>> good morning. 17.s monday, august this is "trending business." we will be live in singapore, tokyo, and new delhi this hour. week numbers, japan contracted last -- weak numbers, japan contracted last quarter. yuan starts athe new week with its newfound freedom. the pboc confirms the currency

will be allowed more room for its own level, even if that means moving up or down. social media making its voice heard about the explosion. the main theme, a lack of transparency and who is really at fault. follow me on twitter. don't forget to include the #trendingbusiness. the china and hong kong markets get underway in about 30 minutes time. good morning. we are seeing a bit more buying coming back into the asian region this morning. we had the regional bin. -- benchmark index closed. a lot more bright spots coming through over the markets. malaysia down by .61%.

taiwan is down by just under 1/10 of 1%. south korea, mainly due to drags falling from energy stocks. japan, we had those gdp numbers better than expected. the economy contracting 1.6% from april to june. expectations were a 1.8% drop. a really good move coming through from the banks and health care stocks, up by 1.3%. earnings season in australia in full swing. by profit well above expectation. japan's economy has returned to contraction after two quarters of growth.

gdp fell 1.6% in the second quarter, slightly better than estimates. minister says temporary factors contributed to the drop. what else did he have to say? : he just got done speaking with reporters. he did say exports, consumer spending were major factors for the contraction we saw in the second quarter. blame it on the bad weather. the first drop in three quarters, down 1.6%. back in the first quarter, we saw a 3.9% expansion for the first quarter. that was due to private inventories. we are seeing some downside risk on that front now. more efforts are needed to boost wages and capital spending. he also mentioned about wages, the pace of the growth not matching corporate profits,

which reached a record high level. the economy minister says he still expects japan will recover moderately. 8/10 of ansumption so percent, a sharper drop than estimated. business spending was expected to be flat, but actually fell. lackluster business investment. wes deflationary mindset have seen in japan has not been completely eliminated. he expects improvement in and comes to support consumer spending, there will be a pick up gradually. there is some strong recoverin th housing sector. he is not expecting an economic package and the government is not aiming to weaken the yen. households may start feeling price increases from food. a possible pickup in inflation.

just what the governor is banking on for the third quarter. maybe enough to keep the boj on hold for now. let's check the yen. we did see it slightly weaken as the economic minister was speaking. thank you. we will take a more detailed look at that story later in the show. we do want your opinions, so tweet us your thoughts. china's economy could be growing more slowly than official data suggest. helping explain why the yuan was devalued last week, stephen engle is looking into this. steve, how weak do you think things are? bloomberghe latest survey showing what many have

long suspected, the chinese economy growing more slowly than official data suggest. iterlying growth -- it makes easier to understand why they are throwing except -- throwing everything except the kitchen sink to stimulate some growth. four rate cuts since last december. last week, the last tuesday devaluing the yuan by 3%. china says the economy grew at 70 -- 7% in the first half of the year. economists say it was more like 6.3%. the government has a full-year target of 7% as well. when we asked economist to give their full-year growth rate, they came up with growth of 6.6% this year. even at 7%, china's economy is heading for itsof annual growth in a quarter century. virgin australia is

launching a business class today. we are at the launch at sydney domestic airport. thank you. i am here with the chief executive who has just unveiled the new business class suites on their plane. -- why did the airlines fight so hard over these passengers? >> [inaudible] the business market is a high-yielding market and in order to attract the market, you have to have a superior product. good service. the investment in the business class has to be right. >> you are upgrading your business class experience on the domestic flights. i'll still people are great

travelers. aren't you worried -- australian people are great travelers. are you worried you are losing customers? they will be retrofitted with the exact same seat. there is no doubt from a domestic point of view, the best domestic business class anywhere in the world. that is undeniable. it is so good that it is also good for international. i have no doubt once it is on the pacific route and the route to abu dhabi, it will more than hold its own. routes will beey flying to western australia. that has changed a little bit. how has that change things for you? john: when we launched back in

2011, we did not have any of that traffic to speak up and by launching the new service, the new frequencies and capacity, we have attracted a lot of traffic. it has been market share going for us and that market is still performing very well. no question it will continue to perform well with this product. >> fuel has gotten a lot cheaper. in the u.s., the airlines have reacted by competing aggressively for market share. not happening so much in australia. why is that? john: competition is still pretty tough in australia. we have strong competitors right now. that we have to go through to establish ourselves in the market has paid off. i would not say it is not competitive. >> your partner delta made an

investment in china eastern recently and the china market is a huge market for this region. the moment most of your flights will go by singapore, what are the opportunities to get more direct access to that market? john: for the moment, we are quite happy to continue to serve china. it is working very well for us. no immediate plans for us to fly into china. >> we saw prime resorts reporting results from their casino in perth. what are you seeing? john: if you would have asked me this question a couple of months ago, i would agree with you. evidenceing, anecdotal

certainly, in the last month or two, things are starting to become -- pick up a little bit. nothing to write home about, but we are starting to see some movement. that is seen through other industries as well. i am hopeful things will improve. >> are there any areas you expect to respond to that in the future? john: we had capacity where it is required. at the east coast, the flight between the east coast and west coast in you would be flying over two or three countries than that amount of time. it is a very long flight. we are not seeing anything slow down there. >> thank you very much. back to you in hong kong.

shery: david, thank you very much. japanese appat are makers doing that sets them apart from the rest of the world? we will find out what makes them so successful later in the show. just after the break, from the fragile five to the troubled 10, we get barclays take on the recent chaos. ♪

shery: asian currencies starts a new trading week after the devaluation of the yuan handed them them up -- the worst performance in four years. so much for joining us this morning. -- still at its

lowest since 1998. given the better than expected gdp figures, was that plunge justified? done,t the market has they have looked at recent fx reserve figures, reserves belowng 100 -- moving $100 billion. i am not sure a lot of this is justified. macroeconomic fundamentals are relatively good. again, there has been a number of noises in the past due to worries about reserve levels and the impact we are seeing from china adding to this. that is why we have seen the pressure intensify. shery: how much support do you think their exports will get? some speculation they may let it

weaken to help their exports. from a is one benefit weaker currency. there are several currencies also weakening. we have seen several competitors to malaysia have their currencies weaken. the net impact on exports may not be as significant. if the currency weakens too much, you could have to implement other policies that would higher interest rates. any sharp fall is also one welcomed by the authorities. a gradual fall may be beneficial . the pace of weakness is not likely to be welcomed. shery: the central bank governor has ruled out any repacking of the currency, but the environment seems very similar to the 1998 crisis. is that a possibility? -- it would be taking

a step back in terms of how the currency is controlled. doing, theld end up pent-up pressures on the currency, it could end up being even worse. there is a possibility, but it would be taking a step that, in our view. shery: the second biggest loser in asia, we have trade data out this week. what should we expect in their currency? perspective, further depreciation likely, but the pace we have seen in recent days across asia is unlikely to be sustained. you have to bear in mind, we have seen a little bit of rmb.iness and the

that will help asian currencies study out going forward. nonetheless, a weaker chinese currency eventually will have some impact on competitiveness, commodity prices, and that will not be beneficial to the reply upiah. shery: is it time to sell the dollar? three latest rate cycles, after the rate increases, the dollar plunges. point.s a good we do not think it is time to sell the dollar. still positive impacts on the dollar from relatively better growth. the market has not priced in the rate hikes. ,f the market had priced it in there would be a selloff. the market has yet to price in a

move fully for next month and further out and we would argue there is still upside potential for the u.s. dollar against various currencies. the euro move is unlikely to be sustained. we are still looking for the euro to hit parity. the dollar-yen sees upside risk right now. if anything, the dollar has more legs on it. shery: thank you so much. >> the number of people killed in last week's blast in tianjin has risen to 112. 95 still unaccounted for. local residents have been moved out of the area. the warehouse may have held as much as 700 tons of sodium cyanide. businesses have been severely disrupted.

apan has raised the eruption morning. the area has been shaken by at least 800 tremors in recent days. people have been advised to be ready to leave. shall i got -- sri lanka votes today. he hopes to become prime minister. analysts suggest the current pm will hang on. over the recovery. the number of tourists have tripled in six years. results are due on tuesday. another disaster hits the aviation sector in indonesia. the latest on the crash.

you are watching "trending business.

shery: the pboc yuan reference rate was little changed. slightly weaker than the closing figure. the yuan to appreciate --

depreciated last week. sayrts from indonesia wreckage has been found from an airliner that went missing in the easternmost province of papu a. it was carrying 49 passengers and five crew when it lost contact. rain and poor visibility were reported in the area just before the plane was scheduled to land. villagers saw it fly into a mountain. our next guest joins us live via skype from new delhi. give us a sense of what the terrain there is like. the weather changes every 20 minutes.

low clouds. it is pretty nasty when you fly. shery: it might be a bit too early to tell, but how much is this case an isolated incident and how much does it have to do with the fact that indonesia safety record has been pretty patchy lately? >> if you look at the region, we are looking at a risk factor [indiscernible] standpoint,stics that is pretty good. determined from that data recorders and we download and figure what happened the last 30 minutes of that flight. all focus goes on the

investigation process and the wreck -- find the wery: that is all the time have today. thank you so much for joining us. ceo of martin consulting. coming up next, stopping the slide. japan putss in pressure on the prime and is to her to refocus on the economy. whenhe opening numbers "trending business" returns. ♪

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call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. >> welcome back. japanese markets are hired today. new data shows the economy contracted last quarter. gdp fell on an 1.6% from the devious three. and into quarters of growth. themedian estimate in bloomberg survey was for a 1.8% drop. chief economist at the people's bank of china says the yuan may move and built her actions glowing last week's devaluation -- may move in both

directions given last week's devaluation. today's reference rate is little theged at just under 6.4 to dollar. has week's deadly explosion halted three toyota production lines at least until wednesday. has been powered down. the blast killed 112 people. workforces 50 of its suffered injuries. julia: it looks like we are opening a lawyer in the shanghai composite and on this -- the hang seng index. shanghai composite down .75. it is a bit of a risk in the

region. the benchmark index fell by more than 2% last week. but we are seeing some good gains coming through from japan and australia. i want to take you to some of the stocks we are watching on the china and hong kong markets. blast, we they deadly have shares coming back online in shanghai, down by 4.6%. another big fall is samsung electronics in korea. if fell 2.5%, its lowest level since october last year. on -- comingg under quite a bit of pressure. it is not getting the sales it is after and lost its bid for apple pay. some brokers coming in with some negative calls. three stocks we are watching in

the region coming up rusher. of course -- under pressure. course, the other major currency is the malaysian ringgit. .75 against the u.s. dollar. there has been a little bit of speculation that perhaps there had been some currency intervention. malaysia's foreign exchange reserves have fallen below 100 billion u.s. dollars. that is the first time they have fallen since 2010. that oilcurrency means and exports will be cheaper and could support malaysia's economy. so a little bit of speculation but the malaysian ringgit under some speculation. and let's look at the one as uan as well.y not changed today.

sherry: japan is back in contraction after two quarters of growth. gdp a 1.6% in the second quarter, slightly better than estimates. by willie from tokyo. where did these numbers mean for japan in the short run? willie: these numbers are terrible all around. you have a trifecta of bad news. consumer spending is down. business investment is down. and exports are down. the third one is a problem because of a nymex -- because abenomics is about boosting the yen. now exports are sputtering, partly because china slowing and partly because the global economy is not booming along. but these numbers are a reality check, a reminder that, for all of the excitement and japan recent years, we are still faced with a contraction situation. sherry: last week am i remember

the head riser to permit mr. abe saying they -- to prime minister abe saying the boj could do more. how much pressure does this but on the boj that the chinese yuan is weaker? willie: quite a bit. in many ways, you will see the yen rising. the boj is really what is driving the economy at this point. abenomics is really kurodenomi cs. he has been pumping a lot of money into the economy that has driven the yen lower. monetary's mlss among the rebound -- monetary policy is what is among the rebound in japan in recent years. japan is all about devaluing the currency. a very bigapan has competitor in this devaluation race, china. so kuroda at the boj, this is a

very difficult scenario. i'm sure that the boj will do in the months ahead. sherry: does abenomics mean a reboot? how would they go about doing that? willie: it means a very big reboot. what abenomics needs is a third base. it has monetary policy, fiscal policy, and structural reform. the structural reform part is the most of what impart. we haven't seen anything from the government in remaking the economy more competitive. we have seen a couple of nerf darts. the haven't really been any arrows at all. we are waiting for committees to pay employees more. their profits are up. they're not paying people more. the reason is that the structural reforms they are waiting for to make the economy more vibrant and competitive have not come through yet. that is what they are waiting for. sherry: thank you. checking in on some other stories we are following this morning, investors and hong kong higher interest

rates after the surprise devaluation last week. the average yield on offshore yuan rose to its highest since may. hong kong banks hold the biggest stockpile of offshore nimby -- rinimbe. wer of flathave a warned cold volumes and falling iron is short of aurizon numbers. the indian unit of singapore airlines has resorted to free flights to lord has addressed.

it managed only a 59% load factor in the first half. the least amount that eight leading carriers in the airline sector is saying and tends come position. you are now looking at live where polls have just opened in a parliamentary election that could see the return of the former sri lankan president webster become prime minister opinion polls and analysts suggest the current prime in us or will hold on. results are due on tuesday. you are looking at polling stations opening now i 9:13 hong kong time. at 9:30 hong kong time.

how big is the toyota operation in? tengion -- in tianj steve: i was -- craig: they make cars like the corolla, crown, vios. important operation in china because last year they cracked only one million units in the country for the first time in terms of sales. so 440,000 units, that is almost half of their local production in the country. they do have a small amount of output from japan that gets shipped into china. for the most part, if you are selling in china, you want to be building in china. toyota had that attack -- that tack. so any issue with production could be significant for the company.

the chinese market has been pretty challenging for foreign makers. what impact could this loss production have for the company's sales from now on? craig: interestingly, toyota recently found its footing in china. there has been plenty of headlines for years about the japanese carmakers having trouble in that market. really since the issues you had with the geopolitical tensions between the countries riling up a couple of years ago. the companies here in japan ever rebounded from that in a significant way. companies like ford swooped in and grew aggressively in china. just in the last few months, you have seen toyota put out these really big numbers in terms of sales gains in china. so any loss of production for a sustained period would be a real

challenge, just given the amount of resins i have in tianjin. and the company really can't afford that when it is really just finding its footing in -- and the market is as challenged as it is right now. supply constraints is not another problem you want to add to the list and roadblocks to growth of there. sherry: we are speaking about toyota. but what about other japanese carmakers? how important will the loss of access to this board be? craig: we are talking with many companies today. part of the difficulty with a determining the fallout from this is the obama holidays last week -- the oban holidays last week. a lot of these companies were down anyway. so you look at the impact to japanese companies as a result of this week, one company will be fiji heavy super -- will be

fuji heavy. ship a lot of vehicles from japan to china. you may see fuji heavy have to reroute to alternative points. we haven't heard from the company but something to watch throughout the day today. sherry: thanks a lot. the latest on toyota and other carmaker reduction in tianjin in the wake of these blasts. the rumor mill is running at full speed. zeb: we have rescuers still on the scene. more than 1000 firefighters tried to guess the blaze from the weekend. saturday, we had a two-my leave accusation zone established. take a look at the -- two-mile event duration zone established.

take a look at this crater. aboutis an investigation what materials were stored in that warehouse and what caused this crater. china now sending a team of nuclear biotech -- biochemical emergency crews. we know the death toll is now people. for those living in and around the area, there is a lot of questions, including was accountable here. this person saying -- that is a big question in this city. some are adding caution, perhaps more loyal -- and the rumors do abound. all you have to do is check your cell phone and social media. a lot of speculation on what

caused this. there is some criticism of the response. washould note that there definite loss of life among those first rest wanders. the worst since the modern founding of china in 1949. his is a significant event. up next, inc. urging signs of stabilization from china. we will take a head start look at the economic week ahead when trending business returns from the short break.

shery: stories making headlines around the world and investigations in the way the -- in the philippines where there was a ferryboat fire. many had to jump from the top

deck to escape the flames. two crew members suffered minor injuries but everybody else made it off safely. the fallout continues from the weekend flight disruption along the eastern seaboard. more than two dozen flights were delayed. delays are expected to roll over into monday morning. the facility was only upgraded five months ago. north korea has marked 70 years since the end of japanese occupation by turning the clock back half an hour. the countryrong as moved to what pyongyang calls pyongyang time. south korea is now 30 minutes ahead of the north.

shery: we have japan's gdp numbers. what should be -- what should we be expecting. thank you so much for talking to us as morning. the japanese economy contracting again after a surprise upside in the first quarter. why is this happening? guest: it does look like the initial relief from the deferment is one thing that is fading very well. the other point is that the overall a greg at demand in the economy remains weak. any hopes of exports german recovery, it has fallen short. even though there have been encouraging signs in terms of age gains, there is still

lack of consumer confidence in terms of getting household income up. so the confluence of these factors are still dragging down the japanese economy. and japan, it seems to be about consumer sentiment. how do you convince shoppers to go out and buy? guest: that's a good question. stock markets are booming. that is good for household balance sheets. wantnk households probably a bit more conviction about wages continuing to rise, especially if one is targeting higher and sustained inflation. the goal has been pushed out a bit. nonetheless, i think households remain quite cautious. japan probably cannot divorce itself from the global trade

cycle. those take a while for consumers to be convinced and her confidence to come back. it doesn't happen in isolation, i'm afraid. shery: we have july property prices coming out of china tomorrow. hasn't that market bottomed out? how much do these prices mean in order to give us a picture of the economy in china? guest: i think china's property market remains a very key area to watch. and the important to station to make is between prices and transactions. we are looking for transaction volumes to continue picking up. that would eventually lead to a more distinct bombing in prices across three cities -- 32 cities. -- across three tier cities. they will continue to weigh on the markets. but there are green shoots emergency and that is contingent on the volatility in the market,

the fx markets, not the destabilization that we have seen. shery: in india and indonesia, trade figures out this week. we have seen sluggish exports there. guest: it looks like, in the near term, the upside will be quite constrained. we saw in india's numbers that exports remain rather weak. that probably will remain the state despite arguably some gains that should have been realized in the currency effects. in indonesia, more clarity on exports and a clinical situation will be required -- the political situation will beer --ed before things pick up the political situation will be required before things pick up. the upshot is that anyone arguing for effects from weaker currency, a weaker exports

environment currently. shery: thank you for speaking to us this morning. next, we are making -- on aptitude for making money, behind the scenes with japanese trade makers and the tricks they used to turn a profit. you are watching "trending business." ♪

shery: japanese game producers have become the best in the world at making money on free apps. people familiar with canned a crash, clash of clans, games you can download and play crash,e -- with candy clash of plans, games you can download and play for free. guest: even for people who watch

the smartphone gain space, it can be a mystery how these companies can generate billions of dollars from something that is available for free. live up is the company -- the cutting age of the monetization used by these companies. it is data psychology and art where these companies hire -- hire teams of data analysts as well as game of veteran designers to constantly churn out content in the foremost limited time events. called final fantasy recordkeeper, at any given time, a player will find scores of events and quests that are completely brand-new and available where they can get additional armor, at rated their skills or gain rare items. but the key is that these events are only around for a week or two and sometimes only 24 hours, which makes gamers come back frequently, stay and eventually pay up. app, awhen i get a free

free game, if they make me pay, i will stop playing. how are japanese pushers making people pay up for what they call free games? pavel: it's a pretty tough balance -- it is a tough line to tow. on the one hand, they want to generate revenues. on the other hand, they don't want games that generated to something called paid to win. of 50 employees games data analysts to carefully tweak the difficulty of the quests to make sure that people are there to pay but still enjoy the games. and these have paid off. japanese companies are are among the top earning companies in mobile game space today. shery: thanks a lot. that was japan's gaming industry

and have free apps are making people pay. will sri lanka is current president consolidate power? or will a former president make a comeback? more on "training business." ♪

shery: good morning. this is "trending business." ♪ live in tokyo and call on the -- live in tokyo and or later in the morning and china's devaluations of rise the market and wounded already weak regional currencies. the ring it continue -- the to fall.ntinues

disappointing data puts pressure on shinzo abe to refocus efforts. it is election day in sri lanka and a vote that could see a political comeback for the former president. think ofow what you today's top stories by following me on twitter. don't forget to include the # 20business. : we have seen the chinese and hong kong markets open in new trading week week or. only health care stocks are higher. crude oil now holding at those six-year lows in the fair market and an injury down by 2% in hong kong.

e just have -- in south korea, the cost is being -- the kospi is being weighed down to its lowest levels in nine. -- in nine months. as you mentioned, gdp numbers in japan were better than expected. we are seeing health care stocks up by 1.3%. stays in australia and supporting the asx 200. new zealand is up by 1.6% -- .16%. this is tianjin port, the scene of that explosion.

this is an oil and gas company dow lower by 3% today in hong kong. our main story, japan contracted in the last quarter, snapping two previous periods of growth. the economy minister but the disappointment down to what he calls temporary factors. not much to smile about in today's data. yvonne: not really. this is a big setback for prime minister shinzo abe. the economy's weakness continues to slump and experts, consumer spending were major factors for the contraction. blame it on the bad weather, the annualized gdp. the first drop in three quarters as the government realized a 4.5% expansion in the first

quarter. a 4.5% expansion in the first quarter. growth stillwage not matching corporate profits, which reached a record high level. consumption also dropped for the first time in four quarters. consumers still trying to deal with the tax hike in pay. japan also saw lauck -- lackluster business investment .1%.w a drop of on --e devaluation of you the debit -- the devaluation of yuan is a challenge. the pressure now on shinzo abe to shift the focus back to

abenomics. he is counting on this weakness to fade this quarter. shery: face a lot. over in china, -- thanks a lot. over in china, the economy could be growing slower. stephen engle is looking into this. thepoc has declined to -- pboc has declined to offer what it sees. yuan will probably move in both directions in the future. the latest bloomberg survey of economists showed that they chinese economy is growing more slowly than the official data suggest. and if policymakers know that underlying growth is weaker than say,t they have been

it is understandable why they are throwing everything to stimulate growth. targeted fiscal stimulus and now , as of last week, a devaluation of the yuan. china says the economy grew at 7% in the first half. economists surveyed said it was more like 6.3%. when we ask economists to give their full year real growth rate, not what they expect the government to name for the full year, which is 7%, they expect average growth of 6.6%. so it is weaker than what the government is saying. even at 7%, china's economy is heading for its slowest pace of annual growth in a rotary century. shery: thanks, steve. we will take a more detailed look on that story and other stories later in the show when we do want your opinions. please tweet us your thoughts. include the #trendybusiness.

#trendinga -- business. current crest mining's expectations.ut last month, they sold to their lowest since 2010 on the prospect of rising u.s. interest rates. the weaker rossi is a boon to local producers' margins. expecting 2.4 to 2.7 ounces. iran's opec representative says the cartel could boost oil production to 33 million barrels a day after sanctions against his country are lifted. it came with the global market already overflowing.

saudi arabia and iraq are responsible for that oversupply according to a report by iraqi state news. crude oil has lost half its value in the past year as u.s. reduction jumped to the highest level in more than 40 years. and saudi output hit a record during the period as well. prices collapsed after opec members decided in november to maintain production rather than sacrifice market share. to the retail space now, alibaba is stepping up competition with .com.com, -- jd alibaba is offering extra acidity deals do brands if they switch over from other platforms like jd. alibaba this month signed a deal with china's largest electronics

dealer. shery: coming up later in the show, we will look at why vietnamese poultry farmers are in a lap about u.s. exports. sri lankans head to the polls. we will find doubt more with our next guest. ♪

shery: japan has raised the eruption warnings. secretaryround mount jima has been shaken by at least 800 tremors in recent days. --ple have in advised to be

have been advised to be ready to leave. the reactor is operating normally. the number of people killed in last week's rally blast has reached to 112. local residents have been moved out of the area as investigators theto confirm reports that warehouse that exploded may have held as much as 700 tons of sodium cyanide. itsta says three lines at chinese plants will be shut until the middle of the week. voting is underway in sri lanka could meanion that the comeback of former president mahinda rajapaksa. has residedmesinghe over the recovery from the civil war and the economy has grown 7.5%.

the number of tourists has tripled in six years. results are expected on tuesday. shery: let's look behind the headlines of this story. welcome to the program. how does the economic outlook for sri lanka change depending on the results of today's votes? adrian: there has been more economic clarity. the economy will grow at a faster pace than previous quarters. rate,core is the exchange there has been a slight appreciation. -- slight depreciation. the interest rate, we will see if the u.s. increases. we will have to increase a little bit, but not very much but to a moderate level.

shery: do you see more stability in the economy, even if former leader mahinda rajapaksa takes power here? adrian: bs. -- yes. whoever comes with a current president will work with the party that goes into power. this is what the people want. they don't want anything else. people will reward [indiscernible] politics in sri lanka has been pretty challenging this year. how has this affected the sri investorsnomy and the ' image of sri lanka? adrian: that was an unfortunate

thing, the presidential time.ons coming at this that was an unfortunate incident. everybody was expecting, ok, we need the general election. after the general election, it will be more stable. i think economic stability will come. political stability and economic stability. after the 19th amendment, that brings more economic stability. shery: china has been investing heavily in sri lanka. what impact does the yuan

devaluation have on the economy? adrian: we would have to evaluate the currency a bit to keep pace with china. be morelations will smooth after the general elections. they relations have been very good. they have been more balanced form policy. not one-sided or lopsided policy. shery: we have seen improved relations with china, especially under mahinda rajapaksa rule. how will this be after the vote? if he doesn't come the current government will continue that frame. they have insurance or projects that were started will continue.

[indiscernible] the projects are chinese funded and have already started. shery: we are looking at live pictures from voters taking to the polls right now. we have seen sporadic violence in sri lanka leading to the polls. how much of a risk is there for more violence if we get a hung parliament? how would that affect the economy outlook for sri lanka? adrian: i don't think that there will be sporadic violence as such. can experienceou anything. there are one or two incidents. but they are only sporadic. there's no need to worry on that side. there is more stability after elections.

everybody understands now, ok, we don't need to go and fight. shery: briefly, how you look at it right now, issue look at a buy or a sulfur you? adrian: i would -- or a sell for you? adrian: i would say it is a buy. the economic prospects are good. unfortunately, we had some elections coming in. stable. really adrian, thanks a lot. so buy for sri lanka as the voters go to the polls. coming up next, stopping the supply chain. we will look at the blasts at tianjin is affecting toyota's

production when we return. ♪

♪ shery: welcome back. you are watching "turning business." toyota's car production in tianjin was just rubbed it in last week's violent six lotions

three plants shut until at least wednesday. how big is the toyota operation in tianjin? guest: toyota has three really big production operations. this is the biggest of those three. last year, the company for the first time sold over a million vehicles in china. and this operation had 440,000 vehicles produced. so a substantial portion of toyotas business in china comes from this production hub. at this point,d, the company has said at least three days the production will be down. they did not lose any production last week week as the company was on holiday. the expectation from the company is that the losses will be contained to those three days.

as you can see from these pictures, the amount of damage was incredibly significant. and it remains to be seen whether the company will have trouble getting parts supply through the ports. as long as the port is down, whether there is any impact supply -- impact to the suppliers and may prevent toyota assembly operations from going down. there are still some questions to be answered in terms of whether or not they company can resume production by thursday, as is their expectation at this point. shery: hal is this loss of production -- how is this loss of production going to affect their toyota sales in china? it's been pretty challenging. craig: the company has for a long time lag behind vaux -- lagged behind volkswagen and gm who have been dominant as foreign brands in china. but really, the last few months,

the company has had some significant sales success and outpace the market as the broader industry is really slow it -- has really slowed down. this could be a challenge for joy i do overcome, to keep that -- for toyota to overcome, to keep that up in this production hub. these are some cars that toyota counts on for a lot of their sales in china. as long as they have difficulty with producing them locally, that is going to be a roadblock for them to keep that growth up in what is a challenging market. shery: so we are talking about toyota. what about other carmakers? tianjin is an important port for other japanese manufacturers. craig: absolutely. the industry a large gets a lot of shipments through this port.

there are a number of other options that the industry has. one company to keep an ion today, as we report further about the impact and fallout from last week's incident, will be fuji heavy. subaru does not have local production in china. and a significant number of vehicles go through this port. so to the extent that they are unable to get cars into china, that could be a significant blow for them as well. shery: thank you so much for joining us. the rumor mill is running at full speed in the wake of these blasts. zeb eckert has that story in today's check of what is trending on social media. zeb: that's right. the tragic death toll continues to rise -- 112 people died, 95 toll onssing, and the first responders, firefighters,

we are beginning to see that now. stillrs and firefighters trying to put out the reminding -- the remaining fires. and now concerns about what chemicals may have been released and did they travel further inland. that is why officials have cordoned off a two-mile zone around the blast site, with potentially sodium cyanide and other toxic chemicals may have been stored at the warehouse. military chemical experts now on the scene from beijing to examine this site. take a look at the crater that resulted. this is no ordinary blast. it set off a lot of speculation over white happened, why these chemicals were allowed to be stored, and who has oversight for this area. is something larger happening here? lots of speculation and views on both sides are pounding online. locals areat what saying on the main chinese social media portal.

with no that executives from the company that ran this warehouse are now in custody in china -- we know that executives from the company the ran this warehouse are now in custody in china. there has been some criticism over the disaster response. certainly, this is an unprecedented disaster, one that will continue that -- one that we will continue to get details in the days ahead. continues itsgit slide back to the late 1990's. we will head to kuala lumpur for the very latest. you are watching "turning business." ♪ ♪

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shery: the top stories trending this hour -- japanese markets are higher today despite new data showing the economy contracted last quarter as consumers and businesses cut spending. 1.6% from the previous three months, ending two quarters of growth. the median estimate was for a 1.8% drop. -- theple's economists economist at the people's bank of china says that hthe yuan

may move both directions. they will review the possibility of sudden fluctuations. today, the rate is little changed. explosions inadly tianjin have interrupted toyota's operations there, with three of its production plants shut down until at least wednesday. however, production has been powered down. the blast killed 112 people. toyota says 50 of its workforce suffered injuries. now for a look at what's moving the markets. >> we are seeing quite a bit of onght this -- of weakness mainland china and the shanghai composite. the hang seng is down by 1% with oil and gas dragging.

singapore, malaysia, taiwan, and the philippines. the philippines market down by about 0.4%. a big drop coming through from samsung, shares at a nine-month low. we are seeing quite a lot of good buying, particularly from japan and australia, coming back from last week. the nikkei is a by about 0.4 -- is up by about 0.4%. moves coming through in health care in japan. has been's asx supported, despite the fact that we have had earnings missing expectations. sharemarket and the new zealand market doing well, up by 0.6%. i want to show you some of the major stocks we are watching this morning. the tianjin port, the scene of last week's deadly explosion,

has come back online. these shares are down by about 315% -- 3.5%. noble group in singapore is down by 7%. it has fallen quite significantly. it's been down this much as 8% this morning. as i mentioned, samsung is weighing heavily on the overall kospi, down by 2.5% at the moment, shery. shery: breaking news from thailand, where the latest gdp figures have been released. 2.8% in thegrew at second quarter. that is in line with estimates and below first-quarter growth of 3%. figure forp growth the second quarter, the economy growing 2.8%, in line with estimates and slower paced than the previous quarter. of course, thailand has been hurt by an el nino induced

drought as well as exports falling every month this year. story, china's economy could be growing more slowly than official data suggests, helping explain why the yuan was devalued. let's bring back stephen engle for more on this. what's the relationship between economic growth and yuan devaluation? stephen: i will talk about slowing growth in china. you mentioned the exports out of china -- thailand decreasing. the chief economist from the pboc saying that the yuan will probably move either up or down. it's going to be based on the fundamentals at the time. they will see adjustments based on how the economy is faring. even if the central bank needs to intervene, "in the market in the future, it could be either way." he is hedging. we might move it up or down.

the market might move it up or down. it will also be based on the economic performance at the time. china says the economy grew 7% in the first half. bloomberg survey of economists, a little more realistic. the full-year government forecast set at 7%. the same economists we polled say it will be 6.6%. that's probably why we have seen a number of different stimulus measures, four interest rate cuts, fiscal support, and yuan devaluation -- all indicating makersrhaps policy realize the real economy is slowing more than what the forecasters have said. shery: we talked about the thai baht. the thai gdp coming in line with estimates, feeling the pressure of everything going on in china. stephen: morgan stanley came out with the fragile five the current -- five currencies,

based on the economy at the time. that is now increased to about 10 currencies. they are not calling it the bloomberg is," but calling it the "troubled ten." it includes the south african rand. emerginges many asian currencies, including the thai baht, the taiwan dollar, the singapore dollar, the korean won, the colombian pesos. let's bring out the bloomberg emerging markets index, falling to a record low. this is the pressure that we are going to be probably seeing continuing as china have devalued, china's economy is slowing down, and the u.s. is about to hike interest rates. that's going to be added pressure on these emerging-market asian currencies. shery: steve, thanks a lot. we will stick to currencies right now because malaysian ringgit is also on the steepest

line since -- we were talking just now about the strong dollar, also the yuan devaluation putting pressure on asian currencies. what is driving the ringgit's plunge? reporter: as you said, it has been a mixed picture in the foreign currency market, given that there is speculation of a us-led rate hike weighing on emerging-market currency. the ringgit's deepest slide since 1998. we saw a 3% drop. the ringgit was extending losses this morning. malaysia is a net oil exporter. we are seeing the selloff. this is the longest back-to-back selloff since the 2008 global financial crisis, compounded by uncertainty over the domestic political scene. a strategist says that the ring

it will likely remain on the back foot -- the rate get -- the ringgit will likely remain on the back foot. we are seeing malaysian foreign reserves plunging below $100 billion. is that a sign that the central bank got in there to support the currency? the $100 billion mark is a psychological level. coming below that is certainly something which is of concern. your today, it has fallen -- year-to-date, it has fallen. the central bank governor has said they need to rebuild the reserve so they can ensure that there is enough ratio here. given that the situation over the ring it -- the ringgit is something we are looking to the

central bank for guidance over, last week, they ruled out introducing capital controls. these measures were introduced to stem the plunge in the ringgit during the asian financial crisis. another economist says capital controls are not likely but cannot be ruled out, given the depletion in foreign reserves. shery: thanks a lot, sophie. the latest on the malaysian ringgit. checking in on some other stories we are following this morning. investors in hong kong are demanding higher interest rates to hold the yuan after a surprising valuation last week. the average yield rose. the three-month interbank rate also spiked. rates.ompted a rise in hong kong banks hold the highest rate of offshore renminbi. full-year profit

beating estimates. aurizon. despite having warned of following iron ore numbers, they said it would deliver on its financial targets. aurizon rising strongly in sydney, 4.5%. shares have dropped nearly 10% this year. the indian unit of the airlines has resorted to free flights to lower passengers -- to lure passengers. it is offering a free companion ticket. growth among the eight leading carriers. there is intense competition. last year, they offered base fares as low as 2 cents. says bloomberg survey china's economy may be growing more slowly than official data suggests. official numbers say there was

7% growth in the first half, but economists think the real rate was lower than that. let's bring in our chief asia economics correspondent. how do we explain this discrepancy? reporter: china set to growth target every year -- china sets of growth target every year. we surveyed economists from last week and said where do you think growth really is. it came in around 6.3%. they said you need to look at indicators like electricity consumption, imports. that gives you a better gauge of where china's economy is at. not many think it is coming in at the 7% level that the government has it coming in at. shery: what is holding things back in china? enda: we know they have problems with exports. external demand is weak. we know there are parts of china's economy that are going through a cyclical downturn.

they have structural issues, too. they have slowing productivity. they have a slowing population growth. they have an aging population. they have a number of problems that they need to deal with to really grab the bull by the horns if they do want to transform the economy in the way they are talking about, or else they will have to really back away with these overambitious growth targets. shery: last week's surprising valuation of the chinese yuan, was that because they are acknowledging that the acorn -- the economy is slowing more than they expected? could we see further weakness? enda: we will have to watch day by day. there is a debate out there, was it a market reform dressed up as an old-fashioned devaluation? they are -- there are diverging views. you can't ignore that they chose the timing of when to weaken the currency.

i will say they have not devalued it at a scale to be a game changer for exports. it would require a lot more than that. shery: analysts saying it would need a 10% evaluation or more -- 10% devaluation or more. enda: it is also weak demand in markets like europe as well. shery: thanks a lot for that, enda curran, on the latest gdp numbers out of china and what the real rate could be. looking at live pictures from tianjin, where relatives of the missing people and owners of destroyed houses are staging a protest. tianjin has been affected by blasts last week in a chemical warehouse that killed at least 112 people. missing.eople remain we are looking at live pictures of relatives of those people missing, at least 95 people missing, and also owners of destroyed houses, now stating protests.

a northern port city in china that also deals with shipments of metal ore, coal, autos, and crude oil. they saw a blast last week at a chemical warehouse that killed at least 112 people. relatives are now staging protests there. they are trying to speak to authorities. we will get you the latest on that later in the program. and coming up next, how a price war over chickens is causing free-trade bubbles in vietnam. we're live in hanoi, next. ♪

zeb: time for a check of headlines around the world. a ferry caught fire in support -- a port with more than 500

passengers on board. several people had to climb from the top deck to escape the flames, and at least one person jumped into the sea. two crewmembers suffered minor injuries, but everybody else made it off safely. the fallout continues from the flight disruptions on the eastern seaboard of the u.s. more than 2000 flights were delayed on sunday, at least 150 canceled. delays are expected to roll over to monday morning. fault atwere hit by a a facility that was only upgraded five months ago. north korea has marked 70 years since the end of japanese occupation by turning the class desktop back half an hour -- by turning the clock back half an hour. it returns korea to the time zone it had until 1912, when the japanese occupiers moved it the

same time as tokyo. south korea is now 30 minutes ahead of the north. sayy: vietnamese farmers they are losing millions of dollars to cheap frozen chicken from the u.s., which they say is either being dumped at below market prices in the southeast asian country or is damaged meat. a bloomberg reporter is standing by in hanoi. what is the situation like? reporter: feathers are definitely ruffled in vietnam. farmers here say they are losing a lot of money because of less expensive frozen chicken imported from the united dates -- states. the chicken controversy comes as vietnam aggressively seeks free-trade agreement -- they recently signed a deal with it eu and are participating in negotiations -- [no audio] shery: so, why do these vietnamese farmers believe that

u.s. exporters are undercutting them? john: there is a sense in vietnam that a country as wealthy and expensive as the united states could not possibly ship chicken all the way across the globe to vietnam and sell it for a price that is less than what domestic farmers produce. representatives of american poultry companies point out that large u.s. companies are able to get animal feed at far less cost than their counterparts in vietnam, many of whom are farmers -- small farmers. they also point out that most of the chickens that american companies sent to vietnam are chickens that are not popular -- are leg quarters. they are not as popular in the u.s. they sell for much less in supermarkets in the u.s. shery: how is the vietnamese government reacting to these claims? john: the ministries of trade

and agriculture are looking into the allegation, they say. but it wrappers -- but representatives from the u.s. poultry companies do not believe the charges will stick. they point out that most of the chickens at the u.s. companies -- that the u.s. companies sent to vietnam are used in large factory cafeterias to feed tens of thousands of workers, so they are not directly competing with poultry produced by domestic farmers. most vietnamese consumers prefer what they call feathered chicken chickening chicken," that is slaughtered shortly before they eat it. theywant a very fresh and aren't interested in frozen erican chickens. perhaps this is a painful lesson for one sector in vietnam in global trade. shery: great to talk to you, john boudreau, in hanoi. you can get more on that story

anytime, anywhere. just download bloomberg+. next, freebies for flyers. the indian airline that has been giving away tickets. it will be live in mumbai to ask if there is a catch -- we will be live in mumbai to ask if there is a catch. ♪

shery: welcome back. you are watching "trending business." i am shery ahn. vistara has resorted to free flights to lure passengers. let's get to mumbai for the details. what can you tell us? reporter: singapore airlines and stake. group have a they have resorted to free

tickets as intense competition and low fares are set to try and customers -- and woo customers. 30th ofgood through the september. filled about 59% of seats on average for the first half of 2018, the least of the eight major carriers -- of 2015, the least of the eight major carriers. earlier this week, we saw a budget carrier, air asia india, introducing a promotional fare. we have seen others introducing promotional fares. comments fromrd the aviation admitted -- ministry. givene these offers being

by airlines. air asia offering domestic routes for less than $15. sunanda, thanks a lot. break,we go to the disney is bringing a galaxy far, far away to its two theme parks in the u.s. in one of the biggest expansions in the company's history. both parks will get "star wars" themed expansions with construction due to begin in late 2017. disney ceo bob iger has made expansions one of the cornerstones of his tenure. next year, he will open the $5 billion disney shanghai resort. "stuniversal pictures film raight outta compton" topped the north american box office on its debut, smashing records for

an augst -- august r-rated movie. cost $20 million to make. positive reviews and viral marketing have helped the film thek out beyond fans of highly influential gangsta rap group. extending last week's losses. they have been falling for four consecutive weeks. let's take a look at other markets trending in the asia-pacific. 0.3%,panese market rising gaming after data showed the economy -- gaining after data showed the economy grew less than expected. let's see what other markets are doing.

that's it for "trending business ." stay tuned for "asia edge." angie will recap the big stories of the day so far.

angie: it's the middle of the asian trading day, and that is a live look at the imperial palace in central tokyo. second-quarter gdp came in with a resounding -- falling less than expected. that's good news for the economy there. it's one of the major markets we are following closely for you. this is "asia edge." the top stories this hour -- signs of stability. the yuan fluctuates the least in

a week as the pboc brings calm back to the markets. but, ouch, feeling the pain, the ringgit slides once again, extending its fall through levels not seen since the asian financial crisis. and a call to arms means shinzo abe must refocus his efforts on the economy. it's election day in sri lanka. rajapaksa, mahinda bidding for a dramatic comeback. will he do it? all that and more in this monday edition of "asia edge." jule: i'm keeping an eye on market and currencies -- on markets and currencies. the ringgit is extending its 17-year low. is nikkei is a i 0.4% -- up by