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tv   Asia Edge  Bloomberg  May 17, 2015 11:00pm-12:01am EDT

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firmer foundations. brings some relief to troubled investors. angie: i'm angie wells. modi on a mission. the prime minister looks to extend india's regional influence. "beyond the banks." new sources of funding for infrastructure business at home. and horror on the high seas. all that and more on this monday edition of "agia edge." yvonne: and i'm yvonne man. we'll be speaking when the fed minutes come out later this week that could affect some of the asian currency and rates.
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there is some woy -- worry in the last half-hour, it was a survey of 3.4% by economists. there is worry that the u.s.d. tai bought may reserve the bull trend if g.d.p. falls below 4%. thailand down now about .010% at the start of trading. i want to talk about the aussie dollar here. we are expecting some of those r.b.a. minutes to come out tomorrow. the governor's speech did weigh a bit today, indicating that the r.b.a. may have some scope to ease. may offer some insight after we got the quarterly positive statement last week. the aussie may be pulled a little lower if the q.e.
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continues to -- the kiwi dollar now trading 74. rishaad: 11:01 in perth. that's where b.h.p. had its spinoff. making a positive debut. they will now be the biggest maganese -- manganese producer. tell us about their assets and where they are going to operate. david: as you said, they made their trading debut this morning. it is a collection of assets that b.h.p., the world's biggest miner had deemed too small, too complex, perhaps, for it to run. so south 32 has about 2,000 assets, as you said, the
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world's biggest silver mine, that's in australia. it has some nickle operations and some coal in south africa. it has a wide geographic spread. it will trade not just in australia. it will trade from later today in johannesburg and london as well. so a wide geographic spread of assets and also trading in those three locations. rishaad: why is bhp divesting itself of these assets. you say they are more complicated, but aren't these perceived by some people as unloved assets and really not worthy of looking at. david: that was the case for b.h. p. they have been clear they have a specific mission to focus on coal, iron ore, copper, and petroleum. this helps it do that.
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it helps them get rid of some of the other non-core assets involved in other commodities. these are seen as php either too small or too short a mine life to warrant investment. so what south32 hopes, is that in giving these assets a little more love and investment they can grow the mine lives and release some of that potential. rishaad: thanks for that, david. david stringer joining us from melbourne. angie: home price declines in china. we are joininged with some of the details by stephen engle. stephen: it looks like some of the property curves are starting to take effect. downpayment rules have been relaxed in a number of cities. we are starting to see as well as developers have been working
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off all their excess inventories. new home prices, month over month is improving. the scenario. in march the number of cities that saw month-over-month price gains was 12 and in april it rose to 18. the number of cities that saw decline 47 out of 70. that's declining. that's a better situation. we were talking 66 in february, 64 in january. so it is significantly better. among the better improvers in month-over-month performance, shanjen. a whopping 8% price gain month-over-month. shenzhen was the first city to turn the quarter in december. we have seen five months of month-over-month gains. beijing 0.7% gains after 0.3% in march, which was the first month in eight months that saw
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month-over-month gains. only one city saw continued month-over-month gains, and that is shenzhen. all other 69 cities going off that base effect from a year ago, prices still falling but we have turned the corner if we look at the month-over-month price gains. the quote, "home prices almost at the bottom." angie: another chinese property developer is in trouble in the off-shore market. we have renhe scheduled to repay millions in securities today. the recent default in kaisa. liangtin tu here. what is the possibility they will be able to repay their
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debts? lianting: we actually 0 have a message from the company moments ago that they say they have repaid the money but we do not know if the money is in the accounts yet. angie: that's breaking news from -- for our viewers. so reassure, you were in touch with renhe and they said -- lianting: yes, just an e-mail, not a public statement. angie: what does this say about the general state of things since things seem to be improving? lianting: yes, for renhe, this is not a really large amount, and investors are expecting them to pay, and they have paid, if that's correct.
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stephen: not necessarily another kaisa or wenhe? hianting: no, and it is not another residential property developer. that will is much different than what is impacting kaisa. stephen: what about kaisa? now we are starting to see a little recovery. a lot of developers have been unloading, getting rid of excess inventories. are we going to start seeing cash flow come back up and helping these companies that are severely indebted or have dollar denominated debt? lianting: from the investors i've been talking to, they say rate cuts are positive for the sector. they say now they seem to be prudent in spending the cash.
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the market hasn't really turned around. that is positive for a lot of the bond holders out there, because the leverage ratio will be lowered and then they have morpe cash coming in from the equity financing. angie: thanks to both of you. rishaad: well, alley babia -- alibaba facing a lawsuit alleging it allows fake goods to be sold. this is the second time such an accusation has been made. >> china international capital corp said it began restructuring. the bank trying to raise about $1 billion through the listing. cicc started as a joint venture. morgan stanley sold its stake in 2010.
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>> greece says it will back down on its election pledge to end austerity. they hope to end problems with creditors this week. an e.u. summit in latvia thursday and friday. protacted talks have so far yielded -- well, not much. failing to unlock additional aid. in that time greece has slipped back into recession, and there is speculation it might have to leave the eurozone. this is something that has been occupation sentiments on the marningt. for more what's happening, let's go to yvonne. yvonne: telecoms leading the way. financials, i want to talk about. real estate, we're seeing the company is down about two-thirds of a percent right now. big movers in the asia market,
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doing well. the inks market has been positive especially in mizuho. up about 2% now. they raised their dividend. they see a higher profit. net income will climb. sumitomo mitsui positive on their up front, too. mitusbishi u.f.j. doing well. they are buying back shares. they said their profit reached one trillion yen for the first time. amorepacific up all morning, up about 9% right now. it hased been raised to overweight by bar clays. trading the highest in six months. honhai up about 3%. their profit beat estimates. they doubled their dividend. that's thanks to apple there with profits also being -- hon hai being a big supplier for
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apple. >> bhp has seen a bit of a tumble here. spins off. started trading about an hour ago. down 7% now for bhp. angie: still to come in the program, john kerry expected to take a hardline stance in his visit to south korea. details later. >> up next could a boost in demand for chinese property indicate whole price declines have bottomed out? ♪
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rishaad: let's check stories making headlines around the world today. angie: the f.b.i. will examine the windshield of the derailed amtrak train to determine what hit the windshield before it crashed. they say there is a mark on the windshield the size of a grapefruit. eight people killed when the
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train left the track on a curve. rishaad: iranian tv saying a ship carrying 2.5 tons of food and medical aid and has permission to dock in yemen. they have been bombing rebels. angie: hundreds of refugees have landed bringing stories of torture and starvation. many are banglasdeshis and others are fleeing persecution in myanmar. rishaad: we're going to get back to the business day, in terms of what happened in terms of economic data. it was that all important property tax number we got.
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down from 49 the previous month. fred, let's start things off with, ok it's getting bed -- better. let's go to fred neumann, head of asian economic research. fred: the problem is still four and third tier cities. we are likely to see a bit more improvement in the coming months. make no mistake, this is a gradual stabilization at best. we see some house increase in shenzhen. angie: i guess this is what they mean by reducing property cunchs and cutting interest rates to stoke sales. fred: that's right, but we had a few false starts as well.
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things rebounded after the p.u.c. cut interest rates. we often gets thees bounces in scent months because buyers think, now the market is coming back. we have to see if this rebound, quote-unquote, will be sustained over the summer months. angie: what do you think they need to do? fred: they need to inject rates, but they also need construction. china's economy is all about construction. rishaad: they want to get away from that, don't they? fred: in the medium term but in the short-term. rishaad: it can't go away. >> you can't prick a deflation bubble all at once. it is not just financially important, there are also a lot of people employed in that sector. angie: you don't want to angry people in china. especially when you don't have a democracy.
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rishaad: no. fred: the construction sector remains at the heart of china's problems. infrastructure spending, local government financing, that will be important to stablize growth in the coming quarters. angie: i guess you could correlate that to what's happening with sub32 today. this is a spinoff from bhp. i guess not only because growth prospects are dim, but because -- fred: china has been the single driver of global commodity prices, including energy. with as that bubble starts to deflate, the increamental amount of commodities is likely to slowdown. at the same time with a lot of supply coming on the market as well. remember we had a decade of investment in the sector. that's why the price adjustment is likely to remain in the
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commodities sector for a while. rishaad: we were talking about that multiyear super commodities cycle. i suppose even a super cycle has to come to an end doesn't it? fred: yes, and there has been a bit of a pick-up. but remember, when you look at the supply response coming through, this is investment being built up for 10 years all of these mines being built up. that will suggests over the next five years or so you will get fairly subdued prices. angie: were you surprised we didn't get rate cuts? fred: let's not get carried away. angie: here's the thing about
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pvoc. there is forward guidance, and it makes the job for economists and everyone else here a little tough, doesn't it? fred: especially when you want to have a free sunday evening. it used to be friday nights. i almost prefer sunday nights. angie: yeah. angie: is the criticism perhaps valid? fred: china's economy works a bit differently than the western economy. they work on the aggregate to the economy. in the western world it is more about interest rate changes and bond markets, et cetera. that's why this transparancy doesn't matter quite as much in china as elsewhere. obviously as economists we like to see more prickability. it makes our jobs easier. angie: it certainly does, especially on a sunday night. rishaad: fred, we'll see you
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in a group discussion in about 20 minutes or so. we'll tell you what we have coming up. angie: we look at the prime minister of india's asian tour. ♪
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rishaad: india's influence on the next leg of his asia tour.
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let's find out more and get over to mumbai where our reporter is ensconsed. what's on the agenda here? >> the prime minister will be arriving in the last leg of his three-city tour. he will discuss cooperation between the countries. he will address with about 1,800 members of the indian summit expected to attend. india will also be addressing -- we'll depol that up with -- and he'll follow that up with some of the heads of south korean companies that are willing to invest in india. he will visit a shipyard. ship building emerging as one of the important areas of cooperation.
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considerable significance being attached to this visit. bilateral trade between the two nations. about 300 korean companies that have invested $3 billion so far in india. both sides trying to increase that. this visit also has strategic importance as the prime minister is looking to widen india's relationship with its neighbors, and that will be to countries like mongolia and south korea gaining even more importance. rishaad: thank you. reporter: let's check in on markets trading now. one of the laggers includes bhp after its spun off lts -- into a new company south32.
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world's biggest miner tumbling the most in seven years before the spinoff started trading. -- seoul down .10% now. south korea is .07% lower despite china new home prices rising in more -- hong kong down .71% despite a rise in home sales. >> japanese shares rising. more when we come back. ♪
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>> the top stories this hour. it was valued a below estimates. the world's biggest manganese producer. >> we start day one with a strong balance sheet, which is important. we also start with assets and a great set of people. we have to do some work in terms
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of growth potential, but from day one i think it is going through the cycle. >> demand was boosted by property and free interest rate cuts. it comes as developers are increasing scrutiny. the demise has raised worries about contingency and unreported debt. and they have made a payment on 2015 bonds. they have paid $79 million of securities today. s&p calls the recent discounted buyback of dollar notes a distressed exchange that is a default. secretary of state john kerry is expected to reiterate america's total commitment to south korea
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during his trip to south korea. this comes as the north is flexing military muscles. >> it's a way to gain more attention for north korea. about a week ago north korea said it had tests to fire a missile from a submarine. it's the first time they claimed to have done so. if it's true, north korea would have a new way to reach the continental u.s. the u.s. bases in guam. people in seoul and washington dismissed those claims pyongyang has the capability to fire a ballistic missile submarine. north korea is expected to feature prominently. we don't have the details to discuss yet. very prominent -- north korea
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was very prominent in those talks. in beijing kerry said a nuclear deal with iran would send a positive message to north korea. he is expected to talk about cyber security in a local university, addressing some students and talking about freedom and access to the internet. >> let's talk about north korea. perhaps there has been some leadership changes. what do we know? >> about a week ago we heard that north korea purged a top military figure. the defense chief is expected to have been purged. we are hearing today from local media that other people close to the defense chief, close to
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people in that faction have been purged or demoted, so that's also expected to feature in high-level discussion between the u.s. and south korea. a lot of talk in beijing as well. basically this visit has been a lot about making arrangements for when they visit the u.s. later this year. in beijing kerry made sure to put forth the u.s. stance it opposes china's efforts to expand presence in the south china sea. we have tensions between china the philippines, and vietnam. kerry said they should conduct smart diplomacy. he urged china to take actions to join everyone in the region to reduce tensions and find diplomatic solutions.
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the president said they can both work in the ocean, as it is big enough for both countries. pax malaysia initiated high-level talks in an attempt to address the growing migration crisis. many are thought to be stranded at sea after a crackdown on human traffickers. this is becoming predictable for the country and the people they are trying to reach. >> a difficult crisis. some call it an emergency situation. thousands stranded at sea. the u.n. warning against flowing coffins. they have been leaving in boats trapped at sea. that is because they have abandoned the human cargo due to a crackdown. we talk about thousands more from bangladesh. they landed in malaysia
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indonesia, and thailand. the situation is indeed dire. no country will take them in. malaysia has rallied its neighbors to engage them to come up with a solution. malaysia is especially concerned because it is hosting 45,000 migrants. it says it can no longer accommodate them. and in asia and thailand say it would start an unstoppable flow. >> you can try to do what you like but how much is there? >> that is an important question. the region has a noninterference
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policy. for years critics say the policy prompted myanmar to commit abuses without being accountable to them. the rohingya muslims are one of the most persecuted in the world. we know efforts are being made to meet with representatives. it is unclear if myanmar has agreed or if myanmar has rejected allegations it is the source of the problem. it is an increasingly tricky situation. the shot: -- rishaad: thanks for that. >> i think we are still fractionally low in terms of asian stocks this morning. it has been a mixed bag.
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the china property prices we talk about how fewer cities received -- were seeing the prices declining. the hang seng down about two thirds of a percent. the straits times down about 1/10 of a percent. the nikkei 225 has been holding strong for most of the morning. we talked about those property prices. poly real estate is seeing some of the losses, down about 2%. these developers they start to see a closer look at some of these developers. they got to look more into the fine print to see how things are doing. let's take a look at japan movers. they are up about 2%.
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mitsubishi is leading those gains. it is one reason some are bullish on japanese equities. we are starting to see some corporations give back to investors. in the last 24 hours we have seen mitsubishi and others announce share buybacks. a few markets seeing a rise in shares. >> the world's richest man says the u.s. economy is strong and it is wrong to suggest taxes and regulations are hurting growth. he says it is nonsense to suggest the current rates are hurting innovation. he said someone earning $40,000 a year is better off than previous decades because of inventions like the internet have boosted quality of life. loads and india may rise to a 14 year high.
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-- loans in india may rise to a 14 year high. india's the us central bank governor says he doesn't see bad loans leading to a financial crisis. india is to open a credit line to help update the infrastructure. as well as funding new power projects. the deal was announced amidst the prime minister's three nation tour that will also include south korea. one of india's top bankers says the government must do more to raise money for domestic project. icici says they need to target new sources.
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>> as the projects get implemented, there could be many other sources of funding that could take out bank exposures. with this, one major source of fundings could be direct investment into the projects. that could be a large source of funding for investments in infrastructure. of course the large funds whether it is sovereign wealth it is all these long-term funds that can play a role in actually providing long-term funding. there are bonds that could be raised that could become an additional sources of funding for india's infrastructure. in a way china has the technology.
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china has the capital. india has the market. india has the ability to become a manufacturing hub. i think that's the way they need to work together. >> what do you think the brick banks -- bric thanks can play? what role can may play? >> one is economic cooperation across the countries. the second is long-term infrastructure invest in. we talked so much about infrastructure investment earlier. i think it's a big role the bank and play there. a role will have to be played by everybody. when we look at our onex very and being in china for 12 years, what you realizes there are a lot of chinese companies who want to set up businesses in
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india and want to grow their businesses in india. that is where a bank like ours can play a role. there are indian companies who want to expand and grow in china. i think for banks like ours or the bric banks there are different factors. >> 12:42 in south korea. this is where john kerry and the foreign minister currently speaking as well. high-level people visiting with the indian prime minister. ♪
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>> the capital of iraq's largest province after government forces abandoned. the battle for ramadi has been raging for six months. iraq is expected to send shiite militia groups to fight back. they played a key role elsewhere , helping the army elsewhere. >> nine people have been killed and eight others wounded at a busy restaurant in waco. police said they met to discuss their differences. eight of the victims died at the scene, the other in hospital. >> the prime minister has appealed for more help as the country tries to recover from devastating earthquakes. he hopes to get help at an
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advanced level for reconstruction. the earthquake hit nepal on april 5, killing more than 8000 people. tuesday a second quake struck injuring nearly 3000. we have shery ahn, fred noonan. for the global economy to function pretty well and keep growing, you have to have growth in china and of course u.s. recovery. you have got to have the u.s. >> there is this expectation we are looking at stronger growth. when we look at the economic data everything shows no celebration growth. even the latest china data. there is an assumption we're going to look at a pickup in growth. i don't ticket is going to be
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quite as strong. europe might start to fizzle again. i think it is going to be challenging. >> he was saying he thinks it would be similar to last year. a weak q1, and in the second half. is that out of the realm of possibility? >> i think that is the baseline assumption most people have. it was the weakest quarter we ever had. we can't just put it down to the weather. it was the weakest growth corridor since the global financial crisis. we're seeing a much weaker growth in the economy and also it hasn't really rebounded. >> does that push the fed to wait until next year? >> it looks like the fed could
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hike later. they would not hike because the economy is strong. they would hike because they are worried about financial stability. if anything, it is likely to be later rather than sooner. >> it is eventually a dollar strength story. we are seeing asian currencies relatively weaker. you are saying we haven't seen that actually help the economy's that much when it comes to exports. >> the underlying demand is just not as strong as it was before. the world has a trade problem. trade used to grow at twice the speed. now it is 141. asia is very much exposed to the trade cycle. >> are you saying all of these central banks that have been injecting the monetary base and
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growing it with extra liquidity don't know what they are talking about? >> they are trying to steady the ship. the problem is we are putting so much pressure on central banks to rescue the global economy, but that is not a long-term solution. we are seeing distortion in financial markets as a result. nothing is really changing. i feel this will be with us for some time to come. that means as financial assets continue to rally without economic russia -- russian now. but you really mean they try to do something about those that are sitting on cash and not doing anything with it? >> the best ring that could happen in the world economy is the boj and the ecb agreed to hike the rate by 100 basis points.
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that would put pressure on politicians to deliver. easy money is a nice excuse to have. if everyone hikes interest rates, i'm not sure it would kill the global economy, but it would add pressure. >> at least we're not expecting another easing cycle this year. >> we actually still do. the boj might have to move this year. if you look at inflation, at the economic pickup, it's not that strong. they were pushing it back, but i suspect they will have to do more. >> you are pretty neutral about the currency. >> the yen has been remarkably stable. the end has stuck in a tight range lately. >> what kind of stimulus do you expect out of china? whether it is trying to attract
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attention to the municipal bond market what do you think is coming for the chinese? >> a lot of expectations and markets. i suspect the chinese are going to gradually switch and we will see regulatory changes. they will try to guarantee some local government debt. it is a qualify fiscal stimulus they are looking at rather than outright monetary easing. >> they got in trouble in 2009 at far as the fiscal package. >> a lot of people say china is easing. is the chinese economy going to bounce back and surprise everyone? i think you will find it is going to pull on the reins. they do not want to overdo it on
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the upside. >> why would that be bad? >> they don't want to see another real estate bubble. they want to stabilize the economy but not see house levels soar. >> 1.8% month over month. >> they will clamp down on it soon. >> if it carries weight too quickly, they will clamp down. >> it really shows perhaps the inability of a very coordinated type of chinese government to be able to sustain growth. instead, we are seeing seesaw action. >> we are. the more they liberalize the economy, the more it is debt driven, the more you see these vacillations. the risk is at some point they lose control. it is no longer the economy of 10 or 15 years ago. this is a different animal.
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that is why you see greater volatility and a bigger policy response. both stimulus and further tightening as well. rishaad: thanks so much. >> coming up next, questions to be answered. we are going to take a look at the charges and check other key events in asia this week. ♪
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rishaad: what we are watching out for this week. the chinese premier beginning of four nation tour of latin america. the aim is to strengthen trade ties. first off it is going to be in brazil.
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we expect a $50 billion deal. >> on tuesday seeing the former thai minister in court accused of negligence. her critics say it was corrupt. >> there we go. the rba went into its last meeting that took place earlier this month. that did result in an interest rate cut. it was cut by 25 basis points to a record low of 2%. >> on thursday we have got the world's largest pc maker reporting earnings. we are talking about lenovo
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expected to post a fall. the company is expected to improve its position. it is one of the few tablet makers to report growth in a sling
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