quiets been a relatively day across markets. " i wonder what the margins are on the phone. i think that is the story. anyway, the markets are doing this at the moment. we have seen the declines accelerated across most of these markets, especially here across china. we have the jobs report from you out -- coming out.

you look at volume today come almost nothing, maybe 20%, 30%, 40% lower than what we are used to seeing at this time of the day. have a look at malaysia's reopening. we are seeing a big climb across palm oil futures. in kuala lumpur, we are looking a 4% drop.op. -- we are seeing declines today. the action is really coming when it comes to the bond market. again, we are pushing towards record lows again. it depends on which when you look at. but that two-year in the tenure, those are at record lows. the five-year, the tenure, and the 30 year are there.

just a few minutes ago, the auto just out.of china 19.4% increase year on year. keep in mind, we have a lot of data coming out of the chinese mainland. what is in store and why markets are cautious, not just because of the jobs data. we have a lot of these things coming through in the next few days or so. sunday, he have inflation data, all the way until this time next week when you have the third line. second-quarter gdp numbers are due out. there is speculation on the market when you look at this. and when you look at the renminbi off-shore here, it is on speculation -- you might just get

see this little spike right above six. basically it goes quite nicely with the news out of shanghai. if the news isn't bad enough, we --ht get a couple of seconds perhaps [indiscernible] eve on: the longest run this year, this is on signs the central bank is coming back. for more, let's bring in the asia emerging markets editor. we are seeing this reflected in the china reserves. what exactly is going on here?

>> people are increasingly betting that the pboc is cutting back on intervention in the currency and allowing more of a decline in the yuan as they seek to help their exports. so they see a decline at a very frantic pace earlier this year, late last year as well. people are reading in that there is some sort of a reduction intervention. we have seen the yuan declining for a while now. yvonne: there is a chance there is -- that the deceleration could lose control. what we saw earlier, we saw in august and january as well that the pboc sometimes tends to miscalculate what happens with its policies. we talked about it yesterday and this morning. finds the people are

more sanguine with the decline so far. yvonne: i want to bring in stephen engle. it looks like this is a very surprising bounds. stephen: yes. $13 billion up to $3.21 trillion u.s. they had to defend the currency after having the sharp devaluation last august. but there were a couple of things that play. obviously, the yen's rise against the dollar, the fx core, cash pile was up 7.3 against the dollar. also, the pboc and authorities in china obviously -- not obviously, but it looks like they are not intervening as much. they are letting the currency depreciate. glad stephen brought up

the young angle. we don't know what the percentage of the holdings are. but it plays a central part in the fx reserves. so that probably contributed to the increase in fx reserves. the going back to the point about the intervention, what we said, we didn't see a huge the client. the sometimes can be a positive sign. yvonne: because we don't know whether it is more about the yen or the pboc -- stephen: we know the british pound is in there as well. that's in the basket, i should say. so the yen's move was all that was obviously little bit more of a -- >> absolutely. stephen: outflows stabilize. but we talked to claudia for own in the last hour. the dollar.seven to

it looks from his perspective they are going to let this thing fly. from earlier this year, we had the depreciation of 6.6. that has long been crossed. so 7 -- what's next, that is the issue right there. yvonne: thank you so much. we have been talking about china and the yen with our guests today. -- at is the head of macquarrie securities. what you are seeing right now is china trying to depreciate the currency without causing a stampede out of the country. so far, they are managing to achieve that. is it because what is happening with brexit? is it because of what is happening with eurozone are what is happening with japan? the answer is yes.

it is all of those things. the environment is more conducive to slow appreciation of roman the -- of the renminbi and avoiding capital flux. as steve just mentioned, he expects officials are on a path of the nine appreciation. >> we can expect a weakening of the yuan. lock -- a lack of outflows [indiscernible] our guests have also been weighing in on the impact of the brexit. the outlook for the world economy is stable. the -- as you see relationship become more

negative, that is where the real pressure comes to good but we haven't seen that yet and i don't think we will because we are already a few weeks into the brexit, it will be a few years before we know how it will play out in the meantime you have economies around the world actually looking pretty decent to the european union was getting in the bit better. it is still expanding. china is slowing but becoming more manageable. so the outlook for the global economy is quite stable. yvonne: that was the word from asia. we will check back on some other stories making headlines now. that -- reports that prosecutors have not posed a travel ban on the owner. his sister was arrested on charges of bribery and embezzlement. investigations into alleged corruption within the founding

family. a quick check on the shares. confectionery down about 1%. [indiscernible] a temporary halt on operations in the u k at least for the shortlisted due to have pulled out the uncertainty created by the uk's decision to leave the european union. unload. they u.k. will have its second woman prime minister where they raced down to just one to runners. conservative party members will choose theresa may or andrea the person who will take the country out of the european union. michael gove came last in a vote against -- among mps. boris johnson did not stand.

still ahead, the world's cheapest smartphone. how much does it cost and is it too good to beach or? coming up -- to be true? this is bloomberg.

yvonne: the latest first word headlines. australia's coalition government power days after the election. with 76 seats needed for a majority, his coalition has 73 and the support of at least two

independence. the labor position is refusing to concede defeat. department has announced resumption of its inquiry into hillary clinton's use of the e-mail issue a secretary of state. andnews comes after the fbi the attorney general said she would not face any charges. the associated press says it is opening an investigation that will not get the way of other inquiries. at least one person is known to have died in attacks across taiwan. sustained wind at 200 kilometers an hour gusting to 250. railroad services are suspended until late afternoon.

yvonne: senior officials have wound up their latest round of trott -- round of talks in tokyo. we were waiting for this emergency meeting among the ministry of finance and the financial services agency. some of the headwinds that really came out are similar to what we saw from previous officials, meaning they will watch markets closely as well as for speculative moves. -- we heard kuroda say nothing cpi is going to remain negative or about zero for some time. rod, it looks like the yen strength is causing some new concerns. have been unique concerns about the yen continuing to be one of the focus of the discussions. and of course the discussion amongst official study was that. spokenance minister

briefly to reporters after the meeting. he discussed mark of volatility, which he said is continuing. and they are digitally watching financial markets, especially the currency's of course. he also said he would take any perfect action. this is a standby >>. >>we discussed -- standby. discussed the continuing market volatility. we will can didn't -- we will take appropriate action if there is any volatile moves in the foreign exchange market. the: this meeting comes ahead of the u.s. bond payrolls data. so far this year, the yen has gained about 20%. the brexit putting -- doing his part in pushing the numbers higher.

yvonne: ye did see the current account balance for may was higher than expected. roslyn: it was $8 billion compared to the 6.9 billion dollars expected. so yes, it was higher than expected. the department of goods and services did fall from 2.9 million to 2.5 million. 2.4% fallerbalances year on year. it has contracted year on year since july 2014. isnne: our next guest neutral on japanese and equities , unconvinced that policy action will have much of an effect. adrian, great to have you. i think you have been neutral and japanese stocks for the

early start of the year. what is going to change her mind? japanesein problem for equities is earnings growth. probably still have headwinds in terms of earnings for the second quarter earnings that will come out very soon, but also in the third quarter. japanese equities are definitely a challenge at this point. it seems like abenomics have gone in reverse. has it failed in your eyes? problem at the moment is definitely that the negative interest rates in use from the beginning of the year

are kind of knew in terms of effect. inflation actually has fallen. despite the yields from japanese bonds, which are already low and zero, before the inflation data, real interest rates are more effective. financial market side, the support of the japanese yen. yvonne: i thought it was interesting, japanese investors are actually rushing to these golden vault in switzerland because they are expecting the yen to collapse given the failure of economic reforms, also with negative rates as well. so there are people in japan who think that again is going to weaken. i think one person from the mos official said it could drive weaker, beyond 300 per dollar. >> the very short-term outlook

for the japanese yen is still supported beyond uncertainties. the we would show the negative view on the japanese yen. it will start to weaken again. we believe global risk appetite will continue with the u.k. referendum. our short-term trading team just set up a new trade with gold as a hedge. the trade at the moment is working more with full strength. but risk appetite is coming back, boosting the japanese yen to start the weekend. yvonne: when you see a turn, what is the timeline for that? we are stroke? -- we're trying to find an

equilibrium. >> the three-month outlook remains probably at 101. but afterwards, we expect some weakness. theainly do not forget local economy, from the u.s. health, is quite stable. the u.s. consumer has shown resilience, the biggest rebound we have seen you to date at the highest levels. we think that the state of the global economy, despite all the uncertainty we now have with the u.k. referendum will actually still be supportive for risk assets. yvonne: ok, still pretty risk on. we will talk more about the fed and the jobs report later on. thank you so much.

coming up, another highflying currency. live from singapore where the local dollar is nearing record levels. this is bloomberg. ♪

yvonne: concerns over brexit has sent the singapore dollar near a record highs. that may prompt the central bank to step in. amin. go to haslinda looking at more further monetary easing coming out of singapore? -- are we looking at more further monetary easing coming out of singapore? it is stronger against

most other major currencies in the world. against the pound, up 14%. against the greenback, 5%. against the swedish krona, it is up 4%. it is seeking safety. safe haven play simply because singapore has a top credit rating. very unusual these days. accounts ofredit let's. three month ago, it was a completely different story. the same dollar was among the worst performers in asia and that's because of its economic indicators. they were lackluster. that hasn't changed. dollar spells trouble for singapore. it is an export oriented country. so experts will be had. it will putting question inflation forecasts. -- it will put in question inflation forecasts. so watch out for october. yvonne: singapore such an open

economy. how badly has it been hurt by brexit ends global slowdown? haslinda: it has been hardened it is likely to be heart even more. brexit does complicated things for singapore. to the pressure it is feeling. growth has been slowing. consumer prices have been falling from more than a year and a half. exports forecast a drop for the whole year. it looked gloomy enough back in april. we are talking zero appreciation, something it has not done outside a recession. amongore expected to be the hardest hit in asia by brexit. yvonne: thank you so much. at how markets are trading in the asia-pacific as we wrap up the trading week. looks like we will see a weekly decline. he much flat in sydney. we are seeing that oil --

overnight, it was down to 4.8%. so we are far from paring those losses. in seoul, we are seeing stocks are looking like this. pretty much flat. get ready for the rio olympic games

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> stocks are headed for a weekly decline. fromy shares are suffering a new month low in oversupply in america. and japanese policy makers they are vigilantly watching markets after meeting in tokyo. a fifthis headed for decline on signs that central bikes need depreciation to help growth. the pboc may have reduced intervention.

reserves grew $13 billion. a big jump in car sales in june. the passenger car association website says retail sales jumped to 1.7 million units last month. sales for the first half of this year were up 9.5% almost 11 million vehicles. the faster than expected growth was driven by suv's and electric cars. let's get the latest from the markets now. david: let me get started with these revised forecasts. they started cutting or year and forecasts for both chinese and hong kong. a good example would be the hang seng index. h shares basically taken up from

10 to 9000 kv can see them at 8500. -- 9000. we can see them at 8500. move to may actually cut the reserves racial requirement -- reserves ratio requirement. it's friday. they might actually move the equity markets doing this. this week has seen two general market themes. the shaking off of the brexit shifted to the jobs later on tonight. the second was the search for both yield and safety simultaneously. which is why you had the search for everything from gold to the yen. and because of the things that you see on your screen. there is no yield across the japanese yield curve.

when you look across the commodities space, that is why gold has been a performing. so something to keep in mind as we go into the weekend. search for yields and search for safety. let's hope it does get better. australia's department of industry has cut its iron ore forecast for next year by 20%. to below $45 a time. stockpiles continue to grow. paul, this is a chopping. paul: yeah. 20% is a pretty big cut. a pretty big reduction. if we look at the reduction of iron ore this year, it has done pretty well but no one really expects it to continue. are notons they give

particularly surprising either. demand remaining flat. export earnings remaining flat and they can see other supply coming on worldwide as well. this is the reason we think they are not too optimistic about the price outlook for iron ore in 2017. yvonne: we also heard from s&p. they put australia on negative watch. is this likely going to put more pressure on its aaa status? paul: yes, the reasons they are giving for that negative credit watches the possibility of widening budget deficits. , the price of iron ore has a huge impact. is a $250 million hits westerly is bottom line. that is based on a iron or price

of $55 per time. it means not great things for the budget deficit and the s&p's negative watch becomes all the more understanding. right, more pressure on this government as we continue with the voting in the selection. thank you so much. north korea has announced a new yes sanctions against kim jong un. in our bloomberg reporter. why has the u.s. acted now? ofit is a building up seen as of what is north korea and oppression, especially in developing of nuclear weapons and the trigger defense minister

. these: so what are sanctions going to achieve? shi: if you see kim jong-il's previous behavior pattern, he is not one to respond to logic. you send a top envoy in december to korea in a peaceful effort, but on generate six, they sought -- they launched a new contact. yvonne: the south has also deployed a new missile system. big news. ting shi: yes, and that missile defense system is advanced. it might be deployed in one of

the northern provinces. said, we strongly will hurt -- and it stability and peace. it will not benefit the country's national strategy and is probably going to hurt, going to affect the strategies for balance. urge the u.s.to to stop the process of them -- the processing merely. yvonne: i guess china is in the middle, getting -- the process immediately. yvonne: i guess china is in the middle, getting the pressure. shi: china-north korean relations are probably at their lowest yet.

beijing does not have a lot of influence over kim jong-un. he is a maverick leader. moscow areg and urge south korea and the u.s. to stop [indiscernible] the value of domestic holdings dropped to 9% to $180 billion in the last fiscal period. the firm has been cutting its exposure to banks while adding stakes in tech and telecom companies. its have more than half of assets in china and singapore. algae are expected to announce guidance on friday. analysts say robust home

appliance sales could make up for sluggish sales. anding to j.p. morgan chase paribas.lic -- pb the bs acquisition and almost a decade entirely with debt aired this is the largest of financing since the u.k. vote to leave the european union royal credit markets and more banks will likely be bought, brought on board as early as next week. it's the world cheapest smartphone and it's about to enter the world's fastest smart phone market. we are talking about you and yeah four dollar phone. this must be shaking things up. >> it certainly is. promise literally the

land of smartphone makers these days. ises in the west [indiscernible] china is contracting. india holds a lot of promise. only 120 million to 200 million indians have cell phones currently. however, it is a credit market. everybody from apple to motorola the chinese platform makers and fighting for market share. prices keep falling. so it is a very tough market as well. so the specs got better and the prices are

cheaper and the prices are cheaper. we see major brands introducing cheaper smartphones in india. why? india is a price-sensitive market. according to the world bank, income in india is about $5,630. a lot of indians cannot afford the basics, like education and health care. so smartphones are a distant dream for a lot of indians. but technology is getting and smartphone makers are hoping that some of those very services that indians cannot afford can be delivered much cheaper with smart phones that are less expensive, such as health care and education. so india is literally becoming a battleground for cheaper smartphones and midrange smartphones. yvonne: for sure. how about apple? we just saw yesterday how it has fallen to the sixth spot in china. but how are they doing in india? exactly devices are not

right for the price-sensitive indian market. $700.eapest devices about about 80% of indians by smartphones that are less than $150. so there is a huge price gap right there. has only 2% of the indian market share. two, you know,s sort of redo its strategy to suit the indian market. it is actually trying out to open its own retail stores to make sure it is in control of the retail environment in india. so there is activity from apple and india. they're looking at this market with new eyes.

yvonne: one iphone could equal to 175 of those four dollar smartphones. thank you very much. next, we will talk more about a rate hike next.

yvonne: these are the latest first word headlines. night was the warmest in the u.s. since records began back in 1895. the average temperature across 71states was 22 celsius or .8 fahrenheit. hottestought its six-month period on record, breaking the high in 1981. january through june sought eight weather-related disasters.

people were hurt, some seriously in an explosion on a commuter plane in taipei. the last official have been caused by an explosive device that was designed to look like a firecracker and was hidden in a backpack. been ast appears to have deliberate act, but it is not being considered a terrorist attack. despite gold dipping in the [indiscernible] seents gold to reach for -- $1412 announced by the end of december. joining me now are heidi, roz, and steve. we are talking about gold.

could reach 1400 by year-end. do you think it will go that high? steve: it is a large range. there will be volatility. it is definitely a supportive environment in the short-term with the uncertainty we are seeing in the market. we still expect the fed to hike once in december. and high interest rates may be on the backstop with the potential for gold. there's probably some upside on the short-term pimm stephen: do you think -- short-term. stephen: do you think the save haven will continue through the summer? adrian: we expect basic risk appetite to continue.

the u.s. economy is still healthy. we see in the second quarter around 3%. we lowered a little bit on the global level. but we still think growth remains healthy. in particular in the u.s. side, we expect earnings to continue to recover in the third quarter. mean third basically quarter, higher earnings, that is what the equity markets is looking for. and probably a new all-time high by the end of the year. we still want to being gauged in the market. the market is a negative in terms of a short-term sentiment.

but it has really helped 10 negative -- to navigate through all the uncertainties. and there's tactical opportunity. we think equity markets, the most attractive at this stage, it is a much more domestic-driven story, much more domestic-driven equity market. only 30% export exposure. benefitan equities can from the eurozone and they u.k. positioning very like in asia. much lower than the other equity markets. we expect earnings also to start to record -- two recover in the third quarter. ros: can yields get any lower? adrian: that's a good question.

at one .4,asuries very attractive. you probably want to take a little bit more risk in the bond space. we stole like european high yields. spread widening and. we are looking for opportunities there. if you want to be selective, maybe not go into the financials . and 20% of the european hide related. receipt some opportunity in the credit space in asia. but we prefer asian equities days in credit. yvonne: in terms of u.s. treasuries, you're saying the bond rally has been over out -- overdone. but when you have negative yields in germany and japan, everyone is going to flock to america and aussie bonds. like musical chairs.

adrian: absolutely. i think 10 trillion dollars u.s. probably trades below interest rates. swiss interest rates [indiscernible] in japan, it is 15 years negative. the germans are 15 years negative. so we are in a very special environment. , bond managersds are looking for some yields. they find it in the u.s.. that is why they pressed daniel curves in the u.s.. but we still think him in the second half, some inflation pressures coming back. u.s. corek at the inflation numbers, they are at a to work in your average. even in europe, inflation is rebounding. and we will get some positive basis from commodities in the second half. so inflation will slowly come up. we've still -- we still expect

the fed to continue to hike and will do one hike in december. that should be supportive for yields. they should go up again. that is headwinds for the fixed-income space. heidi: for the chinese equities, looking for markets, domestically driven, is that something that, as they open up that market as well in the past few months? adrian: they need to open up the market to bring the chinese bonds into some of the global indices. that basically should broaden the investor base. they are still supported because of loss of liquidity in china and they have to find a home. banks back the bonds there. you want to be selective. all the industries, particularly in the steel area, there is risk. is allowingrnment

some of it happening. it is something new for the markets. you have to be selective in this area. have been talking about the you want today depreciating. do you expect it to continue on that pace and how does that affect your investment strategy? isian: are year-end target small depreciation from here. but it is important to that it is managing against the basket. if that pound is weakening against the u.s. dollar, the [indiscernible] will weaken. that means in the next couple of months, probably feel some weakness. a broad-basedt your strength to continue -- broad-based u.s. strength to continue.

i think this is really important. stephen: better than a year ago. adrian: absolutely. ispite the euro, it weakening, a negative impact because of market is understanding what they're doing tonight. yvonne: thank you. a safe, looking for place after grappling with mounting losses.

health care subsidiary of the largest e-commerce is going back to its roots. now venturing into product safety. so they are really going back to basics. heidi: going back to consumers.

that is their home base. alihealth is jack ma's baby. it was based on the technology that they delivered or developed, i should say, in drug tracing or tracking technology that was meant to be part of the chinese regulatory system's ability to identify counterfeit drugs. it was put on hold in february. originble to track the wine comes from, particularly where your baby formula comes from, with these safety issues. >> in the long run, ali health

will be alibaba's flagship in the health sector. think the regulator also needs to adapt to the new reality. the internet itself is innovating in all kinds of areas and the regulator will do likewise. heidi: we know this stock has taken a bit of a beating this year. the revenue model was based on this technology. if they can find a new way to use it, you could arguably say that this is a bigger opportunity given that product safety and food safety is one of the key concerns in china right now. yvonne: what areas are they exploring? heidi: they are looking at insurance. they have been trying to get on this online pharmacy-type business for a while. regulators do not let third parties sell drugs online.

going into that consumer core business. yvonne: thank you so much. that is it for us on this edition of asia edge.

♪ angie: piling back into equities and determine exposure in the face of a loss. and asian markets going for a weekly retreat as they consider the brexit fall out. and brexit cast a shadow over the london property market, but some say they are still opportunities.