Transcripts For BLOOMBERG On The Move With Rishaad Salamat 20140901

Economy, 51. 1. This, of course, is showing expansion, and lets go over to david. More optimists and pessimists. And a reminder, we also have the hsbc final pmi coming out in about 45 minutes. It is not a lot if you put everything together. This is a little bit above water. This is up about half of 1 , and we will see how this impacts trade. More than to move others, i guess, when it comes to the pmi numbers out of china. With what else is moving across the markets. Yes, david saying 51. 1, and the estimates from the economist was 51. 2, and this was down from the previous figure in july, which was the highest in more than two years, and we will get reaction, and with us is the chief greater economist, and this is pretty much in line, isnt it . Yes, but we need to also pay for the pmi. A couple of weeks ago, it was quite it was significantly lower. Sector, and private we also have to Pay Attention to the other numbers. They were shocking, werent they . You probably do not want to land more. And the demand side, the manufacturers, they are very cautious. Lets just look at this. In 45 minutes, we will get the hsbc reading of the purchasers index, but it does show expansion. We really did not want to read too much into it. I think this official pmi is of the largest listed companies, so it suggests that they are still moving at a pace, and we have to keep in mind that in q3, the china gdp growth tends to be slower, and we also have to Pay Attention to the recent low number. Low number will be very critical, if we were to see another low number, it would suggest that there is real Economic Activity that will be negatively affected. It is something that the government does want to bring down, but it does not want to bring down the rate that we saw. It just fell off a cliff, didnt they . Indeed. Governments need to be very disorderly to bring deleveraging from the Banking System. We know over the last several years, the chinese banking most of theinanced leverage in the economy, and if the Banking System starts landing, then we will see a significant down turning. This is as a result of the keep in mind that 7. 5 growth is still the target. Yes. Now, inflation is not a problem. That is right. The pboc and others have many of leverage to sort this out. That is right. Is time, perhaps, for the pboc to cut reserve requirements for the remaining 60 of the Banking System so that the banks will feel more , and if theyable can land more the overall risk facing the economy, it will be reduced, and so china can continue to engage in its Interest Rate liberalization, the Financial Sector liberalization, so that the economy can engage in all of the deleveraging processes. Ok, lets talk about the export picture. Its trade surplus, that is affecting the room in the. What about that . In deed, if you look at that, since midjune this year, there has been a steady appreciation, and that is largely because it remains substantial. It has been diminishing. And overall, without seeing significant capital outflow from china, the room in the re mimbi is bound to be pushed. Very, veryeen slowly. That should not matter that much pre i think the Exchange Rate does not affect china exports much. All of if you look at the emperical analysis, it is the external demands that is more critical. We are seeing recovery in the united states. Recovering,has been and it has rebounded sharply. Also, the japanese economy seems to be rebounding slightly in q3. Not so europe. Europe is still rather sluggish. Where did we go from here . We will get to the 7. 5 growth rate, but what are we looking at . We think china will probably have to lower their growth target. Ishink that 7 growth target more suitable for the next few years. From 2016 to 2020, the government should end up around 6. 5 to 7 , so that would be a lot of room on structural reform china still has a lot of room to invest, but they need to invest in the right space, rather than more in the property sector. But this is an economy which is still being propped up largely by investment spending, investment of vincent structure of infrastructure, etc. Basically, the Central Government is looking at the growth, because it is driving the overall activity. Rail,llion in highspeed and it seems like the chinese economy has not found a new growth momentum. I think the government needs to engage in reform to liberalize the service sector. After all, if you look at the chinese financial services, the transport, medical, education, there is a lot of potential for investment, but the government should not do the investment. It should ask the private sector to get into there and invest more. It . T was the day, wasnt thank you very much, from anc. The pmi, 51. 1, and this is down from the figure that we had in july, as well. And lets check on some of the other stories we are following for you. Alibaba has delayed the roadshow for its upcoming ipo. And the sec there, they are expecting at the investors meeting, it will start next week, and the pricing is now tentatively set for september, and the highly anticipated offering is expected to be the biggest ever in the united states. And the biggest wireless provider, seeking to sell parts mexican operations. Potential buyers include softbank and at t, and just last month, a scrapped plans to buy tmobile. 4 billion in bonds. It could be used for acquisitions. Scandal,ainted meat tainted meat. They say six in shanghai have been arrested, and these are in connection with a suspected production, and major western companies are involved after products wereef sold past their sell by date. Hong kong is bracing for more political unrest. Democracy in the city. They say they has reneged on universal suffrage with the selection of the latest chief executive. Bloomberg news, david tweed is here. Not a huge was surprise out of beijing . Not really. There are some who may have thought beijing left a little wiggle room, and there is going to be a debate about how the nominating committee might have been made up, and that would have allowed them to actually butoff for the protests, what they are saying now is that beijing has left no room for debate, and so they will proceed with their plan to occupy central, which they have not done yet. They have not even really begun. Apart from last night. Yes, with peace and love. That is what it is. Outsidehing is, given this building, for one thing, they are probably expecting protests to escalate. They will definitely, but we will definitely see an increase in the protests. At least 10,000. That is what the founder of occupy centro is planning four, 10,000 people to actually descend on the streets of Central Hong Kong and occupy them and actually block them. One wonders if 10,000 will be enough, because the South China Morning Post had a report out saying you probably need 20,000 to probably bring real chaos to the center of town. The other thing i think is interesting, if you look closely at the occupy central website, you can see what they are planning, and i think it is interesting because there are three groups of protesting. When they are rested, they will not have any recourse for any defense lawyer. You have a second group who will probably be arrested. And then the third group is going to be probably the most powerful group of all of these. These will be the people standing around giving moral support and handing out flowers. It will be hard for the police to start firing Water Cannons and tear gas on these people handing out flowers, the peaceful protesters. How are they preparing for this . We can see when we come to work that there are barricades going up outside the hsbc building, outside this building it self, and they have lines of communication that are going to be and they are communicating with the police, with email, with other lines of and we can see that Hong Kong Centro is teaming with uniform police. Of intelligence on the ground. Internationally, people are watching this. Are they not . I think it was interesting to see the state department putting out a Statement Last night, where they actually said the universe u. S. Supports universal suffrage in hong kong, with the highest possible degree of autonomy under the rule of law for prosperity. Very, very strong statement coming from the u. S. State department. Not only support for the people in hong kong, but that is a pretty strong message to beijing, as well. And i am sure that beijing will say it is an internal matter. David, thank you very much. David tweed there. Now, some other stories we are looking at, the economy in india showing signs of recovery. Gdp up 5. 7 , and that was above thinking, and approaching nearly 100 days in office. This threatens to stoke inflation. You talk about india, lets look at the prospects of the trading day. The pair to friday, where we saw an uptick, and the nifty was up by one quarter of 1 , 79 54. The singapore futures contract, that is showing a decline. Still ahead, investing in china. Trial linking the Shanghai Exchange to hong kong and back. It is not easy for china governments to borrow money. The direct selling of bonds to fund Public Interest projects. However, daytoday expenses, and that is something which remains banned. They prohibited all bond sales, forcing them to set up financing vehicles to support infrastructure spending. Alibaba,ing out on this is one of the biggest in history. Mnemonic on the exchange is opening the debate. They have issued a concept paper, saying respondents have for certain sectors. Any successful trial of the Hong Kong Exchange is going smoothly. They say the trades are being carried out without any major issue. They say asia financial analysts what else needs to be done now . Midoctobering for for this all to start off formally. What needs to be done before this can officially operate question my they just and we heard the last scheduled would be on september 13, and a total, 96 exchange participants, and about 80 of the market turnover, which verified the trading and a point of completion of this test, i think it will be ready and finalized. And we have the green light. Is october 13. Something which has been taking up a lot of time. A lot of people have been having sleepless nights about this one. And they say that investors have been lukewarm to all of this. There are a lot of forrtunities opening up them. In hong kong, like china mobile or China Telecom corp. Or the nine Nonchinese Companies. . 10 or gamings casinos, and you name it, so the group has really widened. Ok, what about the listed premierwe have got shares. Does this affect that in any way . Premium, for the 76 newly listed stocks, covered by bloomberg intelligence, it is for the past three months. H shares,e material they still have a premium. 10 is accounted for. Gives opportunity. I think this will be for the consideration for investors. Thanks for that, from our bloomberg intelligence. . P next, what lies beneath plastic particles are finding their way into our food chain. A special report from sydney. A special report when we continue. Lets just check on some of the stories making headlines around the world, and the thai Prime Minister has named his cabinet. Officials nowy control many areas, including justice, and there is a civilian that is part of the government installed after the last two in 2006. The general was confirmed as premised her last week after toppling yang luck shinawatra. Turned fatal. About 500 injured, others killed, when the was a clash near the Prime Ministers home near the capital of islam a bot. A cleric accused sharif of raging the elections. And a census carried out in spring has nearly 10 million fewer than estimated. People were denied the right to identify themselves , and they were controlled by rebel groups. And micro plastics are certainly small, but they are becoming big news. Pristine waters, and from there, they are entering the food chain. Surface, Sydney Harbour may look pristine, but ,t is what is underneath pollution kilo small to be seen, which concerns the marine science institute. U. K. Get anything ranging from about 40 to 65 fragments of micro plastics. The smaller the plastic fragments get, the worse they intoe, finding their way the structures of sea creatures, including these sea worms. We have seen some of the animals, and this means we actually know that micro plastics are entering the food chain. The institute took samples from a 27 sites around Sydney Harbour in a study that is the first of their kind, and they find hotspots of micro plastics intimidation. The fragments come from many sources, such as the decomposition of plastic bottles, and others not so obvious, like the tiny beads in some cleansers, and even the laundry can pose a risk. Lots of particles and micro plastics come off the jacket, into the washing machine, and obviously, they enter our waterway. So far, it is not known what impact these micro plastics are having on the food chain. Banned them,eady and others are considering following suit. Bloomberg. Disrupted by a situation in papua new guinea. Bursting back into life, with ash and smoke into the sky. Qantas says it has diverted flights to tokyo and shanghai to avoid the volcano. It destroyed a nearby town in 1994. And they may be a group of misfits, but they have turned out to be heroes of the box office this summer. Galaxy, itns of the brought in more than 60 million over the labor day weekend. And the film has been a hit despite box office sales. Looking forward to the first trading day of the week, and minutes to go before things get underway in hong kong. Also, hong kong coming on stream. And there we go. The futures contract also supporting that we will have a fall at the start. That is to come. The open is next. Dealing with debts. China relaxes the rules on local Government Bonds. ,nd a military mandate dominating thailands new government, and the Indian Economy growing at its fastest in two years as they strengthen ties with japan. And protesters have decided to take to the streets of hong kong is said to have reneged on universal suffrage, and the next chief executive says they only have a line of preapproved candidates to stand in that poll in 2017. Meanwhile, china is allowing local governments to raise money through bond sales. There are debt levels that are built up through more opaque financing vehicles. Lets get to the bottom of all of this. John dawson joins me. Yes, they banned local Government Bond sales. All local Government Bond sales. What happened was the opaque financing vehicles started, which created very high risk debt, and that was a concern. To deal with the high risk debt, they are going to introduce the First Time Ever the local bond sales. The reason for this is to raise projects for items in the Public Interest, and that would clearly give a legal flamer legal framework. And this is back in 2011. Moneyt can they not raise selling these bonds on . They can do, for example, daytoday spending. They cannot do that. And the entities, that is also ruled out. This is 14 of the reasons. Thathave revised a law allows for a more even distribution of risk to investors, and also remove, if you like, again, that high degree of disclosure. Beijing seen clearly through what is actually evolving. It is ok. Clarity and transparency. John, thanks a lot for that. Ok, i think, david, we have got something. Yes, we are not seeing a lot at the open. In fact, i think this story today is about certain markets. As half of 1 , and taiwan, look at the point. Roughly 1 there. Japan seeing a little bit of an uptick. Perhaps it also has to do with the japanese yen. We are back above 104 for the currency. Shanghai is going in the opposite direction, as usual, and, of course, the philippines just opening up in the past few minutes. Withave this opening up australia, mo insulation. And inflation, that one. Now, a few things in hong kong. On friday, and one company is coming out with earnings, Profit Growth sliding to the lowest in half a decade. Again, the same thing. They are provisioning more for bad debt. And then the rest also an increase in the actual dad debt, on its loan portfolio, up to 96 billion remimbi. And china southern, swinging into a net loss, and, in fact, they took the biggest forex hit. That is basically everything, so we are looking at 180 million. This weekend in the first half of the year. And 4. 5 . Remimbi, versus estimates of 5. 5 billion. And this is unchanged. We are looking at credit. Of 262s an overdue loan million renminbi. Remaining overdue, that is the story. Have this. This was raised to buy at jefferies. Of the bigger investment banks in china, for thethe price target stock. Yes, 180 hong kong dollars is the price. They did change the course. There we go. We send it back to you. A minister and his cabinet. Are in charge of almost every key ministry. Haslinda amen. What do we know here . Control Ministry Like defense, foreign affairs, commerce, education, justice. Like you said, the key ministries, more than one third of the 32 cabinet ministers are military officers. One thing to note though, rish, a civilian, part of the government installed after the last coup in thailand in 2006. Now, the new cabinet suggested they are consolidating the position and the position of the military. He will continue to rely on those close to him to revive the economy. Keep opposition to his rule at bay. Remember what he said. Reforms will have to take root before elections can be held, and that is slated for 2015. Rish . Lets talk about the finance minister and the policies they are likely to implement here. Is there anything to get excited about question mark not really. Economic policies will focus on tax reform, boosting of the economy, but few people expect exciting policies from the government. They say what is likely populist policies, not policies that would encourage economic reform. The irony is this. Were adoptedrams previously. A 75 billion plan, and the fund will be spent over the rest of the decade, and that is to make thailand more competitive with their neighbors, the likes of indonesia. Thailand, as you know, escaped recession in the Second Quarter. The perception out there though is that political stability is back. They hope to win back investors. If you take a look at stocks, it has arisen since the two. It is up about 1. 5 against the usd, the biggest gain in asia. The economy does appear to be stable, but to answer the question about whether there is reason to be excited about new economic policies, not really. Thanks, haslinda. Latest event in thailand, the new cabinet is announced. And looking at some of the other stories we will be following for you across the asiapacific, and tuesday, may donald out laughing talking about its trust. Wasy this month, mcdonalds forced to pull several items off the shelves after suppliers were accused of selling items past their sell by date. And Prime Minister shinzo abe may change some members. And marking one year after service. And the economy has managed to strengthen. Economy, itave an is certainly showing signs of recovery. Up, 517 percent, and that was above the economist and the minister is approaching his 100th day in office. His efforts to increase growth has been hampered by a monsoon in that part of the world. And the Prime Minister in japan at the moment, and shinzo abe, they went to boost trade in the face of chinas growing influence, and they are expected to carry out also joint maritime drills. And it does come against a background of capital spending, rising less than had been estimated in the last quarter. Our Bloomberg News reporter gerund joins us from tokyo. Tell us, james, about secondquarter growth. Rish. D morning, the data was less that they were forecasting. What we heard is that theyre going to be revising down. They expect a revision down of secondquarter gdp. It initially came in at my list six. 8 annualized, and the economist we heard from said they expect a slight revision plus of ainus seven contraction in the Second Quarter, so it is not an unexpected result, but it does show that the economy is weaker than we were thinking in the Second Quarter. And there werent very weak Industrial Production numbers. Off an economy is coming even weaker performance in the Second Quarter, and then we are seeing even weaker data into the Third Quarter. Fromhat they were hoping hoping for, it is not werening as much as they hoping for. You have alluded to it, but what we what are we looking at in the Third Quarter and beyond . They currently see growth of plus 2. 7 annualized, and that is a rebound from the contraction in the Second Quarter, and we have not had any revisions down of those numbers that is not a politically strong rebound, and it does not make up for the contraction by any means. Joining us there from tokyo. Are we seeing more signs of a slowdown in china . The latest pmi figures, all on the way. This is what it looks like at the moment. The imperial palace there in tokyo. An asian equities are on the way up, as well, and we have got gains. It is strengthening against the euro, in particular. We have chinese manufacturing numbers out, and we have got the sydney market, about one quarter of 1 to the upside, pmi coming in at 51. 1 as the official reading, and that is for august, and it shows expansion is slightly lower than anticipated. And the straight times index is flat. Thethe hsbc measure of purchasing managers index. The hang seng is off by about 1 10 of 1 , and that is all we have at the moment. China as developers is facing a series of headwinds, saying the economy could go into oversupply, and now we have a third issue, which is rising debt, and it is one that is stoking alarm, and that is the topic of todays Global Outlook. A cloud of uncertainty. They feel this is more than the buildup. They are struggling to pay debt. This shows the sales targets with the 13 Biggest Developers in china, the end of july, and they have achieved less than half for their goals, and that is the weakest level in at least two years. And the ratio of debt to equity on the gauge of 84. It has risen to 128 , and that is the highest level since 2005. And this is along with the index, and that is a dramatic difference. Falling prices, new home prices fell in july in almost all cities across china. And 28 , that is a dramatic impact, as well, and there is word of a shakeout. Smaller Chinese Developers defaulting in the second half of the year. Morgan chase, the biggest challenge to growth. Told theire bank clients, and i quote, the whole chinese Property Industry remains challenging because inventory is still high, and some are highly geared. That is a Global Outlook for monday. I am john dawson in hong kong. The official numbers out a short while ago, and we are getting the hsbc numbers, coming in at 50. 2 for august, and that is pretty much in line with thismists thinking, and does compare unfavorably with the july reading, which was 51. 7, showing much faster expansion at that time, so we have expansion, albeit at a lower rate than we had in july. And well have a closer look at what is going on in china, and andy chang is joining us. He is with fitch. Thanks for joining us. What john was saying about the property sector there in china. What is your view . Yes, i think this is a typical challenge. Developers really faced this. Some have leveraged up in late 2013 or late 2014, but, however, because we know in 2014 there was some market downturn, they have leveraged up, and their sales cannot improve accordingly, so they will suffer from the situation. However, what i like to stress is that none of them will give i mean most of them will not give up their targets so soon because they still have a lot of inventory for sale, so i believe they will take advantage for the rest of the year to catch up with the sales target. Ok, how would you read things at the moment . Are we turning a corner . Now it isk that right not very clear. Particularly with the Monetary Policy in china. It is still about hiring at the moment, so we do not think there is a clear trend. But it must be between residential and commercial here. Tell me about that. Right now, i think commercial thanrties have more risk Residential Properties, because ross s, ande is the the second one is in proving living conditions. People are trying to improve their housing, so in this situation, i would like to rossy that we think the Residential Properties normally have thanger situations commercial properties. Ok, lets talk about the consolidation that we have seen in the industry. Is it a good thing . Question markly we think that is totally a positive thing for the longterm health of the sector, and we still see this restructuring and consolidating is moving out strongly. For example, some gradually get a read off off of their property business, and some of them are for slow developers. Like this moment, i would to say there is no immediate factor. The datats talk about we have had, the credit to falling off a cliff in july, the number of loans being issued again, just falling like a stone there, way, way below what was anticipated. How does that work out when it comes to developers . That is part of the reasons and thethe second half, Monetary Policy right now is still really puzzling. We see some loosening policies. How challenged is it . Kindselopers face these of challenges, especially for the very small and local developers because they have much more limited things than the big developers. They can only rely on that. So if the credit policy really titans, i think the Smaller Developers will be the first to suffer. Ok, default. About many ofg these defaulting on their debts. What is your view . Yes, i have a similar view as other analysts. I think the major difference between the Smaller Developers and the bigger developers is that bigger developers have more. They can approach onshore funding and offshore funding. But the small ones can only have onshore funding, and they are not a priority for the onshore banks. I think they will be the first to suffer. Andy, thank you so much for coming in. From fitch ratings. Next, dont despair the horses. We look at the five most powerful cars money can buy. Salamat, andad this is monday, the first of september, and these are our top stories. Protesters are expected to take to the streets because they say aging has reneged on a form of universal suffrage. China says it is only allowing a few officially approved candidates to stand in the election in 2017. Itsaba is delaying offering. It is expected to be the biggest ever in the united states. Prime ministers called on others to weaken the described actions taken so far as strong but said the ecb must go further. The euro has weakened almost 4 since june. Ecb policy made makers meet this week to talk about deflation. Right. Two supercar addicts. Horsepower is just as important as top speed. Lets have a look at the five most powerful cars in the world. Sounds] some of the most powerful cars in the world. And numbers were a tad weaker than had been expected, and this gauge of manufacturing on the way down. And this is why the market is up. There is a feeling out there that the chinese Central Government will, indeed, have to step of stimulus in order to meet that expansion target of, what, 7. 5 percent this year, so that is what we have at the moment, the pmi and the other readings. The show, protesters vowing to occupy Central Hong Kong. That, and more. Hello, everybody. We are live in hong kong. This is on the move. The army dominated. Trading together. The Hong Kong Shanghai takes another step forward. Will they occupy a central . The tricky issue of picking the next leader. Offer manufacturing data out of china. The latest out of hsbc about 15 minutes ago. A decline. It is actually expanding. The figures 45 minutes ago. A steeper decline that also slightly missed estimates as well. Work in stimulus in the the months ahead. That is held to change because we occupy central protests. The start of the day. Attechnically, if you look the timeline for today, we started out trading fairly soft. Volumes were not there. The markets opened around 8 00 a. M. Sorry japan and australia. A little better compared to earlier. The drivers is there. Coming out of china. Perhaps expectations up more support coming from the government hoping to avert and not in the case. The economy being property. That is what is happening across the equity markets. I want to mention taiwan. There you go. Up 1 . Heavier weighted stock. This monday morning. Showing some significant gains. Lets get into that. How it breaks down. We have massive amounts. 124. If you dig deeper, you will see taiwan. That again. There we go. Up at 3 . Taiwan has really been one of the sources for foreign investors. Net portfolio inflows, the most in asia. It is edged out india over the past few weeks. Currency markets. Dollar strength continuing. The dollar index highest since july of last year. Major. E other the dollar yen. Above that. The equity session over in tokyo. 3. 35 beforedollar, 9 the pmi numbers out of china. More political unrest following chinas rejection of a greater democracy. Beijing has reneged on a promise. Suffrage on the selection of the next chief executive. As closer look and over to asia government editor, david tweed. He is in the Central Business district. This is not really a surprise, is it . Well, there had been a great debate. Would put offc its decision and allow some will world for the democrats so they would not spur the protest. They decided that will go straight ahead and there is no wiggle room. Thats what they needed time. Thats what they had to say yesterday. It means they will go ahead with it, rish. Ofbehind you, there are lots police around. Is her expectation that it will escalate . Definitely going to see occupy central moving on , they hope to get 10,000 people to come into the streets of central and actually block central causing chaos. And, there are some people saying they would need more than 10,000 people in order to do that. The China Morning post reported 20,000 expected to come and block the streets if they want to achieve their aims down here. Is, whatght, the thing is going on with the businesses and how are businesses preparing for all of this . It has been a lot concern about exactly what form at the protest would take and how it would affect businesses. Is this is are moving into action to make sure they are not disrupted. Businesses are moving into action to make sure they are not disrupted. Me, the me, behind hsbc building and they are underneath. Go during occupy wall street movement. They going to high areas. This time around, they want to be able to. [indiscernible] scaffolding. You cannot see. Except for a couple of escalators the lead up into the central part of the building. Another landmark building in hong kong. Kong areen in hong putting [indiscernible] right in front of their building as well. Not easy to gain access of the building. It is behind bloomberg as well. David, thank you for that. David tweed joining us in a Central District here. We will have more on this and we will be talking. The founding chairman of the Democratic Party and he is hong kongat 10 10 time. We can get more on these protests and our next guest is a virginia of the new Peoples Party and she joins us on the line from right here. Thank you for joining us. What do they are doing. What do you suggest they do . Becoming a self fulfilling prophecy. They talked so much about it that they have to go ahead. I keep getting a male i keep getting mail saying these organizers do not represent us and they do not want law in order to be disrupted. You are on record as saying the only way ford for hong kong is complete democratization. Do you stand by that . Yes we are not an autonomous country. Within the limits of our basic law. I think there has been a lot of miscalculation on the part of the democrats. They act as though [indiscernible] and ifrd the basic rule there threats to beijing have caused beijing to harp in their line. Have a look, lets at this. Are you suggesting this is one step and the democratization the nextnd may be election after 2017, people would be able to choose which ever leader they would like . People have a real choice because the decisions. There must be three candidates. She said yesterday if there were only one candidate, the election would be invalidated. They are taken a big step forward in fostering real competition. I know they are disappointed but they thought because they thought it will be much reduced. Is there participation is not the only benchmark for democratic [indiscernible] a very familiar person to you and he was saying last night and i quote here you have a choice of candidates and what does the difference between a rock and apple and orange and banana . That is totally unfair. He shows his bias. They are ase different as [indiscernible] independentminded, democratic. To condemnis unfair potential candidates that way. He is also to jessica that china and beijing will keep moving the goalposts. That is also suggesting china and beijing will keep moving the goalposts. Toto allow hong kong people elect in the framework is already a big step forward compared to our colonial days. Do not forget before 1997, britain [indiscernible] the united hong kong people and the right to vote. They were governed by bureaucrats. Thank you so much. Take a giant step four. Regina ip, thank you. She is in hong kong. Getting her views to this occupy central. Beijings decision to allow suffrage and the vote. Right, Prime Minister name and his cabinet and a military government in charge of almost every piece. More from our correspondent. What to do we know . Of the cabinet members hold military or police rank and key ministers everything from economics, security, foreign affairs, education, justice. Position to know the of finance minister has been given to a civilian. He was part of the government installed after the coup. Twoerms of gender, only women in of the new cabinet. There is in a balance. He is consolidating positions, consolidating the military as well and he will continue to rely on them to keep opposition at bay. He said he will have to put reforms in place before elections or held that are held and no longer than the end of 2015. Of thecivilian in charge finance ministry. What about economic policies and what are we expecting . Should anybody be excited about this . Tax reform, boosting growth and that has been made clear. Expected anything exciting, you will probably be disappointed. Not policies that would encourage economic reform. The irony is it was first championed by a former Prime Minister who was ousted in a co up. Spree over the rest of the decade. Has escaped recession in the second half. The sense in the market is political instability is back. Look at the stock market up 11 . The biggest gain in asia. On investorsck screen. We have to look at the policies that will be implemented. Haslinda. The latest on thailand. Up next, democracy protesters abound mass action. Founding chairman of the Democratic Party will be right here with us. Back in ave is couple of minutes. The political temperature is rising after beijing ruled out full democracy. Angry protesters accusing china of reneging on his promise of universal sovereignty but because it would allow them to choose whoever they wanted. They will be handpicked by beijing effectively. Joining me is the founding chairman of the Democratic Party. Thank you for joining us. Lets start out with your quote if you have handpicked candidates what is the difference between an rotten apple and rotten orange and rotten banana . Are ana said he you affair. Of virginia said you are unfair. They do not know. They were not there. Degree have to have some of confidence surely. Anybody who is good will like to be the chief exec of of hong kong knowing he cannot serve two masters. He cannot do a good job. And really let the go and let hong kong people grow. That is the promise and to the people of hong kong. Completely departed from that. Devils advocate. Before the commercial break, our guest was saying in 1990 seven that was no democracy in hong kong. Not to much more than there is now. She has a point there, doesnt she . Yes. We are only asking for what china has promised to do. Did they ever promise universal suffrage . They did promise of this. Suffrage. And the constitution [indiscernible] the right to elect and stand in the elections. As it applies to hong kong. You cannot just give people the right to elect. Beijing picks all of the candidates. Choosing amaybe candidate and that the following the election after that. Ery slow progression do you have any confidence in that . They promised us that we 2007. Have elections in they said, no. Then, 2012 and then they said, no. Nd they are changing the goal post again. Virginia does not know that because she is too independent. Less talk and little bit about what you helped to frame. An international treaty. Not one derived out of beijing. That makes a crucial difference. You helped to frame this. The joint declaration agreement between britain and china at based on that we adopted a law together the anglo agreement . Yes. The Chinese Government wrote the declaration. We expected the British Government to Say Something about it but they said nothing. They betrayed the hong kong people for 30 pieces of silver. You are taught by the investment field. You could argue that. On theing a fault prodemocracy side here in hong kong with beijing as well on terms of a both sides becomeing tooe entrenched. If there was a little bit of leeway here . Would i promise you something and keep promising and not giving it to you and you become angry, whose fault . How can it be our fault . Broken again and promise again, and broken again. What do they say . They are fred of their and they are afraid of their own people. How are you give one people hong kong and practice that if we do not trust us . You want to run hong kong from beijing. People run hong kong. The saying its here, where do we go from here . I am happy that our young people are Standing Firm because they want a hong kong which has a future. Their future is here. If hong kong people were to kneel down and say, of course, we have elections. Even though we do not choose our candidate, hollow louis a. That would be the end of hong kong. Even though we do not choose our candidate, hallelujah. The International Community supports the system. It is time for them to Say Something. China will break. Martin, in your hearts of heart, do you think you will ever see full democracy and hong kong . If we try and do not give up, why not . Thank you. Ee, investing in, shanghai from china. A weekend trial run linking the exchanges and how it panned out. Alibaba is set to delay the upcoming ipo to answer questions. It expects the investor meeting to start next week. Pricing is set for the 18th of september. It is expected to be the biggest ever in the united states. Exchangekong shanghai went smoothly. Brokers over the weekend said mock trades were carried out with no major issues. Joining us is francis. What else needs to be done . Exchange withng the market to rehearsal. As you just mentioned. The last rehearsal scheduled on the 13th of september and participants are accounting for turnover. They joined the task and rehearsal that is part of the process for the trade. The task, youn of may see a more finalized a more finalize the version of the trading. What needs to be done . Problemsure no major happen. [indiscernible] regulator. The 13th of october. Hong kong investors are the a little lukewarm to this . The investors are more lukewarm, chinese investors. They are seeing the things this way. They have opened up a for mainland investors. A lot of state owned Enterprises Like china mobile. And a Nonchinese Companies like hsbc and for some other sectors like internet. In gaming casinos. And the luxury goods like prada or Something Like that to it should be helping. Francis, that is all we have time for. Francis chan on the Hong Kong Exchange. Is actuallys when set to start up. Up next, china may federal gauge putting pressure on the government to step up stimulus and will will head over to beijing and get the details. The rising threat to growth targets. Chinas manufacturing slipping a last month. India at of the fastest pace in it years. India at the fastest pace in it years. India at the fastest space in t the fastest pace in years. Occupy Central Group suggesting they will be doing exactly that. Protesting against the in parts byuffrage, beijing and not actually the candidates of their choice. At that the look Democratic Party. Rulehanges and he does not out changes to the electoral laws. He said a bit of wiggle room up hearing. Anyhong kong can handle illegal protest as well. Thats what we have at the moment. Now the china economy. A look at the beijing. They are perhaps having to step up stimulus measures. There are signs of his slow down. Bloomberg economist is in beijing. It was down from july. That sent off alarm bells. Significantly lower. Below what economists had calculated. Right. Coming out of the Second Quarter, a lot of optimism. Gdp revised. We saw pretty good numbers and july for some fast forward to all this and it seems like chinas recovery is over almost where itd be gone. Recovery is over almost where it be gone. Recovery is over almost where it begun. Weak pmi data. Troubling data. Translate . Does it we had a lot of people suggesting we were over the worst of it and we were looking perhaps at an uptick. What is your view . So, there was a lot of optimism coming out of the Second Quarter and the feeling the government might increase stimulus and it had done the job as there will not be any need to push the Interest Rate or increase spending because the government had done a enough to keep the economy on track and keep it on the target for gdp for the year. The key thing that could change continueds we had a slide in real estate sale. And we saw the weakest numbers since the end of 2008. And now the week pmi data for august is compounding. Tohink it is really starting raise questions about whether the government can hit the 7. 5 target without doing something more to give the economy a boost without turning to Interest Rate cuts or some kind of [indiscernible] lot forthank you a that. Comes against the government raising money through banda sales to reduce through reduce cuts. What it does is remove that finance that has been overpaid. They want to be more transparent. It is a good thing. The risk of high debt. Local Government Debt is a huge issue in china. A huge issue. A high risk Government Debt. What they can do and what due credit do is a to guaranteed to individuals and what it does do is give perspectives. It is even distribution of a risk. It replaces high debt. That is the positive. It is a quite high legal framework. To build infrastructure. [indiscernible] period. It seems to have worked out. It was created three years ago. It is working. We will see what happens. It to really has been a proactive. High debt levels. Thank you for that. John dawson. Felt, weaking itself were talking about chinas local government. The pmi numbers. Watching been marketed and the numbers out of australia and japan. One thing that has happened we have not seen is rion iron ore prices. We see a rebound finally after 96 days of declines. We are a touch of below 88 u. S. Dollars. There. G the minors a you have the chemicals and basic resources. The mining stocks. Lets get in there. Rising. All of the other heavier. Australia. A few names we are watching in addition to the mining, center Group Reported this morning out of australia that it is in talks with singapore on the new [indiscernible] that is something you may want to watch closely. Basically trading at a dividend here. Perhaps a technical move. That is the usual case. Showing a bit over. We are closing out the morning session. The story here, the website, they may have sold food, mislabeled food. Grown have shown rice domestically. Mislabeling is how they are phrasing that. Nintendo is off 1. 6 . If you are a fan of the new 3d s, the hand held gaming console. Loss. Ing its net their target is still a little bit of below. Perhaps that is contributing to shares. The rate of inflation will be announced later on. They seem to have seen a bit of a slow down. It is a bit more benign. We will go to jakarta. What are we expecting here . Good morning. Inflation data will be released with expectations of lower in august. According to economist surveyed by bloomberg, it is exacted due toxpected at 0. 42 declining prices after the month of ramadan. Forecasting lower inflation and the reach of 0. 3 . The government estimates inflation will be maintained or lower than last years inflation. There is the potential [indiscernible] after failing to convince the president to share the burden of and is he is known considering subsidies to raise orl prices by 500 rupiah less than . 35 per liter. They set the price would be finalized before the inauguration. There will be an increase in fuel prices that could added to inflation. Shrinking fuel subsidies, much needed rome to fund a program to improve infrastructure and access to health care and education. 1 trilliondd 14 rupiah. 34. 9 billion u. S. Dollars for subsidies into the 2015 government. In hong kong. Thank you very much indeed for that. Data focusing on wall street. Lets get you up to speed on what is coming up and the united states. Yang yang has our preview. And the crisisg in ukraine and the middle ease jobs are this weeks in u. S. Themes. Mondays is the unofficial end of summer when the markets will be close. On manufacturing front on tuesday, new data should show august manufacturing was near its highest level in more than three years signaling a pickup in the economy and central banking meeting on wednesday. The Federal Reserve will clean them out with is major book conditions giving the Opening Committee and anecdotal septembern before its meetings in washington. Also on wednesday, president obama will meet with the president s of lithuania and a lot of you latvia before a today nato leaders summit. Baltic leaders have expressed concern and they might be russias next target. The ukrainian conflict will be the subject of day one talks. Nato leaders will huddle on the Islamic State threat in iraq and assyria on friday. We close off the wig with the august job support and economist 00 jobs were added and a drop in the Unemployment Rate down from the current 6. 2 . We will be followed all of the news for you on bloomberg television. Back to you. At top corporate stories we are following for you. Scandal that affected make donalds and k make donalds and mcdonalds and fc, six executives have been arrested. Many companies have cut ties. Of of the potential buyers the largest latin american cell phone provider. At t is another possible buyer. Last month, they scabbed they scrapped our boy is said to of teamed up to create apple [indiscernible] details could be announced next week at the launch of the iphone 6. Where we have common goal. Malaysian shares will resume trading. What we have coming up. A closer look when we return. This is on the move. The restructuring plans for Malaysian Airlines to convince investors. The other top stories we are covering on bloomberg. It is monday, september 1. These are the top stories. Theyre reading on manufacturing out of china. The latest from hsbc shows activity showed a slight decline. Steeper declines that missed estimates. The figures signal more chinese stimulus in the months ahead. Protesters expected to take to the streets of hong kong after china rejected greater democracy for the city. They said that china has reneged. Is only allowed a handful of preapproved candidates to stand for elections in 2017. How investors will react to restructuringines plan. The majority owner said it the carrier will cut 6000 jobs. The 20l impact of disasters is expected to be seen in the second half of the year. Right, Malaysian Airlines. [indiscernible] a former chief economist is joining us. Tony, does Malaysian Airlines, what are the chances it has of surviving even though it doesnt go through the restructuring phase . Whenever it you have a government support, you have a strong chance of surviving. 370 and 17, before that they were relatively strong. I think it stands a risible chance as long as the government is getting behind it. Actually have to do here when they go private and a tinker around . What in your opinion do they have to do to really topple, first of all [indiscernible] before mh 370 going missing, one of the dominant reasons or the real earnings pressure is because the key competitor is air asia. Available. Whats malaysia has to do is take cost out of his business and it was mentioned and the 12 point plan, it has to rejuvenate its revenue stream. Take athe key is really lot of cost out of the business and cutting is labor force by 30 and that goes a long way in doing so. How do they rebuild their brand . Think it will take they need to do a lot of things to rebuild their brand. First of all, they needed to demonstrate to passengers that they have and they are going ,o restore their Safety Record quite clearly that has come under pressure. The issues around image 17 and image 370 even though itlls not entirely their fault. Rebuilding safety and issues. All will take some time. What will sing since march of s year is deterioration what we have seen since march of this year is deterioration and a reduction any yields. 10 and 30 . When you have a devastating yields and reduction of that magnitude, you know it will take some time to rebuild this brand. The 12 pointook to plan, didnt you like it or did it go far enough and at the same time, it is about implementation act of the end of the day, isnt it . That is exactly right. The 12 point plan is saying the right things. The ability to implement and make a work is the crux of the issue. There are couple of ways they couldve taken it a bit further. The best airlines in the world and the airlines that really want to rejuvenate their earnings are those in the best position to deal with elevated fuel prices. They need to reassess the Risk Management functions and put exceptionaln hedging team. They need to put in place at capacity plan which is a flexible so they can have the up and down in oil prices. When they restructure, they also talk about complexity. That is another revenue of Cost Reduction and Malaysian Airlines can reduce their complexity and take some of the cost out of the business that depend on complexity. You mentioned capacity. Is it too much capacity and Southeast Asia . InSoutheast Asia Southeast Asia . It is the worst i have seen for some time. Much of it has to do due to air asias rapid growth. They have been growing by 80 since 2004. That is longer than average. Most airlines in Southeast Asia including air asia, malaysia itself, singapore airlines, these carriers have a lot of earnings pain because of a lot of access capacity. Thank you for joining us. alking about Malaysia Airlines restructuring. Right, other airline news. Australia and japan and china being disrupted by a volcano in new guinea. Back into life sending a column of ash and smoke. Which includeds sydney to tokyo and shanghai to avoid the volcano. It last erupted in 2006 and destroyed a town in 1994. Coming up next, turn into japan as it looks to boost growth. Ministersthe prime agenda as he meets his counterpart. Trading over in mumbai. We will have a look at indian growth coming in which is stronger than expected. Hat is positivity cnxthe last trading day and is down a fraction. Prime minister is in japan as he looks to cement ties between the two countries. What is on his agenda . A good day. Good morning. The Prime Ministers visit to japan could very well be the start of two countries who are coming together which is a degree of closeness which will really shake the balance of fire and instability. [indiscernible] and ae see between modi shinzo abe. It is only three persons on the reform and what is likely to be discussed as a visit. Bilateral relationship with a japan and the newspaper said that shinzo abe and modi are likely to raise the meeting framework to a level from the Prime Minister and of the moment opening up the economy for more investment by japan and join the agenda to really double the number of Companies Operating in india over the next five years. On the eve of doing business included great Regulatory Development ind indian projects like highspeed bullet trains. Most likely to feature as a part. Very much for that. Joining us from mumbai. That is it for this monday edition of on the move. Stay tuned for asia edge. We will recap the big stories. Asiapacific of with j. P. Morgan chase. A look of victoria harbour. The middle of the trading day and this is asia edge. I am rishaad salamat. Our top stories. Losing momentum. Cooling in august. More gains. Asian stocks resume their run. Protesters in occupied Central Hong Kong. I am angie lau. Much more on a hong kongs suffrage story. We will hear from all of the Major Players including martin a lee, the founder of the Democratic Party. Thaticroscopic particles are entering the food chain. A special report. Getting away from it all. We revisit welcome be the most isolated hotel. This monday edition of asia edge. I am watching the markets. I am exact i am exaggerating, a good start. Came out ofpmi china, things started to turn around for the better. Another good session over in taiwan. Something that has become quite common. Inflows intoet taiwan. The most in asiace