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 0.4%.

some good news in australia, the %.x up 1/3 of 1 thailand has just come online. pretty flat. it was growing by 2.8% in the second quarter, pretty much bang -on estimates. i will get to currencies in just a moment. witness coming through the rest of the asian region. weaknessdown 1.5% -- coming through the rest of the asian region. malaysia down 1.5%. the shanghai composite down by 3/4 of 1%. the only sector higher in that market is health care stocks. most of the weakness is moving in following the gains we saw on the shanghai composite on friday. let's have a quick look at the malaysian ringgit, tingling it's slide against the u.s. -- continuing its slide against the

u.s. dollar. it's at the 17-year low, levels we haven't seen his 1998. other currencies under pressure -- seen since 1998. other currencies under pressure. the so-called troubled five could become the troubled 10. the south korean won is down. the thai baht also falling. those currencies doing a woozy. china's economy could be growing more slowly than official data suggest, helping explain why the yuan was devalued. let's bring in stephen engle. what are official saying is the correlation between the yuan and the economy? stephen: this sparked the devaluation last week. according to pboc and other officials in china, the yuan got out of whack, if you will, distorted.

other regional currencies started evaluating -- devaluing. the yuan will probably move in both directions in the future, indicating that it will be more in line with how the economy is doing. it's very interesting. we can bring up the four-year chart. far on the right side of the screen is that big spike. four years ago, the yuan was exactly -- almost exactly the same date -- the same value. it's as if the pboc hit the reset button. let's go back four years. we will not be paid exactly to the u.s. dollar -- be pegged exactly to the u.s. dollar. we will let the markets play more of a role. it lost 3% of its value against the u.s. dollar.they seem to be comfortable. they say that's where the currency should be. china says the economy grew

percent in the first half. -- grew 7% in the first half. we surveyed economists and it was less than what the government had been saying. angie: still the slowest growth we've seen in a long time. stephen: even though the government has that rather lofty 7% target, economists that we surveyed say that they probably knew the real story. that's why they did the cuts, the targeted fiscal stimulus, and now the devaluation of the yuan. angie: no doubt they see their numbers exactly the way it is, rather than what they want us to see. juliette detailed all of the currency rushers happening around -- currency pressures happening around the region. how does this affect the region? stephen: there is fairly stagnant global growth. that will put more pressure on

the export-dependent regional economies that send so many of their goods to china. they are buying less. it's going to hurt the regional economies. two years ago, morgan stanley had its "fragile five," which included the real now -- the ria l, the rupie. -- the rialeal, the rupiah. now we are calling it the "troubled 10," we expanded it, not morgan stanley. the thai baht, the taiwan dollar, the singapore dollar, the korean won, among others added to this expanded troubled 10. synonyms that t could go with 10. terrified. the alarm bells are ringing in malaysia.

we are watching the ringgit on its steepest slide since 1990's -- since the 1990's. let's cross over to sophie right now. what's driving this decline? as you and steve were just saying, it has not been a pretty picture for emerging-market currencies. the ringgit has seen a steep decline, the worst since 1998. the ringgit this morning extended losses, tracking the weakness in crude prices down about $41 per barrel. malaysia is a net oil exporter. byhave seen net selling foreign investors, $3 billion longestar to date, the back to back selloff since the 2008 global financial crisis. this compounded by the domestic political scene. given these factors, the ringgit will likely remain on the

backdrop, despite the drawdown we have seen in reserves, which indicate that the central bank is attempting, perhaps, to support the ringgit. last week at a friends -- press conference, the central bank said it is unlikely the capital controls will be introduced to defend the currency. the local benchmark index also opened lower this week, separate slowest growth -- set for its slowest growth since 2012. angie: thank you so much for that, so be. we have -- that, sophie. we have been asking guests all morning about factors moving the markets. one says that china has weighed on the ringgit. >> i'm not sure a lot of this is justified. --ro growth and five group and fundamentals are not really good. there have been a number of noises in the past, due to

worries about reserve levels, etc. and, of course, the impact we are seeing from china now adding to this. that's why we've seen this shirt on the ringgit intensify -- this pressure on the ringgit intensified in recent days. angie: looking ahead to china's property prices tomorrow, he says that recently data was probably behind -- recent weak data was probably behind the decision to devalue the yuan. >> that's going to be week through the second -- be weak through the second half of this year, irrespective of the way prices are going. they need to find some way to stimulate the economy. that motivation is still going to be there. angie: with japan's gdp contracting last quarter, when economist spoke about whether a weak yuan could take a toll on the country going forward. >> change in the yuan exchange

rate itself is not going to have a huge impact on japan's growth prospects. we don't think it is going to affect japan's competitiveness that much. however, i do think it speaks to concerns over the weakness in global trade and world growth in general. angie: and that was the word on currencies. japan's economy contracted in the last quarter, snapping two previous periods of growth. gdp fell 1.6%, slightly below estimates. minister put it down to what he called "temporary factors." smile about in today's data, but not too much to frown about either, right? reporter: when economist here in japan said there was nothing good about today's gdp data -- one economist here in japan said there was nothing good about today's gdp data.

the slump in exports -- consumer spending, a major factor for the contraction. blame it on the bad weather. the first drop in three quarters, down 1.6%, after the government revised and expansion in the first quarter. snapping two quarters of growth. economy minister said more efforts are needed to boost wages in capital spending. pace of wage growth is still not matching the corporate profits, which reached this record high level. consumption dropped for the first time in four orders as consumers try to -- in four quarters as consumers try to deal with pay that has not seen the same rising pace. china adding to the problem in japan. the devaluation of the yuan may

add more challenges for the country in re-inflating the economy. said that japan should not worry about china's valuation and that they could offset it with monetary policy. but they don't expect any fiscal stimulus moving forward. that long-term prospect, that structural reform in japan, the third arrow slowed to a crawl. -- reboot of abe abenomics. angie: let me bring you some life insurance now -- some live pictures now from tianjin in china, where survivors of last week's fatal explosions are staging a mass protest. many lost relatives. others homes were destroyed. the number killed has risen to 114, according to the chinois news agency -- the xinhua news

agency. investigators are trying to confirm reports that the warehouse may have held as much of sodium cyanide. the tianjin port remains closed. businesses have been severely disrupted. looking ahead, an app-titude for making money. behind the scene at japanese makers -- game makers and those tricks they used to turn a profit. australia's largest free college company beats estimates. we will speak to a rising -- to aurizon when we return. ♪

welcome back. you are watching "asia edge." ustralia's leading rail freight

company has beat estimates. despite having warned of flat call volumes and -- coal volumes, it said it would deliver on its financial targets. investors truly liking that. -- investors surely liking that. i would like to welcome aurizon ceo lance hockridge. it's great to welcome you, sir. can you tell us, despite some of the headwinds on the horizon, with falling commodity prices, why you were able to beat estimates here? lance: it has really been around what we call the transformation of the business. in a year of relatively flat revenues, we have had very solid volumes that we have been able on the cost and efficiency side of the equation.

years since2 privatization, our margin has improved from high single digits 25% in this of announcement we've made today. you are definitely listening to your investors. earlier in the year, that's exactly what they wanted, despite what you had been pushing for, which was more of a growth strategy. has that changed now because of the recent news coming out of china? certainly, this china slowdown we are seeing, also falling commodity prices. lance: there is no doubt that the world of the commodity business is a more challenged world. we are still working on some of those growth projects, but we have always said that they will only proceed in a circumstance where we are now -- we and our partners can be convinced we can make our target returns.

our focus has always been on the core business, on looking after our customers, improving the safety of the business, which, again, we have done this year, and really continuing the transformation journey. that has now been a solid period of many years, and we look forward to that again in the future. angie: this is one of those growth decisions you have to make. where are you exactly are not? still 50/50 odds that it's going to move forward? lance: i'm not sure what the odds are, but, today, for example, we have been clear that, for a project looking at a 1/3 increase in throughput, we have been able to reduce the capital cost estimates so far by $1.5 billion. between now and the end of the year, we continue to work on

what the operating cost will be, what the further opportunity is for reducing capital cost. the mine people are looking at the quality and cost. there will be a further decision at the end of this calendar year as to whether we proceed. angie: does the weaker australian dollar also help here? yes.: inevitably, in terms of the range of costs, both from the project costs, but even to go back to our core business and the focus we have on our core business. the combination of what, from our customer point of view, they have been doing around cost and efficiency on the web and and a change in the australian exchange rate certainly helped materially. our customers very much are focused on volume and using the volume labor in a competitive

market. so, even in relatively flat market, we have nonetheless had the kind of strength of throughput numbers that we 2015,ed for fiscal year and we have started the same way for the current financial year. angie: all right, lance hockridge, we're going to leave it there. thanks for joining us first on bloomberg, the aurizon ceo. headlines making stories around the world. indonesians confirm that a commercial plane has been found. debris has been spotted in the mountains. recovery teams are on their way. it lost contact flying from the regional capital as the weather worsened rapidly. there were 49 passengers and five crew on board. it is not known if anyone survived. the fallout continues from the weekend flight is russian along

the eastern seaboard of the united states. -- the weekend flight disruption along the eastern seaboard of the united states. delays are expected to roll over to monday morning. airports were hit by a fall at the leesburg virginia air traffic control center -- by a fault at the leesburg virginia air traffic control center, which was upgraded only five months ago. sakurajimaunt has been shaken by at least 800 tremors in recent days and people have been advised to be ready to leave. they fired up the reactor despite public opposition and fears of another accident. they say the reactor is operating normally. sri lanka votes in a poll could see a dramatic comeback for a former president. we will be live there when we return. ♪

angie: welcome back. you are watching "asia edge." voting is underway in sri lanka in an election that could see former president mahinda rajapaksa make a dramatic comeback to politics. aoomberg news editor --

bloomberg news editor joins us on the line from colombo. what are you expecting today? reporter: there are not many credible opinion polls, but the ones we have seen suggest that the president's allies will see a victory today and that it will be quite difficult for former president rajapaksa to come back to power in any way. these are parliamentary polls. the best he can do is become prime minister, but to do that he needs to be appointed by the president and the president has said he wouldn't do that. even so, if the former president's party does see a strong showing, then that could lead to policy clashes down the line. lost lastn rajapaksa year, it was a resounding surprise, really. it really shook up the stage for a lot of foreign investors. what does today's vote mean for investors now?

reporter: that's right. many people didn't see the earlier results coming. that was quite a surprise. while he wasa, seen as authoritarian by his opponents, he was also good for economic growth. the economy grew more than 7% over the past decade. you've seen the number of tourists triple since the civil war ended in 2009. since the new president came in, people have been wondering about the policy direction of the country. is notchmark stock index doing as well as it had in previous years. but many people are looking to today's parliamentary election to see of that consolidates the current president's victory that he won in january. and if the president's allies win, then a lot of people see that helping for policy continuity. that would help the economy.

if the former president, rajapaksa, does well, many people expect more policy clashes, a lot of political bickering, and that could be bad for economic growth. thanksdaniel ten kate, for watching that for us in colombo right now as we continue to watch exactly what happens in that horse race. we are looking forward, meanwhile, to the afternoon's business in tokyo. we will get the latest on japan's reopening after this short break. we have seen gains pretty much all morning following the broader markets. onebound in wall street friday. the won stabilizes. ♪

>> the top stories this hour is one of little changed today as they bring stability to the market following the devaluation that triggers the current these biggest loss in two decades. economist says it may move in either direction following last week move. market oriented pricing will help reduce the possibility of sudden actuations. battered by the political scandal at home.

something not seen since the 1998 asian and enter crisis. and despite new data showing the economy contracted last order, gdp fell 1.6% from the previous three months. 1.8% drop. bloomberg columnist, what is the contraction mean for the country and prime minister shantou of a? into abe?u o

>> you saw business and investment all and exports sputter. and boosting exports is not even working out. the problem in some ways is china. doing very well. the u.s. is growing but not to the extent japan needs. it really is time to focus on the voters that improve living standards and that is fairly not happening. >> china is also devaluing the yuan. met -- thear yen dollar yen rate matters less than the dollar yen you one rate. china's economy is more

important by about 13 percentage points. the weaker china gets, the worse it is for japan. again, it is about weakening the yen. china is competing in japan in this race to the bottom. the one thing japan's economy have going for them is now being questioned. as doj will have to do more the year goes on because it is the only source of stimulus. >> 32 months of abenomics.how is it doing? >> i would give it a four at best. it has three arrows, but really it has one. it the central bank. the third arrow, the most important one will make japan more competitive.

activity, i would give it a four. and i think that would be generous in some ways. you would expect japan would be growing at a steady pace to be creating jobs. that is rising. it is mandate after all. >> you know you're not the only one harshly judging abenomics right now. our bloomberg view columnist. >> we are seeing a little bit of mixed picture in the asian region.

china will probably resume by years end. on the malaysian sharemarket, down by 1.6%. a couple of major players we're watching around the region today. the season very much in full swing and australia. ceo andheard from the the shares doing really well. also doing well after its earnings are up 4.5%. by .6%. things down

after the blast, shares down by 2.5% in mainland china. we have the oil price. region,where around the dragged by 6% ahead of the investment. it is basically most of last month's rally there. the lowest level since october. we are seeing health-care stocks really support the market there. >> the disaster, cleanup continues. the investigation ongoing.

fatal instructions. how big is the toyota operation? >> we're talking about or hundred or he thousand corolla, crowns, and other cars. operations.tion this is an important part of toyotas china business and very high profile models. if this production interruption is sustained in any way, as you mentioned, i hope that they are calling off the next three days of production.

andously on friday it was evacuated due to concerns about chemical and potential concerns with the air quality in the area. it is significant for toyota and whether or not they are able to bring production back to these operations. >> what about the dangers in china then? >> toyota has in the last few months had lithic and success. it puts up sales increases in the china market.

it is not really much of a concern in china lately given the market slowdown. if you don't have cars going to fordealers, it is something more than just the next three days. >> a wider story than we expected. thank you. easternmostry's robins with 54 people on board. indonesian authorities now confirm the turboprops wreckage

has been found. >> the search in that remote mountainous region. it was a pilot that spotted the wreckage. this comes after the air search off.alled this is an area. this is a very mountainous --ion with rough or rain and rough terrain and tough flying. especially in a turboprop.

this was a domestic plane. >> and if you don't have the latest technology right now. >> this is a big concern for indonesia. and all of this comes together at a dangerous weather situation as a pilot. tragedy can happen. a string oft in airline tragedies. and also the country. >> in particular, it is endemic of what we see across indonesia.

the eu determines that it's safety does not eat the eu standards. .t has had multiple crashes it's been in operation since 1991. >> it has come under question now because documents released by edward snowden reportedly "a highlythe nsa had collaborative partnership with the company." at&t has given the spying agency access to billions of e-mails on its network.

at the end of the first quarter, they held $370 million of alibaba shares. as of june 30, it was less than five alien. -- alibaba has seen $100 billion ipo of its body since hitting a record. they have become more slowly and what is behind the numbers? we will discuss that and a lot more when asia edge returns.

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>> considering debt relief to make it happen, chancellor merkel's first comment is that they back to $95 billion plan. they say the imf does conjure did the latest rescue efforts. and investigations underway in the philippines after a very caught fire. the fire broke out and several people had to climb from the top act to escape the flames. one person jumped into the sea. north korea marked 70 years since the end of japanese occupation by turning the clock back half an hour. those were rung of the country moved to what it is calling pyongyang time. it returns north korea to a time

occupiers moved it to tokyo. joining me in this time zone now, steve and norman at the private wealth advisory. we pulled economist that bloomberg and everybody seemed to think china's growth is coming it explain 3%. does it matter? >> it depends on if you think this is a long-term and patient problem. the chinese are actually slowing somewhere around aim can iteration's.

-- around the same considerations. 1% or more than what had been. from an economic stand point, the numbers are not always 100% accurate. >> you don't say? [laughter] are juste numbers uesstimations. there is no sign china is going down. and inequality, there is .5% growth. >> i wonder if china can transform at the pace that it needs to. faster toed to be move away from the heavy

manufacturing center of the world? transformations were not -- in thehieve meantime, china is still a control economy. a lot of things have to be done. i think it will be five or 10 years later. >> they have a controlled free float. an oxymoron or -- if there ever was one. >> just like hong kong, two policies into systems. control to a complete free

float.- free think this is progress. but progress is always going to be slow. it is moving in the right direction. the imf, was that the reason behind it? >> maybe in the long run, they understand that we need to refloat and also open a couple of markets to allow them to grow into a high income economy. we have not seen --

>> if i can turn to japan, we have those numbers out. they contracted less than expected. >> japan, the economy is going through major competitions. at least in the labor market, we have seen good improvement. in japan and columbia may have it chance to have the bad economy. >>where do you lay your bed? japan, china, in europe is another major area. >> do you think china equities have bottomed out? focusing on the offshore stocks and the shares.

and in asia, we had quite limited exposure. bem afraid that it would trading for at least a few months. >> who wins if there is competitive devaluation? --i don't think it is >> i don't think china is participating in competitive devaluation. that is the major issue. we understand the death of markets. >> some hollywood movie, maybe jack ryan. it is the stuff of international intrigue. so many economies have exposure to china.

>> understand that china is a newer station now. it's still pretty much controlled, but a controlled free load. >> whatever that means. >> i hate that term. i heard these kind of oxymorons all the time. >> it's like letting your two-year-old wonder around the caps on a leash. norman chan, thank you for joining us from nab. money for nothing. after the break with tactics employed by japanese games producers. this is asia edge. stay with us. ♪

>> japanese games producers are the best in the world making money from free apps. how are they generating profits? >> it can be mystifying for people not familiar with it as to how these companies make money on something that is available for free. live operations is pretty much the cutting edge of monetization techniques used by these publishers. it is a mix of psychology, big data, and art which the companies employ teams of game veterans as well as analysts to continuously churn out content in the form of limited time event. if you are a player of final fantasy record keeper, at any given time, the game will make available new quests and adventures offering rewards like armor, weapons, and new skills. sometimes they are available for just 20 or hours. they carefully tweaked rewards

and difficulty of the request to make sure the game has come back. >> it sounds like an online retail strategy to me. >> one of the games we highlight in the tory is dna. their origins are in online shopping and online services. they have analysts churn through data that worked for companies like capcom and square in next -- square enix. bringing a galaxy far, far away right here to hurt. of the biggestne expansions in the company's history. the parks will get star wars

themed extensions to begin in late 2017. next year, he's going to open a $5 billion disney shanghai resort.

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