Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

She prepares his new years address. Is set to be ghosn in lebanon. One source tells us he fled japan ahead of a trial and financial misconduct charges. Markets in asia are winding down for the year. Australias equity market closes early this new year. Sophie has a final session how is the final session of the year looking . Sophie some pressure coming through. The aussie share market off 1. 2 , trimming the yeartodate gain but still set for the best year since 2009. Eminis little changed. Nikkei futures in singapore off by 1 and the bloomberg dollar index extending declines for a fourth straight session as the greenback is set for the Fourth Annual drop since 2010. Let switch out the board to check in on what markets are closed this new years eve. Indonesia, the philippines, and china closing along with south korea and japan entering a sixday new year holiday. We will be waiting to see whether we have yen like we saw earlier this year. Paul. Paul thanks very much, sophie. Breaking news right now. Uber and postmates tending to sue california to block this would strikethat at the heart of the Business Model of uber, relying on these independent contractors. That would classify those contractors as employees instead of just contractors so now we have uber and postmates announcing they will sue california to block that law regarding gig workers. Lets check in on the first word news and get over to viviana. Sources tell bloomberg earlier this week, carlos ghosn arrived in lebanon from japan. That is where he had been under house arrest since april. One person familiar with the matter says carlos ghosn fled japan. He holds lebanese and french citizenships. In november of 2018, he was arrested on charges of financial misconduct. He denies any wrongdoing and says he is a victim of a conspiracy. White house trade advisor Peter Navarro says trade one of the phase deal between the u. S. And china will be signed in early january. He told fox news it is a done deal the. South China Morning post says this weekend, done deal. The south China Morning post says this jongun, ahead of his annual speech to the nation. Kim has vowed to take a nupathe and Nuclear Talks if the u. S. Does not offer further concessions by the years end. The Trump Administration says it is watching for more provocation. We u. K. Is likely to drop its opposition to extend the transition past 2020. Times borisirish johnson is unlikely to honor his claim. He would rather die in a ditch that extend the brexit timeline. Legislation to deliver britains departure will be debated again in the new year. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Paul. Paul thanks, viviana. Datase manufacturing pmi is due in about one hour. Economists surveyed expect a slight retreat in december from this. Asia bring in our chief economics correspondent enda curran. Youan see a chart i am sure are familiar with. A big pop up in pmis that we saw last month. What is the expectation for this month . Enda even if it does slip a little, it is expected to remain above the 50 point level. Remember, it is probably going to cement or reinforce a trend for chinese Manufacturing Sector. We had a big runup in industrial output in november. That will help this pmi reading, and of course, we know that broader sentiment was Getting Better for chinese Manufacturing Sector anyway in the month because of the expectation ahead of the phase one trade deal that was announced between the u. S. And chinese government. One of the components to keep an eye on is the private sector. We know private Sector Investment remains quite weak sophie cme pickup in the index, that would suggest the stabilization is broadening out. Shery we have seen surprisingly good data out of china, including the numbers jumping more than 6 year on year. Can we say that perhaps they are close to escaping that trend we are seeing with Consumer Prices rising but factory deflation just continuing . Sophie enda i think that is it. It is hard to look past factory deflation, really. Only when they escape that can they say the sector is pulling itself. Falling prices of course course will compress profits, and they make the cost of servicing debt more expensive and theres a lot of pressure on some of chinas Indebted Companies at the moment. There is no doubt on the broader picture, it seems to be stabilizing somewhat. The consumer side of things is holding up and we know that now with this trade agreement that has been announced in december and is expected to be signed over the month of january, that will give the exporters a lift, knowing that there more tariffs in the near term. It is something of a stabilization for now, share, but i dont think there is a major rebound for chinas economy or anything like that. People are adjusting to a gradual pace of growth. We will get more details on what exact target the government is looking at 20 later in 2020. Paul the government slowly liberalizing its financial markets. What developments are we expecting to see in 2020 . Enda a broad theme is a gradual opening of the door. It is stepbystep, incremental. We have often had a lot of promise when it comes to china. This year, people are looking at some progress for Foreign Investors being allowed greater access to compete in chinas economy and financial markets, foreign insurers allowed more room. A gradualthing of opening up of chinas financial landscape. We had another incremental move this week of course with the decision to have the benchmark lendingnceled for and moved to the rates set by banks instead. It is all piecemeal. It fits into this broad theme about china moving in the direction it has to go to push through the kind of reforms the modern economy needs versus the economy that it was designing 20 to 30 plus years ago. Shery that new loan pricing regime youre talking about, we continue to see challenges in the chinese economy when you have funding that the pboc tries to offer banks but that does not necessarily translate to cheap loans for businesses. How is this new regime going to help that . Enda that is exactly it. Yes, there is the headline reforms. It moves away from the cumbersome side of things, moves away toward the marketbased mechanism, but the underlying actors in all of this continue to be mostly controlled by the government. The Banking System is mostly controlled by the government, as of course are the big state owned enterprises that dominate chinas economy. We know that one of the criticisms of chinas economy both from a competitive viewpoint and their own interests over the years, has been that china needs to shake up the state owned enterprise side of things. It is something they often talk about. We have not seen any real concrete signs of a firm push recently. That might change in the year ahead, but it is one of the reasons why people are perhaps putting a little bit of caution on the reform to the benchmark rate, because ultimately, it is a step in the right direction, but it is only one step and much more needs to be done to shakeup the grip of the state for the whole economy. Shery enda curran, thank you so much. Still ahead, commodities from crew to copper our set to end 2019 on a high. We will discuss later this hour. Paul im next, we will be joined by the markets strategist to talk about the outlook for the new year. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Asian stocks are beginning to drop. They delivered spectacular returns across all asset classes. Joining us now is the asian market strategist. Thank you so much for joining us, so lets start with the developments we have seen today on trade. Peter navarro saying the deal is putting much in the bag. We are hearing reports that it may be signed early next month, so can you see more upside for markets in asia once this phase i deal is all done . Good morning. Thank you for having me. I do see that we heard the news lee oharauggesting hu will be in the u. S. We do see a little bit more steps in the progress in terms of getting the phase one trade deal coming through. The market price that in. Course, into the new year, this kind of support coming through from the expectations of the signing is likely to carry out. I think to a large extent as well, they want to bring confidence in the market, although we have to see that in the numbers in the coming months as well. A good 2020 perhaps. Paul for chinese equities, would you expect them to continue the climb or perhaps at a slightly slower pace than we saw in 2019 . Enda we think the chinese we think the chinese equities are expected to continue into the first half of 2028 on the somethis recovery, signs of stabilization. This helps accelerate a little bit that recovery mode. Into 2020, i do see chinese equities expected to really have improvement. Of course, into the second half of the year, i would be a little bit concerned as to how the growth itself is going to shape up in terms of the expectations. Evidently, we are seeing chinas Growth Numbers decelerating. China may slow down pace. In that sense, i would feel more caution into the second half of the year. Perhaps for china equities itself. Shery what about Hong Kong Market base hong kong equities . We continue to see attention with the protests ongoing in the city. This summer has been phenomenal for the hang seng index. What are we expecting for 2020 . Shery, i would say that for the hong kong equities, what we are seeing for hong kong, at thet the expectations of phase i trade deal, i think the performances are january. Think we have seen the case continuing domestic issues evidently coming through. A bit of an item affecting the hong kong index. The rest of the asia region. Kong is expected to benefit pairwise. Ise compared to the other regions paired certainly want to watch. I think in terms of the asia region itself, with the u. S. China settling on this issue itself, i think we will see things improve from here. Seeing borrowing costs jumping in hong kong. The dtv chart and the bloomberg showing the one month high again above the onemonth library. This is of course propelling the hong kong dollar. The best month since 2003. The concerns we mentioned. Jingyi i do think that for the hong kong dollar at least, we see it. It helped us out the fact that the u. S. Dollar softened slightly to the end of the year. I see movement to the new year as well given the situation. It is helping asian the fx itself in general. Perhaps we could be seeing it coming through. At least with the hong kong dollar to have that as well. Paul to your point on the greenback, we have a chart in the bloomberg terminal that illustrates what you are talking about. We are seeing quite a bit of weakness for the bloomberg dollar spot index towards the end of this year. What are the implications here for the yuan . Does this add to the case for some strength there . Jingyi so paul, evidently into the yearend itself, we have already seen the dollar yuan itself trading below the sevenfigure target. The risk on has been spreading across the markets. Really helpful in seeing the chinese yuan. At the same time, of course, we are seeing optimism setting and for how china may be conducting the support for the economy. In terms of the requirements of the benchmark rates itself. Expectations for what they may have to announce in terms of their further plans and opening up. We have to see the yuan strengthened against the u. S. Dollar further into 2020 itself, but once again, just wanting to bring back this view in terms of how much further it could go. Quite a bit of a strong support for the offshore yuan. See thating to materialize and it certainly depends on how the chinese indicators, the pmi these are the items we will be looking quite closely to. Once again, the service. Yearend. Seeing the is perhaps a little bit higher from where we are for the dollar yuan. At this point in time, it is likely to carry on into at least january itself and the expectations for the signing of the trade deal itself. Drivenm and sentiment currency itself. The in terms of liberalization you described, bloomberg is running a story about the expectations for the liberalizations. The financial industry. Looks like small steps for insurance. Are you seeing some opportunities here . Jingyi so in terms of chinese teams lookings into 2020. I do think that certainly comes true as one of the items as well. This liberalization itself is expected to help to see the Financial Sector actually bringing favor into the new year as far as the expected chinese stocks. How it might perform on the back of this trade improvement is one of the key things. Shery what do you expect for foreign interest . In the futures market, theres so many restrictions and china including those making unhedged thats against the market. Is it really worth it for these Foreign Companies to actually try their luck in the Chinese Market . So, share, i think at least for shery, i think at least for Chinese Markets, what we have seen is the fact that the msci inclusion is helping to enable the inflows and interest into the Chinese Market. I do think it is an improving sign. Based on what we have seen so far, there is a little bit of optimism, at least we could be seeing a little bit of this increase. In the coming mid to longterm itself. Shery jingyi pan thank you so much for that. Ideation market strategist. And of course you can get a , roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on the industries and assets you care about. This is bloomberg. Shery huawei says it will overhaul its executive ranks next year as Revenue Growth slows on the impact of u. S. Sanctions. Chinas Biggest Technology company missed its internal targets, reporting an overall 18 rise in sales this year. For more analysis, lets bring in our asian tech editor, edwin chan. 18 growth in revenue does not sound so bad when you have the Worlds Largest economy at you. How did they manage this . Edwin i think it is a combination of preparation and overestimated that the the impact white house blacklisting would have on huawei. I think the company had been stockpiling inventory and developing local alternatives to American Technologies since its counterpart, zte, came under the same sanctions a year prior. And also, i think a lot of u. S. Businesses with Global Operations managed keep supplying huawei, enabling it to keep turning out its product because of the 25 rule, which allowed them to these sanctions. Is problems from 2019 inspired by the u. S. Are unlikely to go away. What is the outlook for 2020 . Edwin there are some indications that the americans would escalate attempts to kind of contain huawei as a corollary to u. S. Chinese trade tensions. But then also, you have signs that there may be some sort of detente in the trade war, so its really hard to predict, but i think what came across quite clearly in todays release, you know, the rotating chairman said it does not matter what goes on between washington and beijing. Always going to prepare for the going tohuawei is prepare for the worst and that is what investors have to focus on as well. Paul bloombergs asia tech editor, edwin chan, and hong kong. Thanks for joining us. Thats get a quick check of the latest business flash headlines. Hasese restaurant chain cornerstoneur investors including blackrock for its planned ipo in hong kong. The offering is expected to raise as much as 280 million. It operates more than 300 restaurants in 39 cities across china according to the prospectus file at the Stock Exchange. Asry mitsubishi usta groups an impairment charge of 2 billion in the Current Quarter risks a controlling stake of indonesias bank. The need for a chart has been looming ever since the completion of its takeover in april. That triggered a sharp retreat in shares as they were removed from msci indices. Talkscommerce bank is in to buy an activist funds stake. That is according to people close to it. They say it could announce an agreement to buy 7. 5 stake in the coming days or weeks. They had rejected an earlier offer as too low. Lets get you to some live shots of sydney harbor. Bushfires continue to burn around the city. If you are on the bloomberg terminal, you can follow the progress of the fires. Many of them burning across many states in australia. You can go to tliv and get the latest there. As for the markets, it is a nasty day to end the decade. The asx off right now at all sectors lower. The only right now. All sectors lower. The broader index off by 1. 3 . The asx will close early today. This is bloomberg. When it comes to using data, everyone is different. Which is why Xfinity Mobile is a different kind of Wireless Network that lets you design your own data. Choose unlimited, shared data, or mix lines of each and switch any line, anytime. Giving you more choice and control compared to other top wireless carriers. Save up to 400 a year when you switch. Plus, unwrap 250 off a new samsung phone. Click, call or visit a store today. First word headlines. Phase one of the trade deal between the u. S. And china will be signed in early january. This is according to the white house trade advisor, Peter Navarro. He told foxnews it is a done deal and the agreement is in the bag. The south China Morning post the this weekend, le chinese premier will travel to washington to sign the accord. While selling off 85 billion you rupee of 2021. It is the bank second socalled operation twist option and it aims to bring down longterm yields and flatten the yield curve to ensure better monetary transmission. For the third time in performance, the u. S. Pending home sales climbing, up more than 1 . From november of last year, contract signings jumping more than 5 . The gains suggesting the Housing Market remains supported by a low borrowing costs, improving Income Growth, and steady job creation. At its lowest in a century, that is the status of u. S. Population growth from 2018 to 2019. The population grew by less than. 5 , the lowest since 1918. The bureau saying a declining birthrate, increasing death rate, and a slowdown of International Migration are the main factors. And the rich got even richer this year. According to the bloomberg billionaires index, the worlds 500 wealthiest people added more than 1 trillion to their fortune. Boosting their collective net worth by 25 percent to almost 6 trillion. Amazon founder jeff bezos still topping the list, worth 116 billion, just ahead of bill gates. Kylie jenner become the youngest selfmade billionaire. She sold a 51 stake in her cosmetics company. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Sophie, i guess we are checking the australian markets right now. Inhie yes, aussie shares the spotlight. We are seeing losses off more than 1 as financials are weighing the most on the benchmark but we are seeing gold producers climb in sydney as bullion is headed for the best year since 2010 in the face of dollar weakness so lets flip the board to check in on aussie bonds which are under pressure ahead of chinese pmi, due in half an hour. Youre seeing a steepening of the aussie yield curve with a 10 year yield rising by nine basis points. Despite the backup we see in yields, the three year rate is set for the biggest annual drop since 2011 as equities have had a good run in 2019, jumping to show you the picture. Global stocks ready to end the decade with a bang. Resurgent optimism around tech certainly helping this picture, and that has helped benchmarks in the kospi stage a comeback. Consumer demand has weighed on inflation. Data from south korea showing inflation in december was rightly better than the cast. Cpi for 20 still looking lackluster, coming in at the weakest on record. Two rate cuts by the bok this year have done little to stoke prices, which are seen hovering around 0 going into 2020. The gradual pickup to 1 , paul. Thanks, sophie. Carlos ghosn has reportedly traveled to lebanon after leaving house arrest in japan. The exact circumstances of this departure are not yet clear. Lets get somewhere with bloomberg angus swiftly. He has gone to beirut but the rest is a bit of a mystery, isnt it . Angus this is an extra ordinary story to end the year with. Carlos ghosn, the former auto itan who was in charge of nissan, renault, mitsubishi alliance, and dramatically arrested in november 2018. He has been under house arrest since april of this year, or at least he was. We know he has turned up in beirut this week. An amazing twist considering the terms of his confinement in tokyo, which were very strict. Designed to prevent that in the country. We do not yet know what his plans are. We have no word from the japanese prosecution or from Carlos Ghosns side. We know he has left and what his next moves are are unclear from here. Shery tell us about his ties with lebanon. A naturalts question. Lebanon is one of the countries where carlos ghosn has citizenship. Family ties, investment, and allies. Tale. N extraordinary when he was held in solitary confinement in tokyo, lebanons ambassador to japan brought him a mattress. They also pushed to get him out of solitary confinement. It is not unnatural he should end up there, and we also understand japan has extradition treaties only with the u. S. And south korea. Its not clear whether he was authorized to be in japan according to some agreement with pan prosecution or whether japan has any way of getting him back if he was not authorized to be there. That carlos ghosn faced a very tough task to clear his name. Wrongdoingst denied of financial misconduct allegations, but history shows a 100 nal charge has almost conviction rate. That is what he was facing. He was due to go on trial this year. Paul i guess we are waiting now to hear from the man himself. Is there any indication he is going to talk, and if so, what would we expect him to say . Angus there is a report that he will make a statement in the coming days. Not clear what he is going to say. Offered calls yet. He has long protested his innocence and he has consistently said he will not face a fair trial in japan. Against that backdrop, we see him turn up in lebanon, an extraordinary tale. Thank you,s whitley, joining us for the latest on carlos ghosn. Kim jongun with positive and offensive measures to bolster his countrys security ahead of his annual new years day speech. Our reporter has been tracking this from seoul. So are we expecting him to mend fences or escalate tensions at this point . According to the north korean state media so far, leading up to kim jonguns new years speech, there have been many north korean government officials issuing statements that point to escalating tension instead of using. Seen from many statements urging the United States to abide by north koreas selfimposed yearend deadline, demanding the donald Trump Administration to come back to the denuclearization talks with a better offer that north korea would find more pleasing. This was actually what started the deadlock between the denuclearization talks between the u. S. And north korea after talks fell through in hanoi. In terms of the future of denuclearization talks with the u. S. , what options does kim have here . It is dissimilar to the one held by the u. S. , right . Is, and that definition of denuclearization in itself was actually one of the biggest contingency points between the u. S. And north korea, and they have failed to agree on how they will define denuclearization and how they will define profit in terms of denuclearizing. The options that kim jongun has, one of them is breaking a moratorium and launching icbms as well as conducting nuclear tests. Another one is conducting tests for a satellite launching. A lot of these tests have been hinted by north koreas state media. They have stated that u. S. Is allowed to launch missiles while north korea has been criticized for such tests. We will have to wait and see on what kim jongun announces to see what next steps north korea will be taking. Shery what have we heard so far from north koreas meetings . Seeing isest we are we are in today three. Kim jongun constantly emphasizing the need to ratchet up efforts to hold up his Economic Development plan. This is a domestic audience that kim jongun has to cater to in order to secure his regime and in a way, legitimize his leadership within north korea. Way could also be another for kim jongun to emphasize to the world, and not just the donald Trump Administration, that they will fend for themselves, and they will stand up for themselves and not feed ever what denuclearization demands without having met their own demands from the u. S. Side. Paul thanks so much for joining us. If you are away from a screen, you can always find indepth analysis and the days big newsmakers on Bloomberg Radio. Now broadcasting live from our studio in hong kong. You can listen via the app, Bloomberg Radio plus, or bloombergradio. Com. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. China and asia are an immense opportunity and will become even more important for supply chains. Bloomberg ate to the new Economy Forum in beijing. Theres some longterm shifts taking place and i think we are getting much more regional in the supply chain. So that you are closer to your customer. I think the emergence of consumer markets in asia, china, and the rest of asia are forcing people to put their supply chains closer to the consumer markets and the longterm shifts in buying patterns in the underlying markets. There is the tactical changes taking place as a consequence of trade tension p or that is definitely happening as well. I would put more emphasis on the longterm shifts rather than the shortterm for tactical changes taking place. I think shifting production closer to the u. S. , great in theory, but in practice, the Production Capacity of china is immense, the logistics capability of china is superb, and it is not to replicate that anywhere else in the world. I think you also have to face reality. China is an extremely efficient and substantial producer. It is hard to shift that overnight. How do you think about adaptation of the companies, especially with consideration of digitalization in the long run . What companies are doing is they are having to constantly adapt and they cannot wait for political resolution. Talking to a midsized corporate in the u. K. About 2. 5 years ago just after the brexit referendum. Aboutsaid how do you feel brexit . He said i cannot control it. I cannot do anything about it. I still have to run my business. I am going to open up new markets to die am going to use the digital platforms available to me and i am going to run my business and the politics will get sorted eventually. I think there is an element of that constantly and supply chains, there is an element of that in managing your businesses. You have to make the decisions today. You have to adapt your business, and you cannot wait for the Bigger Picture to be resolved for you. Companies are tremendously adaptable and they are adapting today to the new circumstances. They are investing heavily in digital. They see it as a massive opportunity to go global cheaper, both as Market Options were also in changing their supply chain, so digital is a transformational aspect for all businesses, whatever your industry is, and Business People are focused on that. But we cannot sit there and wait for the Bigger Picture to get resolved for you. You have got to adapt. Hsbc ceo there. Macaus Gaming Sector may see more pain going ahead. Data may show monthly casino revenue plunged for a third consecutive month. The consumer reporter joins us in hong kong with more analysis. First revenue decline in three years. Is that a sure thing now . What are we expecting . We are expecting that casino. Evenue will drop for 15 that is the highest expectation for this year because in the previous month, the drop has never been double digit. The major reason will be xi jinping visiting macau to celebrate the anniversary of hand over of portugal, so during that time, the policies were tightened and security checks were very serious so many highrollers stayed away from the city. We are seeing pain coming up this month and then it will probably continue in january. Heading into 2020, that is where analysts are hoping for mild improvement. So far, we are only going to see more pain coming up. Paul as we go into 2020, what is the outlook for the gaming industry . Seeing quite many negative sectors of this year continuing, so we will see more regional on petition coming up with them opening resorts in Southeast Asia competing with macau and we are going to continue to see the impact of the lowend chinese economy. Factorse are some good coming in this month with xi jinping announcing some supportive policies for macau such as integrating macau into the greater bay area, which will help macau in the longer term and trade talks coming to some fruition so analysts are all looking at that to bring some good news for macau. Other things that are interesting for 2020, analysts are continuing to see massmarket to drive macau growth, and the segment will continue to drop 4 to 5 next year according to the latest estimate, so they are saying macaus growth story right now relies on the market, unlike in the past. Reporterr consumer joining us from hong kong, and of course, if you missed any part of this conversation, tv is your function. You can watch past interviews and watch us live and dive into the bloomberg securities and functions we talk about. Also become part of the conversation. Send us instant messages during our show. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Commodities are set to end the year at their strong as level since 2016. The bloomberg commodity spot index had a riskon move sweeping markets and the dollar eases. More on the outlook for the new year. We are joined by our asian metals and mining reporter, why have commodities done so well . It is the highest in more than a year. There are a couple of Drivers Behind this. We have seen the prospect of a u. S. China trade deal, which means trade tensions have eased slightly, and number two, the u. S. Recession has dropped. Conditions in china, one of the biggest buyers of commodities, conditions have improved. We have early indicators showing activity in december has ticked up for the first time in eight months. Shery what about the currency . We are now seeing weakness in the dollar. This gtv chart showing the bloomberg dollar index is on track for a very sharp drop in the month of december, so how affect weak dollar conditions for commodities going into 2020 . Krystal going into 2020, yes, the dollar is affected. There are other reasons as well, and it really goes down to the individual commodities. If we look at precious metals, that is a very interesting sector. We have seen palladium rally over 50 this year. Time next year, shortages are expected to persist and expected to go higher. If we look at other commodities, for example, iron ore, that will be a very interesting year. The back of supply disruptions. Next year, supply is expected to come back and a slowdown in china is expected to impact this. We are looking at a drop in iron ore places. Shery what are we seeing in the oil market . It is always about the oversupply, the glut story, not to mention the weak demand we have seen that has been the story in 2019. What will be the story in 2020 . Krystal 2020, for oil, it will be about, like you said, oversupply. One of the other big themes to watch in commodities and the oil market will be iron ore for 2020, which is this regulation that chips have to either use or switch to compliant fuel. We have seen the impact of debt and the freight market. Prices are going to roll over. Lookout. E to keep a that is january 1. Shery thank you so much. Our bloomberg reported joining us from singapore. Thats get a quick check of the latest business flash headlines. Huawei says it will overhaul the executive ranks as Revenue Growth slows on the impact of u. S. Sanctions. Chinas Biggest Technology company missed its internal targets, recording an overall 18 rise in sales this year, down from about 23 in the first half. Eric hsu told employees that the company should brace for a similar hit in 2020 if the white house maintains its sanctions. U. S. Shares surged in trade after the electric vehicle makers fourthquarter Sales Forecast beat some estimates. At one point during the trading day, the shares doubled in value. Analysts say the numbers show room for optimism. Theres plenty of reason for caution due to the companies positions. Shery the maker of rayban sunglasses says it has been the target of a fraud at a factory in thailand. The power struggle continues at its headquarters. The italian french conglomerate says it has begun an investigation and filed complaints in thailand and other jurisdictions. It says it is working to recover the lost funds and employees associated with the incident have been fired. So lets turn back to the markets. Who winds when companies wins when companies by their own shares . One argument is that it is the companys executives coming out on top. Peter coy takes a look. Last year, s p 500 companies bought back a record 806 billion worth of shares. They are on track to buy 740 billion dollars worth, the secondmost ever. One commissioner, robert jackson, had his staff study 385 recent buybacks. They found shares rose by 2. 5 more in the days after a buyback than otherwise would have been expected. They also found that twice as Many Companies have executives sailing in the eight days after buyback announcement as they do on an ordinary day. The value of those executive sales is more than five times higher. When a company buys back shares, it is signaling confidence in its future. When its executive sell shares after setting that message, it seems to some like a legal version of illegal pump and dump stock manipulation. They want the agency to rewrite the worlds the rules. He wants to bar insider sales. The chairman has not agreed although he says he is happy to continue the conversation. Paul hong kong and singapore will close early this new years eve. Sophie is taking a look at what is happening on the last trading day of the year and what is in focus. Sophie here is a snapshot of where we are with 30 stocks city stocks on the hong kong dollar rallying in december. The currencys rally may soften as Interest Rates are expected to soften in the city. Hang seng futures hinting at losses this morning, but after climbing more than 7 in december, the hang seng has been able to avoid a second straight annual decline as concern over the economy and the protests has eased somewhat. He did get the latest data showing the trade picture brightening a little after exports and imports shrank less than forecast in november. We saw hong kong shamans to china rebounding, adding to signs of stabilization. We will get the latest official pmi numbers from china. Consensus is for a small retreat in the manufacturing pmi. That is the line and write on on thist in white chart. We are seeing it potentially remaining in expansionary territory. Businessss confidence improves and Commodity Prices gain. Shery we continue to see a little bit of strength in the offshore yuan for a second consecutive session. A 50 futures on the downside when they closed for hours ago, paul. Paul all right. Still to come, we have j. P. Morgan Asset Managements Global Market strategist, Hannah Anderson, joining us in the next hour, and she will discuss her outlook for 2020. That is it from daybreak asia for the year and the decade. Our markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. Markets china open, next. In shanghai0 a. M. And singapore. Welcome to Bloomberg Markets china open. I am david ingles. We are opening to the last trading session of the decade in hong kong and chinese mainland. Moments from the check on the chinese economy. Pmi numbers do due any time. Reasons for optimism. Peter navarro saying stage one of the u. S. China trade agreement will be signed in early january. David former nissan boss carlos ghosn in lebanon. Fled, aheadaid he of trial on financial misconduct charges. Selina want to bring to china manufacturing pmi data. Coming in better than expected. Onto expansions we saw last month. November we saw the first month of expansions since april. This reflects the turnaround in sentiment with business is excited about the imminent signing of the phase one trade deal. Bloomberg economic said do not get too excited. Challenges continue on the domestic and international front. What are you saying . I further evidence would go back to october when we had data coming from china. Not so much hard data, that does support the narrative. This supports that view as well when you look at the index. Last check it was an eight month high for china. We will continue to track this. Was lower than expectations. In both ways you are getting a mixed bag. Chinese new year things are affected. 2 on yourinted out, 50. Official numbers. Lets get more on this story. Joining us on set is Hannah Anderson, global strategist. Correspondent, enda curran. Say prices were higher in the month, but it does explain the betterment better run in november. There was pressure coming off the export sector, but there are plenty of headwinds. Do not forget the factory crisis. They are increasing the cost of debt servicing. Positive, but a bit to go. Hannah i think we are seeing some signs of stabilization with expectations. Particularly that future forwardlooking component of these pmis. What that is signaling for china overall, a lot of companies have confidence Government Support will continue. They are expecting further easing next year. I think that expectation has been borne out by commentary from state regulators who are continuing to emphasize the importance of small and Medium Enterprises and supporting the private sector. Some expectation of further support is justified. Selina you mentioned the private sector issues. We have seen investment there and the sentiment remains sluggish. Do you expect upside next year . Hannah i do not think necessarily investors should be expecting a turnaround in investment, but probably better financing conditions, making it easier for private enterprises to manage existing expenses. For investors when you look at the broader china situation, you would see more confidence and stability and uplifted spending, out not necessarily a go, go,g environment with speculative bets. Selina help us break down the pmi numbers. This is backwardlooking, but it looks Like Services did not come in as high as expected. Is that a concern . Enda something of a concern, but broadly speaking, they have been holding up somewhat. Perhaps this trade deal will be agreed to heading into the new year. The broader narrative around chinas economy is stabilizing somewhat. Feeling this is as bad as it will get for now. Of panic amongn the sector in china just yet. The big question remains whether or not they can get the trade agreement secured and signed off. The economythe role plays. Foring into a choppy period china. You guys have a checklist. Inflationbs, profit, rates, risks and returns. Including china, which economy you can check almost all of that. Hannah i do not think there is one in 20 checking all the boxes. Checking all the boxes. Growth looks stable in 2020, unified. If the stimulus is borne out, i think overall the returns i am looking for are investors taking more of a risk in assets undervalued so far . In the shortterm investors have justified optimism, particularly if the u. S. Dollar continues to decline or stop increasing. David we had exports out of hong kong yesterday. On the turned a corner economic picture in asia . There was an aspect of frontloading. Deliberately shipping in november to get ahead of the december tariffs. Story is in aia better place. Deal, 1 3 of trade asian exports. Something of ag, stabilization. Not talking about a big rebound either. And Hannah Curran anderson will be staying with us. A couple markets just opened up the top of this hour. Truncated session across most markets in asia. U. S. Futures, china futures, india futures. Goodtly lower, a very december. Three hours from now, malaysia, youre under performer. Taiwan, semiconductors within the export space. Hynekhardware, sp outperforming. The bloomberg dollar index is now down for the year. The dollar index is barely hanging onto gains for 2019. We will leave the dollars the markets there. We have an update of your first word news. Sources tell bloomberg earlier this week former nissan boss carlos ghosn had been under house arrest since april. Japan. D fled ghosn holds both french and lebanese citizenship. He was arrested on charges of financial misconduct. He denies any wrongdoing and says he is a victim of a conspiracy. Career postmates are suing california about an alleged law being unconstitutional. Is for worker protections. Say itd postmates unfairly targets gig economy workers and flexibility. Jongun ahead of his annual new years day speech. Take a new and Nuclear Talks if they do not offer concessions by the years end. Likely to drop opposition to extend the brexit transition past 2020 according to phil hogan. He told the irish times oris johnson is unlikely to honor claims he would rather die in a ditch then extend the brexit timeline. Legislation to deliver britains departure will be debated again in the new year. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Selina still ahead, more on that carlos ghosn story, the former nissan boss said to a fled japan, where he is facing trial for financial misconduct. We are told he is in lebanon. Brexit,he trade war, u. S. Elections. We discuss some of the biggest market risks investors need to factor in and consider as we move into a new year. This is bloomberg. His is bloomberg. Selina you are watching Bloomberg Markets china open. We are a few minutes away from the open and the china and Hong Kong Markets. We will bring up this chart showing passive sentiment leading to the next year. Recession,rs of u. S. China trade war, protests, up 24 i indexes actually and on track for the best year since 2009. 2018 every asset class was a loser, but 2019 was the reverse. Only one benchmark is down. G. At is the hongsen does this bull market have legs . Will it extend to next year and beyond . David and what leads it . That theting to say Global Economy is on track for the slowest year. It has been pretty much the same since the crisis. I want to wrap up the decking. Gold made a comeback, 18 . Best since the start of this decade. Held liftlar recently prices of gold. Lets get a holistic view of what this means. Here with us, j. P. Morgan Asset Management analyst, Hannah Anderson. Hannah everyone has their favorite scenario in which gold is the safe asset for their portfolio. You see a lot of investors taking stock of where things stand. We are in the longest Business Cycle in the u. S. , looking at the end of a decade without a recession, not something investors are used to dealing with. We are not used to dealing with the Global Financial crisis. We have a bear market every 10 years or so. A place where most assets are pretty expensive. Equities, people are questioning how much further they have to run after that stellar 2019 y ear. Investors are worn wondering if gold will be a safety for their portfolio. Personally i think investors want to rethink that. There are very few environments in which gold does well. It is not necessarily the case but in20 wont be, market downturns it is a mixed bag. There is no sure thing when it comes to gold. They are of investors far away from the peak. At other want to look traditional assets. It is nott is. Ikely to pay investors for investors you need protection and income, may be look elsewhere for income and do not turn to gold. It may not be the defensive cushion you think it will be. Selina i want to mark the yuan coming in stronger. Yesterday we saw it stronger, 6. 9762 compared to the estimate. Gold, help us understand, why is gold rallying well . We have fewer fears of global recession, the ending of u. S. China trade tensions. Hannah i think compared to where investors see risk and the outlook, gold is cheaper compared to other defensive assets they could buy. There is a fair amount of demand for gold. Scenariohas their own where they think gold will be the defensive hedge in their portfolios. Some investors are expecting steadier growth and optimism. Expecting inflation in 2020. I do not think we will see it overshoot. But you are seeing some investors watching that outcome. We are seeing greater demand for gold outside major developed markets, which provided a boost to prices. Selina lets talk about conditions that fueled the bond rally over the next decade. Is the next decade going to be tougher for Bond Investors . Hannah i think when you are starting at a really expensive starting point, yes, it is more difficult to make money from assets that are already quite expensive, because you do not have as much room for price appreciation. Downturn, in the next i believe bonds could still be defensive assets. With us, Hannah Anderson from j. P. Morgan Asset Management. We are counting down to the last market open of 2019, of the decade. This is bloomberg. Is is bloomberg. Selina breaking news crossing the terminal. The taiwan dollar strengthen to pass the u. S. Dollar for the first time in 18 months. That is also as we have seen the u. S. Dollar weaken. At the weakest point since the First Quarter of 2018. What do you make of this . David it is bound to happen. Is look at what the yuan doing. Even the ringgit is rallying. What is the other one that did well this year . The thai baht. There we go, strengthened is a better way to put it. Bad luck i guess if you are traveling to taiwan. If you changed your money, hope you did it yesterday. Has traveled to lebanon after leaving house arrest in japan. The exact circumstances of his departure are not clear. A lot of parts of the story are not clear. Stephen engle is here to clarify. Following have been this since the beginning, that shock arrest in tokyo more than a year ago. This is a dramatic turn of events. When i first heard of it, maybe it is a phasesaving move. Facesaving move. We are hearing he did indeed flee. We have to confirm if we hear from him or his lawyers, but we know he arrived in beirut, lebanon. He has french citizenship. He was raised in brazil i believe, brazilian, lebanese, french. Not sure what passport he traveled on. He arrived in a private jet from turkey. He has been under house arrest in tokyo since april. He had been in solitary confinement in japanese prison for a number of months following the november 2018 arrest for alleged financial misconduct. Japanese authorities as well as the u. S. Security and Exchange Commission claimed ghosn violated pay rules regarding his compensation. He has maintained his innocence throughout. Light shone a light on what many say is japans hostage justice system. It was going to play out until an eventual trial. The conviction rate in japan is nearly 100 . Those familiar said carlos ghosn felt he could not get a fair trial in japan. He changed lawyers midstream as well. After changing his lawyer he got out on bail. David probably a dumb question. I would imagine he was not allowed to leave. What happens to the trial now . Stephen that is another big question. David of course he is out . Stephen will he go back is the question. His 9ly the terms of million bail, he must reside in tokyo, cannot travel abroad, needs Court Permission to travel beyond two nights locally, must have security cameras at his front door, has no internet access. It obviously, he was able to leave. Did he leave on a private jet . I am sure he did not fly commercial, he would have been spotted immediately. We are still putting the pieces together at this very minute. Selina thanks so much, stephen engle, our chief north asia correspondent, for giving us the twists and turns of that unexpected story. You are watching Bloomberg Markets china open. Bmocaft Leasing Company buying airbus jets, to be delivered in 2022. They granted an option to take the planes on longterm leases directly. Ctly buy the stock gained more than 1 3 in hong kong. Growth slows on the back of u. S. Sanctions. Chinas Biggest Technology company missed its target, reporting and 18 rise from sales. Therotating chairman said company should brace for similar hits in 2020. [indiscernible] just shifting gears. Mainland, hong kong, a good day. Seller session on the mainland. A reminder, pmi numbers were decent, higher than expectations. Pm did show a pickupis,. Can we get that update . When i checked it was at the lowest level. Still in contraction. It is not correct, though. 47. 2. That is actually not correct. Top left is the data point. We will correct this for you. Want tothe number you Pay Attention to. Hang seng index is doing this. Two bestes index, indices for december. You have your futures pointing down. A very big pop in brokerages on the back of new rules, new listing rules. Laste counting down to the market open. Markets here and singapore will be closing at lunch. Aussie markets closing at 2 00 p. M. Local time. This is bloomberg. Whether youre out here on lte or here on a wifi hotspot, Xfinity Mobile has more coverage to keep you connected to what matters most. Moooo. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. Save up to 400 a year when you switch. Plus, unwrap 250 off our best phones. Click, call or visit a store today. David welcome back. You are walking you are watching Bloomberg Markets china. 40 seconds to the other you are looking at live textures of the oriental tv tower. The Stock Exchange is a block kind. You can about face and head in that direction. It looks like we might get a change in direction. The celebrations are not as big as actual chinese new year. Many of the markets are closed. Mentioned the new security and we saw brokerages jumping up to 10 . When we look at the opening of trading, a mixed picture, not a lot of movement after a great december when it comes to returns and risk asset. Those numbers betterthanexpected for the second consecutive month. I want to take a look at the terminal chart. Ofpite billions of dollars tariffs being slapped on chinese good, the broader economic 2019. Wn, it was a good this is the pmi number. We are working on getting the mainland stock. Tech board was the biggest earner. Almost 40 percent. Still significant gains with the benchmark about 20 . It has been steadily getting stronger. We have seen sentiment improving as we reach this trade deal. Remaining below that seven. We did see a significant jump yesterday after news that they say that the deal is in the bag, but no word from china about when the signing date will be. Details and wehe have questions on the capacity of the chinese economy to buy that amount. Have a look at hong kong. Slightly lower here. That said, i should mention that do not have the hang seng volatility index. Rallies of the year end , it has actually been very good on the mainland, which makes me nervous. Here is the end of the year from hong kong asset. Within your top five, globally. The strongest month against the u. S. Dollar, going back to 2003. Some final thoughts. What do you think the big story believe, next. Obviously we cannot dismiss trade. Investorsthing that will have to keep paying attention to. That we are on track, but as you just mentioned, we have not seen a deal yet. I think investors have been here before. Have the deal fall apart at the last minute. Policymakersse will sign something in january, but it does not solve all of the underlying issues. Many outstanding issues remain. I do not think investors should expect politicians to let live because it is an election year. I think investors need to concentrate on the sending issues, which deal with technology, intellectual Property Rights and competition. It will be an issue that is with us for many years to come. Not really. S, if you have a long run focus. Markets react very quickly. At elections more holistically, what happens in the immediate aftermath. For investors, elections will take a lot of the headlines, especially 2020 in the u. S. Nervous,ake investors but it does not necessarily have portfolio implications. They beuch will impacted by other countries . You have seen qe measures. For fiscal stimulus, that could have a risk to market. I think countries generally do not have that much willingness while it would be positive and would support risk assets, i do not think you see much coming through. Off thee are coming third decade of the century. Investors. Rns from up,this new decade coming can we expect high doubledigit returns . Has that failed . I do not think it has necessarily failed, but they need to adjust your expectation. Has beeny return coming down. You can generate modest and decent returns. ,f you allocate around that if you time it right it is impossible to do, those returnsget that you are used to. More diversification is the way. Hannah anderson, thank you for joining us from hong kong. Peter navarro says they is one will be signed in early january. Separately, they say leo hull will travel to washington to sidon the accord. Bank thisal while selling off one billion movies of 2020 bonds. Aims to flatten the yield curve to ensure better monetary transmission. Up more than 1 . Market remains supported by Income Growth and steady job creation. According to the bloomberg billionaires, the 500 wealthiest people added 1 trillion to their fortune. Almost 6 trillion. Just phases still tops the list. Kylie jenner became the youngest selfmade billionaire this year. She sold a stake in her cosmetic company. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Thank you. Kim jongil and is urging what he calls positive measures to bolster the countrys security ahead of his beach to the nation. Brendan scott is tacking this from singapore. There has been a lot of speculation about what she might say. To we looking at a return fire and fury . Ultimates the question. That neitherhink of them once a return to the fire and. Anxiousm john huston is to force him to move on negotiation. The way ofing in sanction reduction and he needs to increase pressure on the u. S. President , a year where the issident is being challenged a good time for him to do that. We are eagerly awaiting this ech from gigi and paying president jesus paying xi xinping. He has steered away from any direct mention of trade controversy. Year, apeech last general message to the nation on the new year, it is filled with a lot of optimism and hope for the coming year. He mentioned that the nation was facing one of the Biggest Challenges and 100 years. To be looking for any some signs out of the economic data. 2020 is a big year for him. It is a milestone where they will meet all these targets that they set out to meet years ago. David good stuff. Our team leader for us there. Oming up, a surge forecasting sales that than expected. We will pull over, pop the hood and have a look, next. This is bloomberg. David welcome back. Overnight, have a look at what happened to shares. 54 here. Forecast. Han expected alice warned about a need for caution. For more on this, we are joined by our editor to help summarize these results. Quite a reaction there. The first good news is that they were better than expected. Everyone has known that they have had issues with cash. It was a smaller loss than expected or forecast. They jumped 52 or even more in the market. 207 million, which is not enough to offset their deficit. But generally, good news. He was hopeful for the Fourth Quarter sales, Something Like 8000 units. Figures, butood they still have challenges ahead. David they have good forecasts. I would imagine that is why they reacted the way they reacted. But they are running out of money. Issue,e bit of an energy if you are running out of money. They are quite short on details. We will see how that goes. Here are challenges the market is slowing. They have been lowering subsidies, which affect sales. A rather highprofile launch yesterday. Year, yet. Happy despite that massive market reaction, there are many challenges. Cash forot have enough another year. Expecting for how it is going to weather the challenges in the year ahead . It will be a tough one. Tesla is a highprofile rival. It will be producing it is already producing 1000 cars per week. I think they expect to double that, very soon. Tesla is much bigger in terms of market cap. History. It was running and it was struggling to keep up. Alone, but it has issues to iron out. For bringing us the latest. 2020. Looking ahead to stay tuned. This is bloomberg. A quick check of the latest headlines. Mitsubishi Financial Group says it will book an impairment charge of almost 2 million for its controlling stake in indonesia. The need for a charge has been looming ever since the completion of its takeover in april. It triggered they were removed from the index. Talks with itsin online broker. That is according to people close to the deal say it could announce an agreement to buy stake in the coming days or weeks. They had rejected an earlier offer. The maker of rayban sunglasses says it has been the target of a 200 million fraud in a factory in thailand. Conglomeraterench has begun an investigation. It is working to recover the funds. David lets talk more about opportunities ahead. Both present immense opportunity the ceo spoke to bloomberg in beijing. There are some longterm changes taking place. So that you are closer to your customer. I think they are forcing people to put their supply chain closer to the consumer markets. Tactical changes also taking place. That is definitely happening as well. Think shifting production great in the u. S. , theory, but in practice, it is immense. It is hard to replicate anywhere. Lse in the world china is an extremely efficient and substantial producer. About do you think adaptation of the company . Companys are doing, are they have to constantly adapt. And half years ago, after the exit referendum i about thedo you feel exit . I cannot control it or do anything about it. I run my business and i will open up the markets. I will use the digital platforms available to me and i will run my politics my business. Sorteditics will get eventually. Decisionso make the today. You had to adapt your business and you cannot wait for the Bigger Picture to be resolved for you. Companies are tremendously adaptable and they are adapting to the circumstances. They see it as a massive opportunity in the market. These are transformational, whatever your industry may be. People are focused on that. You cannot wait for the Bigger Picture to adapt for you. Look lets briefly have a. I should mention that it has started to lead into rvr. This top index that you see there is up 15 . I imagine part of this has to do rally isprotest and expected to take place into tomorrow. Up. Ssive move u. S. , thef the interest is pushing higher as well. Down about 1 . Light. Are quite a couple of those markets including japan and korea. , you havest part pretty much the asiapacific by lunchtime in hong kong. You have plans, do not break them. Head to the beach, head to the pub, head to bed. Whatever floats your boat. Track forcks are on the best year as we close this decade. The best year of the past decade. It is a super majority, about 70 of the world stocks. They are not trading above the average. Some decent pmi coming out of china. I am not going to be hitting the bars tonight because i will xinpings speech, just like you are. I want to be cap those pmi numbers we broke at the top of the hour. The chinese economy might be reaching the bottom of a slowdown. Expansionary territory for the 50. 2. Utive month at better than expected. This is a backwards looking metric and it captures the termsent of december in of anticipation for this trade deal, recapping the china markets. About. 2 , not much movement, but a good december and a strong return in 2019 for all the mainland market. China of 45 since the start of the year. Our market coverage continues. This is bloomberg. David it is a most 10 00 a. M. In hong kong. Welcome to Bloomberg Markets. Yvonne here are the top stories. Pmi numbers show the economy is still expanding. Bag. De deal is in the yvonne carlos ghosn is said to be abroad. Tough. Kim jongun talks we will get the latest from soul. Seoul. David welcome. It is the last trading session for some markets because some already had theirs yesterday. Been up quite substantially. Oft was showing signs overboughtness. Volumes are very thin today. We had pmi numbers, which we will get to. You had singapore, australia. The story are these wildfires. Check that out