♪ it is thursday, the first of september. this is "trending business". i am rishaad salamat. , bettera coming through than expected. , positive territory for china manufacturing pmi. it is improving rather than deteriorating. we were expecting 49 .8, the median estimate from economists. the previous month was 49.9. and given the slow down

negative sentiment, this is a good reading. sinces the highest october 2014. into positive territory, and that means improving conditions or at least sentiment from the thousand purchasing managers at state owned enterprises. we are getting the nonmanufacturing pmi, services industries like construction, itecom, banking, 53.5 here the previous month was 53.9. we did not have a median estimate survey for that. ,till, this is pretty robust powering the new economy, also construction a big part of that, the property rebound in china feeding into that.

from july, butck still historically a robust number. let me dig into the previous month. 53 .5, sumner to june, 53.7, so more stability on the services front and a robust number for ,he official manufacturing pmi 50.4. ther this hour, we will get -- pmi. we are also expecting a reading of 50.1, mostly a survey of smaller enterprises in china. can read from this is slightly improving conditions on the manufacturing front we will dig into the sub indices to see if export orders have improved. theye past few months, have been declining, showing weak overseas demand. line, 50.4, better than

expected for the official pmi. well, shanghai in about and hong kong 27 minutes. let's see if there is reaction elsewhere. juliette: a robust number, better than expected. have a look at that spike in the aussie dollar. pulling back a little bit, holding at 75.28. that has been the main reaction since that information hit the wire. wallts were tracking street lower. downward pressure still coming through, singapore and malaysia flat. taiwan being sold off. the yen holding near that one-month low, even though it has rebounded from six sessions

of losses. a little rebound for the nikkei 225. in korea, more weakness, down .6% on the kospi. we've had a lot of economic year,cpi rose for the ,xports at 2.6% for the year and that weakness coming through and commodities. it is wreaking havoc with the austrian sharemarket, down by .2%, however better than expected pmi number could turn things around a little. china and hong kong react at the bottom of the hour. another currency we have been watching, the malaysian ringgit holding at a two-month low. the dollar also having more strength. the ringgit.

fromad: let's get reaction the senior china a economist at ubs. you had a chance to drill into the numbers, so your view overall. >> overall, the economy is trying to find firm footing after the unexpected weakness in july. we are not rebounding from q2, but trying to find a better footing in line with our view that the economy will be gradually slowing. rishaad: stability is the watchword. >> for now. rishaad: is there anything that caught your attention? >> the strength on the orders and production were encouraging given that you had the remnants of a july flood affecting activity. abouthas been some talk how the g-20 and selective shutdowns might be impacted.

if you look at the large, medium, and small enterprises sub numbers, the strength came through large enterprises. andaad: on the imports exports side, these are both contracting. >> exactly. trade wise, demand remains fragile. it's not falling off a cliff. the frail state of domestic demand. strong seeing a counterbalance on infrastructure and public spending, but that dropped off in july. subcomponente is a called backlogs of work. >> yes. it mean thes inventory overhang has been dealt with? >> you can find some

improvements, but the inventory problem is in selected areas. it doesn't apply across the board. you talk about backlogs of work, if they reduced orders, then backlogs would come down. rishaad: it can be seen as a sign of weakness as well. thank you. we will catch her proper take on the economy and eight minutes. focushinese economy and when it comes to the g summit taking place. we will be looking at excess various industries, which has been garnering the attention of the treasury secretary of the u.s.. let's look at that and some other stories. here is david. we are talking about the steel sector and what will take place when g-20 meets and china this sunday. jack lew said the u.s. will urge others in the group to tackle this problem of overcapacity in the steel sector.

it harms markets, employment prospects, and the call for change has yet to make any tangible progress. let's listen. the chinese have acknowledged for themselves that they have a problem with excess capacity. this is not easy, but i think they understand that if they is't address it, it corrosive to china's economy and the long-term future for china's economy will be dimmer. said the group hopes to continue on the previous agreement not to target lower exchange rates. he says the u.s. is well aware that markets may drive down the yuan value, but china should allow the yuan to rise when tides turn. president the second

to be in peach dan removed from office in three decades of democracy. the senate found her guilty of bypassing congress, charges she denies. she will be replaced by her deputy, who will serve out her term until the general election in 2018. she has promised more business friendly policies to reverse brazil's worst recession in 100 years. he said the worst is over. the bar is quite high. assets and the country have been on a tear this year, the best-performing stock market and home to the best-performing currency. finally, the latest on this on going family feud for the lotte group.

the founder has limited mental capacity due to age and illness. they are locked in a bitter struggle for control. the younger son, who you see on your screen, took control last after his older brother had been trying to oust him. he was chosen to take over. shortly after that, the younger aster of the founder filed court petition questioning her brothers mental capabilities and requested a legal guardian to be appointed. this is where we are at the moment. rishaad: right. coming up, swimming against the tide, a look at the good, the bad, and the ugly when it comes to shipping following the demise of korea's hanjin. the balancing act, why the boj's

books don't quite add up. ♪

rishaad: you are back with "trending business". the boj reviewing policies ahead of the 20th after making little progress towards the 2% inflation target. governor kuroda insists he will not be scaling back, but you could argue the costs continue to mount. the whole idea of inflation targeting is becoming questionable around the world, isn't it? for the boj, we are looking upon holdings, the difference between the book and face value of the bonds the boj owns. ite looking at how much ,wns, 326 trillion yen of bonds

3.1 trillion dollars. that means there's a difference of $84 billion. gap has been exacerbated by the boj negative rate policy. gap does nothe look like a big one, but it is increasing. the boj's income can cover losses, but as it widens, it throws up questions about the sustainability of policies. rishaad: tell me something, this gap exist? rosalind: the boj marks down its bond holdings as the purchase

price minus amortization. is increasing because of the boj policies, bond buying program, and the negative rate policy. research reach institute says the boj's distortions are highlighted. it will consume boj profits and a risk that it does affect the bank's financial stability. rishaad: very quickly, the boj has been putting some money a side for when it does exit stimulus. what are we talking about? rosalind: more than ¥2 trillion million, and that has been set aside and it is adding to that. profits fall, it may not

continue to be able to do that. that is a concern in itself. is increasing and the boj is buying high-priced low income bonds, so you may see the loss exceeds income. we coulde scenarios see that happening this year, and so that could be a concern down the line. rishaad: thanks a lot for that. let's get back to what is going on as far as the chinese economy goes with a surprise pmi index. we talked about this. there are some signs of concern, but they are on an even keel. >> for now. it was a surprise to the upside. rishaad: having said that, the services side is going well, 53.5. perhaps we should be paying more , it has neglected this

number and it is becoming a larger part of the economy, manufacturing. services at the moment make up more than half of their economy. anything, that remains relatively resilient. through the last few years despite the ongoing slowdown in other areas. rishaad: is it neglected because manufacturing seems to be more value added? because neglected eyeballs are normally on the traditional areas, the traditional drivers of growth, which has been exports, property , and therefore manufacturing linked to that as well. going forward, you will need to see more development in terms of official data released about the services side of the economy. i am often asked what indicators, the strength of

, but while, services there are indicators, they are not as deep as what you get from traditional industries. rishaad: we have been looking at alternative data, aggregating it, and finding perhaps from that that the economy is doing better than the official gauges would suggest. >> i agree. -- there aredata different indices out there. numbers,retail sales one of the best on a monthly basis you get. you can look at passenger , or you can cast your i further away, mainland chinese tourists arriving elsewhere in thailand, korea. that gives you a feel for how

strong consumer consumption is. rishaad: does this data have any policy imperatives implications? >> it should all be taken as a whole. they help guide and also enable policymakers to track around what area the policy is working or not. rishaad: it is steady as she goes at the moment. perhaps the growth outlook is in line with what they were saying in january and february. >> they are aiming for stability and growth, cash outflows, and currency. that is why the markets are relatively calm as of late. comfortable that the chinese government should be able to manage and contain risks , keeping things steady. these reverseve

repos, possibly more of them announced shortly. we did not see this two months ago. it has come back. why? >> the lows you get where you don't see what is happening, they are quite short. we had less. reverse repos are one of the key tools the chinese central bank uses to provide liquidity. moment, it is still that-net liquidity for now, but there are times when on a net basis, there is with a draw. it depends on what is maturing. at the moment this week, we have a sizable chunk, so they're playing catch-up to offset that. they may or may not go beyond that, but for july, we saw them not matching it fully, but that was payback for a strong supply in june. rishaad: great to see you.

headlines,s flash the fallout from the sinking of breading. expecting a loss of $340 million from its filing for receivership , a 33% stake there. other companies expected to reveal losses later. , lookis a silver lining at those shares, down, reversing. deniede bank ceo has seeking a merger, saying he wants germany's biggest lender to shrink and not grow. germany has too many banks and needs better not more regulations. samsung launching its new smart watch to challenge apple in the

nascent market for wearable technologies. , one allows you phone calls and book cap without a smart phone connection. other regions will require wi-fi or bluetooth link to a compatible phone. coming up, another bump in the road for volkswagen as it attempts to move on from the emissions scandal. we go to sydney for the details, next. ♪

volkswagen's emissions scandal is turning another page with legal action in australia. let's get to paul allen in sydney with a look at what the consumer watchdog and what they are saying. they are joining the queue

of those litigating against vw, 10 cars manufactured between 2008-2015. it is all to do with the defeat software that gives a better reading for nitrogen oxide and a lab then you get when you are driving the car on the road. accc accusing volkswagen of misleading consumers, saying it is serious conduct by a major corporation. they are seeking decorations, penalties, costs, and corrective advertising. watchdogthat consumer is joining a long queue, isn't it? they probably have a bit of time to wait. yes, even with australia, the queue is long. there is a class-action led by maurice blackburn, seeking a figure north of 100 million

dollars, and 10,000 consumers have joined up. ,ack in june, the united states volkswagen agreed to pay $15 billion in buybacks, although that excluded some of the more expensive models, so a final deal has yet to be reached there. there could be lawsuits pending in the netherlands and germany as well, so this scandal has a long way to run yet for volkswagen. rishaad: thank you a lot for that. paul allen from sydney with the latest trials and tribulations from volkswagen and indeed the legal queue there is. japan, south korea looking like this. we sold in moving to the downside. -- saw them moving to the downside. their reason for negative cues out of new york, the s&p is racing the gains in august, down a fraction, but all affecting sentiment in this part of the world. right. navigating choppy

waters, our next guest expects the six billion dollars loss for the shipping industry this year. that is next. the market open in hong kong and shanghai. ♪

♪ rishaad: a look at our top stories, china showing stabilization with the official factory gauge rising to its highest level since 2014, 50 .4. the estimates were 49.8. there was weakness due to flooding in the southeast of the country and production cuts. the private gauges out in 15 minutes from now. china and south korea, exports and imports rising. uprseas shipments rising,

2.6% on the year and august. ,mports and positive terrain 1/10 of 1% after two years of declines. analysts had expected to see decreases there. jack lew says the u.s. will urge its g-20 counterparts to tackle overcapacity when they meet in china. especially iny, steel, distorts markets and harms employment prospects. leadersident will ask to increase spending on retraining workers and china has yet to make tangible progress despite its call for change. news out of australia, retail sales adjusted unchanged month on month. business investment in the second quarter down by 5.4%, quarter on quarter. retail sales adjusted is unchanged month on month.

that is what we have coming through. let's have a look at what is going on right now. the biggie at the top of the hour, we get the unofficial pmi for august after the official one half an hour ago. i think that austrian retail number was amiss. miss. flat sales coming through. we had seen a dip coming through the aussie on that number, but it did have that big spike when that china unofficial pmi number came through better than expected. having a look at how that has the open.arkets on we have seen weakness coming through in hong kong and china, the shanghai opening lower by .1%, but widespread selling across the board today. wall street finishing off of august on a sour note.

the hang seng down .5% in early from asome strong upside stock outperforming in the month of august, but you can see the oil players are coming under pressure with that weaker crude price and that fall in crude inventories, down by 1.5% on the open. casino stocks coming under pressure. sands china down 1.5%. flat.ilippines has open only the straight times is doing well today in singapore. , havingei 225 flat outperform the region yesterday. we have seen the yen come back after six sessions of losses, but holding near one-month lows, so an upside on the nikkei coming through. week in korea today, even though the data was better than most expected. offtom: off -- the kospi

.8%. rishaad: thanks. taking a look at hanjin shipping, the seventh biggest container line. the latest casualty of prices in the global shipping market. guest reckons it won't be enough to help the industry. how bad are things for shipping? shippingbout in the broad sense, but overall? any time one of these things happens, you know this will pull the industry out of the crisis, the problem is that it illustrates that 28% rise in shares of hyundai merchant yesterday. --jin what will happen to what will happen to hanjin's assets as they will go to other shipping lines, but that will

not solve the problem. the problem is there are too many ships and not enough traffic. over the past 12 months, four of the top 15 container lines have basically disappeared, but the deadweight tonnage of container ships hit a record last month. the needs to happen for ships to disappear, and that's not happening. isn'td: that is the case, it? and good times, many companies ordering lots of ships expecting good times to continue. when they arrive, they have too many on their hands and what is needed to turn things around? you have to get the ships out of the sea basically. david: exactly. are two things, a classic supply and demand problem. one problem is demand. look at imf measures of global goods trade, trailing 12 months, running at its lowest level since 2011.

the global shipping play is bigger than 2011, so clearly we have too much supply for the demand out there. either demand recovers or the demolished,o be taken to beaches in bangladesh, pakistan, and india and torn into scrap. scrap prices are low, so that is not a good option. ander global trade recovers grows into this extra capacity or the solution i'm afraid will not the in the office of a bankruptcy lawyer, it will be in the scrap yard. rishaad: good talking to you. one line dropping, lg electronics, considering canceling shipments via hanjin as well, but only considering it. expecting the is shipping industry to lose $6 billion this year. thank you for joining us.

what is going on at the moment? it seems to be going all pear-shaped. >> exactly. the industry has not made any money for the past few years. look what happened with hanjin shipping. it is sad one of the biggest shipping companies going bankrupt. for the next two-three years, it will stay challenging. the demand is the problem. we have been looking at the industry from the supply side, but demand has fallen off the cliff. the world trade when you look at gdp numbers, they are still growing, but world trade has come to a standstill. right.: the thing is we talk about shipping being one singular certain elements drive it. are there any bright spots there? >> at the start of the year, there were some, but even those

have had a horrid second quarter. at this moment, there are not any. it continues to be bad. is whole shipping industry traveling from this overcapacity, and the demand side is a big black box. with the chinese stimulus at the start of the year, we saw demand coming, but not for other sectors. it is a grim picture for the shipping industry, and it continues. the onlyi guess improvement would be of the global economy generally improves. what happens next? had 3-4 years ago, so many companies were ordering massive ships. are they largely redundant at the moment? ordering,n terms of we are through with the cycle so we don't expect major ordering over the next few years.

you have to look at the global shipping capacity, it has a must doubled or even higher, so the man-supply should catch up over the next two years. until that time, we don't see any cash flows. we are seeing cash burn in certain sectors and that will keep the supply curtailed. we see some change to the demand-supply-side. is hanjinanjin is -- the tip of the iceberg? >> we have seen some consolidation at the top. the european guys are taking the bigger share of the market. earlier, the koreans. so we are more or less towards the end of the restructuring, but i don't see any domino affect. hanjin was not unexpected.

these guys were on hanjin theseed time, and for -- guys were on borrowed time, and for hanjin, the broad time came to an end. rishaad: we have to see some container freight rates move up over the next 18 months. if there is oversupply and limited demand, what makes you think that? >> ok. there are two aspects. because of the hanjin bankruptcy, we will see a shock to the system. there were be a short-term spike in the rates. we are in the midst of the peak season, so there will be some discussion. this is coming off a low base. we see some kind of recovery over the next few years, but like i said, these are coming off a low base. they will still be lossmaking. one company inre

your view better placed than others? i think it is difficult to say. if you look at the biggest of the carriers, even they are going through restructuring. the underlying businesses are stress.ress or it -- at this point in time, it is difficult to pinpoint which companies will come out stronger. is the demand drivers have changed. the industry is going through and over the next few years, a few players will consolidate, and those would be the ones. i would not say which ones at this point, but certainly the next few years is something we want to look out for. rishaad: i want to pick up on what you said. what are the dynamics that have changed in this industry? , we used look at gdp

to talk about global gdp, but has been 2% or 3%, but world trade is hardly growing. world demand is now growing at a fraction of what the world gdp is growing, so are these dynamics that are hard to capture. the new drivers, the new horizon in terms of container demand, they are still to pan out, so -- major drivers in your us in u.s. and europe are still struggling. that part of the demand has basically come to a standstill. we are not growing there. over the next 3-5 years, if we see new demand emerge, then there is some hope for the industry. otherwise it would just muddle through the next 3-4 years. rishaad: great talking to you.

we have to move on until you some other stories. singapore out with the first case of a pregnant woman with the zika virus. officiald environment saying 24 new cases identified on wednesday, the total now 82. the health minister expecting more cases to emerge. the government has urged all pregnant women to undergo tests for zika. saudi arabia promising not to flood the world with oil ahead of informal opec talks. the markets are saturated, and although the kingdom wants to boost output, he does not see the need to do so in the near future. in july, production approach 10.5 million barrels a day, 2 million shy of the country's full capacity. hong kong insurance sales to chinese residents jumped despite

beijing's efforts to curb the practice. mainlanders have been buying insurance and related investment policies because they can manage to send their money are broad. china is introducing new relay can regulations, but that has nt stopped sales. coming up, looking at official pma data -- pmi data, but will tell avate gauge different tale? we will break down those numbers for you. ♪

rishaad: back with breaking news, the caixin unofficial pmi data crossing. , well, not as good as the official data. the fence,ack on neither positive or negative, so

conditions are either improving or deteriorating. it is 50. conditions at the smaller manufacturers deteriorating from the previous month. last month was 50.6. the median estimate was 50.1. now it is 50. this follows on the heels of the official pmi much better than expected at 50.4. we were expecting 49.8. it does show some of the targeted stimulus in key areas of state owned enterprises has been working and helping support growth. also, it shows that july might have been an aberration. the lie official pmi dipped into that contraction territory, 49.9, but that may be due to the severe flooding we got throughout southeast china that accounts for a fifth of economic output and hindered production

and also transportation networks. better thanin expected, the highest reading in two years. was time we were this high 50.8 in october 2014, so that is good news and send the aussie dollar higher, markets reacting to the numbers as well. pmi, 50,he caixin below july, but if you look at the trend line, fairly stable. rishaad: thank you. world'sve a look at the dominant real estate markets. they have so far weathered storms. managers are seeing an increase in anxiety levels. we were joined on "daybreak asia" earlier saying things are looking good for the asia-pacific. is completely immune from the brexit issue.

across the region, there is slowing in the chinese economy, well advertised. tier two andeeing tier three cities slowing in terms of demand for real estate in the residential and commercial sectors, but tier one still have strong demand in commercial and residential sectors. china is one story. india is going the other way. it's growth that seven plus percent will exceed china's growth, but across the whole region there is a general sense of sustained, healthy economic growth with relatively few problems on the horizon. let's talk about returns. looking across the region in asia, which property sectors have the best returns? i think india is doing pretty well over there. can you walk us through that? you measure returns and lots

in realrent ways estate, but if you take the cash yield, india has slightly higher returns than the region, but your previous guest was talking about deflation, and with prices at low or price growth at negative two very low rates, it means the world and across asia, the world is sustaining low interest rate environments, which means that low reference point of the 10 year bond rate across countries means that returns in real estate have been some 3%own to in tokyo for best quality property. in india, higher levels because ly high risk, but there you might be in the 5% to investmentn your

treaty if you talk about which countries are attractive, the growth in e-commerce across the region is really a remarkably fast trend. it is driving the requirement for modern supply chain, and in particular for logistics property close to the major connotations, tokyo, beijing, areas singing a rapid growth in the construction and demand for modern logistics centers driven by e-commerce. that is a major trend across the region. rishaad: right, a quick look at the business flash headlines. tokyo is in definitely of theing the relocation fish market due to be relocated in november. the governor is setting up a team to look into the move, pointing out concerns over costs and safety. the delay could deliver another blow to the 2020 olympics.

the governor says it is a necessary move. governor, i put the people of tokyo first. it is important to rethink the project and make sure it is truly beneficial to the people who live in the city. if there are any doubts, we should be brave enough to reconsider. we also need to make the process more transparent. social media, twitter shares jumping after the cofounder says the company has to weigh all options concerning its future. speculatione during that twitter is an acquisition product. -- prospect. deal with real madrid, a three-year agreement, both sides will enhance their worldwide image. giving hankook advertising

at the stadium and away games. up next, three floors, 2700 square meters of shopping space, the big push into southeast asia. where the company has placed its latest that. -- latest bet. this is bloomberg. ♪

9:54 a.m. in hong kong and singapore. this is donald trump giving a speech on immigration. the presidential nominee for the giving a speech after he traveled to mexico to give a speech with the mexican president. don't know ifhey

mexico will pay for the wall. here we go. let's listen. anyone who is legally crosses the border will be detained until they are removed out of our country and back to the country from which they came. and they will be brought great distances. we are not dropping them right across. they learn that. president eisenhower, they drop them across and they come back. then when they flew them to a long distance, all of a sudden that was the end. we will take them great distances, but we will take them to the country where they came from, ok? number three, this is the one i think it is so great. it is hard to believe people don't even talk about it. zero tolerance for criminal aliens, 0, 0.

zero. they don't, in here. they don't come in here. according to federal data, there are at least 2 million, two million, think of it, criminal aliens now inside of our country, to million people, criminal aliens. outill begin moving them day one as soon as i take office, day one. there indonald trump phoenix, arizona in a speech which he had said would include policy, not necessarily a campaign's beach, but three elements there, talking about building that wall after his meeting with the mexican

president in which he said afterwards that they will build this wall and indeed even though the mexicans don't know it yet, trump says they will be paying for it. this is bloomberg. ♪

♪ announcer: from our studios in new york city, this is "charlie rose." charlie: rem koolhaas is here. he is one of the most influential architects who works today. of course, you knew that. he is an author, theorist, and a professor at harvard. he was awarded a notable prize 16 years ago. some of his most notable projects include the cctv headquarters in beijing, the seattle central library, and casa da musico in portugal. the two major buildings have been opened in the last year are the garage museum of contemporary art in moscow and the prada in milan. i am pleased to have rem koolhaas back at thita