. -- xi jinping backing a stronger role for the pboc.hat were the key takeaway points? >> we just heard from jamie dimon. lounge inthe rooftop the middle of the financial center in china. we have been looking at the financial sector and shanghai and seeing the ramifications of the weekend meeting as we await gdp numbers at 10:00 local time, expecting stability, but what everyone is talking about is policy going forward. gdp is backwards looking. conference was forward-looking, preventing systemic risks in the financial sector as an eternal theme, eternal theme, top priority number one, also financial deleveraging must serve the real economy. that is the number one priority. second, preventing risks. three, deepening reforms and opening up. accountability is also a big theme as they announced the to take over ag supervisory role along with the pboc, giving great power to the central bank in oversight. acknowledged and and preventing systemic risks, basically they will have a new, coordinated committee within the state , andil with pboc ov

the question is, what will the pboc do?the pboc reinserting language about lowering real economies financing costs, but at the end of the day, you're talking about deleveraging. much is a limit to how lower the financing costs can get, and that is really the concern. david: i know you can't talk names, but from the pool of stocks you guys do own, have you seen a pickup in borrowing costs? >> it depends where. -- official interest rate they are doing some tightening. it has been good for insurers and banks in terms of potential asset yield if we have an official interest rate increase, it will be good for them as well. the communication from the recent financial work conference is a positive, a win-win for everybody. the majority of the bargaining power, over $200 trillion in assets, insurance, and then securities, and the banks woulds dictate to securities and insurance what would happen, potentially nonperforming loan securitization where you could amortize them over the schedule. i think it is a win-win and i like it that

we are now listening to the deputy governor of the pboc.ear from the hong kong monetary authority chief executive norman chan along with other dignitaries. it, steve.will take what we just heard is the new chief executive, but all of this after, well, a mixed bag over the weekend, some stern words from president she should in thing. what are people making of the handover ceremonies over the weekend? >> absolutely. this is a monumental and momentous occasion for hong kong and china. i'm being told right now to speak of little bit lower as the pboc deputy governor is speaking. we don't want to drown him out. again innother step the continued integration between hong kong and china. it is inevitable. much forthank you so that. in sam muti. everybody wants to know how important this will be in the grand scheme of things, opinions bege from meh to it will brilliant. piece ofa nice choreography. carrie lam goes to the bond connects her money and gives a speech. that tells you the importance of it and the meaning behind it. it is a geopolitical ge

there is a piece in the pboc newspaper that china should expand the trading ban.hird of a percent, new session boj bonder the latest buying update. moderately than last week, raising its purchase while one year,s buying of to your, three or maturities limited. as -- wontronger stronger as global funds boosted the korean holdings. head of the bank of korea's policy decision on thursday, forecast to hold. the dollar-yuan is at the 200 day moving average, the line in yellow on this chart. the next key levels should be 1140 and 1132. nova scotia bank maintaining their long yuan position while looking to buy dollar-yuan on could bed, so the won susceptible to uncertainties there. rishaad: let's get to first word news headlines. takata shares soared after the announcement of an additional recall. that is despite employing a chemical trying agent to ensure safety. the inflator's were made from 2005-2012 and installed in nissan, ford vehicles. 's potentially lethal products are linked to 18 deaths worldwide. the record date for an extra ordinary shareholder meeting, happe

this chart illustrates repo rate , and that is 2.7% despite 11 straight days of the pboc standing ones and not injecting new liquidity into the system, so where is this coming from? one idea is it could be seasonal , typically you get a pickup in liquidity toward the end of june, early july. another idea is you have corporate and china that on the back of a stronger yuan are selling down fx reserves and ising up yuan and that causing a pickup in liquidity. the other one is that the banks that are under pressure to reduce new loan is yuan's -- issuance. sayingact is that it is a rally in bonds towards the end , and that is concerning and follows three consecutive quarters of losses for china's bond market. so you seen this pick up in the bond market. the analysts are saying that is full hearty because the pboc is still present deleveraging and that he's reduced rates in the money markets are likely to concern the pboc and it will not move off its path. one analyst who said, frankly what we are seeing in terms of the pickup and .orporate bonds is crazy they expect that to be reversed s

haidi: if you want to talk about bond sheet online, take a look at the pboc's challenges.nk you so much. hour, ambitions versus reality, a closer look at china's financial sector reform plans as the national work on chri conference kicks off. rishaad: is the tone shifting of the fed? what we have learned from janet yellen's testimony. that's next. this is bloomberg. ♪ ♪ rishaad: you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: a quick check of the latest business flash headlines. amazon was not the only winner has prime day drew many deal hungry shoppers to the web. ebay saw its best sales stayed by anticipating amazon's big moment and launching an advertising blitz. using the slogan, did you check ebay? the ceo has boosted the marketing budget to freshen its image and change the view that it is an online rubbish sale. facebook trying to turn its oculus rift a fee our kids into a mass-market phenomenon and is planning a cheaper vr device. headsets it is cheap and high in rigs such as the oculus at $400. the new headset is to sell around $200.

where does the pboc go in the medium term?uest: they have been good at following the fed -- ahead of the fed in the past. the concern we have in the moment is far more than expectations ever happened. everyone is aware of the trajectory of the fed. it depends on what the market expectation is. who knows? the pboc are comfortable at the moment and we are on a balance trajectory. anna: as the pboc is tightening, has it been successful in reducing outflow pressure? this could be the story of 2017 and it wasn't. guest: we have seen and info pressure, which is a huge switch. bank else sheets themselves. that will pose a move and coupled with the strength in the rmb and the initially was trying to mitigate speculation between the market three months ago and we have seen continued strengthened currency now. anna: what about internally in china and pressures in the labor market? how much is the growth engine managing to keep a lid on demands of population? guest: we need to be clear about this. there are a lot of people connecting whi

the pboc says it is taking a greater role in financial regulation. they will step up supervision of institutions, a job that previously fell to the regulatory commission. the news confirms what bloomberg reported earlier this month. meg whitman is said to be on the list to be the next ceo of over. -- uber. hailer is set to name its next executive by early september in whitman is said to be in the talks. helping include arianna huffington. global news, 24 hours a day. i am haslinda amin. federal reserve heads into the second day of its policy meeting with traders betting they will not hike the key rate anytime soon. there may be big news when it comes to the balance sheet. let's go over to our global economics and policy editor. what about president trump indicating he might reappoint janet yellen? trump likes to stir the pot. let me fill in our audience. the wall street journal interviewed donald trump. he said, not only gary cohn, the former president of goldman sachs, who was the front runner a couple of weeks ago, now he is saying also janet yelle

is there a sense of the pboc has finished intervening? in a moment, capital rules,s reinforce strict they also had a bit of luck on their side. the u.s. the dollar has weakened and that has helped in significantly. countryrd to leave the to support a significant project. nonetheless, i don't think we can say for sure that the pboc can step away from the yuan for sure. if the economy is still going forward, ppi is a bit of a warning, some might point to the 10 tatian for the policymakers to let the currency weaken, if we start going down that road again, we will still be resurrecting and money will not leave the country as quickly and the policymakers will have to make sure the currency does not go too far. affect andvaluation they are being helped by the cheaper dollar. you cannot leave this scenario will last forever. haidi: the sense that we can just get bored to 2018, -- can 2018 to theward to party congress for a more accurate look at what the economy is doing. >> there is the feeling there is not going to be much done ahead of the co

at the put the pboc helm. pboc may get a chance at that. they want a grip on shadow banking.overheating housing market. they need better coordination, all around. yvonne: thank you. largest software services provider feel they cut back in i.t. spending. they saw profits dropped by 6% in the first quarter. for more on the challenges faced by the industry, our guest has more. one concern is the white house immigration policy. >> that is true, they do not have a workaround. the political environment is unfavorable. their opening a lot of u.s. centers and greeting u.s. jobs, a lot of people on shore which is not their model. it raises their cost, hurts their margins. the political environment is much more favorable in europe. a lot of what these companies are shifting toward is outsourcing in europe. brexit has caused a lot of dislocation. when you're moving staff you have to move i.t. systems and that could cause outsourcing. betty: is that around the edges, the margins, in terms of being helpful? tell me what is really hurting them. >> cloud is an issue for every i.t. services

this morning, we did get a pboc slightly weaker this morning.uld draw into the question of what it means when we have the closing of the yuan diverging from the pboc's reference rate. we have citigroup mizuho wondering if this could signal possible intervention for the currency. another currency to point out is what's going on with the aussie dollar, down about a 10th of a percent. we have data out of australia due out tomorrow.this could be another factor that could stall the aussie value. it has been fairly strong so far, but we are set -- seeing the relative strength index in overbought territory for eight straight days.this is the longest stretch since october 2010. in that year in november, that is when we last got the rba hiking rates. buy show heto end was going on with sue shares. afterre falling over 7%, they announced a share placement at a discounted price -- price. some pressure for synnex china. c china.china -- suna david: lots of news we are following. there is the open, but there's also bad news for the polish ex parte chief. let

not getting in inflation pick up come you don't have to worry about quickly raising rates, but the pboc example trying to deleverage and pull excess liquidity out of the system, at the same time keeping their rates at record lows. the reserve bank of india seeing inflation slowing even though growth is strong. their door may be open to rate cuts. hsbc sees no central bank tightening until 2018. if you look at japan, maybe it tion thedetermina strategy is paying off. >> there are some signs of inflation beginning to creep through, some green shoots, wages picking up, inflation expectations creeping higher. while not the 2% the boj is aiming for, we will see some increasing signs of inflation in the neck excitement 12 months. again, sitting tighten waiting for growth. ater, we will speak with noted monetary economist here in tokyo to talk about his view of the boj and how it fits into this global picture of central banks converging, diverging, and most of all what it means for japan moving ahead. rishaad: absolutely. great to get those insights. thank you so much for that. at a big weeklo

a lot of questions over whether better than expected growth will give pboc more leeway for deleveraging is time for the bloomberg business flash. procter & gamble faces a proxy fight from nelson peltz's try and -- trian fund management over what it calls the consumer product company's slow-moving and insular culture. the buyout firm kkr is preparing for the future, promoting two executives in the 40's to the new roles of copresident and co-chief operating officers. henry kravitz and george roberts will remain as co-ceo's and cochairman. credit suisse is working on a new strategic three-year plan that will focus investing on its most operable areas. according to a memo seen by bloomberg, the swiss bank moved up a strategy meeting to june from the usual time of late august. credit suisse says the new plan should drive the back valuation higher after 2018. that is your business flash. really interesting that credit suisse is signaling the euro of cost cutting and job cuts may soon be over. up 34% overstock is the last 12 months, but if you look at the last 10 years, it is down 18%. it has

we are looking to though and the yuan fix -- the open and the yuan fix from the pboc.ishaad: we will be looking at these tensions in the arabian gulf, having a look at that and first word news, it is paul allen in sydney. paul: thank you. u.s. secretary of state rex tillerson is in the gulf to help with the saudi led crisis in qatar. he will go between capital this week, attempting to bridge the gap between the two sides.the crisis puts washington in a difficult position .qatar , saudi arabia is the top by of american weapons. the saudi alliance severed higher -- ties with johan june 5. u.k. prime minister theresa may is trying to help steer the country out of the european union after you losing status and power last month in the election. will say her political enemies should contribute and not criticize. saudi aramco is to invest more than $300 billion over the next decade to maintain capacity and search for new gas reserves. the ceo told a conference in istanbul that the output for oil suppliers is worrying, and $1 trillion in investments were wiped out by low crude

in the pboc, the pressure is tremendous.it growth targets for the reserve, preserve the balance, and try to serve the economy efficiently, meaning cutting inflation, supporting growth, and creating jobs, i think it is not possible. you need to choose some targets. chinas the reason i think is struggling sometimes. so far, they succeed in achieving the growth targets. the growth target is almost secured. this is why we think in the remainder of the year, we focus on quality-driven reforms. growth is slow, not at a strong pace, but you reduce the imbalances weighing on the economy. shery: given growth is still strong, if they have more leeway in carrying out the deleverage -- moud, thank you for joining us. of course, you can find a roundup of all of the stories for today, including china's property price data, what to expect today. go to dayb on your terminals. it is also available on mobile in the bloomberg anywhere app. you can customize of course your settings, so you can get the news and industries and assets you car

know is off book or off-balance-sheet, and in the wealth management -- from your perch, as a formal pbocfficial now with the imf, how would you see the risk to the chinese banking system right now? >> one of the main risks is the financial risk. certainly that is related to some of the risks within the financial sectors everywhere. this does include for example,, the battleship problems of the banks, and some of the other emerging markets as well. here, yes. largerthe increasing, amount of the off-balance-sheet activities in the chinese financial markets. stephen: from your view, though, in the leveraging campaign we are in now, does it rinun the risk of ruining the stability? do you see this could potentially be a drag on growth further? >> well, i think the deleveraging issues have and weed in many places, are also paying close attention to that. this -- you see there are different types across different sectors, and on the other hand they have to maintain to make sure there is adequate support for restructuring process and adequate support for social sectors. right, and we have all he

could we see the pboc ramping up its deleveraging then?l, a new policies and tighter liquidity conditions. the market had a concentrated selloff in various financial assets, now in june we are moving into relative calm as we look towards the conference ister this week, and th takes away some institutionalization of the deleveraging policy the pboc has been pursuing for the past six months, so financial institutions and mainland china, it means they can take a breather for now, but most of them are prepared for stronger regulations to come. >> thank you so much. julia wang at hsbc. one feature on the bloomberg is the interactive tv function at tv . not only can you watch his life but see previous interviews and dive into securities and functions we talk about. you can also be part of the conversation. send us an instant message during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ >> the latest business flash headlines. our clays on a hiring spree to boost market operations in japan a yea

today, the pboc fix of the yuan slightly weaker. we do have the yuan extending its drop amid speculation that the seven-day advance we saw previously was effective, and as u.s.-china talks get off to a rocky start. ae yuan retreated from nine-month high, and the offshore rate is lower for a second session. for a quick check of what is moving in shanghai, i.t. stocks and health care leading gains, the shanghai composite slightly higher. miners on the back foot, down .3% come the segment that really the shanghaist to composite yesterday, seeing it rise over 1% on wednesday. full up the screen to show you some stocks we are watching in hong kong. after the switch up in the wanda-sunac deal. jumping on was 8% this morning there. wanda and sunac also rising. 10%, adding over 28% gain on wednesday. rishaad: thank you very much indeed for that. sophie was talking about washington and beijing not getting along particularly well, to put it mildly. let's get to first word news. rosalind: talks between the world's two biggest economies off to

take a look at the yuan, steady after the pboc fixed the rate slightly stronger, trading at its strongest level in over a week, the offshore yuan that is. dropen tearing its earlier -- paring its earlier drop. the pace of that decline putting it around that 113.11 level. the dollar yen could retest that we have seen a convergence of the 100 day moving average and 200 day moving average. haidi: thank you so much for that. let's get you caught up to date with first word news with paul allen. paul: stocks towards records, treasuries yellowed, janet yellen signal the fed won't rush to tighten. house committee that the u.s. economy is expected to grow consistently allowing gradual rate hikes. fed'sso repeated the intention to unwind the balance sheet soon. >> my colleagues made the judgment in june when we laid out the final details that if the economy continues to evolve and line with our expectations, that it is something we should begin to do this year, and to my mind, i would say relatively soon. the bank of korea has left its key interest rate unchanged at 1.25%. governor speaks shortly.

it is about the risk aversion from the pboc. extending the retreat. down 1.4% yesterday. question for markets is this, is there a herd mentality? yes, it continues to reverberate through the market, they want to lower the returns on wealth management products. this is the core of what they're trying to do, reduce the risk in the market. -- s&p futures down futures down, it looks like the health care bill is dead and it will not go through congress in the current form. two more republican senators are opposing the plan, and that takes the risk factor of what donald trump can deliver on tax and infrastructure out of the market. >> some still believe, morgan stanley doubling down. that is a 10% upside from where we are right now, they believe the company should of trump delivering and profits could make a difference. get the first word news. >> china's banking regulator has told some lenders to lower rates they offer wealth management products. according to people familiar with the matter, ranks including some big lenders received the order from the revelatory commission ear

at how this plays into the back of the trading numbers that we securities regulator, msci rc, the pboc will have a greater role in oversight. that internal theme will be prevailing throughout. we don't have a lots of details on how this committee will be run and who will be in charge but the fact that they were sharing this meeting, you can tell this is a priority that goes straight to the top of leadership. also, accountability will be a big theme of the statement, dereliction of duty if regulators do not spot and dispose of risk properly and timely. that is the main theme. there are a couple of her thing -- of other things because they knocked down forms. they established three it must serve the real economy. it must prevent risks and it must even reform and opening up your that might be a little bit of a warning shot to foreigners who want greater reform, access to the financial services because it has been knocked down to number three. still on the list, but knocked down. as a we debts must continue -- as oe debts must continue to be knocks it down as well. that could mean more ipo

pboc is watching and there is some intervention.l continue to push and have an influence on the fx market? >> certainly. undertones are ,oming from the dollar side because it has been under dollar pressure for some time. critical for us is the balancing of growth and financial stability in china itself. last year, there was quite a bit of stimulus put in place. after the national congress, we will have a clear idea of policy. >> finally one question on the yen, i was asking about central banks and rate hikes, if one central bank is not going anywhere, it is the boj. do you think they will be pushed by the tightening around the exit stimuluso this year? >> it is unlikely. inflation data in japan is nowhere near the target. so far, the yield control is working well for them. they have been generally exiting at a slower pace. that may slow down a little bit. ultimately, i think they won't have to keep policy varied if they have any chance of hitting those inflation targets. >> thank you very much. you can get around of of the stories t

yuan, a bright spot here, strengthening after a week or fixed on the pboc at 676.11.pop in on me, but the asx 200 not getting support from the data this morning.rba thing is not going to join the global policy unwind. that benchmark falling almost 1% in sydney. wanted check on the shenzhen stock market, given that it has been in focus, given the slump we saw in china on monday. we have it following about half a percent extending losses for a seventh day. there has been anxiety around investors given the regulatory concerns for china, but we do have base metals rallying nicely, following the upbeat economic data. copper is trading at a four-month high. that could be just getting started. this is chinese industrial output for the red metal, jumping 7.6% in june. this chart shows you the red metal broke above the upper bollinger band. that is the line in red. exceeded $6,000 a ton for the first time since march. that could spring more buying from traders. i want to pull up stocks to watch at the open in hong kong. checking on wanda hotels. reports that the chinese govern

there, yeah >> basically you have the banking regulator, insurance regulator, securities regulator and pboc, they all govern different bits of the market that's why when you see this explosion in all of the different forms of finance in china, the asset manager companies have been issuing new products, and the insurance companies which is a massive issue in terms of causing instability in the system, and then even banks themselves are raising more money in wholesale markets than before. suddenly the risks -- >> this committee does what, it pulls in the best of the others or still looks at the others and say you need to come down harder on this area and this area and this area. >> the details are thin on the ground because there's a changeover the fact that they put it out there, this is going to be a super regulator over the top of all the other ones, basically means you have a higher level and more significant one that's going to piece together the risk and all the different bits of the financial system, and that's what we are entering now the financial sector tightening. >> one more for m

both onshore and offshore rates, despite weaker rates from the pboc, the offshore yuan up about 1/10 of 1%. the chinese dollar up marginally higher. it is seeing general weakness here as it did fall to its weakest level on -- since april on tuesday. all in all, it does not seem like we are seeing too much to shake asian currencies so far today. >> thanks. rishaad: that is what we have coming up. you can see that woman on the lectern. who cannot be? >> janet yellen. plans to reduce the balance sheet. but when is that going to start? rishaad: north korea raising the stakes. what the united states can do to rein in pyongyang. this is bloomberg. ♪ rishaad: you are back with bloomberg markets, i am rishaad salamat. angie: and i am angie lau. narrowed the list of bidders for its wealth unit, failed to raise 3 billion u.s. dollars. bloomberg has been told it has invited metlife in zurich to make second round offers by the middle of september. anz is offloading its wealth on to focus on its core business. they expect to name the winner by the end of the year. deal to produce -- cell iron ore

we might get a few clues on who the next pboc governor may be.nology," next. ♪ is "bloomberg technology," i am emily chang. leader mitchty mcconnell has released a revised republican health care bill. he is seeking conservative support by letting insurers sell low premium policies with minimal coverage. the bill is aimed at repealing much of president obama's health care law. joining us from new york on how it may impact insurance companies as a whole, mario schlosser. we will talk about that any moment. first, there is a huge debate and a lot about the future of health care in this country. what does that mean for you? mario: i come back to first principles when i think about this. happen, nobodyo would be suicidal enough and crazy enough to throw millions of people individually insured back into the market without insurance. i should not call the play-by-play what will happen in the senate and house the next few months, but i do think we will get to a market that is stable. worked for the future and the future as i think it needs to be in u.s.

we did have that strong fix from the pboc helping the yuan maintain its momentum, the offshore rate risingtraight session. onshore rate rising to the strongest level since october. taking a look at hong kong, which outperformed chinese equities in july, i.t. stocks s andollowed by telco consumer shares, the banks down. pressurecorrection seen ahead for the hang seng the spiked again for hong kong shares so far in 2017. sunac china and wanda hotel shares, the two may sign a formal agreement today with potential changes to the deal structure. , one hotel on the up climbing above 3% and sunac up 1% so far. news, let'sst word join paul allen. china isters said considering the merger of two of its biggest a run metals companies. the report says that the negotiations have been going on for months, but an agreement could be some way off good both companies have listed units. mmg trades in hong kong and sydney. the hp sharply down in sydney despite reporting fourth-quarter iron ore output that rose 8%. production came in more than expected, 60 million metric tons , thanks to additional capacity an

-- complicate pboc asians? -- complicate the negotiations?i am that sure what that might mean in practice, but the idea that somehow the saudis and are going to dictate to the turks their foreign policy, it really almost beggars belief. you can imagine that some of these parties would try to make some sort of quiet approach. the real problem, i think, is it is not -- i don't think it is a situation where tillerson can go along and say to the countries that to the qataris -- to the qataris, why don't you do this and that? almost all of it is unbelievably unreasonable. peter, if you were a betting man, how long is this going to take to fix? guest: i really don't know. i would think months rather than days. be -- theys got to have got to moderate their demands or drop them. it has to be made up to seem as , whichhow they haven't in the circumstances, is really rather difficult. yousef: lovely speaking with you. thank you for coming on the show. visiting research professor at the middle east institute at the national university of singapore. stil

pboc,licy maker is the they seem to put a cap on raising money market rates, and that is giving theme will be getting official numbers around 9:00 a.m. on the pmi data. manufacturing and nonmanufacturing for china. haidi: thank you so much for that. tom mackenzie for us in beijing. john kelly starts a new job monday as the top need to president trump -- aide to president trump. does he have what it takes? this is bloomberg. ♪ ♪ haidi: i am haidi lun in sydney. betty: i am betty liu in new york, you are watching daybreak australia. john kelly start his new job at the cheapest that on monday, replacing -- chief of staff, replacing reince priebus ousted less than seven months in the job. others say he will fail in his job. haidi: we are joined by al hunt in washington. you wrote this column, widely read. why do you think kelly, general kelly, is going to fail in this job? al: because of who he is working for, betty. could notnd betty succeed. he does not a chief of staff, he wants to be his own chief of staff. that is the first challenge. i have never seen as many warring factions in a

he also said the pboc plans to keep liquidity basic stable as well as maintaining the yuan exchange ratelibrium levels. iran is calling on richer nations to address trade relations. theking ahead of the g-20, fund said countries with account surpluses should use policies to boost investment demand. those with deficits such as the u.s. and you can't ought to tighten their fiscal belts. >> little to cheer in the asian equity sessions with the benchmark on par 4 a third weekly drop. petrochina was downgraded by bernstein in light of its lower old press forecast, and oil was put to a halt over its biggest loss in four weeks. it was the best asian currency in the first half of 2017, but traders unraveling forecasting $31 by year and a just around it earlier, a key support line that a broken could spur another pullback. with the low volatility that has been plaguing the markets, you can see there has been a of the upper band in yellow with the lower band in green and 20-band moving average. this is a sign of future volatility. ♪ caroline: this is "bloomberg technology." i'm caroline hyde. the

the pboc scares.will have a coordinated that fell to the china banking regulatory commission. the news confirms what bloomberg reported earlier this month. the bank said it would pursue prudent and monetary policy and keep supply growing at an appropriate pace. u.s. regulatorsthe bank said itf the hottest new areas of finance, initial offerings of digital currencies. the fcc said users must register deals through the government. and those that raise money through digital must register. they have raised money this year in additional coin offerings or ico's. australia rejecting criticism from the regulator, who said that they misled customers. it accc has reopened cars hades about -- undergone multiple repairs that did not fix faults. for denied the allegations and said it would challenge them. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> i am sophie kamaruddin with a check on the markets. -- ina mixed day on asia the ma

bank says the country's shadow banking sector lacks regulation in an annual report just released the pbocays it will make sure the economy has no systemic financial risks they say the economy faces big downward pressures as a result it's pledging to create a favorable monetary and financial environment. >>> overall, if you take all of that on balance, asian equities did see a reaction we're positive to close here for the general part the nikkei up by a quarter of a percent. the hang seng up bay half percent. the kospi in south korea up a half percent given what happened with that icbm >> gold will be something to watch oday so far it's really shaken off the news, like it does so many times. >> every time. it's been that way for the last couple of year sflos. >>> the european commission has given the green light for the bailout of banca monte dei paschi regulators approving the plan after the bank agreed to ab overall including capping pay for senior employees and transferring bad loans the lender will cut around 600 branches look at european equities early this hour. a bit higher the germ

in terms of the pboc response, we saw money market rates were edged up by the pboc. the credit cycle downturn, that will kick in towards the end of this year, and there will be continued pressure from the real estate sector. so far, no big shots this year in china, but second-tier cities and third tear cities have been resilient. cooled major cities have come up and pressure likely on the property sector, and that could prove a track on the manufacturing sector going forward. the party congress towards the end of this year in the mix and the desire from policymakers for stability, which they seem to have at this stage of least. haidi: all leading up to the 19th party congress. tom mackenzie there in beijing breaking down the latest factory indicators out of china. mounting back to tensions between the u.s. and north korea. japan working alongside that u.s. and south korea to develop stricter measures against kim jong-un following the test of another icbm. let's get it over to isabel reynolds. what has been prime minister abe's response? >> japan has developed a stand

the pboc added millions of dollars.onthshe most in six after demand driven by tax and dividend payments pushed the rate to a four-week high. hasi arabia's king overhauled the company's security agency. agency has been created that will be linked to the office of the prime minister , a title became also holds. king also holds. north korea's economy is growing faster than its southern neighbor, helped by military spending, including the testing of nuclear weapons. korea,ng to the bank of it expended by 3.9% from a year earlier. from three point 9% -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the rally had to end at some point. we have seen asian equities in 10t for the first time sessions. yesterday, the msci asia-pacific index was holding at levels we hadn't seen since december 20 -- 2007. you have the yen moving against the dollar, the nikkei lower. japanese stocks coming under pressure. morgan stanle

some of the concerns perhaps around a stronger role for the pboc.ngthing has been -- some of the smaller mid-caps as well. this is the gilt market. it's at this hour as well, the yield on the 10 year 1.305 right now. the ongoing debate is just how life is that meeting? investors tell bloomberg they like guilt despite the underperformance they have seen. be aware that brexit round to get underway, we seem to be drowning in brexit related sound effects right now. we have whistling from boris johnson. is what we find ourselves engulfed in this week in russell. let's move on to easyjet and i tv. chart these together in a with the ceo shuffle taking place as carolyn mccall flies off easyjet and lance at itv. itv.is rising in advertising spend. production. both those productions in a fitting, not looking great more recently and here is that brexit fallout. a lot to watch out for as we see those stocks opening. you can see that at the bottom of your screen. guy: let's look at some of the other stocks. about nice story talking one of the big stories come up

currency is being supported by the pboc.n to smooth out the yield curve. basically, if you like state direction of market prices, which sends confusing signals to the international markets because people think everything is fine. but if you look at some of the peripheral areas like janet's index or the senate spread or something like that, he said there are a few areas of risk here you need to be aware of. go? where does this as you say, we have seen things accelerate and pick up. do we get a hiatus in terms of the way they continue with the pace of opening this story up? what is the directory? -- trajectory? guest: you come into where everything is a stable and everything has been clamped down, but the interesting thing is, in terms of people's perception of chinese economy, last year you had prices going up, supply of commodities going up, six months ago, everyone was talking about reflationary cyclical from china and this would spread through the next few years. now people are talking about risk of downturn, real estate g

it is the same concern that is the aired in china with the pboc focusing on the wealth management products a concern that central banks beco increase ande net purchases of these assets increase. i think the bank of japan is the oldest central bank in allowing this policy. they have the most experience. has it worked? there is always the question of, where would they be if they had not done it? basically in japan, the private sector started owning part of the public sector through issuances of the jgb's. what is not working is the fact that the stock market index in japan remains very cheap. in the immediate future, we have the olympics in 2020. it will be a huge fiscal impulse to china and the activity level. guy: steen will stick around. plenty more to come from him. we talk about the ecb next. ♪ guy: u.s. health care flatlining. two more republicans will oppose the bill. mitch mcconnell's obamacare replacement bill. what does this mean for the rest of the trump agenda? the rba says economic growth is brighter, sending the aussi dollar to a two year high. but is there more to come? will t

manus: the consequence of a weaker dollar is something which pboc is going to have to deal with.he capital flows are beginning to be pulled back. they are pulling back on the reins. it's always hard to benchmark the past and growth. this is what we are worried about. we talk every month when you came in. about capital flow. guest: that is definitely right. least thetflows, at base of capital outflows have significantly slowed down, which is a welcome development. the other thing that has played into that, apart from the efforts of chinese authorities to put capital controls in place, is the fact the fate of the dollar has been fated. -- faded. people did not want to pile into dollar assets and therefore it is working in favor of other currencies. this is something welcomed by the ecb for an entirely different reason because it holds the tradewinds euro from depreciating irrevocably. china has the biggest weight in the index, so to the extent that the dollar in for shades -- it is a bitciates, more restrained and that is why you have seen a big diversions. euro-dollar is up 11%. m

pboc, tell me what that means. china getting to grips with what management. or the consequences?two things that are going to happen that we are seeing already happen. the money that these offshore will stay offshore. will continue to be managed long-term lower risk. i think the focus is going to be onshore to professionalize high net worth individual practices to the international standard. that is where the flow is and that is where everyone will go in the next. manus: is there a risk in that? >> i see only risk of the transition going from the current industry where i think there has been a vast number of places offering a lot of products, i think they are not up to scratch. the transition from that -- the products, that has some risks. manus: that's could prove a benefits for you. a better relation in the industry will play to your brand. >> in china one of the keep rocks beside diversification will be multigenerational wealth transfer. i think we are getting to a first wave of entrepreneurs on wealth and enterprises for the next generation. that is something i think we do sin

it was interesting to hear from a spokesperson from the pboc she was calling slowdown in the m2 growthormal. >> it is interesting, they are on a deleveraging campaign. we saw it dipped down in m2 in money supply. in june in the latest data you saw a new pickup in loans and aggregate possible. how is it possible money supply is dipping lower -- 9.4% growth nine point 6% in may. before may, the number had never been in single digits in data dating back to 1997. the money is being tightens, but new loans and aggregate financing. the big dilemma is, how do you take the speculative side of debt accumulation out of the equation while not choking off debt to the real economy and growth? that is what the dilemma is. in there briefing yesterday said they are taking that speculative side out of it. there is more efficient use of credit. but there is still a risk here. if you are clamping down on funds to nonbank institutions, which they are doing, and taking the speculative side out of it, you run the risk of a faster slowdown than they predicted. that is a balancing act to they are doing. betty

pboc's report,e they will try to prevent risk.ey also plan to keep liquidity basically stable, as well as maintaining the exchange rate at equilibrium levels. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. agree the federal reserve in their june meeting to hike the key rate. but there is a critical question, of when to start shrinking them passive -- the massive balance sheet? kathleen hays is here with more. it is interesting -- we do not think that by this time we would be talking so much about the balance sheet reduction. kathleen: we didn't, a year ago. march -- but no, we are ready to go. it is clear they were debating if they should reduce the balance sheet this year. the only question is, when? let's look at key phrases from the fmoc minutes. we decipher them to see what the fed was debating, what the takeaway is. several, if we are to start within a couple months. does that mean that in the july meeting they made an announ

the pboc says it is taking a greater role in financial regulation.ys it will step up its supervision of institutions that previously child to the china banking regulatory commission. the news confirms what bloomberg reported earlier this month, the bank also saying it will pursue prudence and new for monetary policies and keep money supply growing at an appropriate pace. economists are raising their forecasts on growth in china after first-half gdp beat estimates. that gives policymakers room to curb excessive borrowing. third-quarter gdp is now seen expanding by 6.7% from a year ago, and 6.6% in the next period according to a bloomberg survey. 10 of arecasts are 1/ percent higher than a year ago. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm a paul allen. this is -- i'm paul allen. this is bloomberg. ♪ yvonne: a new bloomberg survey of investors and strategist critics a bull run in strategies may come to an end as early as next year. ofning us as the head asia-pacific and global emergi

do know even if it is static around 3 trillion because of the attempt to hold up the world from the pbocll expanding the local money supply year.ut 10% year on how can you have static dollars and local money growing up 10% and not have downward pressure on the currency?you can't. yvonne: so you are keeping a bearish call. >> i'm not shifting on that one. for year end, around 725. yvonne: michael every with us. we have much more coming up. this is bloomberg. ♪ betty: this is "bloomberg daybreak asia." i'm betty liu in new york. yvonne: i am yvonne man in hong kong. german prosecutors are escalating an investigation into vw owned porsche over impossible diesel emissions cheating. investigators are looking into the role of unnamed employees at company in porsche germany and the u.s. a former audi manager was arrested in munich last week. betty: that's by dropping the most in more than a service that threatens their geek squad business. amazon's smart home services is designed to help customers install and configure internet products. that is about 5% of revenue at beast by best buy, which a

this is the fine line the pboc in other central banks globally have to walk.e balancing act as they try to initiate deleveraging. they don't want to create a spiral. we have seen a few examples of that in onshore china. i don't think it is time to get extremely bullish on some of those aaa spreads as you mentioned. we think it is a key risk going forward as central banks lean on some of these financial imbalances. investor credit in particular has been a byproduct of the policies. yvonne: great to have you. head of asian credit at a fever investors. live from singapore. i've a feature on the bloomberg. i want to bring to your attention the interactive tv function. you can find it at tv . you can watch us live in see interviews and the securities and functions that we talk about. you can become part of the conversation. send us an instant message during our shows. this is for bloomberg subscribers only. make sure you check it out at tv . this is bloomberg. ♪ ramy: you're watching "daybreak asia." this company has set a bumpy ride this year and things ma

this morning, the pboc setting the daily yuan fix stronger, but .1%.onshore rate down on the dollar nearw i of the fed rate decision. the yuan softening for a fourth straight day there. on the flipside come the yen up .2%. rising for a fifth straight day, and jgb yields picking up after the boj cut its purchases of 5-10 year bonds by ¥30 billion, coming as yields have retreated from recent highs. the yen is strengthening, speculators anticipating a slide , so shorts on the yen and dollar picking up. bets on a showing you drop in the dollar against all majors, except the yen, has risen to the most since early 2013. you can see that by the way the bars have dissented from the bottom of this chart. bearish bets have surged to the highs in 3.5 years, so the aussie and euro among currencies favorite given the broader risk environmentens off, when it comes to the currencies space. i want to end on what is going gauge fore small cap chinese stocks, mostly made up of tech shares. the vibration premium for chinext has been narrowing against the nasdaq, and today by .3% after it advanced four days

i think the pboc and china's authorities are immensely competent, but they have a significant task with which to revel in the second half. mark: james barty, james bevan. let's get the bloomberg business flash. nejra: burberry shares are up after comparable sales beat estimates in the first quarter. that has given the new ceo a boost as he seeks to benefit from a rebound in china while overhauling the u.s. business. tookormer head of celine over from christopher bailey this month. fidelity investments is said to have got hundreds of staff yesterday according to an unconfirmed report. last month, fidelity said that nearly 1500 workers opted to accept a buyout offer. the company that made its reputation by picking stocks has been trying to adjust to the wave of investors preferring low-cost funds over actively managed mutuals. the u.k. serious fraud office has opened an investigation into amex foster wheeler over principle -- possible bribery and corruption. the company said the investigation is not expected to impact its merger with john wood group. that is the bloomberg business flash.

the pboc is promising to increase supervision and ensure the economy has no systemic financial risks. eunice yoon joins us now >> here in asia, everybody in the financial world tends to go to shanghai or tokyo or hong kong to make their money but we spoke to one ceo raking in the profits on the farms. >> reporter: far from his posh beijing office, roger ying is meeting some of his best clients. >> we love coming down here. it's always a treat. >> reporter: the stanford grad from south africa founded a peer to peer lending company called pa flshgs ashp pandai the p to p industry in china has run into financial trouble to survive ying lends almost solely to people on the farms. >> when i look at the china economy, 1.3 billion people. 300 million to 400 million have already been enriched. there's 900 million other farmers who have been left behind by the mainstream financial system we see the demand for farmers. >> reporter: in this village in southwest china, fu used to be a coal miner after getting injured, he wanted to try pig farming but didn't have the money in the countryside it's