and the end of an era. planning to hold his final policy meeting after 10 years at the helm. also coming up this hour, diplomatic language at play. president obama canceled talks with his philippine counterpart after dutarte unleashes a rant against the u.s. >> something not fit for tv. well, okay. have a look at what's happening across markets right now. a bit of a short attention span for me today. things did pick up mid morning. as you can see we're heading toward midday right now most looking at gains across the asia pacific. still not good though. this monday session, parts of asia still a little sluggish especially when you look at volumes here although overall a an stocks are now at one-year high.

a lot of -- japan looking at hong kong and taiwan the performers across asia though hong kong is really, really ushing it. let's shift gears away from the equity markets and look at what is happening across currency. mostly a dollar up, moderate gain. the taiwan dollar here, part of this group pulling back against the dollar. another tepid set of inflation reports out of each country. 46.60. weaker against the u.s. dollar. if you look at the aussie dollar that is i think up for a fifth or sixth straight day ell above u.s. 60 or 70 cents.

commodities, with oil prices you can see ticking up further looking at maybe 80 cents higher compared to the cut off here though the iron ore prices you'll want to watch very closely. look at the contracts in singapore on the way up. relatively it's a decent session so far. fplgs we're good with that. we are moving ahead to the abe decision at 12:30 hong kong time. it is the end of an era in australia as governor glen stevens holds his final policy meeting after 10 years in charge of the central bank. is expected to leave the cash rate unchanged at 1.5%. australia still has issues, weak inflation, under employment. why is no change expected from this last meeting? -- all 26 way

economists surveyed say no change this month or next. there are a couple reasons for that. first off shall the bank has cut the cash rate twice so far this year and both times it's been in response to weak inflation data. now, the next quarter of inflation data is not due out until late october which is after the reserve bank of australia's next meeting. the consensus is that they will wait again and have a look at that before they look at moving to the cash rate. the other reason is the u.s. federal reserve because of course hope against hope the rba will be hoping the cash rate in the united states goes up which would ease pressure on the australian dollar and would at least solve one of their problems in that the aussie dollar has been showing a lot of strength in the past 12 months but whatever the case the incoming governor is not going to have a lot of ammo to play with with a cash rate of 1.5%. >> that suddenly strong aussie.

it has been 10 long years in charge for glen stevens and a lot has happened. a transformative period if you will for the aussie economy. what is his legacy going to be? >> well, he's moved cash rates 30 times since he has been in charge. 12 up. 18 cuts. then the times he's been off the global financial crisis, australia dodging the recession. at that time he saw the runup of the mining investment boom and the unwinding of it as well and now he is dealing with the issue of low inflation, under employment. the employment figures look pretty good on the surface but most of the gains recently have been in part-time jobs. all new issues to confront now. but overall, he has handled the job with aplomb and very little help from the government it must be pointed out the past couple, the past few years. he hasn't seen much help from the monetary policy side of things so glenn stevens has had to do a lot of heavy lifting on

his own. >> self-proclaimed boring bloke glenn stevens chairing his last policy meeting. we expect that to come out at 12:30 hong kong time. president obama has canceled a planned meeting with his philippine counterpart at the summit in laos today. the decision was made after dutarte angrily criticized u.s. presidents interfering in manila's controversial war on drugs. let's go out to our southeast asia correspondent. what happened here? >> well, blunt and off-the-cuff comments were made by duterte in the leadup to the meeting. he was asked by a reporter how he would explain to obama his war on drugs, which of course has led to thousands of people dead since he took power. he replied with a string of ex-pleatives. take a listen to this. >> i am a president of a

sovereign state. and we have long ceased to be a colony. -- nobody but ny nobody. i don't have any master for the philippine party. you must be respectful not just throw questions and statements. >> so you can see why obama skipped the meeting with duterte which would have been the first between the two leaders since duterte came to power in june. rare that obama scrapped the meeting with a world leader. it is a snub. here's what obama, himself, had to say. >> i just heard about some of this but i have seen some of those colorful statements in the past. and so, clearly, he is a colorful guy. >> to put it in perspective, the u.s. and the philippines, a long-standing treaty ally.

they do need each other. the philippines rely on the u.s. for backing in the fight with china in the south china sea and for the u.s. the philippines is a way to engage the region in its asia pivot and counter aggression from china. this incident though highlights the challenges obama faces even as he prepares to leave office. t.p.p. the trade deal hanging in the balance. a defiant ally in the philippines and increasingly ggressive china as well. >> what is really obama's legacy? in the region? >> well, his legacy would be closer relations with southeast asia. some analysts say under obama the u.s. has seen the most deliberate and sustained engagement with the region. laos, the smallest nation and

where obama is right now is his final stop of his last asia visit as president. that, itself, underlines the mportance of southeast asia. >> a very colorful end certainly to obama's tenure and his last trip to asia. coming up later on bloomberg my colleague speaks with the canadian prime minister. you can watch that conversation as it happens on the bloomberg featuring highlights here on bloomberg television. some of the stories making headlines today, shinzo abe has reiterated japan's call for clarity over the u.k.'s plans to leave the e.u. abe met his counterpart at the g20 and told her that the extent of the japanese investments in the u.k. is partly dependent on access to the single market. abe wasn't the only one to question the wisdom of brexit

and to demand more clarity. president obama reiterated that e thinks it was a mistake. a second update on an approach from a buyer but has said it is evaluating proposals from other parties and is considering the alternatives. ayer is now offering $127, a 19% premium to monsanto's last quote in new york. if the deal goes through it would create the world's biggest producer of seeds and pesticides. in july monsanto rejected bayer's $55 billion bid saying that was inadequate. all right. let's check in on some stocks oving in the asian sector. o.g. chemical down over just over 3%. this one crossing the bloomberg.

lg chemical is considering a merger with lg life. that is what those shares are doing at the moment. we'll be watching those as that news of that story becomes a little bit more developed. budget carrier viet jet has agreed to a big deal with airbus ordering planes worth a fraction under $3 billion at list prices. viet jet is key to expand in a low cost market. late last year it agreed to buy 13 more a-21's during president obama's visit in may and said it would take 100 boeing 737 max 200's. one of our top stories, shipping is jumping on news of financial assistance from the korean government and also its own parent company. there are conditions attached to this helping hand of course.

>> right. >> we're hearing from the ruling party in south korea hanjin shipping can get 100 billion yuan in loans more than $90 million u.s. its parent company hanjin group needs to provide collateral for hat. they asked the government to try and provide help to hanjin shipping. the ministries estimate hanjin immediately needs about 100 billion yuan but hanjin actually needs more like 600 billion yuan which is more than $540 million u.s. it's quite a lot more. now, separately we can report that hanjin group will provide about a hundred billion yuan in aid and that includes 40 billion from the chairman according to a hanjin statement. the financial regulator, which is the supervisory committee

said yesterday hanjin group the parent company should take more responsibility for the chaos, his words, caused to the shipping industry and take more actions. this could be an example of hanjin group trying to take more responsibility and help out at least financially. hanjin shipping also can apply for asset orders in 43 countries designed to protect isself from creditors. obviously quite a lot loaded on to these vessels as they are heading for various ports for thanksgiving, christmas, and all loaded on them. >> we are talking about how bad the timing is as we head into the holiday season. there is a helping hand potentially but also this situation where some ships are loaded with goods and some port operators have stopped accepting hanjin vessels. what are they going to do to deal with that situation? >> there are some ports where they may be more likely to be

allowed to dock. that depends on regulation. if you type in b map you can come up with a map that shows where a lot of the ships are located. it will then separate out and you can look at more detail exactly where the vessels are sitting. now 79 including 61 container ships have had operations disrupted. there are some ports like singapore, hamburg, which are ore likely to expect the ships the ships and if hanjin shipping can get their ships there then perhaps they can get some of the goods unloaded and they can be sent on either by land or using other ships. that is just one of the concerns. because there is a possible glut of delay, backlog in terms of global shipments because of this issue with hanjin shipping. >> potentially coming through from korea from the parent

company but a lot to go through logistically. thank you so much. we can get more on that story and the rest of the day's news at bloomberg.com. you'll find an in depth report and also watch some of the interviews that you may have missed on bloomberg today. we're looking ahead this hour. a nightmare. s nversion in the engine leading to seeking compensation. it is time to buy china and beware the fed. our guest will be here next. this is bloomberg. ♪

>> business flash headlines, companies may benefit from the b.o.j.'s decision to double its budget. yahoo, japan and daiwa are among six stocks that will beat the nikkei because the companies don't have as many shares available to be traded.

daiwa says that does add to the premiums which benefits should kick in from six to 12 months. investors withdrew money following poor performance. the alpha fund fell to $10 million from $110 million in 2012. investors are pushing back against performances in the volatile markets with an estimated $125 million from hedge funds globally in july. they considered selling earlier this year sources say. the brokerage bought the company for $1.2 billion about three years ago. sources tell bloomberg it stopped searching for a buyer because they didn't think it was such a good price. citism c said there has been a struggle to integrate the two companies. they've been struggling over the past two years of stock market turmoil with pressure on commission.

all right. well, my next guest says investors should buy into the china store. let's bring in the chairman and chief executive of capital link international. you say china is the only one doing it right. a lot of people would disagree. why? >> i think that the world basically ising run by central banks. every headline you hear. he fed, the b.o.j. p.v.o.c. has veered from the roster but the government is doing what we think is very important which is it balancing. it's actually running fiscal programs and running and investing in infrastructure whereas everybody else is substituting government with central bank. the central bankers are not capable of being actually able to run the country. so if you can't balance investment infrastructure spending, fiscal reform, then the monetary use, we think a

huge benefit to a small amount of people. >> the balancing you say from china is keeping equity prices unofficially stable. we have the ipo being kept unofficially low to drive the interest app returns. how do you factor that into the equation? >> i think if you look at the market in general and you look at what the pvoc and cfrc has done they've taken the volatility out of the market. whether you call it official, whether there is a hand in market it's taken the volatility out and made a stable market which the world was calling for. so in my opinion that means the governing powers are actually influencing the market in a positive way where people can feel safe investing. the next thing which i think is probably more critical is yesterday you had this lift in the -- now investors, international investors have basically unlimited access to the equity market in china. this is the second stage of the bond market opening up months

ago. now you have the equity market opening up. this is this gradual progression of the maturation of the market in china and i think that is more important. whether there is a hand in the market, whether there are some artificial things here or there i think you'd be hard pressed to find a market where there aren't influences right now. then you have to look at what's your upside. if you' out of ammo and sitting with the pvoc who has been very diligent in keeping things tight and has not exhausted all of their means i think you have to feel confident that you've got something on your side. >> yes. undoubtedly it feels like every single central bank is running out of policy tools that they can reach for. but, still, there seems to be the psyche in the market among investors that no policy reversal will happen in their careers, in their trading careers. is this dangerous? >> it's dangerous. i think you get to the point we start to really question the viability of this mechanism that's really supporting

everything. there's no yield anywhere in the world right now so money is chasing data everywhere. money that should be in markets is in equity markets. you just walked through the b.o.j. basically buying the whole market up at this point. they probably have to go into a deeper e.t.f. purchasing program because they can't buy any more bonds because they own them all. at some point you have to look and say where is the opportunity? where is the market that really hasn't responded properly? where is growth coming from? china is 350 basis points from normalized rates in the world. that's positive. that's powerful. i think. so --. >> yeah. the bond market will be interesting to watch for china. stay with us. we'll be back with our group chat. that was brett mcgonegal from capital lifpblg international. we'll get back with you later. up next one of china's biggest drug makers could be ready to go public in hong kong. we'll take a look at what could be a multi billion dollar share offering neck. this is bloomberg.

>> welcome back. you're watching asia edge. pharmaceutical group is said to be gearing up for an ipo in hong kong and could raise as much as $2 billion. how much do we know so far? >> well, we're hearing this from sources that have called blab confidentially that china's second larmingest drug maker by revenue may make a public offering as early as next week. this is if it is given the green light by the hong kong stock exchange. e are being told china resources pharma could raise as much as $1.5 to $2 billion by going public. such an ipo could become one of the world's largest this year. it is not quite as big as the potential $8 billion sale some in the markets say the bank of china is reviewing but should certainly make waves.

it also comes hot on the heels of the recent rally in the hang seng index. this graph shows the hang seng, the orange line. it has out performed the world index, the white line, over the course of 26 days. in fact, it is one of the best performing stock indexes globally over the past three months. hong kong remain the world's top market for ipo's in terms of funds raised and number of listings in five months of 2016. in fact we're seeing chinese financial companies that listed in hong kong this year gain an average 2.2% from their prices when adjusted to deal size. this is according to data compiled by bloomberg. now, hong kong first-time shares have raised $9.7 billion through 2016 so far. that, though, is down from 20.1 billion for the same period last year. it's understood china pharma would use proceeds from the listing to find acquisitions, expand manufacturing and distribution businesses, build warehouses, an invest in

research. the drug company is part of the state-run china resources group. its businesses range from beer to electricity, real estate, and finance. now, bloomberg has reached out to china pharma for comment on these reports. it is seeking to list. however, a hong kong based representative for the firm declined to comment. both a matter of as we like to what --. >> we are really seeing this rally in hopes the fed will be in no rush to hike, driving the money flow in. across the region we're holding close to the one-year highs. the aussie has been bouncing. we see a little bit of recession of risk at the time ahead of the decision. up about a tenth of one percent there. take a look at hong kong and china markets. the hang seng is looking like this at the moment up by 0.4%.

a very dreary day here in hong kong. tokyo, we are at the break looking forward to the afternoon business resuming. getting the latest on japan's reopening after this.

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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. >> the top stories this hour asian shares rising to a one-year high on lingering speculation that the u.s. jobs market isn't strong enough to trigger a rate hike from the fed this month. futures prices indicate the likelihood of a move in september falling back 10 percentage points. japanese shares are at their highest in three months. south korea's kospi is at its highest since july, 2015. the aussie dollar is on its longest winning streak in six months ahead of the latest rate decision in an hour from now the last one for outgoing governor glenn stevens who spent 10 years in the top job. all eastboundists surveyed say the r.b.a. will hold the cash rate target steady after cuts in may and august.

bayer has upped its bid for monsanto a second time the german chemical giant now prepared to offer $127.50 per share. that is a 19% premium to monsanto's last close in new york. if the deal goes through it would create the world's biggest producer of seeds and pesticides. in july monsanto rejected bayer's $# 5 billion bid saying it was inadequate. for news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries this is bloomberg. let's get the latest from the markets now. >> as you mentioned, one-year high across the asia pacific benchmark. you look at south korea of course, hanjin shipping, a lot of trades coming in to really play, related companies there. hanjin still up 19%. now, what else are we following

here? a look at japan reopening. i'll be fleshing out that market in a few moments. wait for it to get warmed up into the afternoon session. a decent bid when it comes to taiwan as well as shanghai. it's ban good week so far for singapore. hang seng, 0.4%. hong kong is really, really pushing it. have a look at the charts. six-month chart. takes us back to levels of about 13, 14 months back. it is quite a rally that we've seen. we're looking now at r.s.i. closer to above 75 now so momentum has picked up quite a bit. let me show you what the chart looks like. two-year chart. this insane rally that we saw, there we go. back in the spring. up 2015. a lot of this has to do with hsbc. have a look at that rally as well. it is not actually overtaken to rebecome hong kong or hang seng's heaviest weight of stock

by a little bit also pushing toward a little bit of the overdone side if you will. now, currencies, nothing much to note. you had a few inflation reports out of the philippines and taiwan. both benign. those are weakening but the dollar is strengthening a little bit today. have a look at the aussie dollar going against the grain up 0.6%. we're about an hour away from the r.b.a.'s decision on rates. 12:30 hong kong time. as promised have a look at the topix index. the reason we're looking at this is this rally in the bavenlging sector. the topix banking index in other words. that index is up about 30%. since about mid july. a lot of this comes down to this yield curve starting to basically come up. in fact i think we have a graphic which shows you that. we were close to flat. longer has come up. 15 minutes' time a 30-year bond option comes out.

that is of course coming off the worst ride if you will for a 30-year bond in japan in 10 years. have a look at the chart and the yield and how that has panned out here. we're seeing that abate a little bit at the moment. there we go. about 50 points. 54%. of course the last auction we had, last graphic, please. just to have a look so we can compare to what comes out in about 10 minutes. there you go. just over three for the last month. >> let's head over to securities. brent crude is strengthening again. saudi arabia said there is no current need for production freeze. bloomberg's energy market editor joins us now from tokyo. yesterday we had the biggest oil producers, the saudis and russians pledging to cooperate to stabilize but they vowed to

articulate any specific measures. it feels like groundhog day the way we're talking about this every day ahead of the meating in algiers. how should we be viewing this story? >> like you said, yesterday russian energy minister and his counterpart, saudi arabia's oil minister met in china during the g $20 summit. after the meeting both countries pledged to cooperate to bring stability to the oil market. what they didn't say is how they might do that. this was clearly a disappointment for the market. in the lead up to the meeting brent rose as much as 5.5% but as details came out or lack of details about how they would do that most of those gains were lost. i think brent closed up about 1.7%. what a lot of people have been expecting or hoping for was an agreement to freeze production. but that hasn't happened. so like you said, the next event people will be looking toward is this event in algeria

later this month when opec meets. perhaps there will be an agreement there to freeze production. that's what a lot of people had been expecting and hoping for and not what they got yesterday. >> a lot has been made about this bull market we headed into a few weeks ago. but still trading around 45 bucks a barrel, what else has been playing into the prices? >> well, there are a few things. opec's production is actually hit a record last month according to bloomberg data so that is one factor. you still have the supply overhang globally. in the u.s. oil inventories are about a hundred million barrels above the five-year average so refiners have to eat through that overhang and excess inventory before you get back to a more -- a better balance between supply and demand. i think that over supply and that glut is still weighing on the market and that's why you have prices around 45, $47 a

barrel for w.t.i. and for brent. > all right. our energy markets editor coming to us from tokyo. add dollar libor to the list affecting the yuan a surge in the u.s. borrowing benchmark maketing more expensive for chinese companies to service more than half a trillion dollars of debt. how big a problem is this? is it really threatening to derail the sort of fragile stability policy makers have managed to forge when it comes to the currency? >> china is a real conundrum. though it is half a trillion dollars, enough to destablize most economies around the world, that is $580 billion as we were talking earlier, more than three times the fx of mexico, twice that of russia give or take. so it is enough to kind of drive some sort of instability in the markets. but the key point here is that

this restatement, need to repay the dollar debt before it balloons further is kind of crimping the monetary policy and capital control option. so they're not able to ease capital control because then you could see a flood of money flowing overseas as we've seen every time. it's been more than 0.3, 0.4% the dollar goes up. we see huge dollar demand and it drives the currency lower. however, the chines policy maker probably doesn't want any mass ive instability in the market, not even a little instability, so it's a kind of highly controlled economy and country. >> i mean, is there an argument chinese companies should take some pain now and try and get their financial houses in order because could it get worse from here? >> it could get worse. we have expectations about 1.1% the rest of the year so the cost of servicing the debt is

definitely going to climb over the next few months at least. with that said, the yuan gets into the sbr on october 1 and there are estimates of some money at these coming into chinese assets over the next couple years. so that could temper the dollar -- the yuan's decline over the next year and a half, two years or so. though like i said the estimate is for the declines this year and the neck bufment if you have a little bit of patience, you can kind of put off your repayment for a while. but then some have to meet deadlines. they have to do it now. >> no rest for yuan watchers certainly. thanks for taking us through that story. taking a look at some of the other headlines, ofbright securities is said to be stepping up its expansion in hong kong with several top hires from its competitors. they include the head of the bafplging from d.b.s. everbright also recently

attracted an individual from the bavenlg of china and the firm has added 10 senior executives since may and plans to hire 10 more by the end of the year. said to be cutting 100 jobs from its plant in singapore, sources have told bloomberg some of the positions will be moved to india. the bank confirmed it is making the cuts but did not confirm the number of people affected. bark claes shut the cash equity operations earlier this year as part of a global layoff of 1200 positions. general motors has settled the last of the bellwether cases set for trial over faulty ignition switches. gm was originally to face six suits that would set precedence on how others would proceed. of them one was dropped. the car maker won two. with the latest agreements three have been settled. gm still faces hundreds of claims for deaths and injuries elated to the 2014 recall.

the destruction caused by faulty engines on some of the 787 dreamliners, the form of compensation has not yet been decided but could be in the form of discount on future purchases and free parts rather than in cash. chris cooper is with us in tokyo. hat was wrong with the engine? >> well, the problem has been with the turbine blade. it all started in february this year. there affs flight going from kuala lamb pure to canada and had to turn back half way. one of the engines had a problem. they flew back on one engine and found part of a blade had broken off. the next month they had a similar problem in hanoi and have been talking to rolls royce since then. rolls royce has agreed to design a new blade and ship it to a.n.a. starting from january next year.

>> that's part of the fix. what is the strategy to try to overcome this? >> well, this isn't a.n.a.'s first problem with the 787. the first customer for the plane and also the largest operator of the plane with 50 of them. back in 2011 they got their first one. it was delayed by more than three years. then a couple years later they had problems with the lithium ion batteries and it was a global shutdown of flights. a.n.a. couldn't fly their planes for four months. and now we're going to another problem. this time a.n.a. has done well at handling it. they canceled just over a dozen flights last month and so far this month they've kept them to zero for the first half and sources are telling us the second half they'll put on some spare planes and triple 7's and try and keep the cancellations to zero again for the second half of this month.

>> what are the chances of compensation in a case like this? is there a precedent in something similar? >> yes. well, these negotiations go on and are discussed privately. every now and again there is an example that comes up where a company will get a cash payment and book it. one of those examples goes back to when they were getting their a-380. they booked the cash payment of millions of dollars in their account for a settlement. and so that's one of the clearest examples. most of them though get settled behind doors and if it's discounts on equipment or if it's free parts, then that's probably not going to show up in the accounts. >> maybe a little bit easier to bear if you're rolls royce as well. thanks for joining us there from tokyo. that is chris cooper our bloomberg aerospace reporter. up next, what's up with the

fed? we'll ask our next guest why he thinks the central bank has lost credibility. brett mcgonegal, next. this is bloomberg.

a quick check on headlines. barack obama says it is in everyone's interests to have better coordination on tax policies to avoid issues such as apple's dispute with the european commission. tax avoidance is a discussion among world leaders at the g $20. obama didn't named eu but said there are risks to acting unilaterally and that decisions made by other countries may lead the u.s. treasury to be, "short changed." a claim from japan for nearly $1.2 billion from the indian company who has filed an application to set aside a london court order saying it is not permitted to pay the sum as the r.b.i. has denied approval.

tata says it plans to pay up but only within the scommines of the law. docomo is taking compensation after they failed to find a buyer. the price has risen more than 30% this year. mdc has cut prices by about 6% this year. the company is seeing challenges in domestic supplies. moderating demand and transport costs. thanks for w, staying with us. let's talk about japan. we are waiting, david's favorite time of the day. >> i can go home now. >> that's right. > in fact i just got word, 3.13 i think was the cover. not very exciting. >> no. >> people are still lining up around the corner basically for

something. what is the thinking here? why is everyone still doing this? >> it's been going on for so long there is nothing else to do, right? i think the real driver right now is what's the next step. i think we're still deep into this process and to say that it's been not effective i guess is probably a compliment. but what changes? is there something that gets things going? on the bond side i think it's very hard to think that you can have any more movement than what we've seen and you can have this real reversal in the last week or so of yields which is very troubling to the b.o.j. right now. and really only on the equity side. so i don't get it. i think we've tried so hard to figure out what people are really interested in and maybe they think there is going to be some change at some point and you get some relief rally and all of a sudden it needs to

become profitable. >> this monetary policy review the b.o.j. is doing what do you want to see as the outcome? there is some speculation that they're going to restrain bond purchases on the longer end and cut rates deeper into negative. will that help? >> they clearly have to focus on the shortened of the curve, right? that's why you're seeing the long end under pressure because people think they'll cycle out of buying the long end to the shortened because they need to actually have some impact now. right? the long data japanese bonds are not really same as long data u.s. bonds. there is not so much activity there. the real thing is where they get their impact. that's what they need. they need to impact the market and if everyone is focused on one duration then they can have seemingly more impact on the one they're not looking at. but i don't -- the markets are so deep and so mature that i don't think you can have that especially in that market. i don't know. i think their hands are tied. i don't think there is much they can do. i give them some credit for the

last meeting not doing much and trying to get something to change but at some point you run out of ammunition or credibility whichever comes first. neither is a good thing. b.o.j., ntral banks, fed, waiting for them to take action to change things up. where can we go? >> look. the central bavenlgs are not governors. they're bankers. they're there to ensure that policy on the monetary side is followed and that they can achieve certain growth markets. you can't substitute a government with a banking authority right? the banking facility only has the ability to really influence monetary policy. i think the whole world is realizing it just doesn't work. you need actually government to get involved. you need fiscal reform. you need planning. you need to look at taxes, immigration, all these things

we're seeing are hot button topics all seem to come second to the investment -- >> why this over reliance on central banks then? why aren't governments putting their finger on it if the economies are in trouble? >> a great question. have you this national pride, people going out, voting everywhere. they're voting for change. so the issue i think is to put it bluntly is the governments are not functioning properly and people want some change. in the midst of these governments kind of figuring out how to actually have impact or relevance they've been moved to the side by the financial means and thus the central banks have been put there. it wasn't designed that way. it just kind of happened because of poor government and poor leadership around the world. you're seeing people vote against it. you have these huge movements. people are saying it's not working. >> what about did you think there was any governmental leadership coming through from the g20 in china? we've been covering this story about oil today.

similar to what you said we're seeing from the central banks as well. >> i think the g $20 the thing most important in my opinion and we've all had this discussion many times is i think china's actually functioning, right? they have fiscal reform in place. they know that fiscal reform is deflationary. they need to have this monetary policy to sit next to it. to inflate. they're spending on infrastructure. i think she made it very clear. governments have to govern. they cannot rely on central banks to do the job. and i think that will be -- >> that's easy. >> the one party system. >> it is. >> what i think is the most important thing is china only has to put up the system that they have. you can't, it can't be always a negative right? it is what it is. they operate with inside of the parameters that they have. sometimes people like it. sometimes people don't. it has the ability to have bigger influence. and more power.

that can't just be a negative. it has to be a positive at some point. so look. the world has allowed the central banks to flood the market with money. that money has benefited a very few, select people in the world. what you've gotten is huge volatility. so in order to regain not only credibility but for people to feel comfortable in the market you need to take the volatility out. the volatility means the government has to sit next to the central bank and act in tandem and they have to come up with well articulated policies that people can rely on so that you can take the risk of the fear of the unknown out of the market. all we have right now is this. you're seeing all these asset managers now playing the vic. think about that right? the only thing that they know is going to happen is volatility is going to be in the market. that's a bad thing. that means people have failed. right? from a policy perspective. >> all right. sound very fed up.

it is a pleasure to have you. >> no pun intended. >> fed up. okay. we have to go. always a pleasure. up next out with the old and in with the new. a number of activist candidates win the elections. we'll see how beijing has responded next. this is bloomberg. ♪

>> a group of younger, more been people have elected in beijing. what is the reaction from beijing? >> beijing has today issued a very robust warning against any type of hong kong independent activities from those outside and inside. so you can see beijing slightly worried about the prospect of might lateral and you argue they have reason to be worried because not only what we call pro democracy camp,

they're not only increasing the seats from 27 to 30, but the entire structure has changed. previously you have two camp, pro beijing and pro democracy and now you have this third, fourth if you will which is more radical, younger, and they are running and actually winning on a platform which advocates greater autonomy and self-determination and beijing does not like open dissent so that is the reason why they are worried. >> in terms of what a difference makes to how hong kong is going to be governed, why are they worried from that perspective? >> because if you think about it for an authoritarian regime the first instinct is to kill any elements they fear is slightly unpredictable, slightly out of control. beijing feels this is the first time this has emerged. beijing feels it is not familiar with it. beijing actually

kind of knew the paper tiger and now you have new variable, young tiger. like the 23-year-old, youngest , you r to openly oppose know, the n.p.c. ruling on august 31 two years ago. this has beijing slightly concerned. >> an extraordinary result. thank you so much for taking us through those results. bloomberg markets is coming up. what are you watching for us? >> the aussie dollar is up for a fifth day. we have the r.b.a. rate decision which we will get to you and break down to you further after what we saw in july and august in terms of cutting those rates. the expectation is that they will hold. we'll also get to an exclusive

interview with the chairman of the capital market authority. make sure to tune in for that and see how you can put your money to work in saudi arabia.

>> giving up much of the early gains after saying there was no need for a cap on production. drawng thanks are being with the hard-line opponents. the exclusive interview with the they yauthority and