♪ it is monday, the 27th of june. i am rishaad salamat. this is "trending business". ♪ rishaad: sterling continues its slide, near 31 year lows amid reports the leaders of the brexit campaign never had a plan. the japanese prime minister

calling for global cooperation. bric nations want their own ratings agency. do let us know what you think of our top stories. atlow me on twitter @rishaadtv, include #trendingbusiness as well. singapore, taiwan, and malaysia giving their verdict to what has been happening over the weekend in britain. david is having a look at all this. david: absolutely. we continue to see the ramifications and markets right now. ,here is a bit more calm volumes heavy, 30%, 40% heavier to what wered

normally see at this time of day. we have swinging between gains and losses. if you include japan, up a 10th of 1%. if you take japan out, down .5%. gold is pushing towards 1330. yields are on the way down. those are the metrics. we are looking at a risk-averse session. as you can see, fairly steep declines at the open. can we get the graphic up that shows you the futures on the ftse? there we go. we are seeing some buying elsewhere. everything u.k. related to still getting sold off. ,ccording to one trader here macro funds are continuing to settle.

-- two sell. let's have a look at how this has all changed the outlook. at ae suddenly looking slight probability that this time next month the fed actually moves to cut rates. is live in the fed july, it could be live for a rate cut. as you can see, markets trying to find their footing after friday. top japanese lawmakers and the bank of japan holding an emergency meeting to discuss the brexit decision. we now have a look at the big take away from this morning's meeting. >> good morning. the big take away is global coordination.

cited the g7 nine times. how everyone is together, all of the officials are together on providing ample liquidity to the market, keeping and i on things to make sure things don't go too far in the wrong direction. really it was just an effort to ensure investors that he and his are paying attention and standing by ready to take action if necessary to keep markets calm. rishaad: the thing is, what are cause japanhat may to embark on the solo buying of the dollar? is there a time table? is it off the table for now? what is the deal? >> i think there is no question that japan is a little bit

relieved to see that the dollar got back above 102. i have never seen anything like it. on friday, he looked like a deer caught in the headlights as the dollar got below 100. if the dollar word to go back below 100, japan would be thinking about the possibility of solo intervention. i think it does want to protect that level. that ifthe question is the moves driving the yen higher are not in japan, if it is or the about brexit slowdown in emerging markets or any other kind of risk factor, it's going to be very hard for japan to fight that by itself, so they will deftly be thinking about that and paying attention to whether this is real money from institutional investors driving the yen or if it is speculative. if it is speculative, we will likely see them come in and set

off a short squeeze to push the dollar higher. rishaad: thank you for that. we will have more on that story through the course of your point in. tweet us your thoughts at @rishaadtv, include #trendingbusiness. britain's exit strategy is further plague. cameron will address parliament a bit later on, the first time since resigning on friday, while opposition cabinet members quit after an attempted coup against jeremy corbyn. this is absolute chaos. >> indeed. absolute chaos. you have a prime minister who stepped down, so nobody leading the government at the moment. on the opposition side, 11 members of the shadow cabinet resign, one fired, and falls -- calls for jeremy corbyn to resign. all this is happening before the uk's started on any kind of

negotiations with the eu. it is only the u.k. they can trickle article 50 -- trigger article 50. so a lot of uncertainty ahead. rishaad: ok, now, what is the response you are getting from outside of britain? >> i want to start with scotland. it is still in the u.k., but what this leave a vote has triggered now is scotland saying that there is a possibility for another referendum on independence. there have been comments from u.k.,people outside the crucially christine lagarde of the imf. christine: the markets had vastly underestimated the outcome. what i hear from my team, which is essentially markets usually get it pretty right and anticipate reasonably well. on this particular occasion,

whether it was bookmaker or the markets, that was not anticipated very much. christine lagarde also said it will be key as to how policymakers react in the coming days. haserms of how the eu reacted towards this, on saturday, we were hearing a hard-line stance with the eu saying the u.k. has to exit as quickly as possible. with angela merkel 's chief of staff saying let's have a timeout. the coming way, david cameron will speak to parliament. we also expect to hear from george osborne. german chancellor angela merkel will meet with her french and italian counterparts today. all of the eu leaders will meet, including david cameron, but he will only be there for part of the meeting. what is really crucial as well

is the timing of when this article 50 could be triggered. that could say a lot about the uk's negotiating position when it comes time to negotiate. at the moment, the u.k. does not even know who it is negotiating with. then of course central bankers also meeting this week in portugal. that was originally meant to be an academic discussion. it will certainly be more than that now. guess it will not be there? bank of england governor mark carney. rishaad: thank you very much indeed. let's have a look at some other stories we are watching. it's not just countries reacting. it is also some of the institutions we have been mentioning as well, which have to find an adequate response to what happened in britain. let's get that story. china investment ever structure bank is meeting in beijing. they will discuss the reaction

to the uk's decision to reject the european union. the immediate reaction to the brexit vote was "very worrisome." wants to seeiib any direct impact minimize. also on the agenda, and the bank's president has told bloomberg that the chinese currency is fair value at the moment. >> market volatility is inevitable. when something big happens in this world, markets often react too much, so i think what is important is for the central bank and government to be more tolerable of the volatility. as long as you are more tolerable, the market would be stabilizing soon, but if you try , you know,e to much

i think the volatility would be getting worse. so you should be a little bit more patient, allowing the ratherto correct itself than taking drastic measures to keep the market down, which often backfires. caretaker prime minister has won the spinous -- spanish election. they took 137 seats. shy away from the anti-establishment party at the last moment. election came after the uk's decision to abandon the european union. indexnchmark stock plunged 12% image ridley, the most in 30 years, following the brexit vote. have called for an extraordinary general meeting aimed at firing 12 directors, including the chairman and president.

it is a bitter takeover battle for the company. the group which has a majority 24.6% stake has called for the meeting, saying the director should be fired because he spent most of the time between 2011 and 2014 studying in the u.s. and britain and had not carried out any duties for the company despite collecting a $7.6 million salary. they say the 11 other director should be sacked because they allowed him to collect the money , and the directors have 10 days to respond to the call. rishaad: thank you very much indeed for that. up, the latest policy response from tokyo, where the yen's post-briggs it search is threatening to unravel years of stimulus. we are live at the world economic forum, gauging china's reaction and beyond. "trending business" that is ahead on -- that is ahead on

"trending business". ♪

so what does this vote in britain at a mean for china? let's get you back to the world economic forum. our next guess is written's industry representative there in china. industrytain's representative there in china. >> i'm sure it was a busy weekend for our next guest. the chief china representative for the confederation of british industry. thank you for your time. >> good to be here. your confederation represents 190,000 u.k. businesses? >> that is correct. >> how much of a game changer was what happened last week to

british industries as they try to build their brand abroad? >> it was a huge shock to us all. punishing ande troubling times ahead for us. the results of the referendum -- my role, it certainly was a busy weekend. my role is to make sure that what ever happens post-brexit, that u.k. and u.k. businesses get a good deal and is in a place for years ahead. or your federation caught offguard like this? see thingshave to from both the yen and the yang. we weren't expecting it, but we we were prepared. >> how much reputational damage will this cause to potential partners in china? >> again, i think it is the uncertainty principle at the moment. i would like to say that the

last two years have been a golden era of china-u.k. relations. anchor following the $40 billion of deal signed last year during the president's visit, but with the u.k. outside of europe in two years time, it will sadly hit brand britain, but i am confident that u.k. culture,s, language, the arts, that they will continue to attract as much investment as ever before. >> the companies i have been speaking to, british and american, and chinese, who invested or set up offices in using thatften times as a conduit into the eu, where they can attract other talent. this will be diminished as well, isn't it questio? >> there will definitely some flack from this.

we have seen some international banks and organizations talking about moving some of their staff into dublin, maybe frankfurt, paris. >> is as likely or overreaction? is somethingis that these banks always had as a contingency measure. wea business lobbying group, want to make sure the competitiveness of the u.k. is at the top of everybody's agenda for the years ahead. >> the numbers i have seen, china investing $32 billion into the u.k. since 2005-2016, do expect that the slow? >> we hope it won't. billion -- 40$40 billion pounds worth of deals signed at the end of last year, they were not exclusively acquiring u.k. brands are businesses that will be directly affected. it was also collaborative

programs, working to further language and education. bringing to the attention of china and the public what the u.k. has to offer in terms of business, the arts, and culture. >> you mentioned all those deals believe both david cameron and the chinese president talked about this golden era. is the golden era tarnished a bit now or can they build on that? >> we have to be realistic. after this shock result last week, there is going to be some brushing up of the golden statue that represents u.k.-china relations. for the short-term perspective, there is an uncertainty perspective that will tarnish our u.k. brand, but we are here to represent the interests and desires of our members and

businesses, so we would do what we can to make sure that is not tarnished. >> there is lots of speculation, scottish referendum, northern ireland, all kinds of different speculation. that must be difficult for you to convey a single voice, if you will, to your potential chinese partners. >> that is absolutely right. phase one of what we are doing here and outside of beijing is members, makeour sure their concerns are fed back into london and to the policymakers who will be deciding on the future for our country. >> thank you for your time. i know you will have a very busy time in the next few weeks, months, and years. more from the world economic forum coming up in the coming hours. rishaad: thank you very much indeed. ,ooking at breaking news fr

fixing byan the yuan 9/10 of 1%, the biggest move since august. david: the last time we solve this from the pboc was when the s&p 500 fell 4%, when volumes were comparable to what we saw on friday. the offshore yuan reacting to this week facing from the pboc. to 666pushing close against the u.s. dollar, the offshore yuan. let me get a quick look at where we are. that is the weakest level for to renminbi going back january 2016, so just this year, the most since august of last year. let me see if we have a quote now on the equity markets here and hong kong. a lot of traders were looking at this fixing from the pboc as perhaps a sign or some help to

stabilize the markets. e moment, it does not look like we will see that. the hang seng index falling, consistent with what we are seeing across the region. that may check what's happening across equity markets. point 5%, ande everything else on the way down. let me get a quick check on pound sterling and see if it is reacting to this news. , 133.69lows right now is your pound sterling. let's see if we have a quote for the onshore rate. friday. david, thank you very much indeed. the shock brexit decision lead to lower interest rates in australia?

we are heading over to sydney, next. ♪

the uk's shock decision to reject the european union raising the chances of further monetary easing in australia. let's get to sydney and paul allen. they will be forced to cut the cash rate again. what is the probability of that happening? what are people telling you? >> an interesting story there. weore the referendum vote, were predicting a 50-50 chance of a rate cut later in the year. after the vote, that has blown out to a 60% chance of a cut by the end of september. that brings swaps down in line with economists, who have made up their minds on the issue, saying there will be note rate cut in july, but then those positions reversed.

us to a record low of 1.5%. readjusting their outlook for the australian economy. one lowering their growth outlook post-vote, so we will have to wait and see if it has impact on gdp growth on the other side of the world. the reserve bank of australia -- when it comes to cutting rates in global reactions. tell me something, what is the austrian prime minister saying about this decision in the u.k. with the election coming up this weekend? >> on sunday, the ruling liberal party held their campaign launch. mileage making a lot of out of this, stick with us, stick with stability, the theme from now can turmoil and his government. he says calm heads and stable

management are needed at a time like this. rishaad: thanks a lot for that. that is paul allen for us. coming up, an exclusive i be president gives his reaction to events in europe and how he thinks china should respond. ♪

♪ rishaad: a look at our top stories, japanese shares rebounding from their worst drop since the 2011 earthquake. measurese says all should be taken to stabilize markets. boj officials calling for an international response. the yen holding steady at 102 against the dollar. there is leadership turmoil in both major parties well scottish

independence is back on the agenda. is eu parliament a president demanding the u.k. applied to leave the block by tuesday. china weakens the daily reference rate to the lowest in more than five years, dropping the rate by a must percent, the lowest fix since december 2010 and comes after the dollar surged following the u.k. referendum decision. let's get to the reaction at the moment. i will give you an update on where we are as far as the yuan spot and offshore rates. here is your market story. sterling pushing towards session lows, 1.3370 is a level. little bit more risk aversion in the last five minutes or so. the dollar-you in doing this, 102.

equity markets looking like was, hang seng index indicating a drop of over 1%, and that's what we are getting in the open. philippines opening up as well. we are continuing to see risk assets get sold lower. chances are this will be one of your biggest markets stories and the next couple of hours. the pboc weakening the yuan fixing the most since august of last year, .9%. it doesn't sound like a lot, but when it comes to the renminbi, it is. can we get the graphics up? there we go. the top is your onshore spot. pushing toward 656 -- 666. that is an adjustment from the

pboc to fix things. let's flip the boards and look at other asian currencies. emerging markets seeing their currencies sold lower against the u.s. dollar. the fixing from china was not made in a vacuum. we are seeing broad weakness across asian fx. have a look at the ringgit. very quickly, let me end on this. look at that. 4.5% for september futures. that's where you are as far as key crosses are concerned. ,ishaad: like david was saying markets are on intervention watch.

let's have a look at the action so far. let's look at this wild ride on friday. it is more subdued, but still chapter of yen intervention in the markets. haidi: that's right. of bojter the meeting policymakers and finance ministers. if you're talking about opportunistic intervention, a lot of people think that happened when the yen hit 100 on friday. in terms of longer-term intervention measures, the verdict is still out. how the yen at 106 is a total nightmare for japanese policymakers, so you have to wonder how much worse it is with the yen close to 100 at the moment. this is another way to look at

it in terms of how much the bank of japan has put through in terms of the stimulus measures and abenomics. this is where we started, and this is where we ended up. we have essentially wiped out the entire benefit of what was coming through for the last three years of stimulus measures from the bank of japan and the government. the rally is not over despite the relative calm in today's session. 124 atted the year at what dollar-yen was going to end that. that has come down to 112. hsbc sing dollar ending at 95, and another analyst and we can get to 95 of the next few weeks. there was a lot of talk from abe about the need for international coordination, work closely with other central banks in g-7

partners, so it does suggest that the preferences for a coordinated response is supposed to unilateral intervention. we have an article suggesting that policymakers are looking at both, and if the yen gets to a certain point, that unilateral moves to intervene to prop up the currency -- push it down, is not off the table. the question is what can policymakers do? more stimulus? about thetalk a lot diminishing returns we see from abenomics. ratese gone into negative and bought up all the bonds in the markets and this is what we still have. is waiting onen market sentiment, waiting on exporters, both in terms of profitability and demand. it will make import costs

cheaper as well, so this will push out that 2% inflation target. any declines in equities will weigh on the inflation picture as well. most analysts in boj do more. morecan probably buy etf's, cut rates further into negative in terms of what is left in the toolbelt. there doesn't appear to be much more. hsbc says that boj is not likely to sit idly by, saying that they do expect they should lean against any overly rapid climb in the yen over the next few weeks. they do say that direct fx intervention is still on the table, but that probably all three dimensions of monetary easing will be up for grabs, q a, risk asset purchases, and , risk assetts -- qe purchases, and more rate cuts. rishaad: thanks a lot. minds as theof

aiib held its first official meeting. said that the british people need to understand the stakes involved. with regard to the impact on the european economy and the global economy, the immediate reaction was certainly very worrisome. i think it depends on first of all the u.k. to handle this in a very prudent way. i think the british people in the next step should understand have ine stakes they maintaining the stability of the economy and to minimize the negative impact. say that a i would brexit or otherwise, the u.k. will have to work with the eu countries, and the u.k. will

certainly have to work with other countries across the world. maybe this kind of relationship would be changed a little bit, but i think both sides should understand that they should work together. >> personally how do you feel about the british people's decision to leave the eu? this is something that i think every citizen of the country should look at from a broader perspective rather than from their individual, very narrow perspective. forink it is very important a well educated nation to look at this kind of international issue in a more rational way. do you see a tightening of the financial conditions in asia, especially in emerging markets? jin: immediate impact probably ,ould point to that direction but i hope this is going to

quiet down and the market overreaction would be corrected. run, i think this theoing to be easier for asian market to handle, because essentially, as you see, the asian market is very strong on prejudiceth no against the important relationship between european and asian countries, but this also indicates how important it is for our bank to push for infrastructure, push for development, which eventually will be helpful for european countries. our exclusive interview with the aiib president, jin liqun. some other stories making headlines. china is raining and cold production as it tries to curb

pollution. output is expected to fall by 280 million tons, 75% reduction in production. eliminate someo be companies in its push to restructure the economy. also posing a new restriction on internet search engines, requiring them to report and content of just -- posted on any website. companies will have to verify advertiser, verify the ratio of paid results, and clearly distinguish ads. studying alibaba shadow banking operation to ensure a fair competitive environment. the pboc and encouraging development of international companies, but must comply with existing banking rules. alibaba runs china's biggest

internet payment service and controls the biggest money market. of the world economic forum getting more reaction on brexit and more. we will do that next. ♪

>> it is 9:43 a.m. in hong kong. the latest first word headlines. brexit is making headlines in the presidential campaign. hillary clinton rushed out a tv forttacking donald trump saying that a falling pound would benefit his golf courses. donald trump clinton "disgraceful", accusing her of trying to wash away her bad judgment call on brexit. the malaysian prime minister is expected to announce a cabinet recessional -- reshuffle.

friday, this up in council expelled opponents to his leadership. the son of a former prime minister was sanctioned for appearing with opposition leaders. te group chairman has defeated his mother for control of the conglomerate. shareholders rejected the proposal to remove seven directors from the board. has been dealing with an official investigation into bribery and investment. , andl news 24 hours a day by 2600 journalists and analysts in more than 120 countries. this is bloomberg. well, this vote in britain to leave the european union has fallout right across the world. it's one of the main topics of the economic forum in china. are you hearing about the expected damage?

everyone is talking about what happened last week in the u.k. it will be interesting to hear speakinghe premier here in a matter of minutes even addresses it, because it is on the mind of everyone, including our next guest. brett staples, thank you for your time. this is an issue close to your heart. how much more damaging to the global economy is the brexit issue? brett: i think there is so much we don't know. the u.k. divided between those that except in those that reject a decision in the referendum last week. tohave 3 million signatories reject that petition and the validity of it. we have parliament sitting later this week.

the majority of members we know were on the remain side, so there is still a great deal of and certainty and it will be interesting to see what the true implications will be from a financial point of view. china just lost its closest ally in the european union. that is significant from a political and economic point of view. uncertainty raises questions. been saying the biggest beneficiary of globalization was china. china has benefited greatly since 2001, joining the wto and the whole move of globalization and lifting so many people out of poverty, but now they could potentially be a loser. it is a complex picture from an asian point of view. abenomics will be strained by that rise in the yen. for global economies like singapore exposed to these tectonic shifts, economic and

political issues, they will be exposed. optimismhere is more for places like india, which see more stable, certain, strong leadership, and a more united country, so it is a complex picture from an asian point of view. >> tell me from your heart how deflating it is. you spent years in brussels, advocating for eu affairs, so what does this all mean, the unwinding of all the progress? >> it is very emotional and very personal. i began working with my constituency when i was 17 years old in the european parliament. i worked the early part of my professional career in brussels. family andt my friends, i see a division emerging between those that voted remain and those that voted leave. not underestimate how meaningful and significant this is to the british people.

montagu's -- parliamentarians and royalists, this is a significant moment for all of us. xenophobia,at the in many ways i am ashamed by what i see. i know many people like me, many brits at this event and others who have genuinely benefited from the digitalization and globalization of our world, they are finding this tough. >> how does this play out? you have angela merkel saying let's wait and see how this worked out. junker saying we never had a great love affair with the brits anyway. you are seeing those who lost a we could have another referendum. decade of foot dragging and complicated discussions between few partners and the u.k.. that the surprise

european union without the u.k. is acting like a good cops and bad cops as they begin to prepare for this negotiation? when you look at who will lead this, it is a challenging situation. , borisservative party johnson, are they going to be able to have a productive conversation with their partners in europe? teresa makes stand a better chance, but getting a productive outcome will be challenging. >> is there a possibility of a success for a revote? that is complicated and on likely, but i anticipate that petition will express themselves more publicly and possibly even in something we see on the streets of london. >> i read that you put out a statement following brexit t seems like a particularly courageous move. i think that is the height of

english understatement. they should understand that i met full hearty. -- foolhardy. tip the global economy possibly back into recession? we were talking about the fed cutting rates when we were just talking about tightening. we were all anticipating potential rate cuts in the u.k. and the u.s.. i think the tectonic plates of politics and the economy have shifted. it is still very early days, but there is enough and play right now, and with the accumulation of issues building, there is certainly a possibility. >> you are a global strategic communications firm. what would be the strategic communications to chinese firms as the conduit into the european

union, which could be chopped off? >> what stands out in terms of chinese investment in europe and investment in asia as a long-term, thoughtful, strategic approach to building business and developing a presence in europe. i would just urged chinese investors to continue to take that long view. i think there are in those markets. there are many wonderful businesses for china to invest in and partner with. we are seeing the most volatile moment in this -- with this whole issue playing out. i am confident that chinese leaders in business and politics will take a long view. >> thank you so much for your time on bloomberg television. issue, thatory, an is not going to go away anytime soon. we will be talking about it all morning. rishaad: we certainly will be. thank you for that. we have upyou what next, what to do if you are unhappy with the three global ratings agencies.

some plan ton, and do just that. ♪

rishaad: now the so-called brics are to break free from the three big credit agencies. they are talking about a new one that would be structured differently. how would it differ? looking at the ratings agencies beholden to the companies they are rating, because they are the companies that pay the fees. the developing countries say they get harder treatment corporate ratings are capped at the sovereign level. brazil, russia, india, china, and south africa, so this

concept is actively under discussion. in next brics meeting is due october. global ratings agencies are dominant, taking 90% of the market. they have been criticized for giving top ratings to risky debt . there have been issues and studies looking into how they could change the structure post the global financial crisis. to convincey have other people, chiefly people in the united states and europe of their credibility. you build up credibility over many years. not a fee structure where you're taking money from kleiman's death kleins, where with the funding come from? if it is the government, you would have to convince investors that your ratings agency is credible.

it takes time to build that up, but there will be a lot of if the ratings are above board. fitch has said ratings of emergency markets are limited by external funding. saidad: one came out and that they welcome competition. they always say that. as long as it is impartial, this body that they might set up. >> look at russia. they started one this year, and that was after the big global ratings agency downgraded russia to junk and said it was politically motivated, so they started their own. china has their own agency as well. rishaad: one of which rated russia higher than the united states. thank you very much.

next hour, more on the u.k. referendum and the implications for global trade. ♪

♪ 27.aad: it is monday, june this is "trending business." here is a look at what we are watching. we have currencies at the fore, a surging dollar trying to weaken the yuan. thedropping on news that bank japan would be holding talks. the sterling maintaining a slump

low amid to a 31-year reports brexit leaders never had a plan. follow me on twitter at @rishaad. trading underway in jakarta. let's have a look at what is going on. relief, a little, for tokyo. >> just for tokyo. everything else, as you can see, looking at this map, we are looking at further declines. we got some breaking news a few minutes ago the 30-year in .11%.is falling to basis looking at 10 points. up?e have the u.s. 10-year

1.49%. sessiony not quite at a low friday, but still trading at these levels still. the price is a little lofty. we are looking at yields continuing to fall, futures and equity markets on the way down. we are seeing oil pushing towards $48. we are looking at risk assets continuing to get sold off. we have a look at some of the assets related to the u.k., futures and some of the banks listed in hong kong. no letup there. futures, 5800. the trigger seemed to be when the pboc adjusted the fixing of

the renminbi. that did not happen in a vacuum. broadly speaking, we are looking at a weak session across asia. the renminbi is pushing on the offshore raise. the other thing i want to point out is dollar-yen. this could be our next trigger. we are close to the session low. 101.73. 101.51 was the session low. friday, 99.02. we have not really seen this play out as far as the equity market. 30 minutes before we get to that. again, rish, things are worsening as we speak. rishaad: thank you.

japanese lawmakers and the bank of japan holding an emergency meeting to discuss the brexit decision. jodie snyder joins us from tokyo. what do we know so far? what was the key take away? rish, they met before the markets opened. the key take away is they are waiting and watching. prime minister abe said they will take action to stabilize the market and that the bank of japan provide funds as needed. there were no specifics about what point they would do that. the message is that we are prepared, and having that meeting first thing before the markets opened was really the key point. rishaad: i guess you just sand,d to the line in the which was seemingly moved in the last few months. >> right.

i do not think we know where the line is. certainly, when you saw the yen against the dollar as the votes were coming in friday, that starts to be the area where they start thinking seriously about action. we have not seen that yet. they have not detailed that yet. as we see the yen heading that way, but certainly has to be in their plan. rishaad: thank you, jodie snyder. we have countries worried about it. institutions are also closely looking at the events on thursday in the u.k. those are some of the stories we are looking at right now. >> the china backed asian infrastructure investment bank tinjian was "very

worrisome. they want to see any direct impact minimized. agenda, andon the the beijing bank told bloomberg the currency is fair value at the moment. >> market volatility is inevitable. when something big happens in this world, the market often reacts too much. i think what is important is and, for the central bank the government, they have to be more tolerant of volatility. the market will be stabilizing. if you try to intervene too much, i think volatility will be getting worse. so you should be a little more

patient, allowing the market to hanrect itself, rather t taking drastic measures to keep the market down, which often backfires. juliette: another reaction to the brexit vote has been in spain. the prime minister has won the election. the conservative people's party seats as voters seemed to shy away from the establishment at the last moment. this came after britain's decision to leave the eu. imageryks plunged 12% following the brexit vote. holders at china one care has called for a meeting in a bitter takeover battle for the company.

group, which has a majority stake, has called for a meeting, saying wang should be fired because he spent the time between2011 and 2014 the u.s. and britain and had not carried out duties for the companies. they say the 11 other directors allowed wang to collect money. the directors have 10 days to respond for the call for an extraordinary general meeting. rishaad: it is a brexit effect on currencies with the pound extending a slide to a 31 year low. roy -- ray joins us now from singapore. we need some clarity. in this time frame between getting a degree of clarity, what happens? >> well, there is a lot of gray

clouds currently. we have all these question marks still in the window. it will be a risky environment. the dollar is likely to be a beneficiary. the yen is likely to strengthen pass the 100 level against the dollar. rishaad: again, we have been talking about this this morning as we head to the hundred level. says, wehere the boj need to stop buying dollars now? >> if you look at the volatility in the yen, it has reached levels when japan unilaterally intervened in the second half of 2011. if volatility continues to strengthen further, you are likely to see quarterly intervention by the g7. the condition for

unilateral intervention has been satisfied, given volatility in the yen is extreme. they arerds to the g7, likely to wait and see how financial markets react. if we continue to see a bloodbath, we are likely to see a g7 response. rishaad: tell me something. when we look at what is happening with the sterling in particular, is this a slow burn down? at what levels? to ripe everyone has had up forecasts. >> you are right. we had several scenarios are in place in the event of a brexit with contagion to the eurozone. we are looking at 115 for the sterling. -- there remains to be a question whether there will be an orderly exit from the eurozone.

we see downside for the sterling. 115?ad: are you suggesting did i hear correctly? >> yes, 115. rishaad: over what time frame? >> we are looking at a 12 month time frame. if theythe article 50, were to invoke that, it is a two-year timeframe. sterling and euro will likely remain under pressure. rishaad: let's look at the single currency as well. what about that one? by no means, it is probably not going to decline like the sterling in your view. >> the euro is likely to be under pressure. it is unlikely to fall as much. in our view, we are likely to downgrade our u.k. gdp forecast

by one or two percentage points. with regard to the eurozone, we are likely to downgrade eurozone by .5%. global gdp is expected to be lower. it is unlikely the fed will raise interest rates this year. the bank of japan may come up with more easing measures. in this environment of safe haven flows, any unilateral intervention by japan is likely to have a minimal impact in terms of dollar-yen. rishaad: let's move to the pressure we have had on the yuan. we had money flowed into the yen and the dollar, putting pressure on the chinese currency, depreciating the most into august when we had devaluation. what messages that sending from the pboc? >> i think the fixing is in line with how the dollar index is moving. dollar index is moving in

response to risk of environment. we are seeing that moving higher. help not going to potential worries in terms of outflows or depreciation. think chinathat, i would be more tolerant in terms of yen fixing or weakness. ap between offshore and onshore is likely to widen, but we think the pboc is likely to narrow the other virgins -- the divergence. teo looking at the foreign exchanges with everything upended by the results in britain. coming up later, more on that decision. we will talk to luxembourg's finance minister for his take.

has anreg smith explanation on trending business. ♪

>> it is 10:15 in hong kong. these are the latest first world headlines. brexit making headlines in the presidential campaign. hillary clinton rushed out a tv ad attacking donald trump for saying a falling pound would benefit his golf course in scotland. disgraceful,it accusing her of trying to wash away her bad judgment call on brexit. the malaysian prime minister is expected to announce a cabinet reshuffle later today. councilthe supreme expelled two from leadership. the son of a former prime

minister was sanctioned for appearing with opposition leaders to force him from office. shareholders of lotte hol dings rejected a proposal to remove seven from the board. lotte has been dealing with an investigation into alleged bribery, which has delayed the opening of its hotel unit. global news powered by 2600 journalists in 120 countries. i am rosalind chin. this is bloomberg. exitad: the u.k.'s strategy from the eu is plagued by uncertainty. we have david cameron addressing the parliament later today for the first time since resigning. we have opposition members quitting in an attempted coup against jeremy corbyn.

this is absolute chaos, isn't it? >> it is, rish. chaos and political crisis. the government has no leader with david cameron having stepped down. also, the opposition labor party, there have been calls for its leader, jeremy corbyn, to step down. there have been 11 resignations of the shadow cabinet and one firing before the u.k. has even started negotiations with the eu. in order for the negotiations to start, the u.k. and u.k. only has to trigger article 50. that would start two years of negotiation. we are not at that point. we have a lot of uncertainty. people everywhere have been weighing in. scotland has talked about potentially having another vote on another independence referendum. we have heard from christine lagarde.

here is what she had to say about the market reaction ahead of the vote. >> the markets had vastly underestimated the outcome. contrary to what i hear all the time from my teams, which is essentially markets get it right and anticipate well, on this particular occasion, that was not anticipated very much. christine lagarde also said the outcome of brexit now is going to depend very much on what policymakers do in the coming days. investors, of course, are wanting to know exactly how the u.k. is going to manage the nitty-gritty of the exit from the eu if it happens. you mentioned david cameron speaking in parliament. we are also expecting to hear from george osborne, chancellor of the u.k., on the economy.

on the eu side, we had strong words saturday from other eu leaders talking about the fact that the u.k. needs to exit as quickly as possible. the tone has soft and since then. today, we will get with angela merkel meeting with french and italian counterparts before all the eu leaders meet tuesday, including david cameron. remainse, the question as to when exactly the u.k. is going to trigger article 50. the timing of that triggering could really tell whether the u.k. is in a strong negotiating position with the rest of the eu. we also have central bankers meeting in portugal. guess what? one person that will be absent from that is the bank of england governor, mark carney. rishaad: thank you.

a brexit vote could mean a rally for gold, already at a two-year high. let's get to global commodities director, greg smith in singapore. great to see you. the ripple effect from this book continues. tell me -- what are you seeing? buy golstill thinking, d, rish. in this environment, it is doing what it is meant to be doing. so are commodities generally. they are finding a bit of support. i am seeing bigger moves in the last six months. as what ishe same impacting securities and bonds. buy gold. if you do not have some, you should have some. highs are a long ways away at these levels. so are the lows. rishaad: what is the impact? we have gold on the way up, the dollar going up.

seems like there is a flight towards havens. the point being that they normally move with an inverse relationship, don't they? >> they do. that is the other thing about the printing of money and reduction of interest rates. we are in uncharted territories in so many ways. what we got on friday with the brexit is the realization how out of touch a lot of us are, including me. i thought logic and rationale was going to prevail. the status quo is always better when you have so many other issues that looked dangerous for so many different markets, rish. this is one of many that are starting to compound, i think. rishaad: greg, please stick around. we have loads to talk about. you're watching trending business. ♪

dominatinge subject is brexit. still with us is greg smith in singapore. ok. what are the commodities likely to benefit or otherwise? we talked about gold. k?h this vote in the u very quickly. losericulture is going to 3.8 billion euro in subsidies. with property prices already starting to decline in agriculture, i would be looking at the possibility of weak increasing. week, the weight had come off substantially on

the back of good weather. it can go back up just as quickly. the other one is coffee. the more stress, the more we are going to have. rishaad: they are going to appreciate? >> they will be using coffee and probably less sugar. everyone is getting concerned about sugar, putting on weight. but people are drinking coffee. i think that is a good long-term trade in this environment. there are issues that are going to create stress in the system. can impact crops. yet, demand is constant. so brexit is on everyone's radar, but ultimately, we still consume commodities.

it is just which ones are going to be tight in the next six months. rishaad: let's go to the next event, now, the vote on july 2 in australia. being the commodities-producing nation it is, does the result have any implication for you? no, not so much in the complex. the politics down there is, unfortunately, not much different from the u.s., with concerns with trump. everyone gets it in australia. no one thinks they are going to manage it right, and there is more of a link to the independents, which is run by idiosyncratic members. at a commodity level, i do not think it is going to do too much. it is a global story and a china story. they will be consuming oil, storing as much as they can going forward, regardless of

whether the u.k. has britain or not. rishaad: always a pleasure. central bank had an emergency meeting to talk about the falling yen, but are they ready to step in? ♪ you guy's be good. i'll see you later

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party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. ♪ rishaad: the yen strengthening, japanese stocks rebounding. the japanese prime minister's meeting in tokyo. the international cooperation in the wake of the british referendum. traders are watching for intervention after the yen surged. sterling extending its selloff amid the political prices in the u.k. triggered by that float. -- that vote. scottish independence is back on the agenda.

the eu parliament president has demanded they leave -- apply to leave as a block by tuesday. dollar strength surged following that referendum decision. , traders taking stock of what has happened. here is david. david: when you look at the benchmark, we are flat. we are on the lunch break in tokyo. down 1%,ke japan out, still seeing risk aversion out there. volumes are fairly heavy at the moment. there is a lot of turnover in 30 5% heavier than

what we are used to seeing this time of day. the markets in japan, when you look at the bond market, the yields are continuing to fall to record lows. let's have a look at the 30 year. a that look at that -- that is a -- look at that. we have never been here before. have a look at the 10 year yield, back to the lows. we are pushing towards that level. don't be surprised if we get there as we approach the open in london. it is not exactly a resounding call to take on more risk, is it? have a look at where we are for the renminbi. this was the trigger when the pboc came out. people were looking for china to to signal some sort of stability. broad dollarg

strength. 6.6646, so we are close to session lows for the chinese currency. that is the offshore spot rate. that takes us back to january of this year. dollar-yen doing this at the moment. it has been consolidating near the session low. to 99,ay, it was closer so far from those levels. well within striking distance given the wild settings -- swings we have sent. -- seen. let me in the gold prices. it has come off a little bit. at one as high as 1336 point. having said that, goldman sachs coming out with their revision on their projections on goal. so what they are saying is that

an ounce of bling in three months would be 1300. ,f you extrapolate this further 1250 an ounce, so they basically jacked up the charts, but it still downward again. an 12 months time. this is in three months. this is on the back of gold's recent resurgence. rishaad: thank you very much indeed. markets on intervention watch that 100 yen crossed level during friday's volatile section. ride, a little withore subdued today chapter of yen intervention still out there. haidi: that's right.

i guess the question is whether you are talking about this opportunistic type of intervention. a lot of market participant saying that is what happened in friday's session when the yen touched 99. in terms of a longer-term effective solution, i guess the verdict is out on that. yen at 106 to the dollar is a total nightmare for japanese policy makers, so you have to be wondering what he has to say with yen close to 100. the concern is this rally has further to go. a number of analysts suggesting for dollar-yenst has come down from 124 two 112. we could actually see dollar yen hit 95 by the end of the year. other analysts saying we could get to 95 over the next couple of weeks. this is what we are seeing in

terms of the unwinding of the impact on the yen after three years of stimulus. from what we saw in march 2013 when it started to now, we are essentially back to square one when it comes to the beneficial impact of the currency. if you look at what we saw in terms of the amount that we are up year to date, a 20% gain when andomes to dollar-yen, that's going to be a problem for policymakers going forward, which is why we had this joint emergency meeting in tokyo. out,rms of what came about the neede for international coordination, work with central banks and g7 partners. over the weekend, we had a domestic news report saying that policymakers were considering either unilateral or coordinated

responses in terms of intervention in the fx markets. clearly a coordinated responses more desirable and effective, but if we say pressure coming on the yen, then unilateral action is not off the table. rishaad: what else can the policymakers do? can the institute more stimulus? ofdi: you have a bunch economist saying they don't expect the boj to sit idly by. what you have is the impact of the stronger yen making import costs cheaper, weighing on inflation, making exporters less competitive and repatriated earnings less flattering. there are quite a number of ways it will weigh on this 2% inflation target for the boj. the boj is already having issues. what can they do? hsbc says we are looking at aggressive easing in all three dimensions.

so potentially we could see deeper cuts into negative territory, more buying of etf's. bought that the boj has up all the appropriate bonds available in the market. as we keep discussing, diminishing returns. banged fort getting the buck in terms of weakness in the yen and desirable results when it comes to pick up in inflationary pressures. rishaad: thank you. asiahina backed infrastructure investment bank is meeting in beijing. the reaction to britain's decision will be one of the talking points. the bank's president warning chinese authorities should learn to live with volatility and not intervene to munch. jin liqun spoke exclusively to bloomberg. key is to provide sufficient liquidity to the economy without creating future inflationary pressures.

that is the central role of the central bank. actuallyina have pretty much latitude to deal with this kind of difficult issues. the problem is that the outside world has seemed to overreacted to the slowdown in the chinese economy. i said on numerous occasions that when economy slowed down year, what6.5% this is the worry? one percentage point of growth in china. it is not the same thing as the growth of 10-20 years ago. the economy sizes much bigger and the economic base is bigger. certainly the increase in our growth rate would be very much different. you simply cannot look at the numbers, it's not the same

thing. and also if you look at the see theof growth, you different structures of today's economy compared to the economy 20 years ago. >> there has been great volatility in the currency markets, all eyes tracking the chinese yuan. people are wondering if the yuan will be strengthened in line with the dollar or will be weakened. what are your thoughts on that? where do you see the yuan headed? jin: market volatility is inevitable markets often react too much, so i think what is important is for the central bank and government to be more tolerable of volatility. as long as you are more tolerable, the market would be stabilizing soon, but if you try to intervene too much, you know,

i think the volatility would be getting worse. so you should be a little bit more patient, allowing the market to correct itself rather than taking drastic measures to keep the market down, which often backfires. >> so in your view, is the yuan fair value? jin: more or less, i would say. therew is that as long as is no excessive intervention of the market, the value of the currency would give you more or less i think the correct exchange rate. sometimes it may be overvalued or undervalued a little bit, but don't worry too much about that. eventually you will see a curve which is more or less realistic. jin liqun talking to

bloomberg there. shadow banking operations enjoying a competitive environment. encourages the development of internet companies, but must comply with existed banking rules. alibaba financial evolving to a giant, running the biggest internet pay service and controls that nation's largest money market fund. escape safely when a singapore airlines plane caught fire while making an emergency landing. the star board engine was ablaze and the pilot had aborted its flight to malan due to an engine oil warning light. an investigation is underway, and the airline says it is cooperating fully. luxenberg's finance minister, pierre gramega, joins us live is brexit dominates discussion of the world economic forward.

-- economic forum. that is on the way. ♪

>> it is 10:44 a.m. in hong kong. the latest first word headlines. china is imposing new restrictions on internet search engines, requiring them to report banned content. sites will be breaking the law if they provide band information. they will also have to verify advertisers, specify the rate of paid research -- search results, and distinguish ads. ship --e contain your container ship has made its way through the panama canal. it also comes amid a downturn in global shipping due to low oil

prices, a fragile global recovery, and the slowdown in china. the report says global markets are increasingly at risk from the problems of emerging economies due to their growing influence and trade and finance. the bank of international settlement said they make up 80% of global trade. typicallyncial crises start in advanced nations, the happen -- chance of the reverse happening is rising. this is bloomberg. smalld: luxembourg is a geographically, but punches far above its weight in the financial world. be seen ascan beijing's advocate in the european union. where at the world economic forum in china, and with him is the finance minister of that country. yes, good morning.

our guest is here, pierre gramega, the finance minister of luxembourg. small country, but a pivotal position in this brexit debate and the internationalization of the renminbi. let's first get your initial reaction to the referendum and the spell out so far. pierre: i would like to say that the brexit is sad news for europe. it will make our life more difficult. it is also bad news for the united kingdom, because it will make its life very difficult. we regret it, but have to respect the democratic vote of the u.k. citizens. >> there will be profound implications on the u.k., whether there's going to be another scottish referendum, whether there will be a vote in northern ireland, but what about the implications to the european union and the other 27 member

nations? would you say you are at a crossroads? of all i would like to say it was a shock, but definitely not a crisis. a was a shock that will last couple of days, and we will have to take time to analyze the situation. i would advocate for the fact that we should not rush to conclusions. when you live for more than 40 years together, as was the case for the u.k. and the eu, you have common legislation together , and it takes a lot of time to unwind that in order to make sure you have a new framework that is good for both parties. waycommend in a very asian for a form in china that we should take the necessary time and not haste in making a fast judgment. are reactings quite negatively. the blame game has already begun.

fingers of blame pointing at the u.k. leader, all kinds of voices going on right now. how is this going to play out over the next coming weeks? pierre: i also think that we should limit the blame game or not play that game at all. i think we have a very deep relationship with the united kingdom, but actual trade and ,ommerce is extremely important and we will keep business in the future with the united kingdom and so we should be aware of that. >> what should be the first priority in these exit negotiations when article 50 is evoked in the process begins? pierre: we are waiting for the united kingdom to make up its mind as to when they will apply for article 50. that is number one. in the meantime, the united

kingdom will remain a full member of the eu. the united kingdom will be part of the eu single market, and in the case of luxembourg, which is an important international finance center, we will continue to cooperate with london. there to take away business with london. we are there to do business with london. >> you don't want to call this a crisis now. , the eu is still feeling the ramifications of the greece crisis. what are the possibilities of a contagion here? there is a vote in spain. there are rumblings in italy. we still have the aftereffects of the greek debt crisis. pierre: the issue of greece has been solved and eight satisfactory manner. eight satisfactory manner.

it shows we find solutions in europe. is part of the eurozone, which is not the case with united kingdom. what we have to deal with in terms of unwinding the relationship goes less deep dan if we had to -- goes blessed deep dan if we had to you have already had lots of opt outs, which it has used in the past, so it makes it easier, and the situation economically and financially has nothing to compare with greece. we have to distinguish these crises as having a different nature. >> from your perspective, you would like to see an amicable split? when countries have had more than 40 years of life together in a union, it is like in a couple, you should do your

best that the divorce is by mutual consent. >> where did it go wrong? pierre: there are lots of explanations. one is that in the united kingdom for decades stories have been told that the eu is causing more problems than it is bringing solutions. when you do that for decades, so i'm not blaming one government in particular and one newspaper in particular, then it is no surprise that when you do a referendum that this would play a role. in the running up with a referendum. >> we need to take a quick break. i want to talk about luxembourg's relationship with china when we come back. we are at the world economic forum. more of our conversation coming right up. ♪

>> welcome back to the world economic forum in china. we are continuing our conversation with the luxembourg finance minister, mr. pierre gramega. luxembourg has built a strong relationship with china, the largest offshore market outside of asia, but also london

as well. clearinga renminbi center, rising to number two after hong kong. i know you will not want to take advantage of the exit, but can you? i have been promoting the luxembourg financial center for two and a half years, so i do not need and want to use the brexit situation to be particularly proactive, but obviously we are very pleased that many chinese players have looked into luxembourg and chosen our country. we have six of the largest chinese banks presence and luxembourg and we are number one in the internationalization of renminbi in certain fields. one is the investment fund industry, where we are number one in the world after the united states.

also, these funds denominated in renminbi, we are number one in europe. it is due to the fact that we have built a long-standing relationship with china and hong kong. today twon hong kong thirds of the investment funds being sold worldwide are luxembourg, so our presence is well noted and appreciated on both sides. >> what are the conversations it ise having so far as related to expanding the renminbi center given the fact that london might diminish. that is also for the chinese to decide. being ine advantages the eu is being inside the european single market. i know chinese banks and players are valuing this very strongly. this will give us a competitive

advantage. the other is that we are in the is an advantage to the u.k. for a long time, so it's easier to reach out from luxembourg than london. >> thank you so much. i'm sending it back to you in hong kong. very muchhank you indeed. we will stay in china there. we have the keynote address at the world economic forum. there he is. about relationships china has with the rest of the world, the state of the global economy, and much more. "asia edge" is next. ♪

>> you are watching "asia edge." chinese premier just starting his opening speech and speaking to the audience.

governance -- language]g foreign >> addressing the world economic forum. managers need to ensure a stable -- measures need to ensure a stable economic environment. the united