, taiwan is out at about 4 00 p. M. India comes out later on tonight. Before i go, thailand also comes out. They have an update on trade. We will see how that impacts trade. I will leave it there for now. Let me send it back to you. For the first time in three surpassed japan as the worlds secondbiggest equity market. Xi jinping over shinzo abe. Both countries may have stepped up their stimulus but it looks like investors are more confident towards beijing to revive the economy over abenomics. China just cut Interest Rate for the first time in two years. Economists believe more could be coming. That might be fueling this optimism. China now number two for the first time in three years according to data compiled by bloomberg. Now, 4. 4rket value trillion. Compare that to japan, 4. 6 trillion. The charts really have shown the divergence coming closer and abe just crossed. China did briefly surpassed japan in 2011 after an shanghaie but the composite index climbed three times as much as the japans topix. What are the factors overall in terms of this . The weakening yen playing a role in terms of shrinking the market value in dollar terms. Resurgence in saw ipos in china after a yearlong freeze. That made a huge turnaround for the equity market which was at one point among the worst performing ones from 2010 until last year. In terms of economy, china surpassed japan in terms of the second largest economy in the world in 2010. Maybe it was bound to happen eventually. Thank you very much indeed, yvonne man with the latest on china versus japan equity markets. Cracks Inflation Inflation in japan slows again. It is now less than half of the bojs target. James, what is behind this downward pressure on prices . What should we expect Going Forward . Today is theory worldwide fall in oil prices. That is having an effect on japanese inflation. Prices or Energy Prices for households fell almost 1 from september through october. There is also a big fall in fresh fruit prices. That is what is driving down the inflation rate in japan. Increasedhen they last month, they said this was going to happen. They said the Falling Oil Prices and a delay in the rebound of consumption after the sales tax hike were pushing down on inflation and that is why they added extra monetary easing. Butas not unexpected, inflation is below 1 now. Mr. Kuroda said that wasnt going to happen at all. He said there was no way inflation would go below 1 . This is not good news for the bank of japan. James, consumption in japan still quite weak especially after that sales tax hike. How is this inflation slowing going to play into that . We saw today that Household Spending fell for the second straight month. The Household Spending has declined. There was a jump in retail sales. What is going to happen is the inflation, as it slows, is going to boost the real wages of japanese households. We should see this continuing trend for inflation below 1 . Although bad for the boj, that is good for the economy. It is more real money in peoples pockets. A pickup of real wages and a pickup of consumption as inflation growth slows. Did have some good news out of all that data this morning. Industrial production coming in better than expected. What was behind that . We have had to consecutive good industrial data. It unexpectedly rose in october. The big reason for this was a large increase in shipments and production of business machinery, things like cranes and machines used to build products. What that shows is that Japanese Companies are becoming more confident and are investing in capital goods that they can use in the future. One of the factors was, there was a big drawdown in inventories. Companies are forecasting growth through the end of the year and that is a sign that consumption is rebounding and people are spending more. Good news for the fourth quarter. James, thanks a lot. Lets get back to the markets with david. Me show you what is happening across the sovereign yields. The 10 year unchanged. The five year, a little bit of movement there. There you go, that is the yield right there. The twoyear is key. Zero for the i saw first time this year. There we go, twoyear yields. Im going to show you what is happening with dollaryen. Flagged lower had Oil Prices Putting Pressure on inflation. We are at 118. 21. 118. 27,oint, we reached which is a 7. 5 year low. We are up 1 for the nikkei. I mention oil, take a look at that. 68. 90 four, fairly depressed level. For west texas, we are down 6. 5 . Take a look at brent. Down about 0. 1 . Unchanged right now in asia. The chart shows you the real story overnight. Opec said, we are not going to do anything. Let me get you the price, down 6. 5 . 72. 46 is the price of brent for a barrel. Back to you. Ok, oil prices front and center today. We have seen the price of crude fall to the lowest since 2010. Opec refusing to cut production. Put another way, saudi arabia blocking any idea of a cut. What has been the reaction from the other members . The fundamental picture is a global price war. Shale Oil Production in the states is booming. They cant afford that, it becomes a price war. They have to keep production and prices down. It makes it harder for the u. S. To keep producing. Threedecade high in the u. S. Only chinese demand slowing down across the economy. Under pressure. Within the 12 members of opec, saudi arabia, kuwait, qatar, than really need more strong foreignexchange reserves. Venezuela, nigeria and iran do needed. They rely heavily on crude exports to keep the money coming in. Venezuela has the lowest level of foreignexchange in 11 years. That is the problem they have. Saudi arabia smiling. They are the swing producer. Iraq has said that what was considered was a cut of 1. 5 Million Barrels per day. What was wanted by venezuela and iran was 2 million. 2 Million Barrels per day. They didnt get either. They got nothing. Reaction has been fairly that is the thing. If they decide to unilaterally cut output, which they could do, they might keep production at you have it on the screen there. Nigeria, 70 reliant on crude oil output. One of the crucial economic intakes. , i reaction from nigeria think for most of us, it has been a rather critical time. Concerns,ve great particularly for our economies that are dependent on crude. The Iranian Oil Minister says he is not angry. I love that. You immediately know that he is. Says, but it is not in line with what we wanted. Venezuela says, everybody has to make some sacrifice. John, thank you very much indeed. John dawson with the latest on opec. Next meeting, june 5. Unless there is an emergency meeting. Still to come, singapores crude awakening. How oil is hurting some of the nations wealthiest investors. Chinas latest milestone. My investors are betting on xi jinping when asia edge continues. Day ifas been a brutal you are long energy. Oil stocks getting hammered. We bring in norman chan. Just a quick word on oil. Production remaining the same. What do we know . Certainly there was a cut being priced in, wasnt there . Market is still disappointed about the lack of cuts by opec. And other Oil Producing countries. Eventually, i think they have to reduce the output. Otherwise prices will not rebound. They need higher prices as well. Eventually we will get there. The thing is, why . What is the motivation to defend the Higher Oil Price . Let the oil price freefall to make you feel the pain. Other opec members will start to feel it now. Barrel, r to 60 a what do you think the chans are that when we see such a move as in the last four months, that we will overshoot . Do you believe that . Financial assets, it will overshoot on the upside and downside. Would finallyopec be able to reach consensus. There must be a line in the sand when they call an emergency meeting. Do you have of you on that . May be closer to 60 they will have to call another meeting. Maybe even teleconference. If they understand that oil prices freefall more, they will come together. How much has the oil price been falling . When we look at the demand equation, that side of it, china slowdown. China, yes, is slowing down. But china is growing. The problem is more on the supply side. The u. S. Is doing much more in fracking and also deep oil drilling is getting more mature. Opec and other Oil Producing countries have to understand that. They cant produce as much as before because other productions are picking up. The demand side, yes it is slowing down, but it is still growing although slower than before. You cant go through doubledigit growth rates forever. Nothing grows in a Straight Line too. Been the central bank has in the mix with a surprise cut in Interest Rates. What are you looking at when it comes to further monetary easing . This is a very symbolic move. No one expected the Interest Rate would be cut. Now that they have cut it, the market is debating whether this is a one time of or a possible change in trends. Although pboc said this is a onetimer, there is a possibility to do such a onetime move again, and maybe again. Slowdown infurther ,ctivity such as gdp growth especially export, if exports slow down substantially, there will be pressures on the renminbi. Norman, stick around. We have a Group Discussion coming up in about 20 minutes. He will give us his thoughts on a wide range of suspects. Subjects. China overtaking japan as the worlds secondbiggest equity market. Next, car recalls with faulty airbags. The latest when asia edge continues. At some otherlook corporate headlines. Japanese carmakers have recalled more vehicles over faulty airbags. Toyota says nearly 60,000 cars need to have their airbag inflator is replaced. Other vehicles were recalled over similar problems. Deutsche bank is scaling back on precious metals. It will no longer trade the actual commodities but will still dealing derivatives as part of a vote part of a larger overall. Barclays and jpmorgan have made similar moves. Shares aresu trading again. Proceeds of the sale will be used to develop other areas of the business. Fosun says the deal will require government approval. Among hedge funds, no one is larger than man group. [inaudible] we are going to get over to stephen engle. Questions about this group which manages about 72 billion. Steve, what have we got . Saying the perception of hedge funds is starting to change. Steve engle caught up with him. Perception is that hedge fund is a much riskier assets class. Fewally, for the past years, man group, we have been working closely with the regulators including the pboc and chinas securities regulator, and also the insurance industry. Also, China Asset Management Association has been established and they have already got 4200 registered members. 1000 of them are what we call sunshine funds. Basically hedge funds in china. Through years of education in the exchanges, the chinese investors and regulators are beginning to understand that hedge fund is about hedging. It is hedging against the risks. We are trying to provide products that are less risky with less volatility. Regulators want more institutional formulas, more longterm investors. Would you say your horizon on your investment is shortterm . Absolutely not. We are an Institutional Investor in china. Chinas investment profile has already seen great changes. For example, three years ago, the asia market was 95 retail. Now it is 85 . It is still very high but it is down by 10 . A key concept of hedge funds also is to be able to short when the market dictates. How are the restrictions on shortselling here hindering you . Right now, there is a lot of restrictions for what you can do. Onshore money, you can. There is still a lot of deregulation that is going to take place. We help with those changes that foreign funds coming into china are traded equally as local money. I think the opportunities of more funding coming into china will travel. You think more hedge funds are going to be actively involved here . In hong kong, 35 new hedge funds set up this year. They have more, i believe, then prefinancial crisis. That is hong kong. Actually, 1200 of them have registered with the emac, which means a lot more hedge funds have launched in china. They are using a lot of long short strategies, which is going to provide opportunities for local investors as well. Right, after chinas much talked about rate cut, india could be next. They are urging the Central Bank Governor to react next week. The finance minister is also getting into that, calling for a cut. Growth expected to slow down further. Gdp figures are out later on today. Economists expect growth to drop down to 5. 1 despite the Narendra Modi governments push to attract more foreign investment. We are counting down to the start of trading in india. Futures were up the last time we tacked. We will be live when the session kicks off. Sydney, as far as what is going on with resources, negativity. Index leadingthe australian stocks. Eoul down by 0. 25 . The hang seng, quick check their off by 0. 3 . Looking forward to the afternoons business in tokyo too. Opecs and action hurts singapores wealthiest investors. Going nuclear, the Chinese Power Company seeking a first of a kind ipo. And, adding a bit of sparkle to the holiday season. We meet demand making Diamond Jewelry for the stars. First, lets get the latest from the markets. David is watching airline shares taking off. Hk, Cathay Pacific up 7. 4 from yesterday. Oil prices coming down. Do you hedge now or continue to wait . Analysts are saying you could go down to 60. We might not be at 60 for a long time. That is what is hurting these u. S. Shale producers. Cathay pacific, 7. 5 . China airlines and sing air. You have hong kong, singapore, taiwan. What are we seeing . All up. Lets go to korea. A, up offr, asian highs of the day. At one point we were close to about 9 . Moving things along, take a look at china. 6 more or less for air china. Let me just wrap things up in Southeast Asia. You have air asia and malaysia and thai air over in bangkok, all seeing substantial gains. Do you hedge now or wait . Lets leave it there. Back to you. Course, the price of oil having an impact on singapores wealthiest residents. Bonds from Oilfield Service providers are the worst performers among all local notes this year. Lets get more from our Southeast Asia correspondent, haslinda amin. It looks like the rich are in for some pain. Who would have thought . They are feeling the pain. They are the main buyers of highyield, but small deals in singapore dollars. When the market slums the way it is now, they are finding it difficult to sell liquidity. The issue is just limited. Into a company that helps to build offshore tforms, that 30s present 30 drop in fuel is worrying. It is now trading below the average since the end of last year. This becomes the driving force in the countrys bond market. Take a look at the highest yielding local note issues this year. Almost 90 snapped up by the rich. The central bank did issue a warning. It did see a rise in sales to individuals. Private banks did it for the rich clients. Apart from the bond markets, oil and gas related sales and singapore have been badly hit. Worldsook at the number two oil rig maker, down 25 year to date. Cap core, same story. Badly, badly hit. So, oil getting dumped. What are some of the market concerns in singapore . Well, the main concern is stretched credit. That is what deutsche says. Risk appetite is rising. Climbed to 40 of issues this year. Last year, it was 28 . It is a lower rate environment. Deutsche says that so many examples of bonds coming to market would stretch credit metrics. Case in point, a Company Called ezra. Washe end of august, it 2. 2 billion. That is 20 higher from a year ago. Companies are getting too complacent after three years of oil at 100. We have a prices dominating our discussion. Nider from the ubs says leaving it up to the market marks a change. I wouldnt be surprised to see an emergency meeting happen in the first half of next year given that the price is going to continue to be under pressure. Testly, saudis want to and look at where shale oil is breaking and where the supply growth is slowing. From that angle, yes, it is a new era. Not everybody is happy and i think that is clear from some of the messages from other opec members. They wanted to reduce production, guide prices lower, but apparently not with the saudis. What about future prices . It is likelysays that oil will go down even further. I dont think the pain has been great enough to invite discipline at opec. The reality is, we go back to the 80s and 90s, oil price can go a lot further than you think before it starts to see supply cutbacks. In that context, i dont think you can rule out 40 a barrel. Im just guessing, but if you look at history, they do tend to fall further than you think. They dont have another meeting until june of next year. That is the word from asia on oil. Rio tinto is offering its shareholders some early christmas cheer, a further boost in cash returns. Paul allen joins us from sydney with the details. How can rio do this with iron ore prices tumbling . They are cutting spending. Not just operating cost, but Capital Expenditure as well. They have deferred plans to construct a mine in australia. They said back in august that the figure for 20 was going to be 9 billion. Price, it iron ore has fallen a long way this year, something in the order of 30 . Miners suchiron ore as rio and bhp are compensating by ramping up production even more. Rio is delaying construction of a mine in western australia. Part of a trend to curb supplies . There seems to be little intention to curb supply. Production is ramping up. They are simply not investing in new minds anymore. The mining Infrastructure Investment boom is over. We are firmly in the Production Phase now. Just this week, the bhp ceo said they hadnt taken a new project of the board since 2012. The plan is to ramp up production and these big miners are lowcost producers. They can stomach further falls in the iron ore price. We have that merger approach from glencore. What did the ceo say . It never goes away, that topic of conversation. The media particular the about glencore and rio tying up just grows louder and louder. The rio ceo was talking today about continuing to return cash to shareholders. That follows from colorful he made back in august when he described the company as a cash machine. Going to go up 15 to . 96 per share. There will be more cash returns announced in february when the dividend gets paid. The message seems to be clear. Paul allen, thanks so much. China is setting ambitious targets to curb its carbon emissions. To get there, they have to add the clean Energy Equivalent of spains entire powergenerating capacity every year. Biggest producer of Nuclear Energy is called cgn power. It is poised to capitalize on the Ambitious Energy targets. It is also making headlines because of a listing in hong kong this month. Joseph jacobelli is here. Why the buzz . Because of the size . The size and the prospect is vast. Which im sure youre going to be reading this weekend. Size, 3. 2 billion. They are going to be raised at the top end of the range. It is a very large amount for any country. Number two, it is nuclear. It is unique. It will be one of the very few pure Nuclear PowerGeneration Companies listed anywhere in the world. The energy itself, it is clean, although tree huggers may not necessarily agree. As far as china is concerned, it is least, really, choice of portfolio. What i mean by that is, right now, you can buy coal Power Generation companies in china. You can buy wind power companies. But nuclear is a relative much is it is, how raising . What are they using the money for . That is what we need to know. Organic expansion. Their equity capacity is going to grow 75 between now and 2019. That is organic growth. They are also going to be acquiring some nuclear reactors. In addition, this company has been looking overseas, anywhere from south africa to the u. K. Acquisitions and expansions are another way. Energy has perhaps been seen as the future. It is really key. Right now, the bulk of Power Generation in china is from coalfired power plants. 70 of them saw capacity. China needs to shift away from that. One way is to build Nuclear Power plants. It is not going to make a huge dent by 2020 but it certainly could make a dent. Ok, thank you very much. The latest on cgn. Coming up, vying for votes. Japans political leaders go online ahead of the elections. We will have details on that and all the other top stories after this short break. John and norman. Thanks for sticking around, norman. We talked about opec and china. Lets talk about japan. We have a horrible cbi number coming in. That 2 inr achieve your view . It is tough and i think it will take a longer time than the japan government would like to see. Eventually, they can reach 2 inflation but it wont be next year. 2016, 2017, that is pretty far off given that there target was next year. We are nowhere near that. Spring 2016, that would be good. Massivewill that stimulus on halloween be felt throughout the economy . The stimulus is probably being felt a little bit already. Abe has done the delayed the tax hikes, there is a better chance for the fiscal policy. What are your clients asking you these days . Are they asking about japan, china, the u. S. . On the market side, we are not very much in japan or europe. The clients are still asking about the u. S. And china. What kind of questions are they asking . Are they concerned about the u. S. . You must always be concerned about slow down. U. S. Slowdown, china slowdown. China is slowing down and transitioning into a less export reliant, hopefully more domestic reliant economy. That means china will not grow by 8 a year anymore. Which questions are you surprised they asked . When allocating resources, allocating assets, what is surprising on the radar that hasnt been discussed . We do have quite a few clients and they ask all kinds of questions. Which one is more surprising recently i was asked about, widely you think china will still be able to grow at all . Obviously, that was a little surprising. Which reflects the current times. When you worry about the china economy, you can also about business being done in china, such as the sales of bmw in china. For now, they are still growing. You can see the single day sales. When you look at what walmart they havent been doing very well in china, have they . I think they need to do more domestic change before they can get better results in china. How do you play that retail space in china . A lot of these are local brands. Do you do the tieups . First of all, we use funds. Using, they are track china retail. Buying korean air purifier manufacturer because they have market share in china. Necessarily by china stocks, rather china growth. What about india as well . We had a guest on saying he is as theop pick fastestgrowing major economy in asia in 2015. Would you be surprised by that . No. India has done a lot. Now, the big question is whether they will be able to cut rates. Is that wise, cutting rates, inflation is better, but it hasnt been that way for the past five years. Inflation has always been a massive problem in india. Onion. Onion problem in india. True, you probably need some help on the monsoon. The way the forces will be able to work with them it is not just about modi. Whether they would be able to without worrying about inflation too much. Invest tohould they make more money . Our clients are very conservative, mostly. We dont chase into individual markets like india or korea too much. Even though india is a growth market. It is, but we have asian equity funds to take the indian market indirectly. You think there is still risk in india . Yes, and more importantly i think [indiscernible] does anyone still ask you about gold . What do you tell them . Somebody just did actually. [laughter] a little bit more than two years already. I think gold is still looking week. I am worried that they will catch up. In the longterm, the question on gold is whether you still think the Global Economy will grow. It also depends whether you are a dollar bowl or not. The dollar has not been doing much on gold lately. Gold actually is rebounding. Priced in some dollar strength, i suppose. Increased quantitative easing in japan as well as europe. [indiscernible] gold price as 1200, i think is high. Norman chan. Thanks a lot. Shunning the high street. After the break, we hear from the master craftsman who does his deals in the back alley. That is when asia edge returns. Some of the biggest names in to one of theed smallest designers to get their jewelry. Manus cranny went to check out londons upandcoming diamond dealer. We have been working on a few pieces. 200,000. Is around bobby, londons very own diond geezer. He is athe heart of the diamond district. The most important one was working with beyonce. Both of them, her and jayz in the room . They were my highlight. You are a master craftsman. That doesnt happen overnight. The kind of skills involved in putting a 200,000 pound piece together, it is time and skill. It does take a long time. I am really passionate about making things perfect. It looks like they are effortless. [indiscernible] design, service, and master craftsmanship. All the elements that go into creating the perfect piece. Our customers might start online and then want to meet us and start designing products. The budgets can be literally i watering. Canary yellow diamond, 200,000 pounds. Bobbys signature ring, 25,000 pounds. Perhaps maybe even a little bit too bling for me. That is one of the standout pieces. I dont know that is very made. That is not me. He is really enjoying himself. Where is my diamond ring . Get more anytime anywhere. Just download bloomberg plus to your mobile or tablet. Android app or windows operating system. That is bloomberg plus. And heres johnny. From the moment he stepped on stage to the day he said goodbye the king of late night was johnny carson. He went right into the homes across america