Companies. Ndustrial really taking a big hit on the conflict with china. Between hanoiring and beijing over a stretch of the south china sea. It has to do with a search for oil and ships in an increasingly tense standoff. Had hundreds of people taking to the streets in hanoi. What are the latest development . Yesterday, vietnams Prime Minister in his speech in myanmar asked other leaders to support vietnam and put pressure on china to remove that oil rig from the waters that vietnam says is in its territory. Earlier, Foreign Ministers issued a statement calling on selfrestraint from both parties as well as progress in formulating a code of conduct for that sea region. The unumlear whether will get support it is looking for from other countries in the region. How did this dispute play out . We have these protests here. What are people saying . In vietnam, people are riveted by this story, this class, this dispute. Drivers, police officers, shopkeepers, everyone is talking about it. Over the weekend, there were protests in the major cities across the country. These protests are fairly rare in vietnam. The government keeps a very close watch on any kind of activity in the streets. This weekend, people came out in force. Chinast outside embassy in hanoi as well as one near the chinese consulate in Ho Chi Minh City where there were a thousand or more people on the street. They were condemning chinas actions. They were calling on china to remove its oil rig. They view this as an issue of sovereignty for vietnam. Thanked u. S. Senators who have come out on the side of vietnam. No one knows for sure what is going to happen but we will see more of these types of protests in coming days in the streets and in the major cities in vietnam. Tummy something. Tell me something. What about this dispute, one of the main topics at the asian summit. How far is hanoi prepared to go here . That is a very good question. Very adept aten balancing its complicated relationship with its much larger communist neighbor china. Relies only, vietnam china for economic growth, foreign investment. They share a border. Sought to hedge this relationship by cultivating relationships with countries such as the United States. A result of this crisis could in fact lead to vietnam strengthening its ties to the United States which china may not like to see at all. It is unclear exactly what vietnams next move is. Some believe they will see some international force. The leaders have staked out a very hardline stand, that oil rigs must be removed. They have a populace behind them. This issue is not going to go away anytime soon. John, thanks. John joining us from hanoi. Poll is out. Rly investmentke professionals are not as optimistic as they were at the beginning of the year. Developments,in mostly in geopolitics, have actually come to the surface and sven. Surfaced since then. Nerve they are not nervous, but skeptical. Lets look at the u. S. First. Winner,anted to pick a that is the winner, 64 inc. Things are improving 64 think things are improving. Russia being the worst if you want to compare both sides of the spectrum. 50 believe the s p 500 will move higher. Reporting what i was earlier, which is not too much higher than what people had at the beginning of the year. Sideways for the most part of last week. Lets look at europe. Half think that things are improving although deflation or the lack of inflation is the biggest threat to recovery. Perhaps aggregate demand is still not quite there to drive inflation. If you look at what they are seeing as far as mario draghi and is he doing the right 67 think he is. What about china, japan . Japan is fairly mixed. There is no takeaway besides that things are stable. There is almost an equal amount both ways. Things are getting better. Things are getting worse. For china, that is a little bit more on the negative side. 47 inc. The economy is think theing 47 economy is deteriorating. To some extent, there is an engineer slowdown. But what is worrying that is two things, corruption and the banking system. Will asian stocks go up . That is mixed . The msci asiapacific index, there we go. That one fairly divided equally. Interesting to see what the investors are thinking. Thank you for that. The other stories making headlines japanese consumers splurging on imported goods ahead of the sales tax increase. They slide into sustained deficit could make japan reliant. Inmsung is set to be stable condition. He had trouble breathing. Polling stations closing early and some parts of Eastern Ukraine as the referendum on greater autonomy amid tight security. The vote has been declared illegal by kiev and the west. 30 . Ut said to be about 24 hours, theer treasurer will deliver his first budget and it is widely expected to be somewhat of a horror show. Thousands of government jobs being cut. Paul, where else is the ax likely to fall . It is pretty hard to discriminate. Up to 70 Government Agencies are facing abolition or merger. Some agencies will be forced to share resources, such as the National Gallery and the National Library as well and the royal mint of australia is likely to be offered up for sale. All, 16,000 Public Service jobs are expected to face the ax during this budget. Beer savings will potentially raising the pension age to 70 by the year 2035. As for the revenue side, that will get more expensive. The fuel excise will be increased. Earn over 80,000, you will be slowed with an extra 800 per year on your tax bill. Which leads us to the question of broken promises. Election,t years tony abbott was famously saying that, in the next election, you are not going to get any new taxes from us, which has left thein the position of basing the difference between a levy and a tax. The government taking a bit of a battering. The Political Climate is clear. Get your ugly budget out of the way nice and early. The next election isnt until 2016 and hopefully voters will have forgotten by then. I will be warding off hypothermia wednesday morning to tell you all about it. Take a blanket with you, paul. Stay warm. Questions. At the big bangy do you think bing theory was so popular in china . It has a lot of cultural references from like when i was a kid. That translates to china . Especially this young generation who grew up in the and are0s and 1990s quite familiar with american culture. Really, the jokes provided a lot of happiness. The ou have to write do you have to rewrite the jokes when it is all settled . No, it is george translation. It is direct translation. Coming up next, going to check in on china with our next guest saying that 2014 is going to be a tough year for asia. Its a monday and the start of the new trading week. Lets cross over to john and see what he is monitoring this morning. First of all, china, seeing gains very gradual in the days trade. Vietnam is caught in the south china seas. Concern, declines. Market reforms [indiscernible] vietnam is losing out the most. The rest is quite mixed. Philippines, taiwan, nikkei, singapore straits, thailand, all seeing slight decline. Opened the day lower, the shanghai composite. It has gradually, gradually, gradually gone further higher. Industrial stocks are clearly benefiting. C equities gaining ground as they unlock the opportunity to invest. China, you have the various industry gainers. Services 1. 2 . Er as goldterials 4. 5 stocks fell overnight. It is the industrial story and its reforms. Risingasic resources 5. 25 . Mining stocks gaining the most. No one is down. Not one is down. Australia falling because of the prices. Industrials, reforms are being discussed in china. Out of the top 6, 3 are cold are coal stocks. Thanks for coming in. Lets talk about the market in china. In asia, you would have lost a lot of money in the last five years. Will this continue this underperformance . Chinas economy this year is going through is slowest period of growth since the w2 oh entry. That makes no sense despite a growing economy. I think the economy is slowing down. Thats why the market is not performing particularly well. Ist we are seeing this year financing costs in china rising. That, large caps will outperform small caps. A lot of the growth sectors that everyone was keen on it the beginning of the year, they have fallen off. I know the market is having a good mood today as well as talk about triple park and other things. Quickly to ease credit and the market will go on a run. Of course, managing expectations out there, warning people that this slowdown will be the new normal, to have slower growth. We are kind of being prepared. Yes, people tend to want to invest in growth sectors, new economy sectors. But that has been very much overplayed. Economy stuff hasnt performed. So we are picking old economy sectors for now. We think the new economy sectors will grow, but we need to see the premium come off of it more. When you talk to people out there, your clients, etc. , is there kind of a lack of appetite . Are people interested in investing in china and some of the a shares out there given what we have sinned given what we have seen before . Ago, if you had asked me that question, i would definitely would have said china and korea stood out as unpopular. But then we had all the problems in emerging markets from last summer. And actually, china is sort of middle of the bunch now. Reallocatedas been into china, away from smaller emerging markets. But emerging markets as an asset class with china at the center are out of favor. Until we get credit easing in china, there was and there isnt going to be too much to bring. Individual sectors for chinese equities, everybody was into the internet and health s, has thatotech become too far crowded a space. We decided to get out of the sectors. We were wrong for the first two months of the year. But after such a big run, we are just on a roundtrip. These stocks are still up two or three times in the last 12 months. Its too early to get back into them. Join us for our group chat in 20 minutes. Coming up next, keeping the ship that day literally. Harboring concerns in manila. Several people have been injured when two grenades exploded near bangkok. Protesters have called for a topple theto administration and install an unelected peoples council. They oppose for julys Election Rerun to because pound. Electionong drawnout finishes today. Mode the most modi must win over the common man party. In manila good luck on the street has led to a traffic jam. You see lots of think and red triangles and blue squares. This is the capital, metro manila. What you are looking at is manila bay. And symbols represent ships approaching or are in and around the harbor. The color is dependent on what what what it is carrying. Ban thata truck prevents trucks from being on the road during rush hour. That is supposed to alleviate the traffic jam on the roads. But it has a side effect. Ports arein the at this time of the year, it should be going at 60 of capacity. We are at 90 right now. Waitly, these containers around six days in the ports. Now they are at 10 days. Any solution in the horizon . Actually improved quite a bit. If you ask the common commuter. The citye manila area, of manila dont confuse the two. It has actually improved quite a lot. It probably will be a drag to drive. Thatyone can tell you traffic is probably as bad as it is in new delhi, india. We will take a break. On the other side, it is the afternoon business in tokyo. Japan opening after its lunchtime break. China and vietnam square off. Electioniveweek enters the last lap. And declaring independence from the irs. The also how the markets are trading. Moodys believes that china will be the biggest economy in the world by the end of this year. China shares, look at that, up by currently 2 . This morning, two hours ago, it was quite a different. It started below the game line. The stock market gained. They are locked in this dispute in the south china sea. China brushing it off. The overall pie chart, you can the miners and the overall impact. Up by 1. 8 currently. Financials to check to industrials to basic materials. That, great gaining ground for the last hour and a half. It opened lower and has taken off 2048. Best performance in the last two months. Lets turn to japan. What is holding the nikkei back . The current account surplus narrowing. The yen jumping up on that. Look at to the individual stock, which is why it is holding it back. Some significant decliners there. The forecast is a big concern for the company. Olympus in the same space after the close of trade on friday. 32 03 ¥. 2its of 3. 2 billion yen. Have this grain. Forecasters have cut their forecasts. Individual stocks on the nikkei is really holding it back. Start of trading in india as well. 12 minutes to go before mumbai gets underway. In the face of an election that is finally winding up today, the polls are crisscrossing the country for five weeks. It is the last phase of polling today, phase 9. D over five phase weeks. Nearly 66 million eligible voters likely casting their vote today. The biggest contest today will be in the temple town. The bjp Prime Minister candidate. He will take on the common man party. Exit polls, the commission of india says that holy stops at 6 30 this evening. Therefore the impact on the markets will be interesting to watch out for tomorrow. Election results will be out on friday this weekend. That will be the biggest you that you biggest queue that you are watching out for. A lot of it has party been factored in. But still interesting to see given the fact that we pose high here on friday, counting down to the exit polls starting today. Likeis what it is looking on the last day of polling. A look now at some of the other stories we are following this morning. The u. K. Government is calling for a more commitments from astra. Over its bid for keep 50 of r b posts in the u. K. But the government wants many more. They will testify to lawmakers later on this week. Tech mahindra is hungry for more acquisitions. Has bought 9 firms in the past 10 years. Investors are now betting against weibo after the stock has essentially plunged. Get a rally for a few days after its ipo in april that it has since lost gains. Around 11 of the shares available for trading are actually on long. On loan. China, ite netflix in etreams licensed programs onlin but four shows were ordered to be taken down, including the highly popular Big Bang Theory. What is happening . Bigba a big bazinga to sofu. Is repositioning the company into the netflixlike a business by legitimizing copyrighted content distribution, including the shows from the United States. He has taken on piracy by paying content to license an advertisers, to win more paying users to stream online in china. So i browsed a silly raise last month when authorities ordered the most popular shows some of the most popular shows taken down from their streaming site. Contents streaming u. S. Online is in a gray area of chinese regulation and the regulators are reacting in an inconsistent manner. Here is my exclusive conversation with charles jeong. They were very busy with the tv stations. Now video has become so mainstream dominant. They are probably with old habits of managing. I think there are more careful and more sophisticated. I think it is a good thing. Big bang theory is sacrificed, but it is a good thing. Are you being diplomatic . No, i am telling the truth. It is only less than 1 of the shows i have been taken down. I think we are enjoying a real china. Of tv dramas in to date, have you gotten an explanation as to why these particular shows have been taken down . I cant comment on it. Is its an issue of being hijacked by the state broadcaster so they can broadcast it on regular television . No, i dont think it is related. Thehat is happening behind scenes of the revelatory bodies that put out a note saying that they need to reinforce monitoring of unacceptable, erotic, political or violent content online . That doesnt necessarily seem to fit into the Big Bang Theory profile. Its not directly related. Chinese people need to enjoy some dirty jokes, right . [laughter] but if the government considered its erotic nature and is not proper, we will take part of it down. The big bangink theory fell into that category. Does it surprise you that house of cards hasnt been censored at all . This season, there are so many chinarelated issues. You can see the randomness. You try it first and then you observe and see it doesnt cause a lot of problems. They would come out with a policy to whats the word make it illegal. Are you in negotiations with the government to get it back up, that particular show . I believe it will come back. It will be back up. The government is reviewing it. They told us it will be back. They told us we will let you show it in the future. That is a fascinating time. The battle lines are being drawn between these online private sohu andrvices like the state owned stations. They are really writing the rules right now for this new way of distributing content, whether censored or not censored. Interestingly, he told me off camera that all the speculation about the reasons why Big Bang Theory was taken down are not true. He says you can never guess the real reason the show was taken down. It makes it more intriguing. Im sure everyone has a thought but no doubt chinese regulators are faced with a very challenging and evolving landscape. But global flashpoint could played spoilsport. Welcome back to asia edge. We talked a little bit about china earlier. Ese do you trade with thies industrial numbers coming out of china this week . We expect the numbers to be on the disappointing side. Had the team running around china, various provinces doing business. It looks like things have slowed down in the second quarter. The lump we need to get over is the Third Quarter. The Third Quarter last year was the best of the whole year. So that is a pretty formidable obstacle to get over. The market might start to focus on other things. What do you think about movies coming out saying that china will be the Worlds Largest economy by the end of this year . Really . They dont want it to be. Thats the trouble. Thathinese authorities that brings a whole host of other responsibilities. Back in 1992, china was already measured as number three. Thats the reason i am into china. Maybe i can quit now. [laughter] that seems really optimistic, by yearend. It seems irresponsible to put that line out by moodys on mondays part. Odys part. Year end of the another group came out with that a couple of weeks ago, the same thing, purchasing power measure your. There measure shear. Measure here. There is no doubt that it will be the Worlds Largest economy. Get away from stateowned enterprises, that is something we do recommend as a mediumterm strategy. There are some decent assets out there, even within the stateowned enterprise space, right . It is all just a matter picking and choosing, i guess. It would be better if they downsize the stateowned sector or find ways of they can be managed on a more commercial basis. There are good assets there but we continue to see underperformance in terms of distributing cash back to shareholders. Reporting earlier. 47 of investors are not optimistic about china right now. Yeah. I guess its not surprising that basically people who are negative on vastly outright villains 77 saw improvement, didnt stly out rank the 77 saw improvement, didnt they . Leadershipe previous both those concerns you mentioned relate to that rally. If the Public Safety can be downsized, you start to eat away or him prove those issues. Over the next two years, a lot of people were talking about them selling off some of these assets. I think sinopec was one model where they try to look at perhaps getting in private money to buy some of these assets. Is that something you would recommend your clients to get into . If done on the terms proposed by the soes, people should take a second look. We will accept the sort of pricing and structures that the market suggests. They dont see my fire sales. I guess this is all a matter of time. Steady as she goes as far as the Financial Sector reforms, maybe not as fast as some people would like. But we are talking about a huge economy. The main positive we can look to is the the pricing of regulations. That has been going on for the last couple of years and it keeps growing. Month, week, month by youre getting progress in all of these areas. Deregulating pricing mechanisms is a way to put pressure on they private sector companies. Hasn the ipo front, china opened the gates to allow for the resumption of ipos. Overi heard, there were 550 Company Still waiting to go forward with their debut. Has that been priced into the a share market . The announcement we had from the state council is the first of what will be some attempts to improve sentiment. But i think the real way to improve sentiment, if they want move up the equity market, they will have to loosen credit. Financing costs in china keep trending upwards. Until they reverse that trend, the equity markets will not respond. Cut rrr, that will boost the market. They have done that in rural banks already. Not enough. Its likely to get extended into the urban banking system. Then where do we go . The market will go up. Unfortunately, when you cut rrr and make credit cheaper, debt levels go up as well. So they are reluctant to do it. But at some point, given the economy is slowing down dramatically, you cant if the economy slows down too much, you endanger reform. People can point to the reforms and blame them for the slowdown. Growthneed to stabilize at some point just to help the reform program. Mentioned that you obviously want to give the markets a bigger role in determining where credit is with pricing. In your view, do you think that the cost of capital will inevitably go up when the markets get it . They private sector is having to pay higher rates. The source of funding is still too cheap. Definitely, they private sector funding must go up. I would say the same thing, basically. [laughter] you are running a twotrack economy, the Public Sector and the private sector. You dont really know how profitable your businesses. Its nice to be spoiled, but nothing lasts forever. If theould be nice Public Sector would shrink to about a third of gdp instead of half. [laughter] keep dreaming. Thank you very much for joining us. Up next, taxing times in the land of the free. More and more americans from the usa are choosing to give up their citizenship. Find out why coming up on asia edge. Tough new tax Disclosure Rules are set to take effect in july. There is a surge of americans giving up their citizenship. To be 3000 last year or thereabouts. And thousands through the First Quarter according to documents and data released through the federal register in washington. In the number of americans who have turned in or relinquish their passports. New taxlinked to tough requirements by the irs. It holds foreign banks and u. S. Citizens accountable for their earnings, their assets, which may be in the u. S. View as sheltered, hidden from the view of irs tax laws. It is a get tough approach by washington. Many americans, 6 million americans who live abroad, questioning these rules because they are quite onerous. What is the toll for these individuals who live abroad to adhere to some of these rules . You have to disclose all of your bank accounts, all of your assets. Of july 1 or before july 1 i have my form with me right now you have to file the form. You do your own taxes yourself . When i lived in the United States, i did my own taxes. I filled them out and did the competitions myself and that cost me about 25 to do. Youve got a bargain than. H r block . In fact, h r block . In asia without a very complex tax situation, it cost me 1000 in the tax preparation fee. Comparable to people with complex tax reparations. I make my husband do it. He is the cfo of the relationship and i am the ceo. I dont go into any of the details are the numbers. I just had my number to the tax advisor and hope that he can do the best he can but it is a lengthy process. Causing americans to give up their passport. Lets take a look at some of the americans over the years who have done so. We will go back to 1965. Winner. Ner, the oscar he was born in russia anyway. He gave up his passport after a tax dispute with the irs. One of the earliest examples. Fastforward to today. Singer tina turner has lived in switzerland for many years. Shes from flatbush, tennessee. She relinquished her passport. Hid t that he did that read before facebook went public. Americans abroad feel targeted. That is it for this first day of the week edition of asia edge. This program is a paid program of the United States gold and silver reserve