♪ theaad: it is thursday, may 26th. i am rishaad salamat. this is "trending business". sydni and melbourne this hour. the benchmark heading towards his biggest two-day gain. the economy can withstand the anticipated fed rate rise. china would like to know when policymakers are likely to act. alibaba down, falling the most

in four months, accounting practices are coming under scrutiny. an informationof request should not be seen as an indication that laws have been broken. think onow what you twitter @rishaadtv, don't forget to include #trendingbusiness. china markets under way in 30 minutes. singapore, taiwan, and malaysia coming online. we have a look at what is happening so far. seven-week lows, now two week highs. >> it is a lot more positive momentum coming through across most markets in our region. malaysia down by a 10th of 1%. the ringgit stronger against the dollar. singapore, up by 7/10 of 1%. the regional index supported by gains in japan despite a rebound

from the yen. the regional index holding a two-week high. back of the fed expectations that we could see a rate hike early as next month. members all can assure overnight, signaling we could see 2-3 rate hikes later this year. australia down to tens of 1%. new zealand up by a third of 1%. i want to show you a story weighing on sentiment in new zealand and australia, the world's biggest dairy exporter payout for its farm shareholders that had missed expectations. that has seen the kiwi-dollar fall by a third of 1%. shares of fun terror down. teraa down. crude nearing that $50 a barrel mark.

parsons extending its its price target was boosted by 50% by credit suisse. yesterday, a $164 million charge booked. the fact that it has shaken off appears to have a piece to shareholders. this is what the kiwi-dollar looks like. fonterra holding at 67 16. asian equities generally firm. others: china and indeed would rather like to know when the fed plans to hike rates. pboc officials plan to ask their american counterparts next month. tom mackenzie has been looking at this one. it seems a bit forward, doesn't

it? the concern ofto chinese policy makers as they love a potential hike in june. they told bloomberg news they will put those concerns to their u.s. counterparts when this china-u.s. strategic economic dialogue takes place on june 6-7. they want to find out the likelihood of the june rate highs and whether or not they could hold off until july. the chinese preference would prefer it happens in july. this comes on the back of the weekend reference rate yesterday for the chinese yuan, down to its lows level in five years. this concern for control amongst chinese policymakers. they made that move, analysts say, to let out some pressure for the depreciation of the renminbi. we know the fed was looking for china towards the end of last year after the shocked

evaluation. the fed said in september that china was a consideration when it decided to hold off on a rate rise. china has benefited from that decision to hold back on the rate rise with a weaker u.s. dollar, but most analysts in that would only be a short-term reprieve. have to burn to a record amount of fx reserves to shore up the yuan. debt levels are high and growth is still weak, so analysts expect a gradual depreciation of the yuan through the year is what we are looking at. got thatthe pboc has are at its capital controls and will intervene to maintain that stability. it also points to the winners and losers in all this, the state owned enterprises, a lot of u.s. debt, now more expensive to pay off, than the

manufacturers and exporters that would benefit from a cheaper renminbi. rishaad: alibaba shares closed 6% down in new york due to the company revealing the sec is looking into its accounting practices. information was disclosed and alibaba's annual report. we know what this investigation is all about? >> alibaba says the sec is looking into "consolidation policies and practices." they've also requested information on single day operating davita. it is a huge driver for alibaba. the sec has requested an alibaba on affiliate offering delivery and the just of services, according to the information on the filing.

cooperating.it is the sec did say to alibaba that requesting information is not an indication that the company has broken any laws. said it cannot predict when the investigation will be concluded. there could be a cloud over alibaba for a while. accounting practices have been a concern among some investors. some have called them unusual. alibaba operates the world's largest e-commerce platform by volume. deutsche bank said the inquiry could be similars to others between the sec and chinese internet companies. also, the unprecedented scale of singles day. alibaba shares closed 6.8% lower in the u.s.. rishaad: right, let's have a look at what's going on elsewhere.

indeed, kicking things off with a look at the scandal surrounding that japanese one person's position going there. >> that's it. , sink what ators bit of upside today, over 6% in the early session. that theakers feel scandal cut profit by 19%, a 174 million charge to reflect related losses. that money will compensate customers and repay government tax rebates. mitsubishi's chairman will take over as president. beenbishi's sales have declining, costs rising, after it admitted to falsifying fuel economy in april. a second consecutive quarterly

loss, blaming it on european operations and global supply. a secondl post quarterly loss. net sales dropped 12.5% in the quarter. they have been struggling to cope with a flood of cheap steel from china. a recent rebound and global steel prices may hold out some hope for the distressed steelmaker. speaking of distress, the novo expected to reporter revenue decline of 7.6% to $10.5 billion. analysts expect net income to drop by 40%. competitiond rising in pcs and smart phone segments. hope to secure a new

source of growth, but it has lost ground in a slowing industry. things could get worse before they get better, at least three analysts have slashed their ratings on lenovo this month. they say the company is suffering a mobile crisis. the stock is down more than 60% over the past year. it is the worst performer on the hang seng index in hong kong. --haad: where looking at forget the iphones, find out why apple's next big moneymaker could be cars. that's on bloomberg.com/asia. right, coming up in less than half an hour, we are talking to richard branson about the state of the aviation industry and the race to space. coming up, bulls back in town according to our next guest. he will get their take on the fence june meeting. ♪ -- the feds june meeting. ♪

rishaad: we have growing economic optimism and growing demand for risky assets helping to extend the rally. see you. you are saying the bulls are firmly in charge right now. two days ago, we were at seven-week lows for the regional benchmark. i think you look at the u.s. world'sthe institutional equity benchmark, the s&p 500, very sleepy trade of late. it seems that people have been looking at the pain trade, nasdaq futures, asset managers were significantly short of that market. some people have been short on tech. that has closed out as well. what is interesting is we have

seen that implied probability going up for various meetings, and the market seems comfortable with that. financials are holding on well. they are outperforming. which shows people are comfortable with the way the implied probability is going up or it there has been a sizable position adjustment. volatility is still very low. the question is how much longer it can go on for. rishaad: well, the thing is you just said it, they seem comfortable with a rate hike in june. previously, there were all sorts of nerves sending equities down because of the possibility of a june hike, and indeed that possibly growing. , the thing we have characterized 2016 is whenever you feel something is right, do the opposite. that worked very nicely in mid february. which aheld 2040, with

lot of technician said was a key level. we've managed to progress. that is exactly right. the credit markets have never flinched, high-yield spreads have been your beacon of truth. , and i'veways told been saying this myself, but we have been suggesting that the implied probability goes up, a move up upfront, the trade weighted dollar would move up, and that is a tightening of financial conditions. in that situation, equity markets would get punished. that has not happened. again, do the opposite of what feels right. the fence message seems to be resonating. improvings economy is , the u.s. economy is improving. it is better than you think it is. have some faith in us. i think the market seems to be growing on that same page backed

in line was some position adjustment. rishaad: when you talk about position adjustment, we have to at the dollar as well when we have the prospect of a rate hike. we see the dollar appreciate. we have been seeing that. what about the austrian dollar? where does it leave the currency you use every day? use every dayi is becoming less attractive when i go overseas, unfortunately. the trend on the weekly and daily charts are down. the fundamentals are becoming more bearish. if you look at yield spreads relative to u.s. treasuries, it suggests a downside, key terms of trade are falling, economics is looking shaky at the moment if you look at wage data, the inflation numbers, and we have to look at q2 inflation on july 27.

it suggests that people will be selling any kind of rally. think all paths do lead to a weaker dollar. in the short-term, the market is looking out of breath. we are seeing a bit of indecision from the price action. let's have a look at what happens to the gdp components which ramp up to date with the numbers.- capex rishaad: what you looking for? what is the likely impact when it comes to the aussie dollar? down --, i think it is numbers, aq1 one .5% decline. the consensus is $86 million.

the economist ranges widespread. the initial reaction from the aussie dollar will be down to that nominal value. the economists will sift through the final details, having a look at the cutback in mining expenditure and what is if there is any signs of rebalancing. if not, the austrian dollar gets punished. -- the australian dollar gets punished. the devil will be in the detail and we will have to see how the rebalancing is going. rishaad: have a good day. great talking to you. >> these of the stories making headlines around the world. has hit out at the u.s. and japan over disputes in the south china sea. beijing says japan is failing to perform its duty by trying to tarnish china's image. the ministry said washington is

trying to cause trouble in the area by stepping up its military presence. french andired italian companies to locate the black boxes from flight 804 as the search continues in the eastern mediterranean. the voice and data recorders are presumed to be on the seabed at a depth of 3000 meters. conducted on being the small body parts retrieved so far. the plane was carrying 66 passengers and crew when it crashed en route from paris to cairo. has causedater main part of a riverbank in florence to collapse. the sinkhole appeared on the river arno. power and water supplies were severed, and local people were your homes.ve it is due to break in a 60 senate leader waterpipe, and not because the riverbank is falling away. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. rishaad: up next, spreading its

wings, air asia plans to expand its fleet, making this region the biggest air travel market. the details are coming just ahead. ♪

"trendingisit is business". i am rishaad salamat. what can we expect from the meetings? on the agenda, but no seat at the table. , but theor china mainland and the issues regarding the slow economy are expected to be the top of discussion during the leaders summit, as well as a weakening

yen and the tensions we have seen on some of the maritime issues in the south china sea. that was one thing discussed between president barack obama and the chinese thursday night. for aesident urge peaceful resolution and that tensions between china and vietnam, china and the philippines, tensions between china and any other nation for that matter, are not of our making, he says. he says it is within china's power to resolve these issues. here's how they responded. the g-7 summit should be focused on global economic management corporation. hosting country, japan is being selfish and playing petty games. the failure of japan to perform properly is not an interest of

the g-7 and appease peace and stability of the south china sea. we keep the basic principles, which is the strategic relationship based on mutual interests. to bring have already committed to this principle, and we are seeing the gradual improvement on every aspect of relations, so we will keep this going. it raises the question of how relevant is g-7 now when you don't have the second largest economy joining in these talks in these discussions. china being one of them. india also not part of the g-7. rishaad: thank you very much. we will take a look at air asia, drawing up plans to expand to meet rising travel demand across the region. the budget carrier adding new planes despite fears of

overcapacity. our southeast asia correspondent , what we know about air asia's plans? >> the target is five more planes next year. if there is demand, it may add as many as 10. air asia currently has a fleet of 117. air asia to expected to have the strongest growth in terms of air travel demand, so expect more travel frequencies, chinese routes. for us to be the biggest air travel market in two decades. just take a look at all the indicator so far. strong economic growth in asia compared to most parts of the world, rising income, flying has become more affordable to more people, and it's not just air asia trying to capitalize on the

trend. 10ther airline ordered single aisle jets with a price tag of $850 million. also chinese dinner lines, a $10 billion order, more planes to hopefully meet more demand for air travel. not too long ago, as we mentioned, there were concerns about overcapacity. has that issue taken a backseat now? are still concerns. it was in february, when there was that warning about overcapacity. it's it carries in the region are facing intense competition. budget carriers placed a flurry of orders optimistic that demand will pick up. china, thats to slowdown in demand, slowdown in growth, were not lead to a slowdown in demand for travel. rishaad: thank you.

.he latest there on air asia we have to take a break. coming up, taking a look at the future of air transport it's a richard branson. ♪ okay, ready?

whoa! [ explosion ] nothing should get in the way of the things you love.

♪ get america's fastest internet. only from xfinity. a look at our top stories, asian equities heading for their best today gain in more than a month on rising optimism that the u.s. economy is ready for a rate hike. regional equities bouncing back 7%. i weaker yen helping japanese exporters. oil at $50 a barrel is boosting energy stocks. china ones to know when policymakers are likely to act, pboc officials will ask american counterparts next month.

beijing wants to gauge the impact of a rate rise on financial markets and the yuan. forecast milk prices shot of expectations. kilo in the next may, up slightly from the season, but a nine-year low. right, let's have a look at the trading day. shanghai and hong kong entering the mix, but it is about oil, isn't it? at this, thek brent contract above $50 for the first time since november. we have that very solid teak as the contracts started trading. 1% after that solid session yesterday when it rose by over 2%. prices $50 a barrel, no

surprise, solid support to energy players in our region. nymex contracts, also higher by six tens of 1%, not quite at the $50 level mark. the european contract has breached that for the first time since november. not surprisingly, that is helping out the oil and gas sector, higher by 1.2%. 24 out of 27 stocks we track on this index higher today. -- some of these are the movers during yesterday's session, but we're certainly sing solid moves come through from those players that are open in the early session. and honglook at china kong, they have opened weaker despite futures signaling some good gains coming through on the back of that rally we saw on wall street and the positive session we are seeing across the region. at aegional index holding

two-week high at the moment. in hong kong, stocks lower by two tens of 1%. 2/10 of 1%. 6/10ikkei two to five of of 1%, adding to yesterday's 1.5% gain, even as the yen attempts a comeback. we also have the g-7 summit leaders meeting kicking off in japan today. generally, a pretty positive session across the board. thank you very much indeed. biggest been one of the open secrets in japan's stock market, traders getting tipoffs about company results, illegal in the u.s. and elsewhere, but permitted in japan because it lacks fair disclosure rules. this could all be about to change. what have companies than passing along and to whom? >> it's a longtime practice in

japan. what would happen is you would have companies meeting with analysts and giving them a peek of the results, usually before earnings. interest of companies. they don't like surprises when it comes to earnings and don't want to see their stock be too volatile. the information they are giving could be the numbers themselves for the bottom line. it could be segment results. it could be just an indication that results may be above or below expectations. analysts may pass that along to clients. now there is nothing wrong with companies giving out this information to the analysts, but what the regulations don't allow the firms to do is pass along the information if it will insight a trade.

rishaad: what is changing and where is the pressure coming from to do this? >> regulators are now cracking down. intsche bank was censured december, -- and credit suisse was cited in april. what is happening is they are now pulling back on a lot of these earnings previews. this is coming as prime minister e is trying to get y fortransparencie companies to level the playing field for investors. this comes amid that atmosphere. rishaad: how does this all affected the investment climate here? affect the investment climate here? >> you are seeing the results in the stock market.

there is now a vacuum of information out there, and the can cause big problems during earnings time when we are seeing ash bigger swings in stocks the results that companies are theng out with our missing analysts expectations, and we are seeing companies missing by the most in -- going back to 2011. rishaad: thank you very much. our next guest is an entrepreneur and philanthropist who founded the verge in group to become a major -- virgin group to become a major multinational. we are talking about sir richard branson. great to see you. what brings you to town? >> what brings me to town? i just launched a new home loans

product. from there, i will go off to see in australia,irg who built a magnificent airline down here. then we would do a bit of a workout. as always, there's lots of things going on. it makes life very and very interesting. rishaad: it does not stop you, does it? you will see your people in australia there. , and newa 10% holding zealand has 26%. they indicated that they are interested in selling that off. would you buy that? there are discussions going with them and a number of different parties.

we will watch with interest what happens and whether or not we will end up buying it, we will have to see. n am a great believer in virgi australia. the team have done eight fantastic job investing a lot of bettern making it a far airline than qantas, so going after the business market and the back in the of it. australia has a spirit which i think qantas does not have, which the public enjoys. we are completely supported. -- supportive. if there are other opportunities that come up, we will have a look at them and make a decision. rishaad: right, if you don't buy it, who would you be comfortable taking that stake in said of you? -- instead of you?

>> obviously we would love to have other airlines involved in virgin australia they can bring something to the party. i will have to leave you to guess which ones they can be. , there havehings been approaches from airlines that are considerable, and i irgin add a lot to v australia. those discussions are going on, so i am afraid i can't go into detail. rishaad: you invited me on your inaugural flight to chicago a few years ago. dealt the has taken a subsequent 49% stake from singapore airlines. the focus seems to be on the transatlantic. are you comfortable with that?

do you see this airlines having its wings clipped and curbing goes global and visions you talk to me about? -- those global ambitions you talk to me about? have always been against these big partnerships, and i fought bitterly against american airlines and british airways getting together. from the public's point of view, it is better when people compete. when they were allowed to get together, we needed a big is aer, and delta formidable partner and a really good partner. the reason we switched some of our routes across the atlantic is that we have a lack of slots at heathrow until they build a new runway. are working with delta in this space, it made more economic sense. we still have some great routes

oversees incoming coming to the far east to shanghai, hong kong, and other places, but until there is a new runway at -- weow, where having to are having to concentrate on the routes where we can make the most money. rishaad: you also have slots at gatwick as well. until we get that third runway, gin are saying that vir atlantic is in stasis? >> until we get the third runway, virgin atlantic will concentrate more on the atlantic than expanding overseas. say, we had some very good key routes going to the far east, going to africa, and those utes will stay, going to india and other places, but we have not got the capacity to add

many more routes into the far east. a lot of my energies have been spent on creating new airlines, like virgin america. it has been a tremendous success storm,taking america by and we are very proud of what was created there. obviously, we have now had the situation where air alaska bought the airline. i have just come from seattle. we had a good discussion about the future of the brand, and i am hopeful that we will see to continue to exist in america, but we will see how it goes. rishaad: a lot of people said that you were not happy with that move. why didn't you say so at the time? i did say so at the time.

i think the situation was that we wanted to build an airline in america. we set it up taste on the rules that america sets. the other airlines objected. the department of transport in posed things on us -- i mposed things on is that were very onerous. result, when our partners , weed to take a good offer had no choice. we had 80% of the votes against us. we knew that that was a risk when we went into it. we went into it with our eyes open, but it was a little sad because i think people love virgin america. we have a fanatical following,

and i person felt we could have continued to grow independently rather than selling it, but now we have sold it and the important thing is to work with alaska and making sure that the spirit of virgin america continues, that the staff can be proud of the airline they are working in, and that 20 years from now, virgin america can be one of the most popular airlines in the states. rishaad: it may not be called virgin america. withou in discussions keeping that name and keeping the brand alive if you want to keep the spirit alive at the same time? yes, those are discussions we had in seattle this week. we will see what happens, but i think that the public has spoken loudly that they want to see the ,irgin america brand survive

and i think alaska when they do their research will realize that what they bought was very much ethos,rgin america and to destroy that would i suspect this drill a lot of the value when they bought it. what we have made clear is that if they decide not to keep the brand, then we will start again in america. afoot if it plans does not happen, but my guess is irgin brand will continue to survive and grow. stick withr richard, a spirit we will return on the other side of the break to "trending business". ♪

rishaad: you are back with

"trending business". we are in sydney with sir richard branson. aviation, let's go higher and have a look at space. virgin galactic, where are we now with it? will people be going to the cusp of space in this decade? i very much hope so. otherwise, i would have miscalculated very badly indeed. the good news is that the new spaceship has been born. it is starting its test programs at the moment. over the next few months, test will be putting it

through its paces and taking it into space. ,nce they finish doing that they and the authorities feel it is worthy of a certificate, then i will be going up and we will start taking people to space. the good thing was that we knew the accident that took place 18 months ago was not a technical issue. it was a pilot issue. we can make sure that that does not happen again. fundamental craft that has been built, we feel very comfortable with it. rishaad: what about the satellite business. where are you with that? it is getting to be a crowded space. elon muskff bezos and in that sector, and even india joining the fray. well, there are five billion people not connected to the

internet, to wi-fi, and those people need connections. some of those people are in countries like africa, but there is a lot of people in america or europe who are not connected because of where they live. by puttingg is that up this array of satellites we are planning, which will be several hundred satellites, that there will be an enormous market for that. if elon musk one day does the same, i think there will be an and norma's his project as well. facebook put up drones and google put up balloons, again, there is a big market for those as well. the only question is capacity in space to send signals back to earth. i think we have an advantage over the other three in that we

were the first there. we have the capacity in space and have all the proper licenses for it, and it does give us an advantage should there be lack of capacity in the years to come, which i think there will be. >> let's move on to politics. seize the june 23 referendum on whether to stay in the european union. which way would you like that to go, and why? enough to'm fortunate live in the british virgin islands these days. my family lives in britain. we have tens of thousands of employees in britain. devastated if we were to pull out of europe. been wonderful for europe

to have britain as part of it would be wonderful for britain to be part of europe. i am old enough to remember the days before we were part of europe. myi wanted to export products to europe, i had to pay a 35% tax. if i wanted to import products from europe, i had to pay a 35% tax. the bureaucracy of all these things going on, we couldn't take employees from europe, go and work in europe, go and live in europe. all these barriers have been that good, so i hope sense prevails and when push comes to shove that people will realize that it would be enormously damaging to europe and great britain should britain walk away. rishaad: sir richard, thank you very much indeed. sir richard branson joining us

live from sydney. more to come on bloomberg. this is "trending business". . out,equities on the way too-week highs after seven-week lows. act in a couple of minutes. -- back in a couple of minutes. ♪

we're back. it has been 12 months since the meltdown that wiped $5 trillion off the value of chinese equities. we are having a look at the charts. >> that's right. it has been very quiet. shanghai has been going nowhere. take a look at this. it has been a trajectory that looks like a straight line when it comes to trading in shanghai.

hasn't strayed more than 51 points from that 2800 level, which is seen as a psychological level that authorities want to avoid falling below. this is what we're seeing in terms of volatility. up all of these if you are in front of your bloomberg. volatility is at the lowest since december 2014. has fallen toity 17 compared to a peak of 65. look at this in context. are now more

volatile than chinese equities. then there is turnover. by 80% at the lowest compared to last year, and that shows you there is no appetite to chase the market higher. value of seeing the shares changing hands in yesterday's session was the lowest since october 2014, 118 billiton on -- billion one worth of shares. up -- shotings brings up margin financing. this was the peak. the authorities clamped down on it to try to bring the market down, and it has worked. thosey have loosen controls, margin financing has fallen and there is no take up in terms of demand. rishaad: we have to take a break. we will have a look at world leaders gathering to the g-7

summit in japan. o there, live looking at issues in front of those leaders, coming up next on "trending business". ♪

♪ >> from our studios in new york city, this is "charlie rose." charlie: we begin this evening with the fight against isis and the operation to recapture the city of falluja. 15 iraqi soldiers were reportedly killed in the assault in the province. meanwhile, a kurdish led forth launched an offensive in syria on territories around raqqa. the operation is backed by u.s. airstrikes, and is aimed to put pressure on isis forces in their stronghold. joining me from washington is david ignatius. he is a foreign affairs columnist for