tv Asia Edge Bloomberg April 12, 2015 11:00pm-12:01am EDT
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their longest winning streak in a year. angie: i'm angie lau. also coming up, in the race. hillary clinton releases of video confirming she is taking a second tilt at the white house. whodunit? a massive hacking campaign is revealed, targeting southeast asian governments and businesses. and, losing the plot. almost half the new season of "game of thrones" leaks online meaning millions of illegal downloads. all that and more in this edition of "asia edge." rishaad: march exports way below expectations. christine is in beijing with the details. we were expecting growth of 8%. instead, we got this shock double-digit near 15% contraction. christine: march exports fell 15%. $145 billion.
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they were looking for a 9% rise. imports fell 12.7%. estimates were for 8-iron percent -- for a 10% fall. that is most likely due to falling commodity prices driving down the value of imports. that brings the march trade surplus to just over $3 billion. given that 60 billion dollars surplus in february, economists were looking for about 60 billion. economists say the march drop is due to that timing of the chinese new year. they say the international market demand is weak. export orders are falling and all the late -- and only the u.s. market is doing well right now. this shows underlying weakness in the manufacturing sector. the overcapacity, there is a lot of hide labor cost, high financing cost. customs officials said exporters
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are losing orders and all these higher costs are hurting trade. we of course see weakness in the eurozone and japan hurting trade. pmi has been weak -- [no audio] rishaad: clearly we've got a technical gremlin in the works. let's get back to the markets. here's zeb. zeb: the export numbers disappointing investors. you are seeing it no more so than in the australian dollar. i'm going to get out the red pen. look at that drop. i tried to make a circle. you see the move on the australian dollar. it is down over 1%. the aussie headed for its steepest drop in two weeks. take a look. nearly $.76. take a look where it was on friday. this is filtering through
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modestly to the stock market. let's look at what is happening on the china enterprises index in hong kong. these are the shares the chinese companies listed in hong kong, that are seeing a buying frenzy. you are seeing a modest pullback on the trait number. consumer services chairs, utilities, telecoms, seeing the biggest declines at the moment. these are declines within this index. financials still powering ahead. we told you about china merchants bank. look within the financial elements. banks are where the action is. china construction and the star performer here, china merchants bank. shares of about 18%. let's look further at the broader markets. this is what is happening in hong kong, shanghai, and across the asia-pacific. southeast asia with some modest downside because of those chinese trade numbers. that index is modestly lower.
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the nikkei in a lunch break right now. shanghai continues to rise. it is a 1.3% gain on the a shares. the hang seng index of 0.3%. we come off the best weekly performance of the hang seng worldwide last week on this optimism this buying activity in chinese shares. even with this move lower in exports, investors continuing to buy into this market. rishaad: thank you. we are going to get you back to beijing. we are going to have a look at the trade data, christine. let's have a look at what this means to gdp. what are people telling you about whether this trade position is going to improve? christine: the bureau has said that while uncertainties do exist in the second quarter, the export momentum, second quarter exports are improving.
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it remains to be seen how much of a improve. at the same time, we have seen the world bank cut the china 2015 growth forecast to 7.1% from 7.2%. they are saying that china may need stimulus measures to counter risks, and they need to make efforts to meet trade targets. we are expecting first-quarter gdp numbers on wednesday to rise 7%, very much in mind with the government target of 7% for the year. whether it is going to be easy to meet that target is the question. china is doing plenty to try to meet that target as it tries to sustain growth in the underlying economy. manufacturing sector, a lot of weakness, a lot of structural problems. at the same time, they are trying to set up an initiative to boost fiscal spending, inject some growth into the economy. we will see if that works.
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the world bank has said that that and other infrastructure spending will help china's economic growth. we will see what those figures say on wednesday. rishaad: christine, thank you. angie: the world bank sees slower growth for emerging east asian economies this year. it says china is the cause. let's get to has haslinda amin. what else do we know here? haslinda: well, like we said earlier when china sneezes, asia catches a cold. growth is set for 6.7 percent down from 6.9% last year. it is because of a cooling china. china's slowdown is significant enough that it is causing -- even with cheaper oil, with a recovery in the u.s. as we've been reporting china's policy to ensure more sustainable growth tackles financial
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vulnerability. the world bank says, expect china's growth to slow down as well. 7.1% this year versus 7.4% before. even with growth being a tad lower for developing east asia the region will account for a third of global growth, twice the combined contributions of all other developing regions. southeast asia is poised to gain from a drop in energy prices. that will boost demand. not looking too bad not looking dire for developing east asia. angie: not dire right now, but what about risks ahead? what is the world bank saying there? haslinda: there are significant risks. the world bank says the weak european economy is a risk. also a week japanese economy. and don't forget the rising u.s.
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dollar. that may raise borrowing costs, beat financial volatility. we are seeing it happening so many times before. massive capital outflows. that may happen yet again, more sharply than you think this time. also, a risk. if china were to slow down more significantly than it is now, signs are pretty encouraging that won't happen. it has policy buffers like large foreign reserves, ability to deploy stimulus. china's central bank has cut rates twice to boost the economy. the china risk, pretty muted at this time. angie: ok, thanks for that. as haslinda amin there, world bank reports coming for us live from singapore. later this hour, we speak with the east asia and pacific chief economist for the world bank. sudhir shetty will be joining us
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live 11:30 hong kong and singapore time. rishaad: hillary clinton has ended the suspense announcing she is seeking election to the white house in 2016. clinton is spending the next 6-8 weeks reaching out the murders -- reaching out to voters in early voting states. she promises to put middle-class americans first. >> i'm running for president. americans have fought their way back from tough economic times but the deck is still stacked in favor of those at the top. everyday americans need a champion. i want to be that champion. rishaad: turning our attention to sharp now. it has fallen from a two-year high. the apple supplier plans to buy a 10% stake in sharp but wants to have a say in how the company is managed. sharp says that it plans to seek
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government help to spin off part of its liquid crystal display business. sharp is looking at its third annual loss in four years. netflix looking to make its shares more attractive to the average investor. it will do that with the help of a huge stock split. look up and he has asked investors to approve an increase in share authorization. there are currently 170 million shares in organization -- currently trading at about $454 a share. analysts say a split would make netflix more accessible to retail investors. angie: still to come, spoiler other. episodes of "game of thrones" leaked hours before its premiere. more on that later in the show. next, losing steam. china exports take an unexpected dip. more reaction after this short break. you are watching "asia edge." ♪
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rishaad: the summit of america's has wrapped up in panama after a meeting between the u.s. and cuban presidents. they shook hands following the first such talks for more than 50 years. castro said the two leaders agreed to disagree when necessary. obama will make a decision soon on whether to remove cuba's designation as a state sponsored by terrorism. angie: turkey has recalled its ambassador to the vatican after the pope called the killing of armenians the first genocide of the 21st century. historians estimate that up to 1.5 million armenians were killed by ottoman turks around the time of world war i. turkey criticized the pope for what it called spreading hatred. rishaad: a germanwings plane was
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stopped on the runway and searched on sunday after the carrier received a bomb threat. the plane was about to take off for milan. all passengers and crew got off safely. police found no signs of explosives. last month, all 150 people on board a germanwings flight died when it crashed in france in what investigators believe was a suicide by the copilot. angie: back to our top story, the unexpected march slump in china's exports adding to the strain on its slowing economy. we are joined now by hsbc's cohead of economic research. fred, is this a case of bad news preceding good news? fred: the stock market already seems to think so. we have seen expectations of more easing by china being ratcheted up. i think this number underlines the downside risk for china. it feels as though officials in beijing are taking note of this
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weakening economic data, not just on the export side, but also in the real estate market. easing is likely to be the theme for the second quarter. rishaad: the export numbers caught everybody off guard. calls already, this will go down well in congress, to devalue. fred: that is going to go down very well. we think they will actually hold the line, in part because there is an important decision coming up at the imf. there is going to be a decision whether to include the u.n. you don't want to rock the boat in washington too much if you want that inclusion. we think they are going to hold the line until then. there are also good reasons not to devalue. it would send a signal that china is panicking too much. it would risk capital outflows. rishaad: it would mask inefficiencies, wouldn't it? fred: it would.
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it probably wouldn't be the cure for china. the domestic sector is decelerating. devaluing the currency is not the magic will it that cures china. angie: this also on the heels of u.s. dollar strength playing havoc not only in china but in the region. fred: that's right. if you look at why these numbers are suddenly so dire, it is in part because the euro depreciated. the euro is a big export market for china. make no mistake, it means that some chinese exporter has taken a hit on the profit margin. exporting to china to cut prices to retain market share. there is a lot of pain in the export market in china. no doubt about it. there is some risk to the labor market. remember, we have factories with
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exports not doing well. that could shake up the labor market. angie: absolutely. they are going to vietnam right now, and even cambodia and myanmar. fred: or further inland. they are now trying to build another silk road. but there is no quick solution to this. we have already seen the first signs of the labor market weakening. if you look at the employment indices, the pmi is starting to signal greater weakness in the labor market. that's something that has always been redlined for the leadership. they say, we do care about labor markets. rishaad: we talk about how the oil price being lower is a net positive. how is it a net positive for china, if at all? fred: china is the world's biggest energy importer. so it pays less for that. rishaad: we are not seeing it. fred: that is the story of
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across asia. we haven't seen a bounce from lower oil. that suggests that the slowdown in china is bigger. if you had maintained oil at the same price as last year, we would have seen a sharp or deceleration. this suggests that a lot more needs to be done. angie: also, i wonder if we should -- some liquidity issues for the smaller and medium enterprises as well trying to get their hands on some dollars. rishaad: peer-to-peer financing could be a recipe for disaster. fred, we will see you in 20 minutes. angie: coming up next, setting boundaries. hong kong imposes limits on visitors from shenzhen as tensions rise. rishaad: this is coming up on the other side of the break. ♪
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delivery dates for some orders stretch into july. the watch officially goes on sale on the 24th of this month. we spoke to some of the customers after their first hands on with the device. you can gauge their reactions for yourself. >> very easy to use. good feel to it. >> i was impressed. >> not too big, not too small. >> i'm a big apple fan. i like good-looking, functional products. >> i don't want to have to pull out my phone for everything i want to do. >> i'm a techie. my coworkers expect that i have the newest and latest. if i don't have it, they will look at me and be disappointed.
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>> i don't think i need one. >> i would say it is a major one. >> it may be obsolete in a year, but then i will buy another one. >> i think it will be a success. i don't think apple have made many flops. >> i think the low priced watches will be a success. >> i think it remains to be seen. >> i think it is going to be up there. angie: china has put a limit on the number of trips that residents of the southern city of shenzhen can make to hong kong. we've got our reporter live with more. this is a little controversial, isn't it? rosalind: you could say that. shenzhen residence will no longer be able to make multiple trips to hong kong.
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for people who are applying for these new permits people who already have the multiple entry permits can continue to use them. they will take a bit of time for this policy to come into place. that is according to a news agency citing the ministry of public security in china. residents who are allowed to make one trip per week will be able to stay for anything they want. but they cannot make multiple trips in and out of hong kong within one day or even one week. angie: to be clear, the people who already have multiple entry visas can keep them, so they are grandfathered in. do we know how long it extends? rosalind: i don't know how long each permit will last, but they are not issuing new permits for residents of shenzhen.
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china i just policy according to a request from hong kong. large numbers of tourists, they say are putting pressure on hong kong resources and hong kong's capacity for tourism. that's why the government had to make this adjustment. they had 47 million tourists from china last year. many of them were people with multiple entry permits. angie: let's talk about those tensions that have been rising. we've seen demonstrations by local hong kong residents against the so-called daytrippers from shenzhen. rosalind: there is something called parallel trading. basically, people come to hong kong to buy necessities. it could be diapers, baby formula, clothes, domestic items, then they go back across the board and sell them in china. some people in hong kong are saying that it deprives hong
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kong of the ability to buy them. it also drives up prices in hong kong. people are unhappy. you have seen this push against parallel traders in hong kong but also an underlying concern about people coming across from the mainland to hong kong. angie: thanks for that. rishaad: we are going to take a break. on the other side, we are looking forward to the afternoon of business in tokyo. the lunch break is coming to an end. a slight decline during the morning period of trading. let's see what happens when japan reopens right after this. ♪\
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angie: china's export surprise. an unexpected fall in shipments could push beijing towards joining the currency war. when china sneezes, its neighbors catch a cold. the world bank predicts tougher times ahead for emerging asia. and the monday hangover. asian shares break their longest winning streak in years. let's get the latest from the markets right now. zeb eckert has got the latest. zeb: that winning streak appears
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to be broken. let's look at the msci asia-pacific index. it has been trading lower. we haven't been able to sustain those gains on a regional basis because of some headwinds. numbers in china adding to that negative sentiment that has crept through to the tokyo market and several southeast asian markets. the hang seng and the shanghai composite continue to trade higher. investors largely shrugging off this march export data from china. we are continuing strong gains that we began last week and the week before as chinese investors seek those bargain opportunities in the hong kong market. they are trying to capitalize on the bargains. the chinese shares are cheaper in hong kong than they are in the asian markets. checking on the hong kong movers, this is what we have. hong kong exchange headed for a record high on this massive trading volume. much of it coming from china.
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investors around the world focused on the hong kong market. tech stocks are doing well. gaming stocks are not doing well. across the region, the afx 200 now trading higher, but we've seen a big drop in the aussie dollar heading towards a six-year low as the china trade data has slumped. angie: we also got some data from japan. it is returning from a lunch break right now. how is it beginning the afternoon session? zeb: we saw curious moves to the downside today in japan. we are waiting for trade to begin again. the story is that the bank of japan expects the economy to continue its moderate recovery. we have comments from haruhiko kuroda at the branch managers meeting the boj branch managers meeting and we will be watching the latest numbers that come in this week. as for the nikkei, it is back to business.
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utilities have been quite electric. look at that, 16% gains. insurers seeing a bit of downside. we will watch that closely in the tokyo market. utilities, one of the key themes across the asia-pacific. utilities falling today. power producers lower on the whole by 4%. rishaad: beijing may be facing an even bigger battle as they try to boost the chinese economy. exports in march unexpectedly tumbling more than estimated dropping 15%. let's get analysis. we are joined by tom from beijing. tom, what is going on here? this is way off what economists were calculating. we've got nearly 15%. tom: it is a big downside surprise rish. i think there's a couple factors at work. firstly, other currencies have
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been depreciating quite sharply. the korean won, the japanese yen, that means that chinese goods are looking relatively expensive. what we could be seeing is that starting to have a big impact on china's export numbers. the second factor, i think, is that the global recovery is looking lackluster. the bright spot was the u.s. but the numbers out of the u.s. have been getting progressively weaker. i think it is that combination of a strong yuan impacting competitiveness and weak demand, including questions about demand from the u.s., dragging down china's export numbers. rishaad: is it really as bad as these numbers seem to suggest? tom: there's a lot of volatility in china's trade data rish, and
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a lot of factors beyond the strength of actual overseas sales that we have to take account of. on the export side, one of the issues is over invoicing by china's factories. factories over invoicing as a way of circumventing capital controls and bringing cash into the country. that was a big issue last year. it seems to be a smaller issue this year. second issue for exports is chinese new year which saw a huge surge in export growth in march -- in february, sorry. now, you are seeing this sharp contraction in march. if you look at year-to-date figures, what you see is mid single-digit export growth around 5% export growth for january, february, and march taken together. that is not stellar, but it is better than a 15% contraction.
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given where global demand is, we think that rate is roughly where china's exports are going to be in the months ahead. rishaad: do you think policymakers read too much into it, or they are going to take a sanguine view? tom: i think this is the latest in a string of negative readings. we had surprisingly weak industrial output data investment data, and consumption data for january and february. exports for march look bad. i think china's policymakers are going to take this seriously. i think the question on domestic easing, a cut in interest rates, is not if, but when. our feeling is that the week data is going to bring forward the timing of the next interest rate cut. perhaps the more interesting question is what this means for the extreme drape. -- the exchange rate. yuan depreciation would support
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the competitiveness of exports, but it could encourage china's rich to start taking their funds offshore. that could add to stress in the financial system. our bet is that even though we are seeing weak exports, the yuan is going to hold stable against the dollar. rishaad: thank you very, tom orlik in beijing. angie: china's slowdown is spreading to its neighbors. emerging asian economies are likely to slow as the dominant economic power slows. let's get more from sudhir shetty joining us first on bloomberg from singapore. thank you for joining us. when you take a look at just what the analysis is six months on from your last report, what has changed for east asia and the pacific?
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sudhir: good morning, angie. two things as we highlighted in the report. one, the fall in oil prices. we see this as the third-largest decrease in oil prices in terms of magnitude over the last 50 years, almost. huge. more importantly, most likely to persist for at least the coming year, through 2015. that is huge for this region. this region, as you know, is primarily made up of oil and gas importers. the second big thing that has changed since october is the appreciation of the u.s. dollar about if teen percent in real effective terms relative to the japanese yen and euro in
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particular. that has meant currencies in this region have depreciated against the dollar. however, they have appreciated most of them, malaysia being the one exception, in a real trade weighted stance. angie: and that is at least a tiny bright spot. but really, deflationary pressures are global. that is one of the critical issues for a lot of central banks here. in fact, focusing on growth concerns rather than inflationary ones, the way they did back in mid 2014. sudhir: that's right. however, for most economies in this region, and here i would distinguish within developing east asia and pacific, between china and the rest. while you are right that the report has a slight moderation
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in growth in 2015 relative to 2014, which was a moderation from 2013, the difference in 2015 is that almost all of that moderation this year comes from our continued slowing we anticipate for china, rather than other economies. with the exception of malaysia, we think most of the other asian economies, particularly the large ones, will actually grow somewhat faster in 2015 thailand being the most notable, but indonesia, philippines, all growing of it faster in 2015. a lot of that is the global recovery, which obviously continues to have some doubts about it, but is still on. angie: it is still on. the challenges remain. especially with china's
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slowdown, everybody else in the region is feeling it. what are your recommendations for those economies that depend so much on china? are they doing it right when it comes to monetary policy and fiscal policy? sudhir: our sense on monetary policy is that they are broadly in the right place, that given what has happened -- again, i go back to this point that most of them are oil importers, so in that sense, inflation concerns are somewhat less serious now because of the fall in oil prices. the real point for us is the point we make in the report as well as around the opportunities for fiscal policy. both in the short term as well as in the medium term. what we see is, in most of these economies, the need for fiscal
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policy to operate in a way that will find new revenues, additional revenues, because the development needs in these countries continue to be huge particularly infrastructure, but also in the medium-term because -- and we have another policy report devoted to the impact of aging. east asia pacific the most rapidly aging region. there will be significant fiscal needs associated with this. fiscal policy is where we would emphasize the focus to be. that includes looking at expenditures, and in particular subsidies on fuel are a big issue. indonesia and malaysia have moved in the right direction. it will be important to sustain that. angie: fine-tuning. it is dependent for a lot of economies in this region.
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sudhir shetty, thank you so much. rishaad: some other stories we are tracking today hyundai grabbing the number one spot as china's favorite car. it goes further than gm in the state backed survey. byd was named the top chinese carmaker and audi was first in the luxury category. chinese property developer kaisa founder has returned home. he resigned in december over a corruption probe. he and his brothers controlled nearly half of the company. indian prime minister narendra modi corning german investment to speed of growth in asia's third-biggest economy. modi said that they were huge opportunities for cooperation in areas of construction, railways
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rishaad: let's check on some of the stories making headlines around the world. angie: militants have bumped a police station and armored vehicle in egypt's sinai region killing 14 people. most of the dead were egyptian police. a group that has declared allegiance to the islamic state has claimed responsibility. violence has increased in sinai since the military removed president mohamed morsi from
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office. rishaad: an attack on the south korean embassy in libya, the ministry saying no embassy staff were injured. at least 40 rounds were fired from a machine gun before the attackers fled. a group loyal to the islamic state said they were behind the attack. angie: 18 years after tiger woods won his first u.s. masters another 21-year-old has claimed the title. jordan spieth remains in control. the texan lead at augusta, becoming the second against -- the second youngest to wear the green jacket behind tiger woods. rishaad: welcome back. joining me is shery ahn and fred neumann. it is all looking a bit soggy. fred: it is looking soggy out
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there. if you look at rates today, it is mushy, soggy. angie: what is raining on the parade, fred? fred: the expectation earlier this year was that china went down fast, that we see strong growth in the u.s. here we are, and u.s. doesn't look as strong. asian exports have not picked up anything of that slowdown. news from china isn't that reassuring on the domestic front as well. broadly speaking, we started the year on a much weaker note than expected a few months ago. shery: i was surprised to see that you are positive about japan. fred: it is all relative these days. if we have growth of 0.7%-zero .8% in japan, that would be really good news. last year, we had a recession.
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the export sector is doing ok. >> we've had bad data lately right? retail sales, inflation not rising. what was it, pbi as well as -- angie: better than expected. rishaad: the data has been mixed. compared to last year, where we had the recession, it is very easy to have growth. the other thing, what we are seeing is, across asia, more stimulus. some of these positive japan data is under the assumption that you get even more qe. rishaad: do you really think it is going to make any difference? you are giving them heroin and you go, he is not getting better. let's give him more heroin. fred: if you make that
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comparison, to feel better, you add more stimulus to the economy. equity prices take another jump. rishaad: it is all temporary. angie: in your report, we are going to see more monetary easing in all these places. your question, will that do the trick? well it? and what else can be done? fred: that is a good point. it is harder and harder to get traction with monetary easing. one thing we will -- we think will happen in china is a fiscal stimulus. because monetary easing is losing traction china we may see rate cuts. at the end of the day, beijing has to unleash these massive fiscal reserves they are sitting on. spend that money now so that the monetary easing has something to feed on. that is something we will see. >> what do you think about the government in china in terms of the property sector trying to do something?
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they have cut the down payments and help homeowners on their second homes. things are still sluggish for the industry. at the end of the day, prices are still too high. fred: i'm not sure the prices are too high. if you take the average for the country, they have kept up with income. on an affordability bases, it hasn't deteriorated much as in hong kong and other parts of asia. what they can do is cut down the down payment requirement further, cut down on mortgage rates. at the end of the day, a buy one get one free kind of deal. that would do the trick to clear out some inventory. angie: it might explain all the ghost towns that we see across china. we heard from the world bank east asia and pacific chief economist, one of your peers. basically saying, it has got to be fiscal policy now. and government should be focusing on that.
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fred: if you look at all the countries across asia, some countries are in a position to do that. the chinese certainly have the ability to do fiscal easing. if you look at india, they have a very large budget deficit. they can't really use fiscal policy. japan also, japan is constrained on the fiscal side. it is generally true, but some countries don't have any way to do that. one thing i want to say about the ghost towns, ghost towns actually don't really matter. nobody wants to live there. it is not effective inventory in the real estate market. it is built in the desert when nobody wants to live there. angie: but it shows the rate of -- absolutely. it is redirecting capital to a ghost town rather than wealth. fred: it is a waste of capital but what it means for the real
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estate market going forward, it is not effective supply that keeps down prices elsewhere in the country. it is just ghost towns where nobody wants to live. it is like digging a hole in the desert and putting money in it. it is not necessarily that bad in terms of the inventory numbers. we have inventory here that nobody wants to use. rishaad: the people paid, they contributed to the economy. i guess there was an economic benefit. fred: temporarily. angie: all i heard was digging a hole. thank you so much for joining us. rishaad: ok, up next have the pirates beaten the dragons? angie: hbo investigating how one of its top shows leaked online just hours before the season premiere. details next. ♪
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angie: welcome back. you are watching "asia edge" if you are not watching "game of thrones" because it is out. the much anticipated fifth season premiere of hbo's "game of thrones" wrapped, but even before it hit tv screens, many viewers got to see new episodes. rishaad: yvonne, you were covering it all morning. millions of downloads now. yvonne: and people already complaining on social media. i have to wait another month to watch the rest of the season because i've already seen the first four online. christmas came early for them these "game of thrones" dan's. angie: well winter is coming. yvonne: don't even say that. talk about a cult following.
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full disclosure -- rishaad: what is this program you speak of? yvonne: i don't know. four of the 10 episodes of the season are leaked. they are not sure who is behind it. these episodes are usually released to a lot of screeners for reviews, for translation purposes. that may be the culprit here. millions of downloads, like you've been talking about, in the first few hours. it kind of is ironic. hbo now just debuted a few days ago. they were going to give it to people. rishaad: 170 countries together. angie: well, you know what, if you haven't watched it, let me direct you to the very romantic episode of "red wedding p co. i
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