stimulus measures are cushioning the economy. greece turning to germany and france with more payments looming this month. angie: also coming up this hour, territorial tensions. china and the u.s. step into disputed waters. they had a spirited discussion. a hands on approach. indonesian central bankers join farmers in the field, hoping to harvest success in the fight against inflation. plus, the art of communism. nostalgia fuels rising prices for soviet era work. all that and more in this monday edition of "asia edge." david: i'm david ingles. i'm keeping my eye on the markets. we are seeing mostly read this morning. s&p futures last i checked were up three or four points. you have a slew of economic data across the region. mostly pointing to mounting challenges, frosty regional

economic landscapes here. the exports dropped in south korea for example. you also had a drop in building approvals in australia. a weak start for the week. japan we are down about 0.25% despite that dollar-yen is trading at a 13-year high. remember that the nikkei was up 11 straight days into friday. just dimension as well, oil prices, big move on friday. we are still creating near this year's highs. china, there you go. 2.5%, bucking the overall downtrend. china pmi data also out, showing a slight pickup. also, reports that china is planning a debt swap program. that is perhaps helping.

let me show you the big movers in hong kong. two stocks. 170%. these two stories reflective of all the money to be made right now when it comes to markets across the region. reorient, a very good day for the stock there. we will get more on that in just a moment. hauatai. the thing to look at with variant group -- with really group is they are seeking exemption from this rule. the other big move huatai securities up 4.5% today in hong kong. not bad, but not as good as what you've seen so far this year. i will leave it there for now. back to you. rishaad: huatai, yvonne has the

background for us. yvonne: pretty disappointing first day of trading. rishaad: it is not what we are used to is it? yvonne: we are seeing shares down slightly now. we saw what happened last week. investors really vying for a piece of it. the biggest share sale we saw in hong kong this year. they raised $4.5 billion. a lot of brokers trying to raise some funds and take advantage of this rally. they were selling like hotcakes. retail investors described it 208 times. institutional investors were also very keen on it. analysts thought this game would be 20% to 40% on the first day. not to mention the hong kong price already at a discount. 38%. rishaad: economists blame the declining market. hang seng is up today. yvonne: this is a stock that

really attracted a lot of internet entrepreneurs as well. two big ones. rishaad: let's not forget its predecessor, gf securities. i think that was back in april. that was quite something. yvonne: less than two months ago. that stock surged 40% on its first day. if you look at the a shares of huatai, they have fallen in the last few days. brokerage stocks have been increased. there is a lot of concern, how long is it going to last? we saw it fall a little bit last thursday when shanghai plunged 6.5%. we are seeing what happens. there is still a risk. rishaad: thank you. angie: speaking of ipo's, subscriptions for share sales

may lock up eight ill dollars of liquidity. we asked if this is something we should worry about. >> not in the short term. it is likely to add to markets' nervousness, and also jitters and price declines. i'm not worried about it in the broad scheme of the chinese market being intact, but if anything, that amount of liquidity will provide a buying opportunity. angie: ubs' senior china economist says the recent rally in china has not been driven by fundamentals. >> there is perhaps some siphoning off or some relief in terms of demand. we actually see a reflation of the property bubble that we think is unlikely. mainly because of the fact that we have changed fundamentally.

the property uprising we have seen in the last few years. we have some pent-up demand in pressure coming back into the property sector. there is demand. we did a survey in china a few months ago. 60% would buy if transaction prices come down a bit more. the government actually delivers earlier rather than later on property easing measures. hopefully, they can start to dissipate that pressure. for the equity rally, agreed. for now, there are structural reforms. we can help to temper some of the pressures. angie: this morning, another sign that china's economic downturn may have hit the bottom. manufacturing estimates.

we've got stephen engle with the latest the them i'm numb -- latest pmi numbers. stephen: just above expansion and contraction territory, the demarcation line of fifth the. it is better than the previous two months, better than the previous four months. january-february was in contraction. we hit march and april, and now may, above. we are now at 50.2. we are saying, this looks like it might have hit the bottom. 50.1 in april -- 50.3 excuse me, was the consensus estimate. missed it slightly, but we are mincing words between 50.2 and 50.3. output, new orders, and new jobs all advanced within that pmi. that is good news. we also got the hsbc manufacturing pmi final reading

for may. this is a smaller survey. the hsbc pmi coming up 49.2 still contracting. it matched the last number and was better than april. also, services the am i dipped a little bit -- services pmi dip ped a little bit. angie: what does this all mean for future easing? stephen: this is not a robust recovery for manufacturing. most of the economists we are reading from say, yes, there could be easing from the pboc probably another cut down the pipeline but we have to see if this is a continuing trend. does it improve the next month? we are still kind of in an easing cycle. angie: stephen engle, thanks. rishaad: have a look at some of

the other stories making headlines. several stocks on the taiwan exchange pushing their new daily fluctuation limit. textile companies are up by more than 9% while a real estate developer is down almost 10%. >> taiwan market has changed. investors are changed. investors are becoming more and more globalized. the trading mechanism they need to start to move it to a line with intonation of best practice. rishaad: another chip deal may be underway. sources say intel is close to buying rival altera. we've been told that chipmakers have been in contact since earlier this year and altera rejected an initial offer in april.

there are reports that the talks are back on. the man who founded the online drug bazarar called silk road has been threatened to life -- has been sentenced to life in prison. anonymous traders used bitcoin to buy and sell drugs, tools, and identifications. prosecutors say at least six people died after taking drugs bought through the website. angie: still to come in the program, the make or break debt repayments for greece. and the prime minister is on the attack as a deal remains ever elusive. next, china's manufacturing pmi increases in may, yet still fails to meet expectations. is the economy showing signs of stability? we will get the reaction from our next guest when "asia edge"

returns. ♪

rishaad: you are back with "asia edge" as we check on the stories making headlines. angie: myanmar has detained journalists trying to reach an island where natives have been held. they insist they signed an agreement not to make the journey again. 727 people were rescued from a boat. the navy denies that they are trying to leave myanmar. rishaad: more cases confirmed of the middle east respiratory syndrome. health organizers meeting to tackle the disease. more than 1100 people have been identified with mers around the world. most of the victims have been in

saudi arabia. angie: greece and again failed to reach a deal with creditors. prime minister alexis tsipras is now hoping germany and france will use their influence to help what is described as a constructive conference call. greece's payments totaling nearly $2 billion to the imf this month, the first due at the end of the week. rishaad: let's check on markets. we will bring on mikio kumada. china is making the top story given the pmi coming in. it is basically in stasis when it comes to manufacturing. what did you make of it and where are we with the economy? mikio: the china pmi data, that is one we tend to slightly ignore. it doesn't give you any information. over the past couple of years it has been around 50. meanwhile, all the other indicators have been rather

going down. if you look at the macro data the stock markets have surged. it doesn't really tell you much from our expected. more credible, i think, is the market. hsbc indices are coming out. there, you get a nice global view. that shows you that china's economy is actually not doing as good as the stock market would suggest. rishaad: you are saying it represents fundamentals? angie: we know that that's not necessarily the case when it comes to the markets in china. what about the uptick? it was 50.2. even though you disregard it you cannot disregard that it is better than the month before. same with hsbc. rishaad: -- mikio: we've had small data ticks like that so many times before. angie: but after pboc cuts and easing? mikio: the cuts do help but i

doubt whether they will solve any of these more structural problems that the chinese economy has that quickly. the cuts just happened recently. if you look at the real interest rate in china, it is actually very high. if you compare it to >> happening globally it is all about the real interest rate. it is around zero in the u.s. now, and that is with the tightening now, the end of qe. it is deeply negative in essentially all other economies. policymakers the value money in order to force people to do something with it. the situation in china is very far away from that. i don't think you will see that that quickly in the macroeconomic data. you see it in the stock market of course. you see it in parts of the financial system.

but probably not that quickly in the macroeconomic data. rishaad: it is interesting when you look at what has happened with the stock market. it has got to go wrong at some point. when it does, it is going to be pretty nasty. angie: they thought it was going to go wrong last week. rishaad: the point is, how badly hurt will the chinese economy be if we get the stock market bubble bursting? mikio: that's a good question. the chinese economy has survived the sort of slow collapse of the property bubble quite well, i would say. it is still growing. we know that has been kept together by very well-controlled -- well, command economy is a bit outdated of a word, but controlled by policymaking. i think they will survive it. the stock market isn't really very much related to how much how well or how valued the real

economy does. the real economy is slowing and i don't think that really changes with the rally that we've seen this year. that said, this is not to say we are negative in chinese equities, especially on the h share market. one-year forward earnings still trade at a discount compared to the global average. they are cheaper than japan, cheaper than everybody else. the valuations in the h shares market are still reasonable. angie: that's not really fair because we've been hearing from folks like yourself, and i don't mean to put you on the spot, but since you are here, we've heard this. we don't believe in the fundamentals of china we are concerned about the credit situation, property bubble, all the rest, but we are still overweight china because the momentum play means there's a lot of upside still left. at some point, what should we

believe here? at some point, you've got to commit to a position. mikio: i'm not sure how you're putting me on the spot with that. our position is very simple. we have a five-year view. we are overweight china in that context. relative to that, we are underweight and we still remain underweight. and that hasn't really changed with all these rallies. we have a position in china. it is relative lee -- it is underweight relative to our other positions. we have kept that and we are very happy with it. we will go overweight only relative to our own benchmark only if we see all these things we are discussing turn positive. i.e., china has no problem in the market economy, has resolved all its debt and structural

issues, and is back on healthy growth mode, which is not the case at this moment. rishaad: stick around. angie: coming up next, hands-on approach. how indonesia's central bank is taking its fight against inflation. rishaad: we've got that when "asia edge" returns. ♪

angie: welcome back. you are watching "asia edge."

indonesia is struggling with asia's highest rate of in nation. some fear the situation may be worsening. prices jumped according to figures today. bankers are trying to get that down to 5%. as rosalind chin reports, that sometimes means getting their hands dirty. >> she has been training this farmers group to grow vegetables more productively, but she's not an agricultural specialist. she's the head of the indonesian central bank's offices. >> bank indonesia's mandate is to manage not only the market and demand side, but also manage these agricultural groups from beginning to end on the supply side. we look at how they are produced, how the seeds are planted, and so on. >> targeting food production is

a first step to tackling indonesia's stubborn inflation which has been stuck above 6% all year. it is an important goal for the president. food makes up about 1/5 of the consumer price index. price stability is a key part of the focus. experts have teamed up to develop programs ensuring steady supplies of produce using the most efficient methods. members of the farmers group say they have seen yields go up 25%. the program also opens up access to markets, helping farmers sell vegetables directly to markets. and it provides support to farmers who grow products which would usually be imported, like these tomatoes which can also sell for a higher price than local varieties. >> for local tomatoes our farmers only get 4000 rupiah. these tomatoes, you can sell for 12,000 rupiah per kilo.

that means our income is much improved. >> they also hope these measures will help indonesia move closer to becoming self-sufficient. still economists say much more needs to be done beyond the field in the fight against inflation. >> it is not just how much you plant and how much you yield from those crops but how well you can distribute. that in turn depends on the infrastructure how the roads work and the shipping lanes to connect the many islands of indonesia. >> there is plenty left on the to-do list. but here in the fields, at least some of the efforts towards fighting inflation are bearing fruit. rosalind chin, bloomberg. rishaad: this is the state of the asia-pacific markets. 1.3% down for australia.

moving along, have a look at what else is going. we have the kospi. data out from there shows exports fell in may by the most in almost six years. they are down by 0.75%. let's find out what is going on in hong kong. on the way up alongside other chinese equities as we have better than expected expansion taking place as far as the manufacturing pmi measure. tokyo, this is what it looks like at the moment. we've got a bit of a pullback today. we've got the reopen also coming up next. ♪

angie: the top stories this hour, a relatively disappointing hong kong debut for huatai. shares rose as much as 7% at the open, but that was much less than the 35% enjoyed by our arrival in april. the difference in their performances, the chinese stock market boom may be ending. huatai raised $4.5 billion in its share offering. chinese stocks rose strongly after the official manufacturing gauge rose slightly in may,

suggesting stimulus measures are helping cushion the economy. manufacturing pmi came in at 50.2. it is struggling to meet the 7% target. greece again fails to reach a deal with creditors with the end of may deadline passing. prime minister alexis tsipras hopes that germany and france will use their influence to help what he describes as a constructive conference call with chancellors merkel and president hollande. greece has four payments totaling nearly $2 billion to the imf this month. it is crunch time for china. cash crunch time that is. typically we see liquidity tighter than usual on the mainland. this year, things could get a whole lot worse. what do we mean? david, what do we mean? david: typically, june is when

you have liquidity getting tight. that is down to sometimes seasonal factors. you have a lot of banks looking to make quarter end requirements. we have seen that money market rates the rates which shot up into investors' consciousness, typically move up. you see that on your screen right now. that is the move up each june. 2011, 2012, the same thing all the way back to 2005. what makes this month different is that you have a lot of ipo's hitting the markets. 23 a share ipo's. and what analysts are saying they could be as much as $800 billion. that is an estimate. i think starting tomorrow, june

2 3, 4, will be the peak days, they say. the pboc is trying to bring down borrowing costs. we will get to see what they can do to keep borrowing costs down with a lot of pressure on liquidity. that is a spike. angie: ipo's might be bad for business when it comes to liquidity, but it is good for business, all these security firms having a renewed interest in the market. david: it has done very well for them. people just want to trade more right now. they are doing brokerage accounts. business is doing well. they need money to expand. huatai debuting in hong kong. it depends. volumes have really picked up. what you see on your screen is a clear reflection of how the

market is pricing into an improved earnings outlook for a lot of brokerages. right now, i think they are up 4.5%. not as good as the one we saw back in april, but still a good return. i think it was priced at the top end of the range. angie: gs securities was 35%. rishaad: and this one, -- david: and this one, huatai right now trading i think about 26 times earnings. citic and haitong, we are talking about 19-20 times. angie: not too shabby. thanks, david, for that.

let's check in on some other stories we are following. skymark getting ready to take off again. the carrier will get investment of $145 million from three shareholder groups. private equity firm integral would keep its majority control. skymark says it plans to show an operating profit by july. corporate japan facing new board room rules starting today. companies are required to have at least two independent directors on their board or explain to shareholders by they don't. it is prime minister shinzo abe's latest move for corporate governance. securities have found that companies with three or more independent board members deliver better returns than those with none. apple is considering a yen denominated bond offering in the

future. it would be the first for apple in the japanese currency. in february, it offered $1.34 billion in bonds. rishaad: we are talking about looming greek debt repayments. it could make or break five months of negotiations aimed at avoiding a default and possible exit from the euro area. the greek prime minister is going on the offensive. we are going to bring in shery ahn now and have a look. the creditors' demands are quote absurd. shery: attacking predators in the french newspapers, writing that the lack of agreement is not the greeks' fault, but because of insistence of certain institutional actors on absurd proposals and total indifference to the recent democratic choice of the greek people. all of this coming on the back of greece missing another self-imposed deadline. the greek government said they

would reach an agreement with creditors by sunday. that didn't happen. creditors are not budging. a german lawmaker is saying it is down to greece to stick to the reforms they agreed to before tsipras came to power. sources telling us now that creditors, and representatives of these creditor institutions came together over the weekend to agree on certain terms. they want concrete measures on the pension system the labor market, the sales tax. a lot going on, but greece doesn't seem to be backing down. rishaad: this is all very confusing. how much time does greece have here? shery: we have been talking about how much time greece has for some time. at least for now, they have one deadline coming up on friday. that is $329 million to the imf. analysts say in greece probably has the cash to avoid a default

then. of course, we have more deadlines ahead, totaling about 1.78 in dollars just in june -- $1.78 billion in june. they have told greece you need at least a technical agreement by the end of this month if they want to get a disbursement approved by the eurozone parliament. after they have a technical deal, finance ministers will come together and try to free up those resources. tsipras right now without being able to move forward the negotiations with creditors is hoping to get some help from the german chancellor, the french president. they already held talks on sunday. officials calling it constructive. hollande and merkel are supposed to be meeting today to talk more about greece. rishaad: thank you very much indeed for that. angie: the annual defense for an in singapore has been marked by

a less aggressive tone. china defending its claim to disputed islands said it did not aim to threaten other countries. the u.s. avoided inflammatory rhetoric. what does this all mean? we've got andrew davis here. this was really ashton carter's first time at the shangri-la meetings as u.s. secretary of defense. does this make a difference at all in toning down the rhetoric that we had heard from meetings past? andrew: he made some pretty strong comments prior to shangri-la, on his way to singapore, in hawaii saying that the u.s. was not going to back down from its patrols. he echoed some of that rhetoric at singapore but did offer a more conciliatory tone. the countries are at an impasse. china says it is their territory and no one can tell them what to do and they are building rapidly. angie: any shift in u.s. policy

here? andrew: i don't think so. i think we are seeing, given the pace of the chinese construction, the u.s. says they now have 2000 acres reclaimed but most of that was done in the last six months area they have really accelerated. there have been signs that there is some weaponry going in. angie: nervous, and no doubt china has to answer these calls. this is a regional conference. you've got a number of neighboring nations calling on china to stop this aggression. how did china react to this? andrew: they said that no one was going to tell them what to do. they claim most of the territory based primarily on this map that was a pre-communist amount from the 1940's, kind of interesting, they do say they want to resolve it. they do acknowledge, at least with rhetoric, that there are

differences as to the claims. they insist that any negotiations be on their terms. no international arbitration. bilateral talks with the claimant states. the philippines across from china, a little intimidating. angie: these are economic partners. if china decides to hold off on any kind of trade, a lot of these nations are really gauging that. often, economic policy is foreign policy when it comes to china. the thing is, china says it wants to resolve these things on its own terms. what does this all mean? andrew: they've signed a memorandum of understanding that basically said all claimant states should ratchet things down and not do any construction in the area. clearly that hasn't been i abided. the vietnamese have also been building. it is the scale of the chinese construction that i think is making everyone so nervous.

china is also in a much better position to enforce any territorial claims. they are the gorilla in the room. angie: which brings us back to the significance of the u.s. in these talks. andrew: and not just the u.s.. we saw some pretty strong language from the australian defense minister saying they've been patrolling there for years. we will see. tensions are mounting area if the chinese really do try to keep u.s.-australian airplanes or ships out of that area then we are in for some real conversations. angie: then all bets are off. andrew davis, thank you so much for that. rishaad: up next, another day another deadline missed. greece's next debt repayment is

fast approaching and there's still no sign of a deal. we've got more on that and the rest of the days always after this very short break. ♪

angie: checking some stories making headlines around the world now. rishaad: the legislation that allowed the bulk collection of phone records is set to lapse. it will not be extended after a heated debate in a rare sunday session of the senate. officials say the lapse of the law could put american people at risk and called it a win for terrorism. the measures are likely to be -- within days. angie: the fifa president has attacked the english teaching media, accusing them of a campaign to force him out of office. several senior fifa officials have been the -- have been

detained. rishaad: the plane powered only by the sun is on its longest and most dangerous leg. the solar impulse is heading for hawaii. the flight is expected to take six days. the plane's journey began in abu dobby in march. -- abu dhabi in march. angie: joining me and rish now are shery zeb, and mikio kumada. we were talking about how many deadlines greece has already missed. it seems like everybody has been following the story. it is four years old now, going on five. mikio: there was no default on 1828. i mean the deadlines are funny because they are basically

self-imposed by the greek government. the greek government says, we will have a deal in two weeks, and nothing happens. it is for domestic consumption, i think. i don't know why they are doing it. there is not really a deadline, at least not a hard one. we hear that it is going to default every month and it never does. there is a very good analyst, independent analyst, not from the financial industry. they are not trying to sell you a financial product. it is a brussels organization. there is a lady there who looks at the greek agitator among other things, of course. she writes about it quite a lot. the most recent figures in april and march, basically they are having a huge primary surplus which is way, way ahead of any vote. what is actually in the budget plan, which is according to the previous ballot program. they are imposing much stronger

austerity, which allows them to keep paying the debt. rishaad: the primary service is what people have been looking at. i think the creditors are looking at maybe 4%. mikio: but right now they are imposing very harsh austerity. the people are buying it. it is something else if you are imposing it on yourself claiming that you are defending national dignity. that is obviously easier to sell. shery: that confuses me right now. whether it stays in the eurozone , or goes ahead, or doesn't, at the end of the day, it will end up being austerity. say they default on payments. there is a banking crisis. then you have to cut spending, you have to raise taxes. at the end of the day, it seems it is austerity one way or the

other. mikio: the question is the degree of austerity. it is 50 shades of grey austerity, so to speak. [laughter] rishaad: terrible. angie: which looks better? mikio: there is a lot of huff and puff going on, but both sides are negotiating using the good cop bad cop strategy. greece's good cop is alexis tsipras. the bad cop is varoufakis. in germany, we have schaeuble being the bad cop and merkel being the good one. the ecb has lent another 100 billion, close to 75% of greek gdp. that is a lot of money. you don't -- it is not a sign that they are about to let greece go, when they just increased, essentially doubled down on the lending already. zeb: clearly, they will not

allow this to go on forever. you hear the exasperation in schaeuble's voice, and merkel has been very restrained, but i'm sure behind closed doors she is losing it as well. mikio: the question is, if they will let a deal not happen, they will have to take the losses. hans werner sinn, who has been an outspoken critic of this whole bailout logic he's just coming out with a comment saying, don't underestimate the negotiating position of the greeks. these guys know exactly what they are doing. if you look at the process, in the beginning, we've had a very strong german position or a creditor position saying, we won't sign anything until you meet all the conditions. as we get closer to the day that greece effectively runs out of money, you hear, maybe we will

extend for four months. a default within the eurozone is possible. negotiations climate is improving. i do think that hans werner sinn has a case in point here. whatever the headlines are suggesting, the greek government's position is not that bad. that is based on what we got in the beginning. they do have a large primary surplus. that makes your threat for default credible. rishaad: tell me, what is the debt profile like? can they change the debt profile entirely perhaps and have more longer dated bonds, just ease the pain on the year on year basis? mikio: the debt profile of greece is not bad. debt service to gdp is among the lowest in the world. they have already a great deal

with their european creditors. the imf loans may be a different story, but they are not that large in the bigger picture. they have no debt repayments for now three or four years. they start in 2019. the interest rates are basically very favorable. you could argue, why would they -- the strange thing is, why do they make such a big story out of a very favorable deal? that is the political question. i don't think you actually need to do a lot with this debt. what is more necessary is to find a solution for the short term funding issues which they have, which is the famous 2 billion this month, 2 billion next month. these are old that's that -- ol d debrtts that need to be repaid. this is a time frame by which they eventually have to return to some kind of growth, which is the greek government's position. angie: let's say -- we are going

to assume that these things are going to be kicked down the road again. what should we focus on in the short term? is it the fed, is it divergence? should we even care about the grexit? should we care more about ecb bond buying? mikio: there are not, except for greece, a whole lot of risk out there in my opinion. the u.s. is doing fine. nominal gdp growth is 4%. it has been steady for five years. it goes is the month -- everything else, goes up this month, comes down next month. greece would be recovering just as well if they would participate. they chose not to. it is a different story. japan has had nominal gdp growth of 7.7%. i haven't seen that in a lifetime, which suggests that it is way above capacity. it is really only greece.

that would affect sentiment. angie: always good to see you. thank you so much, mikio kumada. rishaad: we are going to take a break. one asia stock is up over 100% today. angie: let's take a look after this short rake. ♪

rishaad: a quick round up now. angie: let's send it over to david. david, what is it looking like? david: it started fairly quiet then hong kong markets opened up. you had a lot of reaction when it came to -- there we go, that is the poster for this morning. 160%. the story for the first one is a fund backed by jack ma.

it has taken a controlling stake . two dollars a share on average is what they bought it for. the stock went from 12 to 23. what is key to note is that the fund is now applying for an exemption from a rule that would acquire it to put in a tender offer for the company. the second one, the fourth biggest broker in china, trading debut here in hong kong. 4% top. not as great as the previous share listing. there is a lot of money to be made now in markets. certainly a lot of capital that needs to be put in. that is a look at the markets. 3898 heading into the lunch break in hong kong. not a bad day for the chinese markets. elsewhere, it is mostly red. shanghai, there we go up 3%. pmi, 50.2. korea, exports not as good.

australia also falling today. angie: frustrating day. rishaad: that's a wrap from us for this edition of "asia edge." angie: see you tomorrow. ♪

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