That bill in terms of the prodemocracy protesters. The Indian Markets looking like this, future suggesting a flat start for the session. Take a look at what happened,. 5 to the upside, since x likewise. The 10 year yields, one eye on what is going on with gdp. Growth comethat that would be the slowest rate weve seen. 71 rupees, the rupee has been the worst performer amongst andn emerging currencies part of that could be done to the weve had robust inflows of the greenback into the economy. Lets wait for that open but before that lets get to the first word news in new york. Were going to start at the u. K. Were starting strengthened as a poll suggested the conservative party may win a comfortable majority in the months u. K. Election. Hassurvey of 50,000 voters the tories winning 359 seats and the others 211. A top aide to Prime MinisterBoris Johnson is warning there is a real chance of no overall victory and things are much tighter than they seem. The latest fed survey of the u. S. Economy shows modest growth from mid december and steady consumer spending. The beige book as its called with a more upbeat tone and in october, affirming the general outlook for modern expansion. The majority saw no growth at all. Lawyers for the huawei cfo meanwhile are fighting any broadcast of her extradition proceedings in canada, saying it would raise the possibility of sident trump month meddling in her case. Earlier he made comments on why might try to intervene in the justice departments attempt to extra by extradite her to the guest to the guest booster trade with china. And viral videos criticizing chinas treatment of muslims say the app has restored her account and apologize. A new jersey teenager posted what look like makeup tutorials which quickly marked morphed human moderation error is blamed for the removal of her posts. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan, this is bloomberg. Topaad getting back to our story, china saying the u. S. Has severely violated International Law after President Trump signed a bill that expressed support for the protest movement here in hong kong. What do we have here . Wasnt going to go through, one would have thought. It was going to become law either way. This is not a surprise that this happened at all, yet it still andcts sentiment potentially trade talks. Is it going to slow down the phase one deal, are they going to take other actions against companies that could affect the economy . Theres a number things that go into that calculation but the response weve seen from china today really mirrored the response they gave last week. Theres not much new in there. Theres a vague threat of retaliation without any specifics. Markets arent moving that much right now. Everything is kind of going as expected. Juliette what does it mean for the prodemocracy supporters in thiskong because obviously is in favor of them but we dont know whether there will be overer crises coming up the weekend and ramping up. Thats really chinas biggest worry, giving the hong kong protesters a real boost just at really one bigy and local elections on sunday. China doesnt like the fact that the u. S. Is going in there supporting people it sees as rioters and encouraging them to step up their efforts. Thats a big reason that china and xi jinping have to do something, they have to oppose this in some way. Whether it closes the trade talks is a big question. We will see the protest scheduled for tonight as well as large crowds we seen already protesters waving american flags and encouraging lawmakers to pass this bill. Thats our asia government editor in hong kong im a thanks so much. The deputy ceo of the Hong Kong Monetary authority said u. S. Legislation that requires annual reviews of the citys autonomy is bad news for Financial Markets but is manageable. In exclusive every, he told bloomberg that despite the protest, hong kong has not seen outflows in recent months and the market remains strong and open. Is not welcomeis news, but as you can see, the Market Reaction so far has been pretty calm, so to speak, because a lot of bankers and market petitioners that ive talked to view the impact of the huge. S not going to be rishaad will bring you more from that exclusive interview later this hour. Lets bring in our new guest to the studio. Set the scene for us. The scene is fairly interesting for the current market. This year has been an exceptional year for investors, one of the best performances in recent times. Thats what were trying to grapple with right now. The key here is given whats happening on the macro front, market, ther in the fact remains that Central Banks have come into the picture. That is a big source of support for the markets in general. We think that even though the evaluations of time compared to where they were at the beginning of the year, we still think there is value in the asian credit market. Graden the investment side and more so on the fireside. Tighter, so we think that can potentially unwind a bit. That is a trend we see. Said, return expectations are still positive. Juliette i just wanted to pick up on that point, i got a chart on maternal my terminal showing a drop more than 25 expected to drop more than 25 basis points next her. How much of a risk is lower rates for asia credit . , werees going lower ofling for 1. 25 by the end 2020 410year gilts. The risk of selloff leading to higher rates still remains. Thats why i was mentioning were more selective. Juliette i wanted to pick up on hong kong as well because obviously were talking about the event that is happening there. In terms of the overall credit market in hong kong, is this just a shortterm event . Do you still like the space . Seen a very orderly move there. You have to remember that most of the bonds that are there in the hong kong credit market are large cap names and people are not really worried about the Credit Profile itself. It might take a bit of a hit, but at the same time were reasonably comfortable with the hong kong credit markets. The thing is, you look at what is going on in asia, a lot of dollar bonds being brought up and issued here. Will that concern you should anything go wrong . Especially currency, if you get a stronger and stronger dollar . That is a good point. If you look at the general consensus estimate, people are not talking about dollar weakness in the next few months. Said, if the dollar in the pastains five or six months people have been calling for dollar weakness and has not happened. It has been fairly strong. Way iticular the behaves, has been week as well. The trend has increased, but at the same time, that is a worry. Having said that, were not overly worried about them because if you look at indonesia, for example, they have held their dollar exposure. India, the same thing. Except for a few names here and there, broadly, it should be ok. From us intimate point of you, thats going to be a challenge. Rishaad some saying highyield isnt really highyield anymore. You have to tread carefully here. As ane looking at it investor or looking at to draw conclusions . Asits definitely not highyield as it used to be. If you look at india highyield, it is pretty tight across the board. On the other hand, chila china still is reasonably interested. The third segment of nonchina whichty highyield, almost 25 of those bonds are trading at more than 15 , which is mindboggling to me. A lot of those names are there because they should be there, but at the same time, going forward, that is where some of the alpha opportunity for next year will come in. That space can be interesting if you select the right names. So pick and choose. The highyield still remains interesting. He will join us after the break. The currency peg to the dollar remains strong. My exclusive interview with howard lee is on the way. This is bloomberg. Itiette the u. S. Economy rose. 10 from september, adjusting for inflation. The weakest gain since february. That indicates slower spending heading into the key Holiday Shopping season. The consumer side has been holding up the economy. It could be a little bit worrying. When he comes to the actual bond market, though, what are you seeing in terms of the curve there . We have seen the flattening take a little bit of a pause, if you look at my chart. Thatthink the reality is the risk of recession in the u. S. Has been pushed out by at least a few quarters. Thats because the Central Banks as i said earlier have come back into the market. Flattening to inversion was a big topic at the middle of the year, but since then we need to keep a close watch on the data points that are coming out. Earnings are expected to rebound for u. S. Companies next year, itch should imply that remains an important indicator to watch. But imminent recession has been pushed out of it. Juliette what does that mean for yields on the 10 year because weve been looking to see if they could tick up a bit further. Manjesh thats one of the reasons i mentioned we are cautious on tightening. Its going to have an impact on a lot of credit that we trade, bond spreads have india is tighter on average. Is the Corporate Bond effect im talking about. If you combine that with the fact that it will be wider from , its not a very rosy picture of the markets for that particular sector. Rishaad the u. S. Bond rally this year taken into certainly things are getting stymied thereby local conditions. India is having a tough time of it from a credit point of view. We have credit implosions taking place all the time on a corporate level. Manjesh thats true, and it is worrying. Set up in two distinct ways. Structurally im positive about what is happening and some of the measures that have been taken over the past four or five years have been constructive from a longerterm point of view. But in the short to mediumterm, i think theres probably more pain and a large part of that is ing from the increased funding channels have dried up. Banks are being very cautious in terms of lending out. Accordingly if you are a to Medium Company in india, its going to be extremely difficult. Market is also feeling the challenge in terms of getting access to funding. The medium toat largescale corporates continued to get access ok, but the struggle is for the small to medium category. Rishaad this becomes a negative feedback loop, doesnt it . Manjesh you talk about gdp growth slowing down, that is what is happening there. I thinknk we are youre still going to see some more pain. The bankruptcy regime has improved a lot in india. The resolution of some of these defaults should be quicker, but theres potentially going to be more pain in the corporate space. Rishaad a pleasure having you on the program. Lee have more with howard on the way. This is bloomberg. Rishaad your back with Bloomberg Markets as we have a look at the latest business flash headlines. A slight rise in corporate profits expanding into overseas markets, in line with forecast. Underscore the efforts to bolster profitability as well as music content before 5g wireless rose out across china. The stock seeing its biggest intraday game we have witnessed since the middle of last month. Hong kong has struck a record land deal despite violent street protests about the highspeed rail, the equivalent of 5 billion u. S. Dollars. 300,000 square meters of floor area. Luxury and retail spaces planned and its also next to hong kongs tallest building, the International Commerce center. Report saying alibaba is on the fast track to the hong kong main trading index. The post thinking shares will be included in the hang seng composite on december 9. Alibaba had stopped rising strongly in each of its first two trading sessions. I have a sense of deja vu here. Juliette were looking at first capita group again which will at that yesterday. Today we have heard it was thanks to margin calls, a substantial shareholder wealth shareslling 37. 3 million do to calls. Weve seen the stocks pervak earlier gains. As stock was up by as much 109 , the most on record. Its now just up by 9 after having that huge fall coming through yesterday of 75 before trading in the stock was suspended. The company offloaded about 218 and that was due to margin calls. First china capita group has not had a great 2019. Rishaad lets quickly look at whats going on as far as the trading day in china as we head toward the lunch break in shenzhen. Reflecting a few concerns about President Trump signing a bill backing hong kong protesters into law. That may spur another third of retaliation from china and it is also raising concerns about the prospect of nailing down a phase one trade deal between washington and beijing. Thats what we have at the moment, and that is a look at shanghai. 11 30 in singapore. We are expecting singapore stops lower by around. 3 . Earlier this week, we were talking about merger monday. In singapore, a Singapore Real Estate Investment Trust is planning to merge, according to people familiar with the matter. Both companies have requested for a trading halt pending this announcement. If the property is backed by a thailand asset and is the main sponsor. Lets get the first word headlines now with su keenan. Withe are going to start china which says the u. S. Has severely violated International Law after President Trump signed a bill that expresses u. S. Support for hong kong protesters. Beijing says the bill severely metals in chinas internal affairs and reiterated its threat of retaliation. The Hong Kong Government says the bill is unnecessary and unwarranted. The bill requires an annual review of whether hong kong is sufficiently autonomous from beijing to justify its special trading status with the u. S. Arewhile, Hong Kong Police sending teams into the citys polytechnic university, ending a 10 day seizure against protesters barricaded inside. The aim is to restore the safety of the campus and gather evidence of damage. A University Team searched campus and found only one protesters still there. Meanwhile, police say they have arrested almost 6000 people in protest in june. Half of them have been students. The listing that could be chinas biggest since 2015 is facing headwinds as investors lose interest in mainland stocks. State owned vendor Postal Savings Bank of china is looking andaise about 4 billion, the turnover on mainland exchanges is down 71 on a march i. That coincided with a series of lackluster ipos including on shanghais new star market. Apple is under fire from ukraine after changing some versions of its app to depict crimea as being part of russia. Ukraines Foreign Ministry and the embassy in washington tweet out that the area is actually under Russian Occupation and its sovereignty has not legally changed. Dotted line as a the boundary between ukraine and crimea, indicating the situation is not clear. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Lets have a look at the major market markets and see what is going on at the moment. This is a position we are finding ourselves in, underwater at the moment. The stocks remained relatively mixed. We have the nikkei down. Surprisingly, the market was despite awful retail Sales Numbers coming through. Month. 14 month on and that was not much of a surprise as we had september people frontloading and that was down to the sales tax increase, which kicked in. A huger on year, it was surprise. Retail sales down 7. 1 percent, looking for a fall of 3. 8 . Way, and notad particularly good news for Haruhiko Kuroda or Prime Minister shinzo abe. Looking at the hong kong market, putting much flat. Kospi, point 2 down. Asx 200 in australia, slight move to the upside. Thats have a look at the prospects of the indian trade lets have a look at the prospects of the Indian Trading day, which is playing out for some of the wait and watch, hurry up and wait, stuff going on with the bond market, which is pretty much stable as we look for the worst read for growth in india since 2013 on a quarterly basis, at least. Nifty flat. We had records for that index. We had the nifty hitting record highs, up. 5 , looking as though we will have a flat start. Rupees, the moment, 71 34. Stories, Incoming European Commission president ursula von der leyen has made himms that the climate is number one priority. She spoke about working more closely with European Business on tackling the issue. Must for all is a of us because we know that Climate Change is existential. But there is a huge opportunity because at the moment being, we are the european front runner in fighting Climate Change. New technologies and green financing, we have 40 of all of the patients of Renewable Energy patents of Renewable Energies worldwide. If it is it is not only good for the people but for the european economy, because we knowledge, technologies, and the front runner. When you look at the friction, Angela Merkel said it was too drastic. As the head of the european commission, do you see a bigger nato or the e. U. Within do you think it is time to consider a bigger European Army . Be nato will always collective to defend article five, and it is the Strongest Military alliance in the world. The European Union has a different role. Of course, we have many european Member States that are also members in the nato alliance. And as europeans, i feel we do not the European Union is called upon. Ago,u remember five years the European Union had the will to answer the crisis and to fight terror, but therefore, we are building up the European Defense union in three years, knowing that it will be complementary to nato. Withed the European Union its huge toolbox. We have Development Investment to diplomacy, to servicemen and servicewomen. So we are able to act when called upon. Was ursula von der leyen speaking to maria tadeo. We will hear more from our exclusive interview with howard lee, coming up next. This is bloomberg. The deputyod fud says to President Trumps signing of the hong kong bill into law is unwarranted. Confidence ining the cities Banking Industry in an exclusive interview with yvonne. Is not the bill necessary, but when it comes to the market impact, the Financial Impact so far, he is saying markets are taking this in stride. The bankers and investors he talks to are saying there are still a lot of questions as to how the u. S. Will implement all of this and enforce this law. Basically, the u. S. Has access or needs to assess hong kongs autonomy to china in order to justify that. He is saying the muted reaction is a bit encouraging, but he is going to also be watching the future developments as well. Notf course, this is welcome news. As you can see, the Market Reaction so far has been pretty calm, so to speak, because a lot and market petitioners i have talked to, they feel that the Immediate Impact of the bill is not going to be huge for the time being. Much will depend on further development, so basically, what they are doing is still looking very much at the fundamentals of hong kong, including what we can have under the one country to systems. Two systems. If in fact it lost its special trading status. Would that be the end of hong kong . Howard i dont think its helpful to speculate on different possibilities. Basically, i think the hong kong law is status, the basic still intact. That is what makes hong kong a positioned to offer the opportunities that Many International investors would like to have, especially for access to the chinese market. Yvonne have you seen a visible outflow of capital and do you foresee any pickup if these drag further . Howard as far as outflow is concerned, in the past few months, hong kong has probably the most transparency in the world because we operate the currency system. If we have any outflow from the hong kong dollar, we announce it almost on a realtime basis. You can see it on your bloomberg terminal, so we have not seen any outflows from the hong kong dollar since april of this year so the unrest started from june, so theres no outflow from the hong kong dollar in the past few months. We also look at other metrics. Say for example, dollar deposits. It is actually pretty stable in the past few months. Yvonne yvonne how would it affect the banks . Do you see that hurting asset quality . Howard not really. In terms of asset quality, the hong kong Banking Sector has been very strong. The capital ratio is 20 . Thes much higher than statutory minimum. In terms of loan quality, so only 0. 56 . Io is by historicalow standards in hong kong as well as in comparison with other places. Yvonne would a weaker Economy Force you to tweak your peg . How are you viewing the situation right now . Howard absolutely not. If you remember, it was introduced 36 years ago. This 36 year period, we went to a lot of different cycles. We went through the Asian Financial crisis, we went through the Global Financial crisis. We also went through the first period where hong kong went through deflation for some six years. So it has proven that it will survive. The benefit is clearly difficult. Confidence in the Late Exchange rate. Very strong among hong kong residents and also in the we see no need to change it. He said the markets, given the muted reaction from this bill, has been good news, but they are all watching these developments. The key thing they are watching. S the risk rally, this ipo alibaba as well certainly has made hong kong still looked pretty strong when it comes to the ipo pipeline this year, so he is still looking pretty positive. He really cannot take things for granted. They are talking to bankers and investors. He say anything about how the Hong Kong Monetary authority could be helping out smes . Yvonne he mentioned that just now about the capital ratios in banks right now. I asked him about what they are doing when it comes to the helping or at least encouraging banks to extend credit to these local businesses, which they have in terms of lowering some of these ratios or some of the requirements when it comes to loans and whatnot, so that is going through. I asked if that is enough to help with some of these smes at a time when the economy is at every session. He said we are watching this. If more measures are needed on the economy, they will act to do more if they see signs of that. I asked what would it trigger to add more stimulus out there . He says it all depends on what we see so far. Obviously, when it comes to the bad loans situation, if that starts to pileup, they are not going to act the reactive before these things start piling up or they see any new measures. At this point, it seems to be kind of a wait and see, but for him, he is encouraged by the fact that the Financial Markets are muted so far. Greatte yvonne man, interview. Thank you so much, in hong kong. Indias markets have just opened. Lets get straight to mumbai, where is standing by to take us through what to expect from todays session. Record highs again. What are we seeing today . It has been great for Indian Markets. , a positiveion start right now. Sensex, all the indices have opened in the positive. The volatility index seems to have collapsed by almost 67 . It is an important day. We could see volatility picking up as well. We have the monthly x. Indices as well as stock futures. In terms of individual stocks, we are watching out for the bank in the green. On board will be meeting november 30 for a fundraising they are looking to sell a 4 stake, which is open. They set a floor price of 205 per share. The stocks open with cuts of 2. 5 . The stock has not undone anything in this calendar year. A heavyweight among the constituents, trading at its record high levels. It is trading with little gains today. Credit suisse the target price ,o 585 from an earlier target citing the devaluations even at current levels. We expect the operating profit to be at 20 for the next two years. With that, back to you guys. Rishaad thank you very much indeed, Navneet Saluja dsouza, in mumbai. We can get back to the capital as well. We have the stocks surging to records. Things asrms helping this recent rally broadened to the wider one. Expecting a new low in the last quarter. Forecaster our next guest says this may be close to bottoming out. He is the head of Equity Research in mumbai. Thank you so much for joining us. I am going to start off with our question of the day, and that is how long can stocks diverge from economies . It seems to be more stark in india than anywhere else with 4. 7 growth anticipated tomorrow when we get the latest read on thirdquarter gdp, which will take us to the lowest growth for a quarter since 2013. On the other hand, markets are at record highs. What gives . Thank you so much for having me on the show. If you look at the headline markets, especially the largecap index, which is the nifty, and you compare that in terms of what is happening visavis the Economic Growth trajectory, there appears to be a better chance. If you look at the broader market, the midcalf indices have outperformed the largecap indices by 25 to 30 . What we have seen across the globe has been a significant polarization in terms of stock performance, and that polarization has been extremely stark in india as well. A handful of largecap stocks contributing to the market moves. If you look at midcap valuations today relative to the largecap valuations, we are back to almost 2014 levels, when the first when the government came into power for the first time. The risk reward appears to be in favor of midcaps. For midcap stocks to move up, you need to see Economic Growth actually coming back. What really can drive growth is the progrowth policies being followed by the government. You have the latest round where the Government Cut the Corporate Tax rate. You have seen changes in terms of their disinvestment policy, where they are looking at strategic investment of some of the companies. You have seen the bank of india cutting policy rates and changes which will help speed along the resolution process for a nonperforming loan. All of this, we believe, is going to help in terms of growth momentum picking up. Of course, i must adhere that it is not going to be a sharp vshaped recovery over the next few quarters. It will be a slow, steady improvement. A good you are talking game. You are talking about the right government policies, but this is going to defend on their access to credit and this is a huge problem in india. The Liquidity Position is bad. We have banks unwilling to lend. And there is a hold which is ultimately leading to a negative feedback loop, it fuel. Tell me about that. That needs to be sorted out if you are going to get Corporate India going again. Hitani yes, i think you the nail on the head. The biggest problem today is access to credit for certain sectors of the economy, especially banks which require that money to be able to lend to ande small and and end medium end enterprises. They have cut policy rates and improved liquidity to the system. Today, we are in surplus. I think the transmission impact has been muted. That is likely to pick up. We moved to something called the external benchmarking of mending rates, especially for small and Medium Enterprises and retail loans. The policy rate cuts for the lending rate should start to improve and we would expect there will be a few more policy rate cuts as well. Is that isto happen the key. Recent changes that have happened on the Bankruptcy Court , where indices are part of the Bankruptcy Court, it should help speed up resolutions of some of the industry loans in the system. Not sorted itself out over the next few quarters. R. B. I. And also in terms of reforms from policymakers, what kind of key Structural Reforms in your view are needed to help rebound this growth which could be bottoming out at the moment . Shibani i think the biggest thing that needs to that is needed to kickstart the Economy Today is the investment growth, which has been clearly absent. Capex is completely absent. Therefore, the government needs to in order to push through the investment led growth recovery. The great thing is this government is trying to focus away from just consumption led growth to investment led growth. Policies are clearly more structural in nature. We do expect that if they are able to push their Disinvestment Program on the strategic fronts more objectively, they will have fiscal room to be able to that is soft in turn would lead to improvements in the system. And then, it kicks in. This is going to be a slightly long drawn process. It will not be a few quarters. We expect the Recovery Process will be a slow ushaped recovery, and then investment growth is kicking in over the next 12 months to 18 month period. Juliette shibani kurian, thank you so much for joining us in mumbai. Plenty more ahead. Stay with us. This is bloomberg. Rishaad boeing saw itself all the most on the dow after the faa said it would conduct the checks rather than allow Company Employees to make routine sign offs. Will davis is with us. The faa certainly is responding to the criticism that they were far too close to the company at one stage. Is that the primary reason here . Will they have come under scrutiny after those tragedies. Has been grounded since then. The faa is saying it has got to do the final process to do the approval rather than handing or delegating that over to boeing engineers, who had sort of sign off rights for some of the safety features on the plane previously, and they do that just as necessary manpower, using boeing engineer skills, under scrutiny after those crashes. The faa is taking a closer oversight through the whole process. Juliette it is not just the 737 max in focus as well. There was a bit of an error with the test. Will the triple seven acts 777x is a larger plane they are bringing into service. They had a test in september whereby a fuselage on the plane was on the ground. The fuselage blew out. May stop testing on that because it is a major issue. It is worth remembering that these are extreme stress conditions that the plan is put under. They have never actually encountered it during flight, but they have to go really, really test out these crafts before they certify them. Ll, when it is the 737 max going to take to the skies again . The boeing was hoping for the end of the year, but that is unlikely, it seems, because obviously, the faa is now involved in the certification. Other regulators are going to be involved as well because they want to approve it. And then there is a training schedule for pilots globally, and also, you have got all these planes in storage around. Rishaad in the building. Will they are still selling, still getting orders, so there is still demand for it. The delay until next year is very likely. These claims are in storage. They have to get them ready to put into use service. Rishaad will davies. Juliette will davies in hong kong. Lets have a look at markets. We are seeing a little bit of weakness coming through. Of course course, President Trump signing that bill in support of hong kongs prodemocracy protesters. The hang seng a little weaker. The nikkei flat. Australian stocks at a record, as our indian stocks, slightly higher on the sensex in early trade. That is it from Bloomberg Markets asia. Eastberg daybreak middle is coming up next, from hong kong and dubai. This is bloomberg. I am taylor riggs in san for emily chang, and this is bloomberg technology. In the next hour, full steam ahead, antitrust chief tells bloomberg the eu will push for a tech tax even if a global push fails. We hear from her. Plus, finetuning forecasts. We will explore how technology is changing weather forecasting with pinpoint precision, an important tool when it comes to predicting travel tie ups and potential wildfires an