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tv   Bloomberg Markets Asia  Bloomberg  May 18, 2017 9:00pm-10:01pm EDT

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♪ i am haidi lun. rishaad: i am rishaad salamat coming to you from bloomberg's asian headquarters in hong kong. this is "bloomberg markets: asia." ♪ a muted start, wall street's modest bounce has not traveled far. rishaad: no, no, next question. trump says he is a victim, calling the whole thing a witchhunt. haidi: the biggest bankers to
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report, worsening loans as a major issue. america,even without is there hope for the tpp? bloomberg's live in hanoi. well, equity markets did shrug off the scandal surrounding the white house, and donald trump denying any ring going on, saying it is a witchhunt. #8522, increasing frustration amongst the people being polled about what is going on with indeed donald trump and his popularity. 53.1 is his disapproval rating. we go into the 40's when it comes to his approval rating. that is the lowest on record for a president in office for as
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long as he has. it's not playing out that great with the people polled here. that is one way of looking at it, but equity markets, well, -- went haidi: you can see that playing out. even though you did have the president saying it is ridiculous to say he did anything that would warrant an impeachment, we did see a prevailingt in asia, when it comes to sentiment. 30 minutes from the open and china and hong kong. shery to it over to see how things are doing. coming on mix, the asx
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200 meeting declines. some optimism out of wall street but those positive fives not lasting that long in the asian session. the nikkei down .25%. slightly positive with new zealand, but a mixed picture across markets. we have the south korean won meeting declines. ae yen is rebounding after session of losses in the previous session, so no wonder we are seeing a decline for the equity markets. , a safeook at gold haven assets gaining ground, .3% , that after retreating in the previous session overnight, so something we need to keep an eye on. wti, let me see if i can bring it up.
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.2%. we are getting this survey from bloomberg. 24 out of 25 analysts expecting opec will indeed continue those output cuts. did have saudi arabia, russia, talking about a nine-month extension. ,ake a look at the nikkei energy gaining .6%. oil gaining, helping the stocks. financials of, but not enough to pull up the whole index. the index itself is down .2%. right, currencies right now, as i mentioned, the japanese yen is climbing, while the korean won continues to decline for a third consecutive session. emerging-market currencies are still feeling the heat as we had that political crisis in brazil,
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and south korea, jay y. lee samsung feist chairman, his trial resumes this morning. thank you for that. let's get to first word news headlines. the brazilian president refusing to resign, saying a supreme court investigation will clear him of an alleged cover of. local media claims he approved hush money for the former house speaker who drove the impeachment of dilma rousseff. tumbling.arket petrobras among the biggest losers. iran has hit back at new u.s. sanctions, denouncing them as illegal and imposing countermeasures. targeting seven
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entities, including the ceo of booz allen hamilton, alleging human rights violations. the u.s. is working to curb iran's ballistic missile program and will continue to cut under the 2015 deal. iran voting today in the presidential election, seen as the most important since the founding of the islamic republic. the economy has been a major issue. rouhani is defending his record. haidi: alibaba disappointed investors, earnings heard by a high tax bill and greater spending on entertainment and the cloud. shares fell the most in the year, the biggest intraday drop since june, but recovered to
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close in the positive. ryan, well, president trump has tried to distinguish the political firestorm raging in washington, categorically denying he did anything, claiming he is the victim of a which hot. the story.ys has what can we read into not just what the president said, but what he has been tweaking as well? were in contrast to the official statement issued yesterday afternoon, which sounded very presidential. here is what president trump , "this isis morning the single greatest witchhunt of history."t in with all the acts that took place in the clinton campaign and the obama administration, no special counsel appointed!"
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he said the special counsel will hurt the country terribly and make the country look divided and mixed up. that he does not excepted it. later in the day, he did seem to leastming up, at accepting that the special counsel will be in place, but continuing to insist that the russia charges are baseless. >> believe me, there is no collusion. russia is fine, but whether it is rusher or anybody else, my total priority, believe me, is the united states of america. special counselor robert mueller, former fbi director come in fact james comey's predecessor, the longest-serving fbi director after j edgar hoover, saying it gives the fbi credibility. it is not just with a trump and his team colluded with russia, it is a broader probe. was there meddling? what happened with the election?
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the senate intelligence committee praised the appointment, the house intelligence committee requesting james comey's dismissal documents. obviously they want to get started and dive right in. hisrt mueller can follow inquiry wherever it takes in, so perhaps that is why the president is feeling preyed upon. the appointment has managed to ease tensions in called the and also markets. what are we hearing from the fed and treasury? >> not much. the fed has to look past short-term swings in the market. she seems to be arguing that conditions are in place for a rate hike and the fed has to not fall behind the curve. is important to remain
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vigilant against falling behind as we continue to make progress on our goals, specially the low level of interest rates and the large size of our balance sheet. >> let's take a look at the chart. the rate hike odds from the market perspective are not as high as they were a couple of weeks ago. the white line looks at the odds of a june hike, now down 70%. markets convince the fed will hike in june, but look at september, now the odds are only one in three. u.s. jobless claims underscoring tightness in the labor market. if you won a reason to move, the lowest again since 1973. as for the treasury department, steven mnuchin testified, talking about reforming big toks, going back glass-steagall where you separate investment banking from commercial banking, break up take banks to he wants some
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version of that. maybe there is a sign that in the midst of all this trump turmoil that congress will try to stay on its agenda, at least debating some of these a questions that donald trump came to office on, and maybe that's isther reason why the market back on track. i think that is what people are waiting to see now. haidi: thank you for that. kathleen hays for us in new york. looking ahead, the versions has been the name of the game when it comes to chinese stocks, and now the biggest gap between a-shares in h-shares in a decade. we ask wine. right, can the tpp survive without america, and should it? we will put that question to a former u.s. trade negotiator next right here on bloomberg. ♪
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haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. planes domestic comac investing in boulevard is single aisle plane. this is the sea-series. 75% of mainland aircraft done by narrowbody aircraft over the next two decades, and comac talking to rolls-royce for engines on its wide-body aircraft. , bmw come anda two other carmakers every settlements to resolve economic atas claims tied to tak airbags. lethals potentially linked
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products have been linked to death. seeking to capitalize , aston martincess may list in london. 60%eri shares have risen by , trading at a reasonable violation, 14 times earnings. that multiple would value aston martin at $3 billion. thei: trade ministers from states meet over the weekend. how significant is this meeting and the timing given everything else happening right now? haslinda: it is timely and
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significant. it is time for a globalization reset. globalization has raised millions out of poverty, lifted up the living standard for millions more, but it has also caused disruption. president trump blames globalization for the loss of american jobs. say it is not globalization per se, but technology, the internet of things, the disruption caused by technology. it is so important that this aipac meeting discusses inclusive trade and focus on how technology can help small and medium enterprises via part of this global community. enterprisesdium have been unable to tap the potential because of the disadvantages it has had so far, willec member nations
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help. 90% of workers throughout the world. yet is the biggest meeting this year, but what is significant is how muted and quiet it has been good we have a tradeelected u.s. representative's and questions are being asked about what the u.s. trade policy will be, and trade ministers would want greater clarity on how trade willbe carried out, so he be in focus. on the sidelines of this meeting, tpp members will be meeting sunday at a breakfast meeting to discuss how to bring tpp forward. non-, malaysia, even japan have had a change of heart. the tpp wheninst the u.s. pullback, now they may be on board and japan going a step further by trying to fill
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the leadership vacuum left by the u.s., so a lot of optimism that tpp is not dead, but how it will be brought forward is the question here. rishaad: thanks. more on tpp and a second. we want to get to this yuan fixing, the first week of fixing for the chinese currency and seven days. 6.878. bright, our next guest says the quickest and simplest approach would be tpp minus one. stephen olson, tell us about this. >> good morning. thank you for having me. it is a pleasure to be with you today. the country positions on the tpp are continuing to evolve, but at this point appeared to be several must likely possible pathways ford for the tpp. certainly the quickest and most simple way would be for the tpp
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11, the members minus the united states. rishaad: doesn't make sense without the u.s. involved? >> from the u.s. perspective or the other countries? rishaad: either really. >> the united states has said the best way to move forward is on a bilateral basis. we will see whether that proves to be tenable. otherhe perspective of countries, they were primarily focused on gaining access to the u.s. market, so the loss of the u.s. is significant. rishaad: we have seen in the #6983, a slight ratcheting down in terms of trade that the u.s. has had with tpp members. is this a trend or because we have had a slowdown taking place as we saw here in 2009 when it fell off a cliff? what is the story in your view? variety ofuld be a factors explaining why the trade might be declining come but the real issue is that from the u.s.
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perspective honestly speaking trade vines were not the real issue propelling them forward with the tpp. the primary objectives were to establish an agreement with higher-quality trade standards in the region to signal a commitment to also signaled to china that united states was going to continue to be a player in the region. haidi: i want to throw up this chart as well, another way of questioning the relevance of the tpp when it comes to the u.s. in terms of what these countries do, is it a better concentration of time and effort to focus on bilateral trade deals, the way australia has been doing? sure. we have to recognize that there are divergent points of view amongst a tpp members, different reasons and priorities for being in the transpacific partnership. for some countries, the primary
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interest was to establish higher-quality 21st century trade rules, and that was an important priority to get out of the agreement. others, vietnam and malaysia in particular, access to the u.s. market is the primary point of interest. countries like them, it is a fair question as to whether it makes since to continue forward with tpp or if it might make since to continue on a bilateral track with the u.s.. effortso many years of come around after round of negotiations behind closed doors . it really looks like it was coming to fruition, then this happened. taken on thishave approach of expecting the unexpected with the trump administration, what is the potential they could act track on that stands and rejoin the
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negotiation? >> i certainly would not be presumptuous enough to make any predictions about what the trump administration might do, however although we have not seen any indications thus far of potential backtracking, that does not mean things could not change in the future. if the united states pursued a bilateral track, but found they were not able to get terms as favorable as what they had agreed to in the tpp, that would cast the tpp in a different light. whether that would be sufficient for the u.s. to reconsider its position, i'm not sure, but would cast the agreement in a different light. rishaad: stick around. we have to take a break. we will talk about nafta and why donald trump hates it. also, having a look at the premarket as well here in hong kong. loads more on the way. this is bloomberg. ♪
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rishaad: trade ministers from the 21 apec states meeting in hanoi. we continue our conversation with stephen olson. nafta was some 23 years ago when this deal was being born. there is a lot of economic research suggesting it has worked very well, and economic research saying maybe not so great, but why this donald trump hate it so much? >> i think most criticism center around labor market dislocations that we see any time you move to a free-trade scenario. in mind isnt to keep that the nafta agreement is in fact 23 years old. is perfectly reasonable for all the countries involved to take a look at the agreement, if i wait what has worked well, but has not worked
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well, and if there are reasonable modifications and amendments that can be made, the way we have done business changed since nafta was initiated, so it makes sense and appropriate. you have written about the unpredictability in the president's first 100 days here it is this intentional or a sign of disarray and chaos in washington? well, i don't know if it is intentional and if it is a sign of disarray in washington. i think there is a probably a variety of factors of play. there is a certain learning gettingvolved coming more steeply entrenched into the issues. there are different advisors with different points of view articulating different positions, so there is a variety of reasons that could explain why we have seen somewhat of a mixed bag from the trump trade
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policy. thank you so much for that. , india's biggest lender reports amid concerns of bad loans. we will take a look at what is in the cards for state bank. ♪
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rishaad: there you go. , 9:29 as webour count you down to the start of the session. a slight move to the upside when it comes to the hang seng pre-auction. i am rishaad salamat broadcasting from bloomberg's asia headquarters. ♪ haidi: i am haidi lun in sydney. one stock we are watching his glencore. reports that they have hired standard chartered to proceed with the sale of its stake in australia. kemcore will sell its port
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bla stake, looking to offload assets. they are reportedly up for sale. rishaad: looking at one another stock, unchanged in the premarket. just bring up a chart, and absolute, well, massive move to the upside to this is in january when it announced it would be having a share buyback of epic proportions. this is over a year the chart i have brought up. they will be looking if the chair structure complies with ordinance.
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we found out from the securities and futures commission that the top broadcaster and hong kong was owned by a chinese media tycoon will rather than a hong kong resident as required. keep an eye on that. let's get to the open. shery: the shanghai composite and the hang seng extending declines. unchanged at the moment when you weigh all of the stocks. energy is up, oil gaining ground. news that saudi arabia and russia will extend those output cuts for nine more months, but 24 out of 25 analysts do expect those cuts to continue. energy is out, but the rest of the sector is not looking pretty. rebound on wall street, but that positive sentiment not getting filtered through the asian session right now. take a look at this chart, the made upna index, mostly
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of overseas stocks in those traded in hong kong, they have been gaining ground, but the shanghai composite has been losing ground because of deleveraging efforts out of china. correlation between the two indices has fallen in the past few sessions, although we are seeing a slight correlation falling to a 2006 low. today, the big news comes out of the currency markets, the offshore yuan, some weakness for the offshore yuan, that after six sessions of gains. dc,he turmoil in washington not only that, but what is happening with the political crisis in brazil -- if all of that continues, we could see more headwinds for the yuan and the rest of emerging-market currencies. today we saw that the korean won
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was falling for a third consecutive session. get takata, lower third, if you can get takata of? it is doing crazy things, 20%, if we can get that. , news out of japan's auto sector that they have read some sort of deal for those airbag recalls we saw al of that company -- saw out of that company. that is being felt in the takata stocker, more than 20%, very early trading out of japan, so a picture of asia right now. rishaad: thanks, right, let's check first word news headlines. , a reinforcement to her hard-line approach of leaving the european union.
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theresa may wants of brexit deal freedom, supporting her if talks fail. she said negotiations will be tough, but no deal is better than a bad deal. haidi: the u.s. is considering extending the ban on laptops and other large electronic devices from aircraft cabins worldwide. homeland officials have told eu commissioners that washington may apply the ruling to all flights heading to the u.s.. however, they said ample warning will be given to allow nations, airlines, and passengers to be ready. violence returning to athens the head of a vote on new austerity measures. lawmakers debating new demands which would impose income losses for another three years. the prime minister wants new pension cuts and tax hikes through 2022 release the next bailout installment.
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without that, greece will struggle to meet its debt obligations in july. haidi: indonesia keeps rates on hold. the rate remains of 4.75%, but as forecast by all but one economist, consumer prices rose of the fastest pace in more than a year and april. indonesia went on a spree last year, lowering rates six times, but has been on hold since the last move in october. well, we were talking about it earlier, this run of six straight days of stronger yuan fixing against the dollar coming to an end. stephen engle says been watching all of this for us. what do you do with the yuan? edit time when the bond and equity markets are volatile. >> the yuan has stayed relatively stable versus the dollar. against the basket of
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currencies, a different story. the terminal chart here will show you how -- i'm not going to intervene, but someewin saying it has been manipulated to maintain an image of stability. the green line is the relative strength versus the dollar that the pboc has kept the currency at. the basket of currencies, the yuan against the basket of 13 currencies, it has been weakening. what has been going on? it seems as though the pboc wants to keep the yuan stable arsus the dollar as sentiment-boosting move as stocks and the bond market have then selling off and showing extreme volatility. they do not want to increase the panic that they saw last year with the yuan and increase the risk of outflows.
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do not necessarily have the regulatory grip on the tiller, and that is with the concern is right now. the reference rate, the pboc this morning a few minutes ago actually that the reference rate versus the dollar slightly weaker as opposed to what we had been seeing the past six straight days of a stronger reference rate versus the u.s. dollar. i don't get it. why do you have to go to four decimal places? moves,these are minute very small moves, but the reference rate came in stronger than forecast in 24 of the past 32 trading days, so the trend is still in place, but what we are seeing is that every trading day came inril 5, the rates stronger than the consensus estimates from those who track the daily reference rate of the banks. atdi: you just have to look
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the signaling and these minute moves when it comes to china. we have any clue as to how long the pboc may continue? are trying what they to do. well, today, the six straight days of strengthening they rate has come to an end. withis what an economist -- in hong kong, saying the pboc it to prevent panic sentiment from spreading into the currency market, but in the short-term, no one can write against the pboc when it intervenes to the fixings. investors will be more likely to sell the dollar. so it is anyone's guess where they will go, but today, they have stopped a six-they run of strengthening the daily fixing rate versus the dollar. thanks for that.
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india's biggest lender reports full-year results on friday amid concerns about growing nonperforming loans. take a look at that. what should we be looking for as we get earnings out of state banks? >> thank you for having me around. i think it will be interesting from an update on the merger. longer-term, there are more synergies, but i think we will see a lot more pain near time because some of these banks generated about 59 billion rupees of losses through the first nine months in december, and that will wipe out some of the profits, but other than that, i think we will see compression going forward even more so, because the home loan by 25have been lowered
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basis points, so it is interesting for the housing finance companies operating in that segment, and the biggest issue in the room will be on the asset quality side. i would like to know that the fbi has done better than other government owned banks, but still expect pressure to be there. rishaad: looking into this chart , #8643 on the bloomberg terminal, other versions in the performance of government and private banks. what i have here is the banking index,the india banking and we can see clear outperformance coming as we see bad loans rising from a bad loans go up, so does the stock price. it is a bit be musing. the diversions has been on two issues come loan growth and asset quality. if you look the loan growth
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element, they are doing better because they have fewer npl's than government owned banks. we have seen a lot more retail, and retail has driven the sector. if you look at unsecured loan growth, that is 24% versus the total loan growth of 9%, so that gives you a bit of flavor and the private sector is pushing the petal. dal.e the private banks want the government banks to be in the picture because of the size of their loans. quality, on the asset side, 90% of distressed loans are with state banks, so the private sector has done better there, but if you look at the new information coming out, talking about the diversions between what the private banks have reported versus the amount
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that r.b.i. audits have disclosed. with one bank of the reported number was 15% of the actual audited amount, so that will affect a little bit of trust investors have placed in the kinds of numbers reported. these two issues go hand-in-hand because if you have bad debt and can't write it off, then it puts a strain on your balance sheet growth, which is what happened with the government banks. so much.thank you joining us from singapore. the state bank of india at with results later on today. coming up, more diversions, this time in china. the widening gap between a-shares and h-shares. ♪
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♪ rishaad: this is "bloomberg
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markets: asia." i am rishaad salamat in hong kong. haidi: ikea aims to double its sourcing from india ahead of the opening of its first store in a nation pegged to become the world's third biggest consumer market. the company has a goal of 25 stores by 2025 despite having trouble acquiring land. the first store was originally slated to open by the end of this year. biggest right, india's digital payment startup has raised $1.4 billion from softbank, the largest funding round in indian tech history. ytm we use the money to grow its user base. softbank will join alibaba and take a seat on the paytm board.
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the nikkei news says bain may bid for toshiba chips. hynix would avoid a management role to prevent antitrust concerns. rishaad: unusual signs with a rally,shares leading leaving mainland peers behind. what should we make of all this? hong kong exchange chairman, good to see you. what is going on here? withu would have thought the shanghai stock connect that pricing and the differential and pricing gap would close.
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obviously it takes time to work to the system, and i guess it oldalso be a question of economy shares as opposed to new economy shares. rishaad: how much does the deleveraging story play out and all this, capital controls and all that, and this general clampdown on leverage in china? >> that is part of it. that said, we do have a big in novembere 19th , so i suspect if there is any deleveraging, it would be tempered with a lot of caution. rishaad: i'm going to bring up this chart that shows this diversions, and we have this premium of h-shares over a-shares, when it used to be the other way around. this is also dividends. so what gives?
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how long does this go on? how long until we see them in lockstep? >> i'm not sure if you look at h-shares between hong kong and london, there's a small difference of currency with the pound and u.s. dollar from but when you have renminbi and u.s. dollars, and greater volatility and the exchange rate of a recent fewite weeks, it has been relatively stable and calm, so the differential will always be there. the next catalyst i guess could be msci and inclusion for a-shares. you think it will be fourth time lucky? >> i wish i knew. think some of the issues that
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might have been a consideration a while back -- hopefully, they going to get over that and it will be a good thing for a-shares to be in the msci china index. this one you think step forward, two steps back type policy maneuvers coming out of beijing that they are on the right track to gradually open up the markets? there have been some concerns come in the ticket when it comes to some of these companies listing in hong kong, a lack of transparency and actual information about what is going on. a chinese derek company has been making negative headlines as well. do think there is more that could have been done on the regulatory front?
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--both the exchange here obviously aware of what is going on -- and obviously in terms of the due diligence that the professional teams put into it, that obviously is going to , and hopefully things like this will become a rarity. i'm not sure you can get rid of it entirely. that is little consolation, but you can only do your best. andgovernment side transparency in hong kong is high, but when you have a board are a company doing business outside of hong kong, there is bound to be a risk cap there. rishaad: talking about consolidation, i need here. it looks like the dead by
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deutsche's boorse is dead. >> i can't actually see that. bigexchanges that are enough would be tokyo, shanghai, hong kong. rishaad: singapore? >> it is not a question of affordability. it is a question of size, and of cu, youwhen you buy ls have an arrangement with johannesburg. they are working closely together, and of course equity , with etf's and all the new products that have come out -- to be mythat was going next question, but next time definitely. always a pleasure. right, let's have a look at what
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we have on the way. the brakes onting alibaba. we run through the numbers that have to impress investors. ♪
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rishaad: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. adjusted earnings per share coming in at $.36 for alibaba. some big numbers in the report, yet investors were not exactly jumping for joy. >> it was a mixed set of results for alibaba. there are eps missed evidence, but the revenue soared 60%, the fastest since their ipo, mostly because of attacks hit, their tax expenses were 149% this previously they had
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the benefit of certain tax benefits, but that expired in the past quarter, and so we were seeing some of that affect taking place. also, costs continue to rise for their entertainment and cloud business as well. haidi: you mentioned the cloud business. lines, media, cloud, how did they perform? cloud and entertainment media continue to drive revenue growth. for cloud, it doubled more than $2.2 billion in revenue, the same for the digital entertainment business, revenue tripled, but both units are still a lossmaking. alibaba is in competition with tencent as both companies are trying to drive growth in the space, and at this point, alibaba has no choice but to continue to invest dollars in
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order for future growth. evergreent about that and vision, international expansion? >> management did say they continue to see southeast asia as a strategic part of their business. they will continue to integrate and drive growth. of thesethat big companies are, they are trying #7236, theto amazon goliath and the last little brother. there we go. thank you so much. all right, over the next hour, the drama in washington continues to play to packed houses.
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we will ask what lies ahead for president trump as he called impeachment talk totally ridiculous. this is bloomberg. ♪
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♪ >> from our studios in new york city, this is "charlie rose." >> good evening, i am filling in for charlie rose. there is uncertainty hanging over the trump presidency. less than a week after the firing of james comey, the white house careened into further damage control today following reporting that president trump asked comey to end an investigation into michael flynn's ties to russia. meanwhile, the president faces questions about classified information given to a russian diplomat


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