accounts are not necessarily even dating taxes, saying that disclosing this information in some sense could come under the purview of agreements and treaties signed with foreign governments. that said, it has been an active weekend for the prime minister who, internet address he does to the nation, called -- has said he's making every effort to bring back every bit of black money. the prime minister, and this is important, clarifying, saying the debate was not nondisclosure of information but premature exposure -- disclosure, which could affect future disclosures
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and the treaties, saying india taxs to sign the foreign agreement, which would clarify its position as far as these black money accounts. >> thank you for that. minister looking to remove black money and bring it back for the poor. counting down to the open of the mumbai session. futures are looking like this in indiana. this is on a day where the japanese market is closed for what is called culture day. the rest of the markets are open. the nifty looking for a slightly higher open. the hang seng, a slight decline. .5% afterp about those hsbc figures coming out above that crucial 50 level. a concern won is right now, the weakest three-day drop since 2011. the yen, the issue. that is it for "on the move."
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stay tuned for "asia edge." hsbc.ewman, this is bloomberg tv. "asia edge" is up next. ♪
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>> hello, i'm john dawson. we are live in hong kong and this is "asia edge." day two of the jolt in japan. the bank of japan's decision sends off gold and the yen. more signs of a deepening weakness in china. and, ready for takeoff. >> i'm angie lau. also coming up, warren buffett has some advice for potential airline investors. don't.
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indeed, more than half of the asian carriers listing are trading below their sales prices. the suspect in the hong kong double murder case is due before a magistrate. he's a 29-year-old british banker. we will have the latest from the court. and on the road with the jacksons. the brothers launch a talent search in china. all that and more in this monday edition of "asia edge." the impact ofe the china data playing out in the markets. david is here to look at the reaction. >> let's take a look at the equity markets. we have a lot of data, a lot of china this morning. what we are seeing across the mage and -- the region is mixed. kospi, hang seng, australia, all lower.


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