♪ ofit is wednesday the sixth july. this is "trending business". ♪ angie: we will be a live in sydney and singapore this hour, but first, here is what we are watching this morning. the asia-pacific extends a global selloff. the yen climbs. the pound under pressure after the bank of england warned that brexit is hurting the u.k. economy.

the australian election remains too close to call. agency says the aaa status is threatened by the budget deficit. us know what you think by following me on twitter. the china and hong kong markets are getting underway in 30 coming, but taiwan online right now. david: money is getting out of risk assets. , investorsndex swaps are pessimistic, pricing in the first fed rate hike in march 2018. that could all change. malaysia and singapore opening up now.

some markets shut today. acrosseeing a selloff the asia-pacific. higher, gold at the highest level in two years. have a look at how asia breaks down. the big losers are the mining stocks down 2%, carmakers down 3%. a lot of that comes down to the yen pushing towards 101. a lot of money coming back into the bond markets. japan yields record low. all at record lows. the 20 year bond touching zero for the first time.

frome seeing some comments , flagging that the 20 year could fall below zero today. charts, have a look at the hardest drop today. there we go. everything is going to get hold underlie quicksand. have a look at this, pound sterling all about brexit. assess whating to the tangible impact on the economy will be. towardserling pushing 129.50. the last time we saw these levels was june 1985.

angie: is it still yield if it is in negative territory? just a question. bank outline measures to shore up the economy. mark carney made yet another statement, his third since the referendum. >> it is the third time he has addressed reporters and the public. mark carney said the current outlook for financial stability is aallenging, and there prospect of a material slowing of the economy. about theoncern vulnerability of the uk's current account deficit. here are his observations. portfolios into u.k. equities and corporate debt appear to have slowed, and sterling experienced its largest today fall against the dollar since

floating exchange rates were introduced 50 years ago. now more likely that adjustments and commercial real estate could tighten credit conditions for u.k. businesses. foreign flows of capital into commercial real estate fell 50% in the first quarter of 2016. england will take whatever action needed to promote monetary and financial stability, and among the was loweringoduced the capital requirements for banks. the capital buffer was cut to zero. this should effectively increase bank lending capacity by $200 billion. the central bank financial policy committee said it was monitoring five key risk, including further deterioration in u.k. assets and valuations in

the commercial real estate market. mark carney did warn that it is a time of and certainty and the boe cannot completely offset the market. we will take a detailed look into that story later on in the show. we want your opinion. tweet us your thoughts. please include #trendingbusiness so we can check it out. some other stories we are watching for you today. john williams says a rate could still be wanted this year, brexitpt or no brexit -- or no brexit. growth to will lower just under 2%. this leaves rates and change if growth and expectations are met.

the labor department releases its a june payrolls report on friday. china resources beer looking to funds$2 billion to raise to purchase the remaining stake miller.iller -- smb , paving the way for sab miller's takeover by anheuser-busch. china's beer market is one of the most competitive with brewers competing with a myriad of smaller regional players. in preparation for its highly anticipated ipo, shadow banking arrangements could make investors question its reputation.

the lender revealed it has $140 billion of interbank investments in special purpose vehicles. postal savings bank has followed other lenders into such arrangements which can be used to raise capital. channel money into boroughs who don't qualify for loans. bank is reportedly seeking to raise $1 billion in what could be the world's biggest ipo since alibaba in 2014. malcolm turnbull is closer to victory, but there is growing concern the indecisive election could hit the country's credit rating. as rating agencies warned that aaa status could be at risk unless the budget deficit is reined in. paul allen is falling all of this in sydney. what is the state of play? paul: malcolm turnbull had some

, the seatlast night of gray had fallen to the coalition, taking them to 70 seats, the magic number being 76 to form a majority government. have improved. the prime minister was also in television offering a mea culpa for a disappointing campaign. a lot of his colleagues are unhappy, but he did get support from john howard coble who said nobody should be "lifting their throats at the results." -- slitting their throats of the results." australia's aaa credit rating could be at risk. australia's if deficits get wider, and that is guerin teed to happen with a minority government because we will be in a situation of policy paralysis. there won't be policy reform,

deficit grows bigger, and that's when aaa is at risk. angie: thank you for that. plan top, samsung's spend its way back to success. we will ask if it can revive the brand smartphone business. anxietyre on the slide, over global growth intensifying, so is the brexit effect far from over? we will be discussing that next. this is bloomberg. ♪

angie: welcome back. you're watching "trending business". taking place again, stocks falling, bond yields have dropped over brexit concerns. let's get more inside. -- more insight. he joins us from the studio here

in hong kong. bed thinking everything was ok and woke up to -- >> a new world. you knew everything had changed, but when you looked around, it seemed quite the same. we are still trying to come to the realization as to what the implications are for the u.k. and europe. 129, more pound is at scope to head downward still? >> there could be. it depends on the directions you think negotiations will take great the current account deficit, the amount of money it needs to finance it, you could see the pound move towards 120. ,f we get more accommodation some kinder words from the u.k. anti-eu, a good strengthen. angie: we will all have to be political scientist. theresa may, she has the

leadership. she said she was a quiet remain supporter. does that shift perhaps what could happen with article 50? >> what we need to keep in mind is that once they invoke article 50, it starts a two-year negotiation process. how the world will look into years, the attitudes might be quite different at that port. angie: there is a question of if they will? >> even that. there is a lot of short-term uncertainty in the markets. in terms of the longer-term implications for the u.k., there are so many paths things can take at this point. once we see the consequence of the vote, it is still an open question whether the u.k. does exit. angie: does mark carney have the answers? do what he can, so we

are likely to see more support for the economy in terms of rate cuts, quantitative easing, but again, the central banks can only do so much, so he will support, but can't change the trajectory of the economy. angie: what about japan and the fed, are they going to raise rates? >> you would expect it gives the fed another reason to not raise in july, september and open question. we do need to pay attention to the payroll numbers on friday. forecast is 175, which is above the replacement rate and would suggest you still have inflationary pressures in the economy, and that's again going to put the fed in a bind. domestic economy in the u.s. not doing badly, what do they do? angie: is it right though to

take a look at these job figures on the surface. feeling among the american electorate that there is anger that the quality of jobs on their, that the rate of it replacement has not come back. >> there is a global sense that even though we have had the recovery, and economic recovery, subpar, below average, but people don't feel recovery. it is part of the caution you have when you look at consumer demand and consumer sentiment, but again if the production capacity in the u.s. is reaching its limits, that will promote inflation and that's what the fed needs to focus on. you are seeking return, where you go? cautious.still

we think it will take several more weeks to work to the implications. longer-term, we think there is value in equities more so than bonds. if you're looking at where you're going to get relative ,eturns over the medium-term equities look better. where are we in the cycle? are we cyclical or playing defense? >> short-term, defense, but longer-term, u.s. economic solid, evenill european growth, -- angie: isn't that a risk? >> there is still contagion risk , particularly italian banks. that is a problem that was there before. our perceptions have changed, but i don't think the overall situation has. angie: hang on right there.

breaking news from the pboc, setting the yuan fixing since its week it -- weakest point since 2010. they are dealing with the post-brexit fallout, having to adjust the yuan against the dollar. where do we see china factoring into all of this? are they expensing the fallout? >> there is two ways you could see contagion from brexit. italy, morespain or concerns over instability within the eu. we don't expect that to happen because the strength you're seeing in the dollar now is driven by risk aversion, which we think will past. it is not being driven in a rise in interest rates, which would be longer-term. yes, some turmoil, but we don't think it will last. angie: if the fed does not raise

room foresn't it give the pboc to act now? are trying to value how the chinese economy is doing, one thing you take, from -- comfort from is there is more stimulus, soal that is the extra tool they have it they needed if the chinese economy does not grow as much as they would like. angie: it's good talking to you. thank you for joining us. the latest first word headlines. hillary clinton will not face charges over her use of private e-mail when she was secretary of state, although the fbi described her actions as callous. -- careless. obama says he believes in her and deserves to be in the white house. is president says election

not a choice as the republicans do not have anything to offer. a fire broke out on the egyptair flight. information from data recorders emergencyent with warning messages of smoke in the cabin before the crash and the mediterranean. signs of smoke, heat, and fire. all 66 people on board were killed in the crash. arguments about the iraq war are said to be revived with the u.k.'s long-awaited report into the conflict that divided the country and led to the downfall of tony blair. the report has taken seven years and is expected to ease politicians and military for their roles in the us-led invasion of iraq and the subsequent collapse. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. angie: coming up, chinese firms

look overseas to make healthy deals. why from a suitable and health care sectors are the targets for billions of dollars in investment. this is bloomberg. ♪

angie: china's health care acquisitione on an tear, attempting to get into international markets like never before. we have a look into the story and the numbers. we are almost that the total we hit in 2015. this is as of early july. say, it isids would sick. >> and profitable.

$3.9 billion have been spent on overseas acquisitions by chinese firms in health care and biotech. .t is a tenfold increase companies thatby have to diversify. the government has also been , butng for homegrown tech it is hard to do that at a quick pace. it is also an attempt to consolidate. in china, you have 5000 drugmakers. it is difficult to find a market leader. a number of these companies are jostling. if they can pick up prime assets overseas, they can beef up their portfolio. we had a number of high profile deals coming through.

is successful, it does help the degree of internationalization. there is a sense acquisitions will continue. bank of america points out you have a number of these companies investing in earlier stage are r&d products.

angie: demographics will be playing a big story. >> you look at what has happened to japan, it is following along that track. at the same time, china has this health care system that is essentially crippled by the demand as normal people get old. by 2020, 250 million chinese over the next 10 years. is there froth in this market? >> we have seen a few misfires.

angie: thanks for that. a lot more coming up on includingbusiness", wyche shenzhen is leaving shanghai in the wake. ♪ get ready for the rio olympic games

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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. ♪ >> asian stocks sinking along with the pound as risk aversion grips markets once again on post-brexit anxiety. headed for one-week low. the yen is at strongest this month. the bond yields suffered zero for the first time while gold is climbing. slid as u.s. stocks comment of the bank of england reunited concerns that britain's withdrawal from the eu would hurt global growth.

risks from brexit as third to started to -- have crystallize. then we have australian prime minister right there, under pressure, said to have a slightly as county continues after the weekend election. they expect the liberal national coalition to win with the labor opposition -- independent parties are expected to hold the final say. a district still in doubt. all right, well, the voting continues in the markets. the marketstoring as they open and sank i -- in shanghai and hong kong. david: have a look at equity markets. have a look at these bond yields.

these set everything up. we're looking at the 10 year, 1.35%, that is-- a record low. have?lse we german tenure bond, basically everything at a record low. everything in japan. levels that we have never seen before. back to equity markets looking like this at the market, we're seeing declines across markets in asia. risk aversion continues. it is one of the worst days so far that says a lot. japan is leading the declines for obvious reasons, down 3% of the back of a stronger japanese yen. that should be down over 400 points. we're looking at the index 1.6%. get out of that

the moment. gold getting up quite a bit. --dollar you on -- yuan, this will spike right here that you see coming. you look at some of these models from the banks, it does make sense where you get this midpoint. with that being said, politics the matter because of these things. suffice to say when you look at the weakest level since november of 2010, that does add to reasons for you to sell. that is what is happening. thisr yen come all pressure safety pushing the yen to below 101. post-brexit, it was as low as 99. by my closing basis if we do

close of these levels that would be our strongest level for the japanese dollar since february of 2014. 130d sterling pushing past left a knife through butter. 129.35. very risk-averse session come i cannot emphasize that enough. before i go, a macro picture -- excuse me. i want to have a look at china resources. breaking news early this morning as companies were planning to raise more money. , we arethe price trading about 4% lower right now. price, looking to raise 9 billion hong kong dollars. the company owns the world's

snow, i think? water, down. anyway, i leave it there. angie: never ask a canadian about beer. risks from the brexit decision has started to crystallize here in their announced measures -- to crystallize. despite those moves come we have mark carney also warning the central bank has limited measures to upset -- offset brexit uncertainty. >> they have only so many tools big and use to try to steal the economy. but in some ways it is trying to show it has some kind of leadership in terms of what the economy can be doing. already he has signaled there be bige because -- could cuts coming.

yesterday they announced they would lower the capital investment for banks, increasing the amount banks have on hand to loan out to businesses and also to individuals. the so-called countercyclical was cut to zero and would free up as net -- free up as much as $200 billion for the banks. the central banks policy committee also said it was closing -- closely monitoring five key risks. further deterioration for the uk's assets and also the commercial property sector, that has taken a bit of a hit in the last few days. angie: in the field of contenders to head up the uk's conservative party and become the prime minister has narrowed to three. >> some are saying mark carney is one of the few grown-ups left in the room after the political figures fled, including horse johnson, saying he is not running for the leadership.

also the prime minister of the u.k. also david cameron stepping down. now we're looking at the vote from the conservative party mps who voted on tuesday. there were five candidates. here are the key once. here are thee -- key ones. the field is basically now three.utted -- now it is not clear, just because theresa may is ahead that she will win because she had supported the remain can't in the brexit campaign. voting to end up to be eurosceptics. angie: are they on social media?

they usually have something to say about his brexit shenanigans. what are you monitoring? >> there has been criticism about him, saying you must go, we need people in your position -- another saying every time he opens his mouth he creates a self-fulfilling prophecy. damning.hose pretty but he is the only one left in the room with any kind of leadership left in the u.k. angie: thank you so much for that. on to china. if you are evidence of the economic transition to technology and services on the mainland come all you have to do is go across the border from hong kong to shenzhen. new economy stocks there are outperforming their shanghai years by a record level.

we have stephen taking a look at this divergence. i guess what we are seeing is a tech play. stephen: the new economy versus the old economy. shenzhen, they had the start of boards, biotech companies, technology companies. this is a bet on the new economy which the government is pushing. it is funny to talk about how performers in the china market, which the two markets are both in the top 10 worst performers globally. dogs, but you might as well look at the pedigree. let's choose right now as investors are, which is a highly retail driven market. highhai, since at june 12 last year it is down 42%. yesterday, they close above 3000 for the first time since april. there is shenzhen. a little better since june of

last year. but this trades at 46 times earning, almost three times the level of shanghai. why? because those 1800 companies are the shenzhen composite are tech companies, new economy stocks that are attractive to punters. of you canivergence see over the last three months, the two indices tracking each other but more recently, the breakout has happened. shenzhen outperforming shanghai by quite a bit over the last three months. shanghai is down. the next chart shows you the record level over historical basis. i drew it back to the year 2000. this is the premium, if you want of how it -- gap shenzhen is outperforming shanghai. on the far right is the record level -- record high level. angie: retail investors clearly

making it -- making a play. stephen: 90% of the shenzhen market right now our domestic punters. if this hong kong shenzhen connect, when it does happen, it will broaden the investor base, foreign investors will be able to come in. and you will be able to see a more sophisticated investor. no official date has been set but they quoted the chairman saying it will happen this year. also deutsche bank said it would happen with the next three months. angie: checking in on some other stories, shares of great wall motor right now in hong kong down 1.25%. the maker of pickup trucks reported a 29% increase in june to more than 65,000 units. take a look at the margins,

remaining under pressure. shares are down 49% over the past year. they reported first-half sales up 11% from a year earlier, driven by entertainment interest. total revenue topped $11 billion. back in january, the company predicted revenue would fall this year for the first time in 11 years due to the slump in property. properties -- two aaa, grade a towers, each with more than one million square feet of floor area in the city for a big district. the project of the most important investments in more than a decade in hopes to complete the building in 2018 and 2021.

samsung will report disciplinary second-quarter earnings tomorrow. analysts are optimistic about the results come expecting a 5% jump in sales as was plans for expanded company spending. our analyst is here right now. i guess it is all about the galaxy s7. >> yes it is. were worseectations at the beginning of the second quarter, the first quarter was so good. second-quarter shipment could be only flat but actually they delivered some growth and other s7, --at not only the costp of that, some margin in terms of demand, the memory chip, is also helping earnings. angie: cash flow is good.

those it that samsung is going to raise its capital expenditures? anthea: it is quite likely. the company did hint they would slightly raise capital expenditure when they announced first quarter. they have not announced a breakdown in terms of how much is allocated for memory. llion. we're hearing $5 bi what does that mean for investors? stephen: investors -- anthea: investors might be very excited about that. faithors can get more that this momentum could carry on in the second half and also next year. they have been skeptical about when apple comes back with new products.

samsung may sustain momentum. angie: we will wait until tomorrow. coming up, a force for good. -- are next guest believes this is bloomberg. ♪

♪ the new president of the philippines has dismissed five generals. he made the announcement at the event thing is war on drugs will be bloody, which for which he will not apologize. at least 17 drug suspects have been killed since he was sworn in last thursday, and dozens have died in the weeks since his election. japan will --

it bought holdings last year for nearly $5 billion. it also sold at $12 billion worth of shares of november. the stock has gone by more than 30% this year. open a room for high rollers. the move could offset two years of slumping profits. drop in revenue. studio city opened in october with 250 tables aimed at leisure gamblers. global news 24 hours a day. this is bloomberg. angie: the gold rush, it is literally here. gold is at a two-year high in by next guest sees it reaching

$4000 a year and possibly even feder thefed -- if the decides not to move. he is a gold specialist at state street investors. the day after brexit, people were selling their gold, physical gold, jewelry, rings, 430% premium. that is how viable gold was. as a remain the case right now? -- does it remain the case right now? >> in terms of the flow, we saw $2 billion. a lot of investors are pouring into the physical market and also the eft market. we see that continue to be in the foreseeable future. angie: last time we saw gold hit close to 2000 back in 2011, do

you see that scenario happening again? >> possibly. we do see that any long-term because my guess, back in london -- back in 2011, investors that bought into etk saw the price premium and went into the physical market. saw ance this year we different story where a lot of --estors will resume isld important all as a strategic asset. flows, it upe etf -- it is up to 500 tons. it is quite masive.

gold as it exists right now, one precious metal in play, silver is another, we're seeing the retail investors fraud that market up. isse precious metal plays, there a bubble scenario here? >> i do think there is a bubble because precious metals, gold and silver, they play a very important role. talk about gold, gold has a low correlation with assets. assurance. good it will make expense to -- only 1% of investors invest in gold. if we can bring that to 2% or 5%, the upside is significant. angie: but central banks to play

a critical role. gold really kind of manipulate the gold price in the market. >> you're right. central bank has been a net by since 2009 and they continue to be a good net buyer. 10% goes into central bank. look at china, russia, emerging markets building their gold positions. that is a good thing for the gold market. fore: it is a good thing the gold market but is it a reflection of the capitulation that investors have about the global economy? >> that's right. if you look at the data we're looking at now, you look at the flows in the global markets into the gold etf, you are higher than 2009. investors are buying more gold compared to 2009.

the split between two years and 10 years of the lowest since 2007. they were be quite learned about the -- worried about the financial market. so, if you look at what is happening now come it is quite when we're at7 the height of the financial crisis. angie: buy etf or gold? >> etf. angie: of course you would say that. thank you so much for joining us. coming up next, careless action the fbi gives -- this is bloomberg. ♪

♪ the storm around hillary clinton's use of her private e-mail when she was secretary of state back in the headlines. the fbi declined to recommend a criminal charges although did describe her charges -- her actions have careless. jim higgins has all the details from washington dc. given that the attorney general had ari situate except whenever the recommendations were from the fbi, it would seem that clinton and her team can put this issue behind them. that may be easier said than done. that is because fbi director james comey, while saying there is not enough evidence to say she intended to violate the law, said there was evidence that suggested she and her team were extremely careless and how they

handle this information. that just gives new ammunition for republicans to attack clinton for her handling. donaldng that republican has already been making a cornerstone of his campaign. tweet saying the system was great in support of clinton. paul ryan, the top ranked republican in the nation also came out and attacked the announcement think it defies explanation. none of this came up during president barack obama's first campaign stop with hillary clinton in north carolina, and important battleground state who could -- which could decide who wins the white house. it is a state barack obama lost in 2012 and one in 2008. this is tim hagans, bloomberg news, washington. angie: coming up, the hunt for haven. risk aversion group markets once

again. we will the biggest losers in our next hour. this is bloomberg. ♪

♪ >> from our studios in new york city, this is "charlie rose." >> the glorious ideals and ideals of the declaration of independence, which we celebrate, as we should, every fourth of july, and as we know, our secular faith, would have been nothing more than a declaration, words on paper, if it were not for the people doing the hard slogging and the fighting, against all odds, suffering terribly.