tv Trending Business Bloomberg August 20, 2015 10:00pm-11:01pm EDT
market. oil heading for an eighth weekly fall. it will be the longest streak of such deadlines since 1996. follow me on twitter. ndingbusiness#tre as well. some big guests on the show. goyder is from australia's biggest employer. more worries about the state of manufacturing in china, the lowest since march of 2009. here's steve engle with this green -- this grim reading. stephen: it is a 6.5 year low for the market. we get the flash number about a week and a half before the final number is out september 1. it is about 80%-80 5% of the
final reading. it is heading further lower. 47.1 is the reading for august. it looks as though it will be six months in a row where the reading is in contraction. this preliminary reading for august holds. the final number will likely hold in contraction territory. it is the lowest since march of 2009, when china was dealing with the effects of the global financial crisis. a bloomberg survey expected the reading to have improved from july, but it did not. was expected at 48.2. august comes in 47.1. a weaker you want not helping sentiment. there's not a lot of pricing power at the factory gates in china as producer price deflation has persisted for 41 consecutive months.
more bad news coming out of china. back to you. rishaad: let's have a look at the reaction from investors. here's juliette. one of the biggest things we saw was a huge drop in the aussie dollar. you can see that big fall coming through, the aussie dollar now down 0.6%. i'll put the hang seng index over the aussie dollar and you can see -- you should have been able to see what it actually had in a reaction as well. the shanghai composite also having a big fall but not playing with me at the moment. we will have a look at the map and see how the markets are reacting. 10 minutes ago, the shanghai markets continuing the fall down by 1.6%. the hang seng index continuing its fall as well.
the manufacturing number not helping that overall sentiment that we were seeing on the markets. if we look at the hang seng china enterprise market index, pretty much every sector in the red apart from the telcos. it has extended its loss to 2.2%. already in a bear market and the hang seng index itself looks like it could be on track to close in a bear market as well. these numbers not adding to that -- really adding to that negative sentiment on the market. rishaad: here's yvonne. yvonne: talking about greece here, another surprising twist to the long-running debt drama. prime minister alexis tsipras has called an early election to strengthen his power base and shut out dissent in his own syriza party. the vote may be held on september 20.
it adds another element of uncertainty just as athens secured $90 billion in bailout. among athens leaders, the move was seen as positive. the head of the eurogroup, jeroen dijsselbloem, said he hopes the election will lead to more support in the parliament. emphasized the need to stick to the bailout. let's switch gears to malaysia. the country has ruled out capital controls despite the dramatic fall of the ringgit. the prime minister has said the government is committed to market-friendly policies and will impose restrictions on capital flows or a fixed rate for the currency. the ringgit has hit a 17-year low. political uncertainty way on malaysia's economy. the prime minister is grappling with allegations of financial irregularities.
and, facing accusations of impropriety after it was disclosed that political donations ended up in his private accounts in 2013. efforts to defend the ringgit led to a foreign exchange reserves dropping below $100 billion in july. finally, li & fung earnings out. weak demand from the u.s. and europe has taken a chunk out of li & fung earnings. profit coming in below estimates at $182 million. the world's largest supplier of clothes and toys to retailers counts walmart among its customers and says declining consumer confidence in america, slowdown in china, and the falling euro are all contributing factors. net income was up as sales rose slightly. ceo said the relationship with walmart is still very strong. the company sees the logistics business as its high-growth area.
bloomberg intelligence says the company may need more orders in the second half to boost core operating profit. shares on the way down today on news the chief executive david knox has quit. the announcement coming on the heels of a drop in profit. paul allen is watching this in sydney. santos has been hit by the collapse in oil prices. is david knox really the fall guy here? paul: it is hard to say if he is the scapegoat or not. as much as you would expect, a rather bland corporate statement talking about strategic reviews, a time for renewal at the top, etc. they did thank david knox for his leadership. the chairman will be executive director and david knox will be staying on while the search for a new ceo gets underway.
he has presided over a pretty awful half. profit down 82%. this time last year, $206 million. this half, $37 million. a huge fall. this halfer barrel compared with $115 a year ago. they are really getting pounded by the oil price. which of course they cannot control. is to focus santos on the things they can control. they are going to be looking at assets ales and cost-cutting. david knox says they are keeping to their plan to cut costs. the markets obviously liking all this talk of renewal. santos shares counterintuitively are up. $.15 interim a dividend as well. rishaad: thank you, paul.
biggest australia's private-sector employer came out with an annual earnings statement that showed a strong performance. that is due in part to heavy discounting as retail competition remains fears. joining us from perth is chief executive richard goyder. great of you to join us. you were so diversified here.
tell us what was behind the numbers. richard: obviously, strong numbers. nearly 9% growth in profit underpinned by strong revenue growth. it is tougher in our industrial businesses, given global commodity prices. across the board, growth was up. earnings per share up nearly 10%. a pretty strong performance. rishaad: tell me something, how does the strong aussie dollar play into this, and signs of weakness in the economy as well dustin mark -- as well? how do you change your guidance looking ahead to the rest of this year and next? richard: it had two impacts on us. the decline against u.s. dollar helps our export coal business, which is important because
prices have reduced a lot. hurt products in kmart and target. we've got hedging in place which helps a bit and we are buying more from our suppliers and supplier cuts have come down. we think we can mitigate that pretty well, particularly with the strong revenue. think we can ride through the ups and downs of the dollar as long as we continue to perform well within our business. byhaad: also mitigated perhaps making some acquisitions as well. we are in a cyclical downturn. we have companies under a lot of pressure here. you have been using the warren buffett maxim, be greedy when others are fearful. what are you going to buy, richard? richard: i think he's pretty right in the sense that, when
things are down, people say you should sell, but that is when prices are relatively cheaper. look to grow industrial businesses because we think the time is right for that. we will grow our businesses through extending the network. we spent over $3 billion on capital and acquisitions last year. that sets us up for growth going forward. rishaad: got anything in mind at the moment? richard: we've got lots of things in mind, but they are in our four walls and we will let you know if we ever do one. rishaad: let's talk about retail a little bit. it is a tough is this. it is getting tougher. you've got low-cost entrants in australia now. how do you compete with them? richard: through making sure
we've got a great alternative and our doors are welcoming to our customers. importantly, to continue to invest in price, which is what we've done. our prices are down about 6% over the last six years and will continue. we are driving cost down. the lesson from overseas would be, maintain margins and keep the pricing up, then you create an umbrella for discount stores to come in. we are not going to do that. we will continue to reduce our cost. that is the reason we are doing well with our customers. rishaad: is that what you learned from looking at the entry of aldi and little into the u.k. supermarket industry and how that hurt the likes of sainsbury's and tesco? richard: very much so.
operating ini australia for some time now. they are a strong, vibrant company. we've also been getting advice from archie nolan, who is a legendary retailer from the u.k. helping a number of our businesses. archie keeps tabs on what is going on globally as we do. you learn the lessons and make sure you run your business as best you can. yourad: you've grouped industrial chemicals operations into one large division. is there a spinoff on the cards at all? richard: it is the furthest thing from our mind at the moment. we like these businesses. they are good cash generators. there may be opportunities to expand them.
they generate good returns on investment. growing thosen businesses and improving returns. theaad: the last word on state of the australian economy. it is quite a difficult read in many ways. how would you characterize it? richard: i think it is pretty solid. you don't get the sort of revenue increases we've had across a number of businesses if the consumers don't have some confidence. i think the economy is ok. generally, the australian economy is still growing. we've had 20 something years of economic growth. we are positive on the outlook for the australian economy. rishaad: richard goyder, chief executive of wesfarmers in australia joining us from perth. we are going to turn now to some stories making headlines around
the world. kim jong-un ordering his army across the demilitarized zone. zinhua news saying the order takes effect at 5:00 local time. that is 4:30 hong kong singapore time. each side accusing the other of provocation. earlier this month, two south korean soldiers were injured by landmines that seou saysl were planted by the north. bangkok'splicated in bombing. one is a chinese tourist. the other is a thai man who spoke to police thursday. the other suspect remains at large. they do want to talk to the drivers of a motorcycle taxi who may have taken him to and from the scene of the attack. the bodies of all 54 people killed in the air plane crash in
indonesia have been recovered. investigators are still hunting for the planes'flight data recorder. it slammed into a mountain on sunday. this is indonesia's third major air crash in eight months. let's show you what we've got coming up next. china mobile reporting a surprise profit as a description sores. ♪
let's look at what is going on with shares in china mobile. the company's profit rising for the first time in two years area -- two years. the net income level was $5.2 billion. worldwide, a rise in 4g inscriptions. sales and revenue marlee doubling in the first half. insurance profits leaving in the first half, income topping $5 billion. results benefited from china's stock profit. the shanghai composite surged by
more than a third, helping to boost the value of thing on -- ping an's holdings. squire properties first half underlying profit coming in at a 4.3% rise on the year. it is continuing to see a pickup in hong kong demand. it does expect office rent in beijing to weaken. sales declined nearly across the entire board here. the company seeing sales fall for 15 of the last 16 quarters. it is trying to rescue revenue and growth. jack clark sent us this from san francisco. >> hp has been dealt a tough hand to play while trying to undertake one of the biggest corporate splits we've seen in history. it is dealing with a destabilized currency market,
which means the swinging value of the dollar is affecting hp's ability to do business abroad. people are buying mobile phones and cloud services rather than pc's and data center equipment. that has put immense pressure. emily: so hp is now splitting. where are we expecting growth to come from? >> the growth is going to be hp enterprise. that is the part of the company which deals with corporate advertising and services to keep the back offices of the world coming. the issue is that we aren't seeing growth today. fromcing tough competition chinese server makers. it is facing an anemic spending environment. one of its key growth divisions, software, has failed to expand at a time when we see companies such as salesforce booking
record revenues. rishaad: continued worries about twitter's growth prospects. the selloff hit three weeks ago when interim ceo jack dorsey warned it would take some time to boost the slowdown in user growth. cory johnson said it is a scary moment for investors. twitter traded off in the midst of a global selloff. suddenly, twitter shares were trading below the ipo price from back in 2013. the stock recovered at exactly $26, the ipo price. it was a scary moment for investors. the company warned that user growth, which has been abysmal, doesn't look like it is going to get much better anytime soon. investors look at that information, the lack of confidence, and take the suggestion that things aren't
going to get better soon. the result was this massive selloff of twitter, reminding people a $26 ipo might have been appropriately priced with the stock closing at $26 a share today. rishaad: let's have a look at some of the other stories we are following. unique low is testing a four-day week. there is no such thing as a free lunch. it does come in return for a longer working day. staff in japan will be offered three days off in exchange for 10-hour days during the week. there are hopes that the new deal will persuade them to stay full-time. a big investor says the company should sell overseas businesses that don't cover their cost of capital. nomura reported a profit in the last quarter, but income from asia had to offset losses in america.
harris has become an activist investor here, having built up a 4.5% stake in nomura. nomura shares because of that up nearly 22% this year. 17% in fact. intel is a says -- tesla says it is providing charging stations to select properties in the u.s. be 30says there will charging spots at high-end properties along the west coast. we've got to take a break. we are looking into the deepening gloom on china's factory floors. manufacturing numbers missing estimates. details and reactions next. ♪
rishaad: asia-pacific stocks extending losses. this after the latest chinese manufacturing gauge falls to a six-year low. hang seng entering a bear market. caution oil fell to the weakest reading since march 2009. david knox is the latest victim of cheap oil. stepping down. santos has been cutting jobs.
it has like the possibility of asset sales too. the company is undertaking a full strategic review because of continuing pressure on its share price. the stock up today 3%. 'greeces debt drama has taken a new twist. prime minister alexis tsipras decided to call an early election. this adding another element of uncertainty. billion in as $95 new bailout. citrus aims to isolate dissenters and return to power with a broader mandate. closing up foro its lunch break on this last trading day of the week. getting more reaction to that week manufacturing gauge out of china. here's juliette. i want to show you the reaction from the hang seng index, the shanghai composite,
and the aussie dollar. the aussie dollar had this big spike coming down, extending its week starts against the greenback. we have seen a bit of a spike as traders started to in just this information. if we look at how the shanghai composite fared as these numbers were coming through, you can see there was that big spike, but shanghai always does its own thing. it rose again. quite a lot of volatility. the hang seng index is what we are watching today. it is on track to close in bear market territory. it did have quite a lot of volatility. let's get back to the map and see how markets are faring in general. it pretty much is a sea of red. we were expecting that on the back of those big falls in u.s. markets. the s&p 500 market in new york erasing 2015 gains overnight.
the shanghai market now down by 1%. hong kong being heavily sold off. the jakarta composite down 1.6% today. it has entered bear market territory. in hong kong, all five of hong kong's $800 million plus ipo's this year, now trading below their offer prices. a couple weeks ago, it has gone to a record low today. before i go, you mentioned the nikkei heading into the lunch break down by 2.1%. not a great day at all for asian markets. rishaad: getting to what juliette was mentioning, more worries about manufacturing in china. i'm going to let steve announce this. it is the lowest since the growth will -- the global financial crisis. stephen: this is the china manufacturing pmi.
used to be called the hsbc. taking over the moniker of that pmi index, basically representing a survey of smaller private sector manufacturers in china. this is a preliminary number, but if this holds true, by september 1, this will be the worst reading in 6.5 years. that was the depth of the financial crisis, march 2009. there was a lot of pressure on exporters. we are now back in that territory. july was 47.8. survey for this month was 48.2. we got 47.1. it is not much of a surprise that the stock markets are down considerably. output decreasing. new export orders decreasing at a faster rate. employment decreasing at a faster rate. this is bad news. this is confirming what a lot of
people are saying, why there was whyvaluation of the yuan, we have had targeted fiscal stimulus. the economy is probably worse. normally, when there bad numbers like this, what we've seen is a pick up in the stock market. rishaad: i was just going to mention that. stephen: because they expect possible further easing. this might be too much bad news to digest. much not going to improve to the final reading. on theirthere is a lot plate, chinese authorities. they've got this unprecedented size of population. the population is getting older. it is also possibly shrinking. stephen: before we get to talking about priorities, you are talking about aging. i've always likened the chinese economy to being like a
teenager. pimco's managing director also does that. you remember what teenage years were like so long ago? pimply and moody. let's hear from pimco. >> right now, we are going through that awkward transition. aom a controlled economy to much more open and much more slowly growing economy. we are seeing that they are really grappling with that challenge and that transition. it tod: they've likened teenagers here. become 18, do they get the vote? stephen: in china, no. the demographic shift is a big issue too. every five-year plan has been about growth. xi jinping -- perhaps we are hearing that the priority will go from economic growth to
population growth. the working age population last year shrank for the first time in two decades. they have a demographic time bomb. new is why we might get rules on health care, pensions, social welfare, and possibly a further easing of the one child policy. rishaad: steve engle there. we are going to check on some other stories making headlines. the purchase of a 50% stake in a kazakh oil producer. getting full control of a venture. [indiscernible] parent already own the other half of the company. abreu david's state owned company wants to court more buyers. [indiscernible] uae is opec's fifth biggest
producer. air asia saying it is positive about its outlook for the rest of the year after its earnings report, net income at nearly $60 million. the chief executive is tony fernandes. he says demand from chinese travelers picked up in may and he expects the operating environment to improve. our southeast asia correspondent, has haslinda amin, spoke exclusively to tony. he told us that he can't control investors who have devalued the stock by 60% in the past 12 months. why are they not buying, are they shorting, is it the ringgit situation, there's a lot of issues out there. my job is to deliver profit. i'm confident in that ability to do that.
i've been through this many times. my job is to continue to deliver results, listen to what the market is concerned about, explain our situation. we look at the long-term. criticism has been the same that was given to us on thailand. feel we have a valuable franchise. we have a fantastic database. haslinda: you talk about how thailand is a key market. with the recent bomb blast, a deadly one, do you expected to be impacted by that? >> in the short-term, yes. we've been through this many times. many been through incidences in thailand,
tsunamis, etc. in this case, it appears to be someone from outside of thailand, an isolated incident. we've already seen sales coming back. haslinda: what is the biggest challenge at this moment in time? >> talking to bloomberg. every day is a challenge. we've got some great tailwinds. we have oil. i've always predicted $45 oil. we are not far from that. now -- it ise happening again. haslinda: the strategy you've been adopting is also being adopted by your rivals. >> we are the largest market share. we are a short haul airline. in terms of short haul, we are
all ahead of everyone else. the bigger challenge is the perception of the malaysian ringgit and the malaysian economy. i started thist, business at $30 oil. it went up to $150 oil. we still maintained our margins. the ringgit situation will be andt with through fares we've got a lot of capacity on fares. auxiliary income is big growth. my target is 60 ringgit. hedged a lot of our dollar debt anyway. rishaad: they say a change is as good as the rest. perhaps not so in china. we will have a look at the strained relationship beijing has had with reform. ♪
>> checking some stories making headlines around the world. president has let officials to discuss the explosions in tianjin. there are growing concerns about contamination around the site. the media reported cyanide readings at more than 350 times safe levels. officials were also alarmed by a mass fish kill. officials say there was no indication of cyanide in the water. a party statement after the meeting said if whoever is responsible for the disaster will face strict punishment. china has released pictures of its military drone. the test was carried out in mongolia late last month. china says it was intended to assess different targets and destroy them. the company has been delivering
it to clients. a new study says july was the warmest month ever, with records going back to 1880. combined land and sea temperatures were 0.8 degrees celsius above the 20th century average. in addition to a new record, the first seven months of this year were also the warmest ever. skeptics saye world temperatures leveled off since 1998. china's current leadership is struggling to identify and impose reform. brings us a case of the unstoppable force meeting the immovable object. david: i think it is pretty clear that china's leaders recognize there is an absolute reason for reform.
they are looking at reforms over a whole lot of areas. we've been talking about it today, rebalancing the economy, improving consumption, declining workforce, all of these need to be addressed. one of the things they are having difficulty is actually getting these reforms executed. one of the reasons is the corruption campaign. twoas had an impact on levels. one is that these bureaucrats are no longer getting all the perks they were used to, the free limousines, the banquets, and they are on a go slow campaign. we've heard that from various levels of the party. theseiang was saying that bureaucrats are lazy and lacking in action. this week, there's been an article. they are talking about this
scale of resistance to reform coming from the bureaucrats, which they say couldn't have been imagined. this is something which is recognized and it is a problem. rishaad: change for change's sake, some would argue that. what about the centralization of power into the hands of xi jinping? many people are saying he may be the most powerful leader they've had for years. and what he's done is he's actually consolidated power around himself. he's leading 10 high-level policy groups -- eight. i should say. those include everything from cyber security, military reform, but most importantly, he's leading the financial and economic affairs group. every time you've got a decision about how a reform should be even the top level in
china are waiting for him to sign off on it. it also means the reactive process is much slower. difficulty like we saw with the stock market, -- rishaad: let me just tell you something here. what does this mean when it comes to consistency? the point being, when we saw the seemedarket july 8, it it was a scattered approach and it didn't seem there was any unified way of dealing with it. david: it is difficult to see how the link between the resistance you are getting from , andbureaucrats to reform the actual implementation of reform. people are beginning to look at what is going on in china and they see a certain inconsistency. the stock markets are a good
example. you saw the government encouraging people to put their money into the stock market, and they reversed course. the way the devaluation of the currency was handled last week, it took the central bank a couple days. tried to explain what was behind that. rishaad: was the failure more of communication? david: it was a communication failure that came about because it looked as if they hadn't through the timing. that came decision straight after the trade numbers. it looked like a reaction to that, the trade numbers, and the reason they went through with it was to prop up exports. there is a longer-term goal to get the currency involved. difficult to actually discern exactly what
was the reasoning behind that. there's going to be a lot more decisions coming out of china regarding a whole. ofareas -- a whole myriad areas they are looking at. rishaad: david, thank you so much. we have to take a break. we are looking at this new twist in the greek debt drama as the prime minister resigns. we will hear how social media is reacting. "trending business" is back in two. ♪
september 20 and it adds another element of uncertainty just as athens secured $95 billion in a new bailout. this aims to isolate dissenters in the syriza party and return to power with a wider mandate, and perhaps a more manageable coalition. >> we have not achieved the deal we were hoping for in january, but we didn't expect such a reaction either. that was theeal only one that could succeed. the rap ont's get what is trending on social media. a lot of people talking about the resignation of the greek prime minister. he is hugely popular. yvonne: he really is. some people talking about what is going to happen out of this election. most people expect that he will continue and win. another roll of the dice for the prime minister.
people on social media have said this could be a clever move. on the opposition side, within his own party, they don't have a lot of time to make their own coalition. some asking the question, who should we vote for when it comes to anti-austerity? here's what some are saying. for every voter tsipras loses -- another person saying -- one more last quote here, someone posting this -- euro area partners have talked about this. they say this could be a positive sign. they are hoping that they do
stick to the agreement on these bailout terms. this election could possibly delay the program review by a couple weeks. end this laste we edition of "trending business" of the week, let's have a look at the stories we are following. a quick look at earnings. weak demand from the united states and europe took a chunk out of li & fung's numbers. there, 182 million dollars. it is counting walmart among its customers. the slowdown and the falling euro all contributing factors there. sales rose just ever so slightly. profit at aying 4.3% increase on the year. sales in the period rose 12%.
swire is continuing to see a pickup in hong kong demand. it doesn't expect office rent in beijing to weaken. [indiscernible] coke, and visas, met soccer's governing body in europe and urged reform. fifa says it is restructuring and elections to replace president sepp blatter are scheduled for february. a quick snapshot of the markets. dismal at the moment. the benchmark for the asia-pacific is down to 17-month lows. we've got the hang seng and the shanghai composite helping to lead the charge. tokyo not far behind. australia, new zealand, also in the red. it is a sea of red out there. numbereakens, the pmi
john: with all due respect to donald trump, two can play at that game. ♪ john: i like this bird. a good-looking bird. happy national lemonade day, sports fans. first, trump. last night the kingpin of disruption upstaged jeb bush in new hampshire, hosting a town hall meeting 20 miles away. trump treated the dual like a