Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

As well. Down 0. 9 . That was expected considering all the liquidity we have seen pumped into chinese mainland markets. The hong kong hang seng well off the lows, very modest losses. Roughly flat on the day. Up near 1 surging, at the moment. As you mentioned, this after losses of 3 in the u. S. Trading session, the worst day in two years. That completely detracted those gains for the index. Lets look at a couple of the risk metrics. Across the fx and commodity riskts, seeing a little, seeing a little bit of tension, a push toward risk. Put it all in perspective. Some major moves in these Asset Classes in the past couple days. The yen having its best day since august. The aussie dollar trading near the lows since 2009. Look at commodities, copper pushing for the upside, representative of Global Growth in the economy. The gains in gold over the past five days starting to temper. 1650 dollars near a troy ounce. Haidi taking a look at a deeper dive, david is in hong kong. What you watching . What is driving a potential recovery . What does the market need to see . Break up answer into three parts. In chinas case, certainly the signals coming out of xi jinping and the pboc that they are here to backstop the economy. Does that add to confidence with these risk assets . That is the shortterm story. The second one and the third point i want to make is when you divvy up what is happening in japan and the rest of the region as well. I mentioned this earlier on the show. Toe on thet your foot of the bed, the initial first second is japan today. They are playing catchup to the pain yesterday. Asia is seeing the lingering 1015 seconds of after you jab your toe on the foot of the bed. It is still there. When you look at measures of expected volatility, even the kospi index, which is relatively unscathed, moving even a little bit higher. Haidi we are seeing some signs of a bottom when it comes to risk. Sustainable, particularly when you look at the bond market and that rally continuing . David it does continue. Big drop10year, yesterday. We are still out about 1. 4 . When you go with what goldman is saying interesting note, as well on top of the fundamental drivers, we could hedgingconvex exacerbating that move down. We could move further lower by about 2035 basis points because people in the Municipal Bond space need to adjust. That is the sort of treasury side of the story. Well, i wantde, as to bring this up and i think we have a chart while chinese equities have moved up as well, it has come at the same time as the value of chinese stocks being shorted. People are jumping on it, people are also putting those hedges in in the u. S. That equities fall further. And of the day for stocks, this comes down to earnings, right . Part of this bearishness is being driven by earnings being hit by coronavirus. David case in point to your question, we had a lot of companies talking about exactly what you just pointed out. United airlines, mastercard, we know the news on apple and iphone sales in january, that is another bid as well. Theave a version of this on screen. What we have done is put together the estimated eps and we have measured that across the different benchmarks from the time that the virus actually hit. What you will see is to a large extent it is china, asia, em that has been hit the worst. Nothing massive. When you look under the hood sectorwise, you get more divergence, but you are seeing it show up more in china, em, more than the s p 500 or europe. It is about asia and it is a more china and em story for now. Haidi dave, thank you. David ingles there with a look at the markets. Lets get to our top story. The number of coronavirus cases worldwide has topped 80,000, sparking fears of a pandemic despite comments from the world health organization. The sudden increase in new cases is certainly very concerning. I have spoken consistently about the need for facts, not fear. Using the word pandemic now does not fit the facts, but it may certainly cause fear. Haidi we have just seen some headlines crossing the bloomberg. Japans nhk reporting a japanese cruise passenger in his 80s has died, the fourth casualty from the diamond princess cruise ship. We are hearing from australias Prime Minister and the us trillion Health Minister saying that the impact of the coronavirus is more significant than the bushfires. Parts of australia have been gripped by the devastating bushfires, but they are saying the lack of tourism arrivals, the number of International Students that have not been able to return to australia as a result of quarantine measures really impacting the economy. We are also hearing that they are concerned about these cases of outbreak in japan, italy, and korea. That is australias chief medical officer speaking. Lets get the latest. I want to bring in tom mackenzie, our beijing correspondent. The fear over this virus has really moved from wuhan to china to the rest of the world. Tom absolutely. The rates and terms of the infections continues to go up. The death rate continues to rise. In europe, the focus remains on italy, where you have at least 50,000 people essentially on lockdown. Large parts of milan and around milan, the Financial Hub for that country, remains in lockdown. Italy has reported six deaths and 200 infections. The European Union also saying that some of the control measures italy has put in place may need to be reprobated. In asia, beyond china, the focus is on south korea, where you now have 900 confirmed cases. The u. S. Has advised citizens to avoid anything but essential travel to south korea. The u. S. Itself has 53 confirmed cases. You have concerns about the middle east, and number of countries reporting infections, not least iran, where you have had at least 8 deaths. Concerns about the global spread of the disease. The head of the who not yet calling it a pandemic, but saying he is very concerned about developments. The definition of pandemic is uncontrollable geographic spread. Haidi we did see a slight uptick when it came to new cases in china. What are we looking at in terms of these numbers . Global investors continue to be confused and somewhat doubtful in some cases over the methodology and what we are seeing in the data. Tom yes, a lot of mixed messages and many would argue lack of transparency when it comes to the data. But if you take it at face value, the top line is that you seem to continue to see this trend of moderating infections in china. An additional 508 cases reported today. That is above what we saw yesterday, 409. Given how infectious this disease is, it does not undermine that we are seeing a moderating trend. An additional 71 deaths, unfortunately. It is important to point out that in terms of the noble people that have been discharged and recovered, you are looking at about 2600 in the last 24 hours or so. The total than in terms of people who have been discharged, about 27,000 here in china. That of course is significant. In terms of what we are hearing from the experts here, there is a concern that as people returned to work and travel restrictions are removed, there may be additional spikes. That is where local officials are keeping their focus. Haidi all right, thank you so much. Tom mackenzie, our china correspondent in beijing. Lets get the first word headlines with su keenan. Thank you very much. We will start with south koreas Consumer Confidence numbers. Consumer confidence has plunged the most in five years. The index dropped to below 100, the largest decline since june 2015, when another type of virus hit the korean economy. The low reading is seen as another reason for the bank of korea to ease policy when it meets thursday. Moving to malaysia, malaysian politics have been thrown into turmoil by the resignation of Prime Minister mahathir mohammed. And94yearold quit dissolved his cabinet after a power struggle over who should be anointed his successor. Promisedosition long to his deputy. Mahathir will stay on as an interim p. M. While he seeks the numbers to form a new government or a new leader emerges. Failing that, there will be a general election. The u. S. Is expected to sign military deals with india later tuesday worth about 3 billion. President trump announced to the agreement at the start of his visit, addressing a crowd. He also reiterated his pledge that the u. S. Would sign a significant trade deal with india, although he gave nate no timeline and he later said he was in no rush. We are in the early stages of discussion toward an incredible trade agreement to reduce barriers of investment between the United States and india. And i am optimistic that working together, the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. Deadlyning to india, clashes erupted in new delhi hours before President Trump arrived for his twoday visit. One policeman and two muslims died as protesters demonstrated for and against Prime Minister modis controversial citizenship law. The new religion based law, which was passed last year, fasts citizenship for indias religious minorities, but excludes muslims. 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. Im su keenan. This is bloomberg. Haidi thank you. Still ahead, political turmoil in malaysia as mahathir quits and succession plans are called into question. Political instability could be the new normal. Coronavirusxt, shocks could bring the fed back to the table. Bumpng out for a trump 2. 0. This is bloomberg. Global equity selloff continues in asia, particularly in japan. Joining us for more analysis from hong kong is our guest from daiwa Capital Markets. Great to have you with us. There is a sense that they coronavirus and the widening impact outside of china is really one of the greatest macro risks for uncertainty that we have had to contend with for some time. Are we seeing the effect in the selloff . Investors and the markets underpricing the potential for economic detriment . Paul that is a really great question and good morning. I think there are a couple of things here. First of all, we have seen markets locally price in quite a bit already. But i think what we have seen is that while on one hand, weve got on one hand, we have hong kong, korea, and china sort of having corrected significantly, there has been a sense that the rest of the world has been somewhat immune. Now, the events overnight have changed that to some degree. That is why we are starting to see a more localized risk off type of event. Haidi does this mean once u. S. Markets recover somewhat, particularly with expectations that this opens up room for the fed to potentially move, does this mean we are basically getting another year where american exceptionalism, king dollar is really still the same . Paul absolutely. One of the recurring questions that i get in my discussions is is there any reason to believe example, equities, for are not going to outperform . Over the very near term, the answer to that is there is no real reason. So long as there is policy firepower in terms of Monetary Policy space. Coronavirust, the opens up a path for the fed to come back to an easing stance, because of the effect on oil. The oil market has taken a hit in particular through a decline in demand in china. This impacts Inflation Expectations very directly in the u. S. That is important for the feds policy reaction function. Unexpected, relative to the guidance given by the fed, even as recently as last month. Haidi in fact, another reason for the american exceptionalism story that you like i want to throw up a chart when it comes to what the betting market is looking at in terms of outcomes for the u. S. Election this year. Another four years of President Trump. This is what you think will happen as well, particularly after the latest developments, the latest debate. Paul when i put out my top surprises for 2020 late last year, one of them was a socalled trump bump version 2. 0. What im referring to is the market anticipating a republican victory and following that, significant fiscal stimulus. This happened in 2016 ahead of the election. And through into 2017. I guess one of the key issues is that is there likely to be any sort of meaningful fiscal stimulus coming through either another round of tax cuts or a sizable Infrastructure Spending deal . Sandersrise in bernie opinion in my increased the probability of a Trump Victory later this year and that is being reflected in those bidding wars. That means that if indeed the republicans win a sweep through the president ial, house, and senate in november of this year, there is really nothing much stopping and more aggressive in 20 to anyone. Now, the markets will not wait until 2021. This may get anticipated somewhere in 2020, but until then, we obviously have some growth shocks. Haidi outside of the u. S. And in fact pertaining more toward asia, talk us through some of your picks. You are underweight china, hong kong, japan. Are you not interested even if there is a pboc put . Paul clearly sort of looking at policy flexibility in china relative to the rest of the region has a bit more, there is no question about that. I think the fiscal deficit based 2. 8 willvious mpc of likely get increased at the next one, when it does take place. Has been talk of a potential delay in the National Peoples congress meeting. There is potential upside risk. If the fed does start to come back to the table and we do see at least guidance of more accommodative Monetary Policy, that will provide cover for the pboc to be a little bit more aggressive on easing Monetary Policy. Because hitherto there has been a concern about undermining the rmd in the context of a trade war. Haidi do you see an opportunity in chinese bonds or asian bonds more broadly, particularly with the moves in treasuries . Paul absolutely. I think some of the highyielding sovereign bonds in the region, whether it be indonesia, india, and also closer to home even in china, i think have caught a bit for very good reasons Global Growth expectations are shifting down. That is being led by the move in treasuries. I think there is a catch up trade in asia. Haidi always great to chat. Paul kitney, thai baht Capital Markets joining us paul kitney, daiwa Capital Markets. Find our quick take landing page. Headlines from the bloomberg newsroom, as well as how specific companies or stocks may be exposed. This is bloomberg. Lets get you the latest business flash headlines. The Coronavirus Spread across the country. Ubs says the drop, which came before the full extent of the outbreak was known, was bigger than usual. Ubs was expecting the number to be worse. Official chinese data shows the Smartphone Market saw a 37 drop in sales as the outbreak led to travel bans and a massive drop in consumption. Is doublingologies down on the folding smartphone. They say it is more durable, has a faster processor, and 3d graphics. The first generation has been sold mostly in china, but this version will not be sold in europe. The price tag will be just over 2700 u. S. Dollars when it goes on sale in march. Southeast asias two biggest ridesharing apps are said to be in talks for a merger. They have been battling over ridehailing, food delivery, and mobile payment services. A merger would create one of the worlds most highly valuable startups. The two sides are said to be far from an agreement. United Airlines Says it is withdrawing its redrawing its fullyear guidance due to the impact of the coronavirus. They said they have seen a 100 drop in your term demand for travel to china nearterm demand for travel to china. United maintains its guidance for First Quarter adjusted earningspershare. Lets take a look at what we are seeing in fx land. The big currency movers of the day. The continued demise of the aussie dollar. Lows trading in 2009. That risk Currency Exposure to china and impact on the domestic economy, with the Prime Minister saying the impact of the coronavirus is bigger than that of the brush fires. Japanese yen taking a bit of a breather. The biggest move in about six months. We are seeing a bit of a decline when it comes to the korean won, as well. The biggest loser, though, in the Asian Session is the indonesian rupee. This is bloomberg. Kong. Is 10 29 in hong im su keenan with the first word headlines. We start with china, which has released its latest data on the coronavirus outbreak. 449 new cases were recorded on monday, bringing chinas total since the upright began to just under 77,700. There were 71 new deaths. 68 were in hubei province, where the outbreak began. Asian markets are following the global selloff as fears grow over the spread of the coronavirus outside china. More than 1200 cases and 20 deaths have now been reported in about 30 countries, with big spikes in italy and south korea. The who says it is too early to call it a pandemic yet, but countries should be prepared. The sudden increase in new cases is certainly very concerning. I have spoken consistently about the need for facts, not fear. Using the word pandemic now does not fit the facts, but it may certainly cause fear. Su Harvey Weinstein has been convicted of rape and sexual assault. The verdict in new york came more than two years after allegations against the hollywood producer sparked the metoo movement. The 67yearold Harvey Weinstein was acquitted of the most serious charge, which carried a life sentence. He was taken into custody and then to hospital after the verdict was read out. Sentencing is on march 11. We were disappointed. We knew we came in and we were down 350 the day we started the trial. The jurors came in knowing everything they could know about the case. We could not find a juror that had never heard of Harvey Weinstein. This is the age of empowerment of women. And you cannot intimidate them anymore. Because women will not be silenced. They will speak up, they will have their voice, they will and to be subjected to your small army of Defense Attorneys crossexamining them attempting to discredit them, andliate them, shame them, they will still stand in their truth. Sayand in germany, police amanda liberally rammed his car into a crowd at a parade a man deliberately rammed his car into a crowd at a parade in a town south of frankfurt. The driver was arrested and is being investigated on suspicion of attempted homicide. The incident happened days after an extremist shot and killed nine people in another town just outside frankfurt. 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. Keenan, this is bloomberg. Haidi a quick look at markets. We are now joined by our across asset reporter. How much conviction are we seeing behind what is going on in markets at the moment . Sarah for one measure of conviction, we can look at trading volumes, which have been extremely tight. Even as we look across the asiapacific region, the nikkei 225, on average, 88 above the average over the past 30 days for trading volume. It is not just in the asiapacific region, where we are seeing excreting extremely high trading volumes. In the u. S. Session, we saw major volumes. 10. 5 billion shares traded hands, almost on par during quadruple witching periods. Another measure you can look at. Just to sheer amount of shorts. The value around the chinese stock market, almost toward 15 billion. That is a record. Thatalue surrounding those believe the chinese stock market is due for further losses is at record highs, so that does show you that conviction is pretty strong right now. Haidi and to be fair, we have seen other assets in the market signaling for some time. Is this just capitulation from stocks . Sarah you could certainly make that argument. Ive heard from a few investors that yes this is very much overdue, but not just because of the runup we have seen in stocks, but because of the disparity we have seen between the equity market and the likes of the commodity market in particular, the bond market. You can say there are Different Reasons as to why bond yields are so depressed or a different explanation, but the reality has been that there has been a belief that the bond market has had a much more dire outlook on the Economic Outlook then have stocks. You look at the 10year treasury yield. Currently trading at 1. 4 . Yesterday, overnight, we did see it reach as low as 1. 3 5 . That is just a hair shy of record lows. What investors are saying is that it is just about time that stock markets became more pessimistic and started to align more so with what the bond market had been laying out. Haidi at the end of the day, it is about earnings. What are we hearing about profits and revenues playing into sentiment right now . Sarah absolutely. Stockmarkets follow the fundamentals. That includes corporate profits. We have heard a couple more Companies Come out and either withdraw their guidance, say they will not meet First Quarter revenue guidance, whether that is united airlines. Also whether that is the likes of other companies. We heard from apple in the past. When you look at the u. S. , sure we had a nice reporting season for the fourth quarter, but First Quarter no looking for declines in corporate profits. Look at this chart. It is not just the u. S. , it is across the globe. Especially in asia. The blue line at the top is analysts estimates for health care. We have seen that trend higher as you might expect from all of the sectors that you might expect that to happen to. To the downside, we have seen some major earnings cuts across different regions, particularly energy. That has been the worst energy of the stock market we have seen. We will have to see if it goes further. It is difficult for companies to come out and give a dollar forecast, a true forecast, to make a true prediction about what we are going to see happen to the numbers that have been guided. No one is really certain what the fallout of the coronavirus is truly going to look like at the end. Haidi so much uncertainty still. A long simmering power struggle in malaysia has boiled over with the resignation of Prime Minister mahathir mohamad. Lets bring in the director of riskegy at a political consultancy group. Thank you so much for coming in with us. Was it surprising, the latest Dramatic Development . Was it a strategic move for mahathir . Well, it was a very bold and unexpected move by the Prime Minister yesterday. Both resigning as leader of government, as Prime Minister, and also chairman of his political party. Strategice read as a retreat, as well, for the Prime Minister to stay above the fray. I need to point out that dr. Mahathir is still a member of parliament. Now he has been appointed as interim Prime Minister until a new government is formed and a new Prime Minister is appointed. Having said that, dr. Mahathir remains as a member of parliament and he can still technically be in the running as Prime Minister, if his supporters command the majority in malaysian parliament. Of course, the race is wide open. Of 222 to form a government in malaysia. As of now, it is still very much wide open. Haidi it is wide open, but im wondering what you expect as the most likely scenario as this is a country that heads to the polls. R garners enough support or if mahathir is ultimately successful here . I think everyone is talking to everyone. There are closeddoor meetings of different political parties. A, we see that mr. And mark anwar and his party also talking to different parties. We have seen confirmation that haveast two parties supported the leadership of dr. Mahathir if they get the numbers. Would want to see a swift and conclusive closure to this, but i dont think clarity can really begin until the later part of the week. Everyone is still talking at the moment, as we speak. There are closeddoor meetings. People are going to see the interim Prime Minister, dr. Mahathir, in his residence. A lot of jockeying around. And what the final outcome is is yet to be determined and, at this point, it still lacks clarity. Haidi and what is interesting is looking at the market reaction, how investors feel about this, we had the end to run,orlds longest bull with malaysia entering a bear market this political upheaval. We are also seeing question marks about the Economic Outlook for malaysia. There is rising Downside Risk to malaysia and the Growth Outlook there. We have seen reaction in the and policyhe racial divisiveness in malaysia and the impact on the economy and talent in the country in particular. Yes, you are absolutely right. This whole Political Development comes against to the background of a weaker than expected Economic Growth in 2019. It also comes with the outbreak of covid19. We were expecting a stimulus package had these developments not unfolded. The stimulus package was supposed to be announced on february 27 and this now looks like it is going to be delayed, given that there is no longer a cabinet when the Prime Minister tendered his resignation. Of course, the week Economic Growth is the one issue weak Economic Growth is the one issue and whoever gets into power in this coming round has their job cut out for them. Economic growth and unemployment is a major issue. And of course there is a fear that if the new government is formed is not inclusive enough, if the representation of different ethnicities and different geographies in malaysia are not taken into consideration, what will happen to the stability of the malaysian government moving forward . The longer this drags, the market hates uncertainty the longer it drags, i dont know how much more the market will tolerate this. , the index was down by 2. 7 . Out onlion were wiped the market. The longer it drags outcome of the more uncertain things become, the greater political risk, instability there will be. Of course, in all this, it goes to show that stability, which is always the price asset of malaysia and the Investment Community looking into malaysia is no longer going to be the case. If it continues to happen of course, this is understandable that it is part and parcel of coalition politics, but then again this is something unprecedented in malaysia. Whether this will be the new allal is what we are waiting and seeing. We will have to leave it there. Director of strategy at kra group, a political consultancy, talking about the turmoil in malaysian politics. Flagging Downside Risk to the malaysian economy and saying they will be assessing revising their outlook for malaysia in the coming weeks. Coming up next, President Trump announces a 3 billion deal with india and hints at a trade agreement. We find out what is on the agenda for day 2 of the trumpmodi visit. This is bloomberg. The u. S. Is expected to sign military deals worth around 3 billion with india later on tuesday. President trump announced of the agreement at the start of his twoday visit and reiterated his pledge of a significant trade deal. We are in thep early stages of discussion for an incredible trade agreement to reduce barriers of investment between the United States and india and i am optimistic that working together, the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. More from ouret government editor, who joins us out of new delhi. Great to have you. Looking ahead to this visit, we were kind of managing expectations. There would be a lot of pomp and ceremony we have seen that. Militaryhe take on the aspect of the deal . The deal certainly was not a surprise and it is certainly a significant deal, but it is not the major hit they were after. It was flagged last week in new delhi and it was flagged out of washington, as well. What it does signal is that two nations are committed to forging closer defense ties and this definitely takes them a step in the right direction. Warning whenere a it comes to trade sentiment then . Ruth im not sure. That you would call it a warming. Trump just said, as you heard, that he is committed to forging a trade deal with india, but then later yesterday, he told journalists that he was in no rush to complete a trade deal. Indeed, he has indicated that it might come after the u. S. Election. India has a very unpredictable tax regime and there is a view what is moving in a much more protectionist direction. This is even as Prime Minister Narendra Modi seeks to attract more investment Foreign Investment to india. It is proving difficult for them to find Common Ground on trade at the moment. Haidi this visit was seen as a welcome distraction for Narendra Modi, as he has dealt with all of these protests over his controversial citizenship law. Even as trump has been in india, we have seen new violent protests in delhi. Ruth thats right. Deadly clashes broke out yesterday. Police were trying to contain the protests with tear gas and at least one policeman was killed in that violence. They imposed curfewlike restrictions in parts of delhi to deal with the unrest. We know President Trump was planning to raise the issue of religious freedom with the Prime Minister and these clashes will only serve to highlight the growing tensions over the law. You have to remember, from day one, india has insisted this is an internal matter and modi is unlikely to be influenced one way or the other by any intervention from the u. S. Government editor there in new delhi, ruth, thank you so much for your time. We are counting down to the opening of the session in india. Lets get over to our reporter standing by in mumbai. How is the trade today given that we do have the pomp and ceremony and pageantry of the state visit by President Trump . Even that left aside, it is not having much of a reflection on the equity markets. What has been happening on the updates and the coronavirus, that has been the impact on the indian equity markets. The nifty 50 closed below. There could be a bounce in todays session. T could also be [indiscernible] the structure of the market is extremely weak. The rest of the market is weaker. An important watch on the banks. The private sector banks, the Public Sector banks, all of them will be in focus. The next level on the downside to watch for will be the budget. It is still about 200 points away. If the tensions with regard to the coronavirus continue, you could see that level coming about pretty soon. Haidi all right. A look at the market open. We are getting more reports out of south korea, the country reporting a 9th coronavirus related death, according to their state news agency. This coming is confirmed cases areove it covid19 coming up to almost 900 cases as of today. Large parts of these affected areas in the country are on lockdown and struggling with containment measures. The Foreign Ministry warning against nonessential travel to south korean locations. Reporting that ninth coronavirus death. Hong kong is called to account after months of political unrest we willal shocks be discussing the hong kong budget outlook next. This is bloomberg. All right, we are getting some of the breaking lines across the bloomberg. Economic Downside Seen in vietnam. Revising down the 2020 gdp forecast to 6. 3 . At the same time, we are also seeing coronavirus and the Economic Impact play out with Singapore Air sia, saying it is freezing hiring amid the coronavirus concern. That is according to the times. That stock. On airlines have been some of the hardest hit. Than 140s more billion reserve will be in focus when it unveils its budget. The economy in recession, another slump predicted this year. Lets get over to our asian across asset reporter. Theyey consideration as prepare this latest budget. Theertainly for most is expectation that the budget is going to see the first deficit for hong kong in more than 15 in thegoing back to 2004 aftermath of the sars crisis. Has beene hand, chan tempering dictation for this budget, warning about longterm affordability with all of the extra spending measures they have been implementing alongside their recurring spending, as well. On the other hand, as economists have told me, you dont necessarily want to be seen as a government that does too little. Singapore recently announced to their own budget which includes aggressive measures to address the virus issue. So, hong kong faces pressures on both ends in that sense. Haidi there has been a lot of talk about this controversial handout. What is some of the criticism and what are the alternatives that are being supported . Certainly, the criticism for the 10,000 handout is that it will cost quite a bit of money. It is estimated that it would add about 70 billion hong kong dollars in hong kong spending to implement that cash handout to all permanent residents in hong kong 18 or older. Some alternatives, it was suggested that instead of a straight cash handout they offer an electronic spending voucher. This will ensure that people will not hang onto that cash and save it and they will use it to spend. Itemssly also, recurring that we have been seeing in recent budgets are likely on the table as well. We have seen regular oneoff tax breaks and some spending addressing hong kongs technology initiatives, as well as looking forward to possible addressing of longerterm issues , such as the lack of public housing. There are plenty of things that are possibly on the table and that we may be watching out for tomorrow. Haidi what else are you looking for in this budget . Eric i think it will be interesting to see if they will add any kind of broader spending. With the stimulus and the virus spending we have seen over the past six months, over the past year has been focused on low affectedmilies, those by political unrest and the virus shut down. We will be expecting and hoping to see some broader spending measures that are addressing some of those groups that have maybe fallen through the cracks so far. That is something that economists have mentioned to me in reporting this, as well, that they have been looking for something that is a little broader. Haidi all right. Thank you so much for that. Lets check in on the global bond market rally. We saw these cases of coronavirus outside china sending that surge to safe havens, starting with the rally in u. S. Treasuries. Heavy volumes in overnight sessions. We are starting to see the nascent beginning of a bond market rally in china. Watching south korean 10year yields. Threeyear yields likely to fall to record lows as we get the virus threat. Expectations that the bank of korea will have to step in, as well as the dip in Consumer Confidence. We are also looking at another record low for the aussie 10year yield. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] almost 11 00 in singapore. I am haslinda amen. Haslinda amin. Paul here are the top stories. Asiaarket selloff eases in as governments step up measures to avoid a pandemic. Singapores Investment Fund manages to take pay cuts amid the coronavirus outbreak. And primeident trump minister modi sitting down to make a deal. This is Bloomberg Markets asia. Haslinda asian stocks carrying through the global selloff. Sarah, pan getting smacked. Japan is getting smacked. Sarah we knew that there would be a catch, but the extent of it is quite eyepopping. Falling to the lowest levels since october. The Asian Pacific is also trading at the lowest level since october. We see a mixed picture. Is tradingkospi higher. Also, stocks in Mainland China falling down more than 1. 5 , bringing those declines from the highs we saw earlier in the year to roughly 3 or so. Strength is seeing in s p 500 futures. This after what was the worst day since that episode two years ago. Offthose yeartodate gains. I do want to show you some stocks performing well today. These are your best performing stocks in the index on a points basis. You will notice it with tencent, samsung electronics, all Technology Companies and all stocks relatively hard as we have been dealing with the spreading coronavirus. Seeing a little bit of a rebound today. Stocks higher. This after japan said they will will try to use their drug to treat the coronavirus. Thank you for paul thank you for joining us. Lets go to david in glace in hong kong lets go to david in hong kong. How sustainable is this . Big losers of the are seeing quite a bit. Take japan out of the equation for the moment. Look one level below the hood, the korean markets for example were quite bad yesterday. You are also seeing, at the same remaining at or moving higher. We have seen the bottom of the market. Will consider a primary factor for these markets in the coming days. On the chinese market, i want to mention. Youre getting a lot of the health care as well. The thing. As the equity market moves up as well, the value of chinese stock being shorted come as of yesterday it was at a record high. The fear of mess missing out. Haslinda in the end, it will be about earnings. That the surprising outlook appears grim. Absolutely. We had a couple of examples coming out. Just very recently in the last hour or so, they were reporting on hiring their. Change in the entering expectations from the time that the virus hit about five or six weeks ago. What we have seen so far, they are limited on a short basis with all the shared constituents. Europe and u. S. Are largely unscathed. You have cyclical sectors. Expectations. Is what we are looking at as well. Earnings will be the big story in the weeks ahead. Paul lets look at south as well. How is that playing out across markets . David malaysia is a good story to note. The equity markets into the bear market yesterday. It has pushed it over the edge. Some lines on malaysia. That itorts suggest might get pushed back. Thailand entered the bear market yesterday. Case, the 10 year is either on the verge, if not already falling for the very first time. Out from theed malaysian market in one day, yesterday. David, thank you so much for that. The number of coronavirus cases comments fromite the world health organization. The sudden increase in new cases is certainly very concerning. I have spoken consistently about the need for fact, not fear. Now does word pandemic not fit the facts, but it may cause fear. Us. Inda yvonne mann joins it feels like this burst we are seeing is sparking concerned that this could actually start a second wave or a repeat in the epidemic. In south korea, we saw another spike in the cases bringing it to 893 cases. This surpasses what japans numbers were, if you include the cases on the cruise ship. More than a dozen countries issuing tighter restrictions for people traveling from stopped from south korea. Level at three, which is the highest and matching what they gave to china. , we saw a spike in the cases. You had the most prosperous in a virtualrth lockdown and this virus threatening to push an already weak economy into a recession. Adding to the concerns are a lot of the cases are happening in hospitals. They do not know why or how this disease arrived in italy in the first place. Saw iran reporting at least 12 official deaths and we are seeing cases out of afghanistan and kuwait. Uptick in china. What can we glean from the latest numbers . Yvonne we are seeing more signs of stabilization. Outside ofe focus is china because we were acting these numbers to keep going lower. Who of thism the being a pandemic. Cases outside of china remain relatively small. They are very different in each country, depending on how you look at it. Be aere a potential to pandemic . Absolutely, but at this point, they do not see that yet. Hasdirector general consistently backed china, despite seeing evidence that the government has been slow to atct and silenced scientists home. It seems that they are engaging with this diplomatic dance, which is very sensitive to negative comments. They are one of the biggest financial supporters of countries across africa. The director general used to be the ethiopian Health Minister. It is a complicated task and a thankless job as well. Haslinda not many people agree with the assessment of the who at the moment. We had a decision to postpone. What are the implications . Yvonne it seems that is more about the symbolism than anything. We thought they would have to reevaluate this event being postponed. They will be focused on maintaining the measures than going through with this given the safety of the people. Not have much impact because they will still later on they will decide this is not a cancellation but perhaps at a later date. It is a meeting that has gathered to talk about the growth target and whether we will see that language this year. Those questions may be further down the road. Paul thank you so much for joining us. Lets get to breaking news now. A Pharmaceutical Company is near a 1. 6 billion settlement in the opioid epidemic. One of the largest opioid makers in the u. S. Anotherlunged following report from the wall street journal. In on the first word news with su keenan. Freezelementing a firm to support singapores Community Amid the coronavirus outbreak. Management to take voluntary pay cuts for a year and slashing bonuses. The money saved will be used for staff volunteer initiatives. South koreas Consumer Confidence has plunged the most in five years. The index dropped a low 100 in its largest decline when another type of coronavirus that led to respiratory syndrome symptoms hit. To malaysian politics. Politics have been thrown into turmoil by the resignation of the Prime Minister. Dissolve theld cabinet after a power struggle. A position long promised to his deputy. Interim primen as minister as he forms a new government or a new leader emerges. Thatank of israel has held , keeping the benchmark at a quarter of 1 . Inflation is likely to fall below zero in the coming months. They will maintain a policy on foreign currency purchases. Saying the outbreak raises questions about future economic activity. 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. Im su keenan and this is bloomberg. Haslinda thank you so much for that. Still plenty more to come. Missing estimates. Paul first, investing in south asia. As the opportunity global stocks selloff continues. Paul lets check in on what is happening in the china markets today. A risk off with a capital r. Index now declining. Weaker by similar amounts. Chinese stocks are leading the declines. Good one. Global stock gains for the year is continuing in asia today amid growing can learn about the spread of the coronavirus. Joining us on the line from hong kong. It was just last week when apple came out with warnings. Isismissed it because it about korea or italy . When we look into equity markets in general, it has been under price when it comes to this risk. Everybody looks at the coronavirus today as looking back at what happened. When we look back at how things , i thinklded right now this is obviously a much bigger risk that people need to be focusing on. That chinese Growth Numbers will be down by 1. 8 to 1. 9 percent and global gdp could have a downward turn for 2020. In terms of the equity market, at the beginning of the year, everyone, including us had in inflationary theme in mind. This is definitely going to be a more delayed theme towards the second half or the end of the year, as opposed to now. Haslinda has your base Case Scenario changed at all . Because weobviously are expecting the First Quarter to be weaker, but it depends on how we expect the subsequent quarters to rebound or offset the weakness in the First Quarter when it comes to not just the economic side but when we look into the earnings picture as well. Conviction as our far as this progress environment. In terms of the underlying theme , we like parts of asia. Those have not changed that much, but it is a tough time right now to be risk on. We expect that to be a more viable strategy down the road. If we talk about the hang seng, only off by about. 4 . Bloomberg,a look at the lowest since 2004. You are looking for opportunities, do you look at hong kong or are there too many problems right now . We are still avoiding hong kong. , but in undervalued market the concerns are still there and there is no nearterm resolutions in terms of how the government will induce the greater sentiment into the city. Strategyour investment is to go for quality. That means we are not going for cheap markets. Quality,icking with decent Earnings Growth momentum. The likes of u. S. Equities remain a consensus. That is where we are sticking with much of our allocations. Paul the government does give us an opportunity to do something soon with the budget do. Do you expect anything to change your opinion . Orso far, the budget estimation it will be a angeted response as well and aggregate way of boosting the economy. The numbers that come up, 40 billion is the number that analysts are expecting in terms of the fiscal target. That is still quite small. We look at thousand three, the size of the gdp number at that time, the response was also around 40 billion. We need to be expecting a bigger number to compensate for the loss of tourism and retail. Yes, i think the budget cut could help a bit, but we are avoiding this market as a whole. Haslinda would you say that indonesia is a sweet spot . Been a year. Beginning, when we have the trade war before, it was less attached to the Global Supply chain, but in general, indonesia is at a sweet spot. It is actually much less versus the likes of north asia and even in thailand and malaysia. Becomet that real rates a very important story when it comes to investors trying to get into income. We let the local currency bond play inthe safe haven asia, as opposed to north asia, which we still like, but it is more of a secondstory. Haslinda thank you so much for your insight today. Plenty more to come. This is bloomberg. Haslinda lets do a quick check of the latest is this flash headlines. A stake in credential. Ther 5 of shares to become second used shareholder. , there hasthe deal been no response yet from the insurer, but they want the company to expand in china. Is buying a website. Billion. Ing 7. 1 free Credit Scores and other financial services, such as applying for credit cards or applying for auto loans. To 20 from 2018. Afterda hp shares jumped saying it will return more to shareholders after a takeover. Buybackn to boost share from 5 billion. It will raise its costcutting. Rogram by 2022 it would reach out to xerox on its own terms. Up, the new head of discussing its mists. Also, the impact of the coronavirus. A check of the markets as well. Stay with us. This is bloomberg. We are in the middle of the trading day. 8 . Ntly up by news out of the company. Plans amid the virus concern. They expect passenger load for 2020 to be at about 84 . Up. 8 . Lets get first word headlines with su keenan. Su we start with responses to the virus. Wagementing a firmwide freeze with the intention of using the money for singapores Community Amid the coronavirus outbreak. Alsonvestment firm is asking Senior Management to take voluntary pay cuts for a year and alshing their bonuses. Slashing their bonuses. The u. S. Is expected to sign military deals worth around 3 billion in india later tuesday. President trump announced the agreement at the start of his twoday visit. Reiterated his pledge that the u. S. Would sign a significant trade deal with india, although he gave no timeline and later said he was in no rush. We are in the early stages of an incredible trade agreement to reduce barriers of investment between the United States and india, and i am optimistic that working together, the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. Su deadly clashes erupted in new delhi just hours before President Trump arrived there for his visit to india. One police man and two muslims died as protesters demonstrated for and against Prime Minister modis controversial citizenship law. The new religionbased law was passed last year fast tracked passage for religious minorities but excludes muslims. Kobe bryants widow is suing the owner of the helicopter which crashed, killing the retired basketball star, their 13yearold daughter, and seven others. She is seeking damages from island express helicopters for negligence. The lawsuit claims the pilot was not licensed to fly in cloudy conditions. Reduced visibility is thought to have contributed to the crash. 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. Im su keenan. This is bloomberg. Haslinda thank you so much for that. Lets get back to markets and take a closer look. We are joined now by Sarah Ponczek in new york. How much convection is there . Sarah it is certainly a nervous market. Still very much uncertainty hanging over the market. Conviction, you can look at trading volumes. We see extremely high trading volumes across the asiapacific region at the moment. If you were to look at the nikkei or csi 300, shanghai composite, all seeing volume at above. 0 points trading volumes in the United States with 10. 5 million shares trading hands. That compares to an average of 7 billion over the past year. The total value of surrounding shorts on chinese stocks. Here approaching 15 billion. That is a record high for the amount of people going into betting against a further rise in the chinese stock market. That set a record high. Are stocks finally capitulating . Sarah that is an argument that could be made. A couple investors i have spoken with about why we have seen this sudden reversal, this sudden selloff across global stocks while we had been seeing over the past couple days some gains being made. Some are pointing to the bond market. 10 year benchmark treasury yields falling as low as 130 overnight. That is a fair away from record hair away from record lows. The bond market has a much more dire view on the global economy. It has been preaching this all along but the stock market has been not been taking that into account. Now the argument is being made that stocks are catching down to the bond market, and we could likely see further selloff. Latest inwhat is the what companies are saying about profits and revenues . Sarah within the last couple hours we have seen a couple more Companies Come out with guidance for the year and say they will not meet revenue guidance. The likes of united airlines, mastercard. This is likely just the start of what we will see. Sure, these are not the First Companies to come out, but the reality is there are many firms around the globe that are not necessarily sure about the coronavirus is truly going to affect their business. It is going to affect the revenues, therefore affect their Profit Margins as well, and profits and earnings at large. What youre looking at is analyst profit forecasts for the asiapacific region. We have seen profit forecasts come down. The white line is energy. That is where we have seen the largest hit. We have seen health care forecasts move to the upside. You might have expected that would be a sector to benefit from this. We wereinto the year expecting to see a recount rebound. Now that has turned to negative territory. Quite the change from just two weeks ago. Haslinda Sarah Ponczek in new york, good stuff. From japan, we have to japanese Prime Ministers of abe speaking in tokyo seen the government has put together a policy on coronavirus measures. He also said it is vital to limit the spread of the virus within japan. The boj earlier from saying they are prepared to move in. But you are wondering how much room they have. Australia listed oil search has reported an 8 fall and annual profits due largely to weaker Energy Prices. Joining me is the companys managing director, keiran wulff. Thank you for joining us. And congratulations, new managing director, but coming to the top job at maybe a challenging time. Keiran the coronavirus has had an impact on all businesses, especially the Energy Industry. We just saw your graph and so the Energy Industry is most affected. So, the uncertainty in the market always affects Energy Prices and you saw that today. Paul the oil price has been suffering. The Energy Sector has been suffering. What is your outlook . When do you see a timeline for things to turn around . Keiran a lot is tied to how quickly the coronavirus can turn around. The reality is the world needs energy and there are markets other than china. I was in japan last week talking to some potential markets, and there is still Strong Demand and expectation to enter that market. To see how long it takes the coronavirus to play itself out. Haslinda of course we are seeing a lot of travel restrictions. Is that restricting talks with asian buyers in any way . Keiran it definitely is. You do not have the flexibility to continue to conduct negotiations as freely as you were able to before. Travelntually enough, restrictions, especially when youre talking about longterm contracts, this estate facetoface meeting. So naturally those discussions have slowed down as a result of travel restrictions. Haslinda have any chinese buyers requested for delays or modified shipments . Point, we doortant not con talk about our contracts. Fact that exxon are in strong discretions discussions to make sure these are longterm relationships and they will be flexible as possible. But at the moment as far as im aware, we have not had any significant movements in oour demand. Paul how about your major project in papa new guinea . Are you confident that expansion can get back on track, and what discussions are you having around that . Keiran at the end of january, discussions, the formal negotiations were suspended. Given the fact that there was a deadline for those negotiations to be completed. The important point there is informal discussions are still its, but the value a serious amount of value and benefits for all parties. Especially with the papa new guinea government. Not having a deadline now allows us time to have informal discussions and to try to bridge the gap between expectations. We are confident that gap can be bridged. Paul do you have a sense that maybe the exxonled side might be prepared to make a few concessions . Keiran it is a matter of understanding and listening to the key issues from both parties to make sure theres a mutually acceptable arrangement for these projects. This is a 30plus year project. We need to make sure the government is totally satisfied with the benefit distribution. Talk about the confidence in being able to move these projects forward. They are the operators of these projects. Our role is more in a facilitating discussion. So people do listen to the concerns of all parties. Haslinda for the expansion, would you consider evelyn down, doubling down on retaining a bigger stake . Keiran it is a good question. They have surprised us on the upside in regard to resources within essential part of expiration, and also we have been drilling this winter season. We have been delighted by the reserve growth in that area and the fact they have been able to move approvals for that project forward. Having said that, we have an indication a while ago we were always going to get equity in the area of 35 . It is still our intention to do so. But certainly the positive results we have seen out of alaska will make us sit back and look at the relative value for our shareholders compared to the alternatives. At this stage it is our intention to continue to sell and divest that effort for the right price for the right customer or party. But you will always look at things on the basis of value. Haslinda i want to go back to the numbers released today. Profit down 8 . Cents. Ds 4. 5 what would it take for turnaround to happen . Keiran if you actually look at the numbers, the numbers are solid. We had a number of oneoff events last year that impacted our numbers. We had a substantial increase in production. When you combine the lower commodity price with a oneoff event where we had a convoy incident. We had a problem with one of the chains for six weeks. And that curtailed production from our oilfield during the period where we focused on the uptake. The fields themselves are performing well. We have had some very Successful Development drilling and lifted production in papa new guinea to about 50 thea 15,000 barrels a day. Forecasts have ability a very solid expectation. We are focused on getting control across the country and using capital efficiency. These are initiatives that will be going we will be taking going forward. Paul keiran wulff, thank you so much. Want to get you some breaking news out of hong kong. Set tos for schools extend beyond easter, or as they call the 10th. The previous extension was march 16. Hong kong schools are now due to remain shut beyond easter. A difficult time indeed for hong kong during the coronavirus. We are counting down to the opening session in india now. Lets get a look at the futures. A risk off day around the region. We will bring you all the details in the moment. This is bloomberg. India has just opened. A steep fall yesterday. How is it looking today . A slight bit of rebound. Seen but so far the trend has been any sort of recovery. It has opened with some gains. Both the Frontline Industries we will be watching for the 200 day moving moving average. Nifty bank is still trading week. Down about 50 points. Be000 is a level we will watching for the downside. Yesterday the market was very weak and the index is seeing some gains in the opening session. Surged 25 index has yesterday. Seeing a bit of cool off in the opening trade. Paul any particular stocks we should be watching out for . The bellwether of the consumption space in india. Has approved board a foundation of a few hundred percent of the could take. They have about 12 existing subsidies where they hold about a 200 stake. Subsidiary can potentially have stacked benefits for the company. You can see the stocks reacting positively. Motors down about 5 after the company informed Stock Exchange due to coronavirus outbreak, their february production will be impacted by as much as 10 . Back home we have seen auto stocks as well as metal stocks correcting because of the coronavirus outbreak. Paul all right. Thank you for joining us. To United States is expected sign a military deal worth about 3 billion within the later tuesday. President trump announced the agreement at the start of his pledgeand reiterated his in a significant trade deal. We are in the early stages of discussion for an incredible trade agreement to reduce barriers of investment between the United States and india, and i am optimistic that working together, the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. Paul lets get some more on this with our government editor. This visit is very big on pomp and ceremony, but the trade deal the president is so optimistic about, how far down the track is that, realistically . Downthink he has kicked it the track until after the u. S. President ial election. He said that last week. And while he was very big on the fact that this trade deal was reporters he told later yesterday he was not in any hurry to complete it. So i think for now the focus of this trip is on the defense deal on those 24 seahawk helicopters and missiles and defense radar that is expected to be signed today. That looks like the one big take away. Know trumputh, we calls india the tariff king. What have they done exactly to draw the u. S. President s ire . Ruth there are signs that india is moving in a more andectionist direction, that is even as parameters their modi travels the world trying to attract more Foreign Investment in india. Officials have been trying to hammer out a modest trade deal which would open india to Agricultural Products and medical devices in return for preferential export status that trump stripped last year. But there has been no breakthrough on that and it does not seem there are signs any side is softening on their demands. Paul we have also seen some violent clashes in delhi over the last 24 hours over indias religiousbased citizenship law. Did that cast a shadow at all . Ruth i think it has. Curfewolice imposed restrictions on parts of the capital in order to try to quell those protests. We saw one police man killed in the protests yesterday, and th eres no indication that the protesters will go off the streets today and not restart the violent clashes. Expected was already to raise the issue of religious freedom with modi in his meetings today. The clashes only serve to highlight the growing tensions throughout india over the law. But we have to remember that india has assisted from day one that this is an internal matter, and it is unlikely to be influenced by anything that President Trump said to Prime Minister modi today. Haslinda ruth pollard, thank you for that. Still to come, political turmoil in malaysia. Succession plans are called into question. This is bloomberg. Haslinda and long simmering power struggle in malaysia has boiled over with the resignation of Prime Minister mahathir. Dan, you cannot help but feel it is a strategic move by mahathir. Dan he is certainly in the driver seat. Whether he planned it that way, he is certainly malaysias crafty is politician for the last few decades, probably ever. So it remains unclear. But what is clear is he is in the driver seat right now. The cabinet has been dismissed so he is basically the whole government right now. Know that the parties were feuding behind the scenes thats spilled out yesterday, all of them have backed him publicly now. Tonight a meeting later about an alliance. The real question is how does that stake out. Does he stay on . Does and war takeover . Take over . Ar the next coalition could look a lot like the previous coalition. That is kind of what we are waiting for. But mahathir is definitely firmly in the drivers seat. A path forere still power or is he running out of allies and options . Sense its still, in a was a stroke of show of strength for him that he left. Left the party with 10 other lawmakers. His faction was smaller than had been anticipated. In that sense it could be seen as a victory for anwar. Whether that remains the case, we will have to see. Things are always fluid in malaysian politics. A lot of horse trading backandforth. A lot of different variables. A lot of people who want power. So, that could always change and anwar has consistently been denied power over the years, even when it seemed likely. But so far it looks like he might emerge as the designated successor for the time being. Whether he will actually take power tonight remains to be seen. We are not getting that indication from the party. He has said he has been betrayed. Who has betrayed him . Mahathir . Azmin . Wheres the betrayal coming from . Unknownsof the big playsnow is what role he in all of this. He told anwar, the finance minister, the earlier coalition partner, that he would not join him. Anwar said he believed him. And were optimistic lately through all the blame on him. Whether he would make this move without mahathir, who knows. So yes, that is a big question and we will try to find out the answer. Haslinda bloombergs managing editor, thank you so much for that. It is a risk off day in asia. Nikkei 225 down a whopping 3 . That is it for Bloomberg Markets asia. This is bloomberg daybreak middle east. Global stocks tumble as the world ride worldwide number of coronavirus cases tops 80,000. Schools in hong kong will remain closed until the end of easter. Says she sees the outbreak as a threat to the u. S. Economy, but not one that justifies any change in Monetary Policy yet. Sign. S. Is expected to Energy Deals Worth around 3 billion with india later. We are live with the latest