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tv   Bloomberg Markets Asia  Bloomberg  September 14, 2017 9:00pm-10:00pm EDT

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♪ it is 9:00 a.m. in hong kong. our top story, north korea launching another missile over japan four days after tougher sanctions. washington calling on china and russia to take action. and markets,sponse 1.10.r-yen above our global disruptors series, alibaba founder jack ma, his plan for international expansion. this is "bloomberg markets: asia." ♪
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we thought it was going to be a quiet friday. i would not say there is a lot someise, but there is movement into safe havens. dollar-yen outflows coming through. ind is up, a move down -swissie. suisse on theedit japanese markets and how they are changing their outlook there on japanese equities. , 4055,look at my chart very straightforward. credit suisse is saying if you
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look at the headwinds facing japan, whether uncertain boj policy, a diminished case for a weaker currency, strengthening since the summer, and we've been 1.10, a flatlining in the markets. you take those two things together and look that the buybacks are tracking lower compared to last year, so it is benchmark right now. we are no longer overweight japanese equities. unsurprising as we move into the open of markets in china and hong kong come 30 minutes away from that. singapore, malaysia, taiwan coming online. , sophie take us through those numbers. sophie: the yen easing gains. markets.d response to
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management says this is a continuation of provocations, not an escalation. it, itarkets will like is not a precursor to a call back. led higher bys health care and industrials, but korean assets under pressure. , it hasn debt risks risen by the most in a week on this north korean missile test. the cost to ensure five-year debt has risen by 1.5 basis points. in the currency space, the korean won on the back foot along with the aussie. while the won has lost .7% this month, it is still up 6%. as pyongyang ramps up its rhetoric, putting a dent in
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other asian currencies. still gaining momentum in september, leading gains in the asian space here it j.p. morgan has upgraded its forecast for 80% of asian currencies in september. they have upgraded 57% of emerging-market currencies as a contrast. not doingen bitcoin as well. here is a look at the downward trek. sixthn has fallen for a day and now in a bear market after losing her for 27% since september 7. much after a chinese bitcoin exchange said it will halt trading. the motivation for the
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clampdown is unclear. this comes in the midst of china's attempt to curb financial risks. jamie dimon the latest to say he is not along with what is going on in the currencies. david: thank you for that update. the latest lines on the north korean story. the un security council will be meeting 3:00 p.m. friday on north korea. south korea urging north korea to come to talks and talk about scaling down there nuclear program. we will get you the details when we get those. let's get you caught up on first word news. rosalind: how for bed has held conversations with lyft on potential investment. the google parent is considering an investment of $1 billion. the source of funds will be google or g. -- or g. how for that and lyft have not
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commented. president trump says he is close to a deal with congressional democrats to permanently safeguard from deportation one million immigrants. he is not linking funding for his border wall with reinstating the protections known as daca. leftresident steelmaking republicans fall mixed as he issued several contradictory statements. >> we are working on a plan for daca. people want to see that happen. you have 800,000 young people brought here through no fault of their own, so we will see how it works out, but we will get massive border security as part of that. the president says he has not made a decision on the next fed chair. he told reporters that he respects a janet yellen and the stock market is doing very well. earlier this week, stephen mnuchin said that janet yellen
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was among the people they consider to run the central bank after her current term expires in february. rivala says alibaba's tencent are learning from each other in the financial services market. he said alipay spent 10 years on competition is welcome. bloomberg spoke exclusively to the alibaba founder as the company marks 18 years in business. we are learning a lot from 10 and they are learning a lot from us, so if we can work to get the whole society based on the trust and credit, that will make the market much bigger. rosalind: global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. back to our top story.
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north korea has fired another missile over japan before 7:00 a.m. tokyo time. it flew over the northern island. it landed 2000 kilometers in the pacific ocean. the un security council will meet friday 3:00 p.m. local time. the u.s. secretary of state is calling on china and russia to act as well. we have yet to hear from those two countries. indid hear from shinzo abe tokyo that the launch is not acceptable. >> if north korea follows this way, it will not have a bright future. this is a message which should be sent to north korea to make a change it stand. japan and russia averaged common understanding that we would cooperate closely. david: let's start a conversation on this story. snyderjoined by jodie
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and our managing editor brian fowler out of tokyo. brian, let make it started with you. a lot of people are wondering why the japanese don't shoot this down. chart defensed to spending in japan relative to korea and the united states. have a look at this. as we can see, it has stagnated since the 1960's. to thef this comes down pacifist constitution, but when you are up against the wall, why don't you shoot this thing down? >> there are two reasons. first, if japan launches a projectile to take the missile out of the sky, it starts to look like a shooting war and there is a risk the whole situation could spiral out of control. the bigger factor is the risk that such an attempt might fail. japan has a couple of missile
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defense systems to deploy. it has ground to air and ship to air, but for the systems to work, there are two times when it would be most likely to succeed, when missiles are taking off, and otherwise when they're coming back into airspace. to shoot down a medium-range missile as it's flying at peak altitude through your airspace, it is very difficult to the risk is that it japan attempts to do so and fails, it undermines all confidence in japan's ability to handle the situation and place into north korea's hands, so it is better to observe, collect data, and then take it from there. david: what is the feeling on the ground? are we seeing deepening outrage at the second time in a few weeks? or is there a sense that because of that people are getting used to this? reacted, then
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bounced back comes to maybe investors are becoming a little notused to it, but that is the feeling on the ground here. one of japan's national dailies had a front-page story today with the headline citing north korean propaganda that said sink korea was vowing to the japanese system of islands with atomic arms, so it is on the minds of people here, the escalating risk, and the pressure is on prime minister abe and his allies to do something. david: brian, right. heard from the u.s., from the white house? heard from secretary of state tillerson, calling on china and russia to do more on the sanctions, which was the expected comment. this is something that the white
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house has made there talking point, that china needs to do more and step up sanctions passed the other day in the united nations to get the approval of china and russia that would not go along with an export oil pan, and the white house has ramped up their talk about that weird -- about that. ofid: the definition insanity is to keep doing the same thing and expecting a different result. as the nature of the threat changed in terms of an icbm threat from north korea, given that it wants to provoke further? >> the test earlier this month through that this is a real iseat and that north korea raising its provocation level. the question is whether the .arheads would survive
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that question, but the u.s. is in a position where they really don't have a lot to do but continue this war of words and try to push for sanctions. china has made it clear that they will not go for the export oil band. david: brian, we saw pictures session so i'll be arriving from abroad. what is the position of the japanese government. >> japan wants a measured response to this. it wants to achieve a collective response, so one of the big risks his north korea was to drive a wedge between china and the other parties who have an interest in this dude we saw not only rex tillerson, but prime minister turnbull of australia, say that china is in the biggest position to influence north korea, but the key thing is for the u.s., china, and russia to
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take a coordinated approach to this and send a signal to north korea that no one is going to tolerate this sort of thing. japan's position is consistent with that. david: thank you for coming on the program. ahead, we will be talking about the head of the largest milken summit in singapore. market reaction from north korea, where we go from here. a new look at how technology might he reshaping your investment landscape in the decades to come with goldman sachs has set management. that is next. this is bloomberg. ♪
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♪ david: this is "bloomberg markets: asia."
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more on the market as we move into the fourth quarter. ofare joined by the managing fundamental equity at goldman sachs asset management. thank you for coming in. i thought it was going to be quiet. northe to talk about korea, but markets taking this one in stride, a measured reaction. you put out this latest report, will it last is the title. will it last? >> we were trying to help clients understand the growth environment and world capital markets. taking a step back, one of our in a is we would be synchronous growth environment and have all regions of the world going together come and that would be good for risk assets. that has happened. while there are challenging
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geopolitical headlines, underlying growth has been robust in the broadest environment in the last five years. on the back of that, we like equity over credit and credit over rates. positive,e to be very and the good news is that that strong growth environment has supported earnings, so this year as an equity investor, i'm interested in the fact we have the first year of double-digit earnings growth in global markets then in the last five years. that is the good news. the challenging news coming back to the headline, will it last is that valuations are demanding, particularly in our largest -- we can call it expensive. particularly as it relates to u.s. large cap markets because thy ua shinzo in the 99th necessary, so it is
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to look beyond markets for reasonable violations. david: where is that? >> if you look at value for example, there are still some good opportunities. value within the u.s. is trading at a 30% discount to growth, the wider since the tech bubble in the early 2000's. we see opportunities there. going down in market cap in the u.s. is interesting. if you look at small-cap companies, they always trade at a premium, but that premium has shrunk. is other interesting things they have an effective tax rate of 35%, whereas larger cap companies have a tax rate of 26%. why does that matter? they are pricing in the possibly of tax reform. that was priced in that the end of last year, and has not in priced in this year, so we think there is the possibility of tax reform. major expectations of
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deliverables drove valuations up , 22 times. we have not gotten any major deliverable, but yet we are here. what is driving a valuations? how high can we get on large and small cap? >> what has driven valuations, earnings ultimately have been supportive, and then of course the part of the market that has performed best is tech, and there has been support for that story. to your point, what hasn't rallied and what has sold off is the part of the market that would benefit a lot from getting some part of this agenda through. i think the markets are too pessimistic on the possibly of any reform out of washington. we want to be overweight value and fee and be in the smaller cap part of the u.s. market. the u.s. over all still is expensive, so investors have to look yonder the u.s..
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would pointhat we people to is japan. i just been a couple of days there earlier this week. in a world of valuations, japan is at a 20% discount relative to the u.s. one thing i'm observing this had a rally we have in japanese equity markets at the same time we've had a strong yen here at that is quite unusual in the historical context of the japanese market, so it is telling as this rally in japan could be more sustainable. david: we will talk more about that. you are sticking around. many more ahead. this is bloomberg. ♪
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david: breaking news out of australia. this cd 00 fortescue metals will be stepping down in february -- and the ceo of fortescue metals will be stepping down in 2018. let's continue our conversation on the broader markets. just very quickly come your thoughts on the pickup in inflation and whether that changes anything for you. >> inflation and a measured way can be good for equity markets and shows the growth story is real. as equity investors, we are ok with some inflationary coming through. is a case to there be made that market will rally. the other part of the
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conversation is that it is structurally on a downturn. which one wins out? japan is an incredible opportunity because it is a market where we can get equity returns without a norm us topline growth. the reason we believe that is there is opportunity for corporate governance reforms. our return on equity has doubled in the last five years because they have started to run these companies better. we think half the market has done that and is making progress, the other half still has room to grow. forthat can be a big driver japan equity and you get it at a 20% discount to the u.s.. what part of the market should you be looking at? other interesting parts about japan is that it is
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exposed to the secular growth themes. specifically automation of factories. 3000 per worker for japan makes robots and will sell it to china and the world. robotics, automation, electric location of vehicles, and the emerging-market consumer. japan has exposure at better valuations. is there a level of dollar-yen that makes you abandon these optimistic calls? know, what is interesting is the decoupling of the japanese equity market and the yen. we are positive on japan. david: let's leave it there. thank you for coming on the program. , he has made history in the philippines and we are live to the milken summit to speak with the chairman and ceo.
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we will be live out of singapore for that chat coming up. plus, the market open in hong kong, china, and manila. this is bloomberg. ♪
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david: it is 9:29 in the morning in hong kong. manila closed at a record high yesterday. cloudy day, 28 degrees. our version of autumn in the city. markets fairly sanguine. we are up on the week. we will see what happens. i'm looking at the premarket. some downside, unsurprising given the run-up we have seen. two days of marginal declines across the benchmark. we are a little above water on
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the week am a but that could change from here. that being said, one data point, have a look at my bloomberg. pointl be getting at some money supply data out of china. 's and aggregate financing as well. is thellion renminbi number we are expecting. in the meantime, let's get it to the open of markets with sophie. sophie: when you look at the big picture, asians stocks set to snap the today loss. a mixed picture when it comes to equities. the hang seng extending its drop for third day, down .25%. stocks see how chinese are faring, large cap losing ground, down .1%, falling for a second straight day. fix,it comes to the yuan the offshore losing a bit of
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ground, but mostly stable this morning am attracting dollar weakness as investors are overlooking the softer data out of china yesterday. when you look at the onshore rate, we are seeing that fall .2% so far this friday. when you look at the big picture once more, several market shrugging off that missile test from north korea. japanese shares set for the best week since june. the nee nikkei 225 gaining. the malaysian ringgit the best currency and asia, gaining .2% this morning. rising with malaysian stocks. earlier, we had the deputy ceo expressing confidence in asia given the figure growth picture. the fundamentals are not entirely overlooked by geopolitics. a closer look at some stocks in hong kong.
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we have the move in the premarket session. , goldman sachs, and maybank raise their price target today. hsbc says it is positive that it will maintain its lead in the years to calm. agile group rising after announcing its spinoff plan. flipping the board, fortescue shares after the company said the ceo is to step down in february 2018. shares falling for a third day there. david: thank you for the update. lots of corporate news, but the top story is north korea. let's get an update with first word news. rosalind: north korea has fired its second missile over japan and as many months four days after the united nations approved harsher sanctions. japan said the missile flu over and landed in the pacific ocean. command says it was
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in intermediate-range missile. the united nations security council will hold an afternoon meeting. rex tillerson has called on china and russia to take action on their own. mexico have crippled a u.s. proposal to include a five-year sunset provision in the nafta agreement. commerce secretary wilbur ross is the u.s. is unlikely to quit nafta has allowed in the current agreement. he has also confirmed that he will travel to china with president trump in november. japan and india have agreed deals on transport, trade, and security. narendra modi and shinzo abe said they will take action on north korea without giving specifics. global news 24 hours a day
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powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: our next guest runs the oldest business house in one of the country's largest inglomerates with interests real estate, financial services, infrastructure, and health care or it let's go over to the milken institute asian summit in singapore where it -- singapore. haslinda: you said it. real estate, finance, but what you don't know is that it has been investing heavily in manufacturing. why? the ceo joins me this morning. good to have you with us. why diversify from your strengths? >> if you go back to our structure as an investment come any, our reason for being is looking at industry and seeing
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what disruptions take place and have the chance to overweight investments in that sector. the telecoms space, public utilities face, once upon a time in real estate, banking. we are seeing a shift taking place, particularly in the automotive sector, a massive the endking place from of the industrial combustion engine and the move to electronics as the main driver of cars. we have a number of automotive assets in our portfolio. susan, and honda, is basically hadthat businessiring 50% of in that space. we decided to take it manage of the disruption of build a portfolio around the space. haslinda: how big do you want to be? >> everything has its own
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momentum. it is like an organism. if capital gets used properly, you put more capital behind it. we have committed 150 billion dollars to the sector and have bought a couple of medium-size companies, two in visual displays, another in the automotive space and are supporting that with th experts on the electronic side. the are making a bet in the industry it -- industry. we built a nice partnership and are building components and making motorcycles in the philippines. it is an interesting new play. we are a midsized layer in this sector, a successful one, and would like to overweight the sector that is going to massive disruption or it haslinda:
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markets like indonesia and thailand are the ones dominating car production. do you see competing -- >> we are making a play in that sector. we believe they will remain relevant, but the equipment they have today will have to be changed. the engine is changing dramatically. the chassis is changing. electronics are driving things, not the original moving parts. once upon a time, a car engine had 2000 yards. will have lessit than 100. it is a very big change. will havef equipment to be changed dramatically, not incrementally. you are looking to lead southeast asia and producing green cars? >> i would not say looking to lead, looking to participate in that shift. i'm sure other countries will do the same. we have built over the last decade and a half strong
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expertise in that sector. portfoliocts in the with plans and eastern europe in the philippines and china have then some line the automotive industry in europe and germany are many years now. we have some very strong relationships are at those things take a long time to build up. it is an interesting new play for us. when do you see yourself participating in a significant way? >> we are already participating in a significant way. the car building company in germany is a tier one player in supplying the industry directly, major names. we arely in the display, a major supplier. and electronics, we do a lot of electronics, including cameras that drive many of the cars you drive today. i would consider ourselves a major player.
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certainly a major player in supplying that shift taking place in the industry. china recently said it will put a deadline on fossil fuel cars very soon. what kind of potential do you see in the chinese market, especially given there is a better relationship between the philippines and china now? relationship is important for a host of reasons. we have already been a player. we have a strong relationship with huawei. we are a new partner of alipay, the only partner in the philippines and we are looking to develop the micro finance industry in the philippines we have names we are proud to be working with already. chinae four plants in feeding the telecom industry there. belt and the infrastructure
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play. we are looking to participate in this belt and road initiative of china in the hopes that the infrastructure will come to the philippines. the new relationship we have with china is conducive to that. there is discussion about ports, roads, rails. we are part of that discussion we have party participated in the philippines, and why not do it with chinese counterparts as well? haslinda: we thank you for your insight today. there you have it. big plans. back to you. thank you for that. we have another big interview coming up this weekend, the conversation with ray dalio, the billionaire and cope founder and chairman of bridgewater associates. that is on sunday.
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speaking of guests, coming up, our next guest says there are great opportunities when it comes to the credit space, but smart investors need to look beyond relative value. there we go. that is your next guest. that's after the break. this is bloomberg. ♪
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david: this is "bloomberg markets: asia." let's get you caught up on the business flash headlines. fortescue metals says the ceo will stand down. is consistentn with its long-term succession plans. shares down more than 2%. the climbed more than 6% since he took the ceo job in july 2011. an investor group led by chemchina is now looking to
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raise $3.9 billion from a sale of up to 40%. shares of the obtained company will be sold between $7.50 and $10. it was delisted after being on the italian stock exchange for 90 years. considering the sale of a auto-parts business with the price tag of $1.5 billion. sources have told us that he is working as an advisor on that sale. the company makes engine gaskets and sealants. he does not believe we are heading for another technology bubble here it the company shares have doubled
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despite short-sellers saying it is all poised to fall. our chief northeast and asia correspondent spoke with jack ma during alibaba's 18th anniversary celebration. years,ink the next 18 globalization and credit will be better because of the internet. , we should vision build an electronic role trade platform. we are making sure small business and young people can benefit from that. 18 years is enough for us to improve globalization. i believe when trade stops, war starts. what is the u.s. strategy right now? u.s. small and medium-size companies to sell to china. to the usant to go and be a local e-commerce company, which amazon, ebay,
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nice, interesting companies are all over the usa. we don't want to take on amazon now. how about entertainment? withu had at partnership amblin entertainment and steven spielberg. you have in the tortoise there. what is your strategy? entertainment ali for 10 years. going theret is not to buy a movie company, by this and buy that. stuff, souy all the you have to learn from them to do have to partner with them. there is a lot china entertainment can learn from hollywood and should partner with them. >> you talked about the coming winter in 2007 when you listed
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also, the infrastructure of the better thanmuch 10-15 years ago. , ifou are not that greedy you're not that stupid and crazy , it is easy to survive today. that was the founder and executive chairman of alibaba jack ma speaking exclusively to stephen engle. you can catch more of our half-hour special coming up later today, alibaba, khmer 6:30disruptor, p.m. hong kong time, and 5:30 p.m. if you're watching out of new york. this is bloomberg. ♪
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right, golem capital is one of the leading middle-market lenders with $20 billion of
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capital under management. back to the milken summit in singapore where we are standing by with the company ceo. we are running into some technical problems and will get you that interview when that does come through. in the meantime, there is lot to talk about in the markets. when you look at where equities have gone, it has been a fairly good week. wednesday lacked the momentum to carry through the rally, but we were already at a 10 year high. they are already at two standard deviations of the 10 year. thisere not seeing dropping off in the correction despite the macro risks out there.
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to thecounting down market open at the top of the hour, indonesia appeared philippines is party running. -- indonesia. philippines is already running. make announcing plans to theeries 40 emission cars, president said the company plans to team up with a carmaker in china to join the market. we believe that the new energy vehicle is an important direction for our company's development in the future. we are discussing details to cooperate to do cooperation on tv projects. we will bring our advantages to push the technology and innovation. the competition has already been very fierce in china.
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we need to employ strategies different from our solar manufacturing when entering the electronic vehicle market there it -- market. >> are you aiming to be the tesla of china, or is it a different vision? >> gcl is not hugely ambitious in the second or. we simply want to take heart in the fast development of the energy. tesla has great practice in the electronic vehicle manufacturing. we choose to follow our own model instead of copying the tesla model. >> how do you see things developing in the sector broadly given different factors? >> solar energy is definitely becoming one of the basic units of global energy in the future. therefore, we all believe it has itright business prospect. is common to see market fluctuations in phase global competition, but we have remained extremely competitive
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as we always seek to optimize or business structure and reduce possible risks. pricesr cell have been pressured, but they started to inch up marginally. do think that price increase will be sustained? at the long run, the prices of solar products will continue to move downward as a result of technology improvement. development of capacity and growth of scale are still dominating the industry despite to the slowdown we are seeing at the moment here it -- moment. >> there is pressure building in the u.s. to put tariffs on imports. how concerned to be and what impact would that have on your business and have you taken steps to mitigate potential u.s. tariffs? measures of trade protection have party exerted certain
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impact on relevant industries and business. we hope governments and international agencies can take effective actions under the wto framework to into the practices of antidumping and anti-subsidy worldwide good -- worldwide. presidents the speaking exclusively with tom mackenzie. one feature we would like to bring to your attention is our interactive tv function. you can catch everything you , including this exclusive chat, but securities and charts and other functions we talk about here on the show. bottom left also take shoot --
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takes you to the questions. sin those questions through and we will try to get them in the conversation with our guest. keep in mind this is for bloomberg subscribers only. .heck it out tv let's get a pulse check on your markets. break,entering lunch tokyo, last 30 minutes of trade, up 13 points. the dollar yen whipsawed below 110, now at that level. algorithms exacerbating the move down, so we are back to normal so to speak. big a look at sydney, the story is the ceo of fortescue metals announcing that he will be stepping down come first quarter next year. let's look at hot and humid morning over the lion city and singapore. peered downgy today
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.7%, markets lacking a bit of heat. , hong kong, the hang seng is doing that. more coming up. this is bloomberg. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: president trump posted today a bipartisan roundtable of lawmakers to discuss tax reform, health care, and infrastructure. this evening, the president will meet with house and minority senate leaders, nancy pelosi from the house and chuck schumer from the senate, to hear further input from the democratic leadership on daca and health care. president trump tweeted that the -- this morning that the approval process for the biggest tax cut and tax reform package in the history of our country will soon begin. move fast, congress. last night, president trump welcomed republican and democratic senators to the white house as his adminis


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