Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

A couple of days on the holiday and we are seeing assets catching down, what weve been seeing most of this week. The csi 300 down. 6 . A lot of focus has been on the renminbi. Fixed slightly stronger, but marginally. Perhaps it has limited the volatility. Weve seen implied vol spike for the offshore renminbi. We are seeing a bit of spread between the onshore and offshore. The onshore at 7. 0 632. We are watching hong kong as we slowly return back to normal. Weve heard from carrie lam that they will open gyms, theaters, massage parlors. 123 in hang seng, up points. U. S. Futures, still heading lower and nifty futures. We will see it seems more troubled when it comes to the indian reopened. And theylot of brawls are slapping a huge tax on liquor sales too. Tom lets get more on the Market Action with Mark Cranfield in singapore. The question of the day on the mliv is how important is trade for these assets . 10 investors look past the tensions between beijing and washington . Maher it will be a major question for the next few months as we ramp up the running toward the u. S. Elections. I dont think anybody will be surprised if china becomes a hot button issue for the people in the United States. Of course, it has ramifications for assets around the world. China hasady seen used quite Strong Language to push back against the claims that they started the pandemic in the wrong country. One ofa markets reopen, the places that people will certainly be looking is the dollar yuan exchange rate, chinese equities, and anywhere we have seen higher volatility in the past, so certainly how these assets respond over the next weeks and months is going to be important for Global Markets, and if donald trump does pursue this line, he has theed topix tariffs ultimate punishment against china and it would bring a lot of unexpected shocks to markets which were dealing with the downturn to global growth. It seems the reopening in china is different from what we saw post Chinese New Year where we saw assets actually catch quite down significantly to what we are seeing now. When it comes to renminbi, what are some levels you are watching right now . It seems at this point, most analysts i read say we will not see a huge depreciation. Mark certainly this level of 7. 2 for the dollar against the one has been a focus point for everybody. We got really close to but not long ago and certainly china will probably trying to be trying to make sure the market doesnt get excited about this breaking anytime soon. The fixing today was well below the level the offshore yuan was trading, even though we saw the offshore yuan trade to about 7. 14 when china was closed for its holiday. Quite a disparity between the two and the pboc is trying to rain back in Market Expectations and you will probably see this over the next few days. Fixings,fictions they will try to calm everybody down. What they really avoid at the moment is the market getting excited and china responding with their currency when there is a disconnect between the two countries on the political level. Of course, if the United States actually pursued additional tariffs, the whole picture could change because we did see in 2018 the yuan we can significantly weake when the u. S. Went ahead with moren tariffs. That is something we should watch if the u. S. Wants to add more pain against china. Tom a weaker dollar would presumably be helpful. Weve heard from fed officials in the last 24 hours warning of the Economic Impact getting worse. Does that suggest to you that the fed is prepared to do more . I think the fed have made it quite clear they are not finished. If they have to do more, they can come back. They could increase their bond buying, they could do more measures in terms of helping specific areas of the u. S. Economy. Weve seen this lending to small businesses. Of can find other sectors the u. S. Economy they can lend to directly. They are certainly going to use this expression, whatever it takes. Every central bank in the world seems to be working from the same playbook, fed included. They are all trying to protect their economies, make sure liquidity is plentiful and support asset prices as much as they can because the last thing they need as economies are slowly trying to get back on track, they dont need Financial Markets to be making it worse by having the huge volatility we saw in march. Certainly there is the net result that could be a slight shift out of dollar assets to andr parts of the world, that slight blunting of the Dollar Strength would be good for emerging markets and china would probably benefit, as well. Yvonne all right, that was our mliv Mark Cranfield with his analysis. You can follow more on this story on the markets live blog that is on the bloomberg at mliv. Get the run down in one click and there is commentary, analysis from mark and his expert editors. You can find out what is affecting your investments right now. Lets get to the first word news. U. S. China relations sour over blame for the coronavirus, with beijing turning its fury on President Trumps top diplomat after the white house repeated the infection came from a lab in wuhan, chinese and media unleashed a torrent of criticism on mike pompeo, calling him evil and a liar, and rejected his claims of enormous evidence connecting the virus to a wuhan lab. Malaysia cut its key rate by 50 basis points, the most since 2009. The bank slashed the overnight rate to 2 , saying the outlook remains gloomy. Indonesian growth slowed sharply in the First Quarter, the weakest showing since 2001. An heavier toll is expected in coming months. A new report says indias virus ofs lockdown saw the loss 120 million jobs last month alone. Tom the u. K. Has become the most seriously affected Company Country in europe as far as debt, surpassing italy with 30,000 confirmed fatalities. More pressure on the johnson government, with critics saying he has been slow to respond to the pandemic. The Prime Minister ordered a locked down much later than other European Countries and was slow to begin testing in the early stages of the outbreak. The white house is discussing shutting down the Coronavirus Task force possibly as soon as this month, with Vice President mike pence saying it has achieved its goals. Slowed the u. S. Has spread of infections and the administration is confident it can meet demands for medical resources in the future. He added any decision on the task force would be based on conditions at the time. Next, hong kong is inching toward normalcy with the move to reopen schools and bars, but signs of protests returning may spoil investor sentiment. The former Hong Kong Exchange chairman gives his outlook for the city. This is bloomberg. Yvonne hong kong leader carrie shutteredto reopen schools. Fresh political battles over the future of the city. She raced the number of people allowed to gather from eight to eight from four and said theaters could open friday. We have a former Hong Kong Exchange chairman who led carrie lams Campaign Team in 2017. Always great to have you. It seems the city is but surely getting back to normal. What do you think the new normal looks like and can the economy get back on track . Ronald i think there is a lot , but i thinkround it is going to be a steep climb, particularly when you look at , almostment rates among 50 of the workforce is employed by the smes, so it will be a it might take the better part of 12 months, 18 months, and hopefully the virus doesnt come back in the meantime. Do you think the government is doing enough for those smes . This is a state that doesnt have bankruptcy protection. Which seen some stimulus come into the fray, granting 80,000 for some retailers out there to keep businesses afloat. Do you think it is enough . I think almost 35 billion u. S. Dollar package the government put out has not fully found its way into the economy yet, but as you have secretary finance if thatn has indicated is not enough, they are prepared to come out with more so lets hope we dont need it, but the government, i think, so far has done a good job both in terms of release to the economy as well as controlling the virus and keeping the numbers down. Hong kong people of course played a very Important Role and they had the experience in 2003 maskss, so wearing face and social distancing, washing hands and all of that, is probably ingrained into our dna. Tom it is tom in beijing. What do you think the prospects are of renewed protests and how would you expect the government to respond if people do start going back onto the streets on a regular basis . I think the protests really started last year out of the now abandoned extradition bill, and i think the whole democracy supporters and the politicians seem to have taken advantage of that, but i hope that at the end of the day, common sense will prevail in terms of getting back into the Legislative Council in september this year and really to work for the people. It is one thing fighting for democracy, but another thing if to jobs, economy, that would not be good for the ordinary folks in hong kong. Tom part of the tension is what many see as beijings overreach in hong kong and Beijings Liaison Office saying it isnt accountable to rule 22, preventing central governments from interfering in internal affairs. Is that a correct interpretation of the law . Is the Liaison Office corrects that they can get involved in the internal affairs of hong kong . Ive not looked into it deeply. Speciality, ill put it that way. I think all of us remember from time to time, foreign governments like the u. K. Government or the u. S. Government have made their comments about hong kong, and if they can make comments, then why cant beijing make comments . I find this a bit surprising, seeing we are one china. Ron, speaking with michael the other day, when it comes to mainland tourists coming to hong kong, he is expecting half of what pleased to see. Chinese buyersf coming into the property market. Is this a symbol of hong kongs economic importance dwindling in the eyes of the mainland chinese . Ronald i dont think so. So, simply because if you look in the Global Financial Center Network and e zones, we are probably one of the most important Asian Financial hubs there is. Obviously play a big part, as well, but the japanese entry into the Global Financial network is largely domestic as opposed to International Like we are. Have lots of mainland companies, hong kong companies, as well, overseas Companies Listed on the Hong Kong Exchange, and in terms of that, we havel of over 170 foreign banks in hong kong. The list goes on. Yvonne what are you expecting when it comes to the september elections . What is in store now, do you think, ron . Ronald i think it will be tight. It could well be that the democrats might get a majority, a small majority or the proestablishment might. From what my friends are telling me, it is not a given the democrats would acquire a majority. At the end of the day, even if they do acquire a majority and they try to use all sorts of filibustering techniques to slow things down, they really still to do things like pass the budget, passed laws because that is their function. Their function is not to bring hong kong to a halt. That would be a terrible indictment on democracy. The government is discussing, there have been reports they are looking at reintroducing the National Securities law. Would they be right to do that and will you expect them to be successful if they go down that path . I dont think it will happen in this term because there are only two and half months left on the calendar. I dont imagine they would be able to do the right consultation within this timeframe, but i think under the postegislative council september 2020, they would have to dor almost two years it and that would be the right time to do it. Whether they can get the right numbers, to some extent depends on the election results. Are you concerned about weve been talking a lot about the tensions this reescalation of tensions between beijing and washington over the origins of the virus. Are you concerned that if we get to a situation where the Trump Administration is looking at reimposing tariffs, hong kong is again hit by that and it is another potential headwind for the city . , trade warsously dont do any good. Bute really are no winners, this is an Election Year in the u. S. And during the Election Year, sometimes strange things and unexpected things happen. I hope that common sense will prevail and if mr. Trump gets elected, there would be a new dialogue on the same front, as well as other issues. If a new administration comes in, mr. Biden, the democratic candidate knows china, knows Hong Kong Well and the u. S. China relations importance, so i am cautiously optimistic that postelection, there might be a firmer and clearer path for those two countries. Ron, thank you for your time, for taking time out to speak with us. We are loving the library, by the way. Hong konge former exchange chairman and one time carrie lam Campaign Manager ronald arculli,. This is bloomberg. Tom spotifys ceo is eyeing a slice of the 18 billion radio Advertising Market and spoke about apple opening its platform following in antitrust complaint with the eu. I think first and foremost, this is an ongoing complaint in the European Union at this point, so i cant talk too much about the specifics on this, but obviously longterm, we do expect apple to open up and we are very encouraged about being ase to now finally use siri a way of building invoice support and also being available to build products for apple tv and apple watch, something we havent been able to do until very recently, so i think it is moving in the right direction but we still have many steps to go before we consider this an open and fair platform. Apple has stopped releasing numbers for apple music. Do you think their growth has slowed, perhaps . Cant really speak to what the numbers are. As much asuld be your guests. What we have, and we have said this publicly before, we are two times the size of our nearest competitor, about three times seen engagement that our nearest competitor too and we think those two characteristics mean we should be growing faster. Emily are you surprised apple has not been invaded more in an industry that it dominated for so long . Daniel heres my take. We talk a lot about these Big Tech Companies and we talk a lot about how you can be very good at building these Great Companies come and they truly are phenomenal companies with amazing businesses, but i think there is something about focus. This is something that ive said a long time, that we are unique in the way we are focusing all of our time and attention on this one opportunity, and it is all about bringing audio on to the internet in a big way and moving it off of linear radio and physical formats. Thats what this whole company is focused on and that means thatone is as passionate our mission has a sure way of coming here. Passionate about music, audio, spotify should be the company you want to join. Except, outlook for bonds. This is bloomberg. 10 29 in hong kong and shanghai, 10 29 p. M. In new york. Unemployment rose in new zealand and wage growth slowed in the First Quarter as the covid19 pandemic pushed the economy toward recession. 2. 4ess claims rose to percent, below forecasts. New zealand is bracing for a recession and surging unemployment is a nationwide lockdown force businesses to make workers redundant. Is weighing aank german courts ruling on the Purchase Program and if it is in law. With eu click the bank has three months to respond. It will not stop the Program Immediately and it will not to combat the fallout but it raises questions over how far the ecb can push its monetary stimulus. Meanwhile, the venezuelan president Nicolas Maduro has shown evidence he claims proves american mercenaries have tried to launch a coup. He said u. S. Citizens have been and blamed washington for trying to topple him by force. He blamed the u. S. Although the Trump Administration did not denies involvement and a new report from the International Energy agency says irans Missile Program received record expections last year inspections last year amid increasing criticisms from werengton the inspectors able to verify commitments under the 2015 deal the u. S. Had abandoned. The Trump Administration has imposed stronger sanctions on iran. Global news 24 hours a day, onair and online on quicktake and twitter, powered by more than 2700 journalists and analysts in more than 120. Ountries im Karina Mitchell. This is bloomberg. At markets,ing particularly southeast asia, a mixed bag across the region. Chinese markets are heading slightly lower at the reopened, but we are seeing decent gains in singapore, up close to 1 . A bit of pressure after we saw a rebound yesterday. Several things we are watching for when it comes to singapore, of theseatched some movers, singapore banks reporting. Only the First Time Since 2016 on the credit cuts. After a heated order to shut down. That is one of the big things to look out for in the philippines right now, but looking at metro pacific, those are jumping on the news of the president offering a detente to some of the philippine tycoons after attacking them a couple of months ago. We are not really seeing a clear conviction in these markets today. Lets get some focus on the fixedincome market, in particular. Central banks around the world, we heard from fed officials saying their concerns of the Economic Impact that Central Banks are offering loans to mitigate that impact through an unprecedented range of borrowers to support the economy from the slowdown we are seeing as the result of the coronavirus. Lets get more analysis on the bond markets with jenny do unn. What is your assessment . What stands out to you at the moment from these markets . Good morning. Theou look at valuations of credit markets, the asian highyield, asian highyield is over the years and still around 1000 on the spread and four basis points higher than the u. S. Yield and they are pricing a probability in the year. There have only been two episodes in asia the default raise rate has closed 10 over the past 20 years, one is the asia financial crisis. If you look at highyield in, much of the market has recovered most of what it lost during the recent shocks of march and the yield of the market is back below 5 . That is surprising. The fed, and you rightly point indirectly steering over billion sundar yields etfs. However if you look at the default rate continuing to lincoln with more than 2 of highyield indexes, the Bloomberg Barclays highyield index in april alone. Yes, we can say that on a highyield valuation asian highyield, valuation is cheap, but an economic recovery will be uncertain and there will be longlasting impact of the virus and individual behavior. We remain cautious and selective there. Tom what would you need to seek to shift your focus from Investment Grade to highyield and is part of the world . Well, the thing is, for us to be more comfortable investing more in highyield, we need to see a stabilization of the economic fundamentals, which continues to be challenging at this point in time. The nearterm outlook really depends on the pandemics development, which appears to flatten in most countries, but the more the governments lockdown reaction, which seems to come to an early stage of loosening, perhaps that is partially why the market has been reasonably optimistic lately and if you look at the asset price in the market. The next step is to focus back to the fundamental data. The collapse of Economic Data is we just unprecedented, but believe the structural damage suffered by some of the fastestgrowing sectors of the such asonomy, hospitality, services, aerospace, travel, increasingly great on the longerterm. I think the fx valuations particularly growth assets, the Market Sentiment is largely disconnected from the financial reality. Just look at the performance in april as they came out today. Which seemed high debt levels across all sectors. Hugh are seeing this trend of withonetization of debt not much of a plan for many Central Banks. It doesnt seem like these things will reverse anytime soon, has changed soon. Has this change the investment landscape are you . Jenny this is the interesting thing. Back theledged to ,ackstop has washed away particularly for the higher grade credit. Dollarll without strength, just talking the market up. The Program Announced by Central Banks are not yet in operational leaving the market temporarily vulnerable to shocks. Greater clarity on the programs may may disappoint investors to a degree, i think. Yvonne we are dealing with this inming wall of supply and many different economies of china in particular is one where local governments are expected to sell a record one trillion renminbi of bonds this month. Could this derail the recovery in sovereign debt right now and how should we look into some of the supply issues . The supply issue, lets talk about the offshore supply. , were and what were seeing in other parts of the market, the u. S. Eiji or other ig space. Offshore igall, the supply in asia is manageable and the reason asian ig corporate have kept liquidity and cash on hand to prepare for any days. They dont necessarily have to come to the market. We talk aboutore, the local government, we do think the local government supply will be on the high side. However, at the same time, we believe the pboc has the capacity. Las, china feels engaged and committed to opening up the market. Be sloweds that might down by the pandemic. The trend is there to go into the china onshore market and invest there. To a certain extent, i think it is an issue in asia and china than the rest of the world. Tom we saw the fed setting up the swap lines in the region. What is the dollar situation looking like . Are we still seeing a bit of pressure in dollar shortage in the region . Ronald jenny in march, once the problems in Asian Countries like india, we see the situation has recouped since then, but im less worried we are more worried about the fundamental data that will be announced by these countries rather than the dollar shortage. Yvonne jenny zeng, thank you for joining us, the cohead of asia pacific fixedincome. Crossing mention lines when it comes to the norwegian cruise line. They are pricing their upside 36. 3 million shares, out at 11 each as we learn they secured a 400 Million Investment from the private equity firm l chatterton. They tell us the travel Company Might not survive. Is pricing to the upside, shares at 11 each. Andng up, through sickness death, President Trump wants the u. S. To reopen soon. Details coming up. This is bloomberg. Yvonne President Trump has raised eyebrows as he continues to push for reopening of the u. S. He says americans should begin returning to their everyday lives, even if it leads to more sickness and death from the pandemic. The people arent going to accept it. They wont accept it, and they shouldnt accept it. We have a great country. We cant keep it closed. Ive had doctors say why dont make close it for a couple of years . This is the United States of america and will some people be affected . Yes . Badly, yes. But we have to get our country open and we have to do it soon. Yvonne the president went on to say he is preparing for phase two of the response to the coronavirus. Lets bring our markets coanchor to tell us more. What is the second phase . Rishaad it would include disbanding the White House Task force, including Anthony Fauci and deborah birx. So far, they have been leading the government response to the outbreak. Trump, encouraging americans to think of themselves as warriors as they consider leaving their homes, some seeing the knowledge meant of public reservations about easing restrictions and lockdowns too soon. The white house has consistently expressed frustration over the massive economic downturn caused by covid19. More than 30 million americans out of work. We should have confirmation of that in one to two days as the nonfarm payrolls come out. It is also hurting his bid for a second term and reelection in november. The stats are quite bleak, the United States is the epicenter of the pandemic now, 1. 2 Million People infected and more than 70,000 people have died as a consequence. India is planning to evacuate its nationals and have been hit hard by the economic nosedive in the country. It sounds like an ambitious undertaking. Rishaad as has been labeled as the biggest ever peacetime repatriation exercise in history. In a jets, labor warships mission to bring back thousands of indians stranded abroad. Many have lost their jobs. Only those without any coronavirus symptoms will be allowed to return and millions of indian work in the persian gulf and have been hit by the economic downturn. Plus, many have been falling victim to the perceived antimuslim bias of the modi government. In india, there are moves to ease restrictions after some 40 days of strict and often ignored stayathome orders. The lockdown also meant the closure of liquor stores. Theyve reopened on tuesday, and we had legislation rushed through by the delhi government. S they took pressures they imposed a 70 special corona fee on all sales of alcoholic drinks to stop a rush and then avoid the crowds. Yvonne pretty chaotic scenes. So far, there is only one drug that has been approved to treat covid. How do they get enough supply out now . Onlyad when you are the game in town, the only treatment available, that demand will be humongous a task, even as questions about the medicines ever see have been raised efficacy has been raised. Gilead to manufacture its treatment for covid19, cleared by u. S. Health regulators for use and the company says it has to get it onto the shelves of pharmacies around the world, and as a result, they are discussing this with some of the worlds leading chemical and pharmaceutical Manufacturing Companies about their ability to make this drug for europe and asia the next two and a half years. They are also talking at the moment to producers in india and pakistan about manufacturing for developing nations and how to license the drug in those markets. That is where we are. Thisabouts how good medication is, but we will see how they get it to peoples shelves first. Tom rishaad salamat, in hong kong with a roundup of the latest. Next, will it be a no or yes bank for yes bank . Likely to see losses when it reports quarterly numbers later. We will have the details. This is bloomberg. Yvonne the business flash headlines, the coronavirus cost disney as much as 1. 4 billion last quarter with one billion of that coming from shuttered theme parks alone. Almost every part of its business was hit. Earnings plunged by more than half to . 60 a, well down on estimates of . 86. Dieters were shut to disney movies and advertising revenue on broadcast assets fell. One bright spot, Shanghai Disney reopened monday. Singapore United Overseas Bank reported its First Quarterly profit drop since 2016 as charges tripled and credit costs rose in the coronavirus kosice crisis. As much as 600 million fall while impairments rose to 200 million in a challenging environment. Airbnb is cutting a quarter of its workforce as the coronavirus ravages global. Ravel 1900 staff are affected with the ceo saying the world is living through the most harrowing memory asliving Global Travel comes to a standstill. It airbnb was poised to be the biggest stock listing of the year. It has raised 2 billion in a bid to whether the fallout. Ferrari says it is winning the race against the coronavirus pandemic with demand holding up and full production expected by the end of this week. Workers returned to factory factories monday after they were closed for seven weeks, causing loss production of around 2000 are cars. Ferraris order book remains strong and deliveries in the First Quarter rose by about 5 . Tom yes banks earnings are likely to remain under pressure after its recent bailout. In thets shrink further fourth quarter. Lets get more with indias finance reporter in mumbai. What are the key things you are going to be looking out for when you spank comes through with its numbers yes bank comes through with its numbers later today . What exactly happened to yes bank, yes bank was indias fourth largest privatesector one of thech had biggest bailouts in financial history. Coming to your question, the first important thing being looked at from yes bank results is its asset quality. , indias yesuarter bank, bad loans attributes more than doubled in two months and this was a reason yes Bank Investors did not want to put in because of questions around quality. This will be a factor investors will look at, how the quality stands out in the future. How much you spank will cover loans. Yes bank will cover loans. We would like to look at how yes bank has been able to recover from its loss, which has come down in the past months. We want to see how yes bank has been able to build its confidence back from depositors like you and me. Yvonne what are the areas should we be focused on in particular when it comes to the bailout in march, and what to look out after that . Are they going to have to continue to raise capital . Because the large amount requiresquality rated into the bank. They are looking for more capital, but given the vulnerability of the bank, and the most important factor yes bank would like to build on his because theypace have been focusing on highcost deposits and they will shift and focus on a more sustainable. This would be the biggest factor for them. Steer on howve a the lockdown in india is likely to impact yes bank . Suvashree this is an important question because the Financial Sector has really broken down. 2018 with them shadow banking crisis hitting yes bank the most and that was their downfall in march, so yes bank has been at the center of all the troubles. Yes bank has about 11 of its andsure to shadow lenders 21 in small businesses. Important, and it is vulnerable during the lockdown. Pressure from asset quality, so yes bank that was our India Finance reporter joining us out of mumbai on what to expect with yes bank later today. Lets do a market check, still hovering between gains and losses when it comes to asian but mostly higher. You are seeing continued pressure on chinese stocks today after the return from the holiday. Abouti 300 is lower by. 4 . Singapore is still an outperform or, up 1 . We are watching the likes of the renminbi, certainly seeing quite a bit of strength coming through for the onshore and offshore. The two have narrowed a bit, but the offshore renminbi at 7. 10, we saw a strong fix from the pboc, so policymakers trying to limit some declines. Geopolitical tensions. Tomorrow, we get trade data out of china which will give us some sense of external demand. Plenty more and some great guests coming up. This is bloomberg. Its almost 11 00 in singapore. Im haslinda almond. Laste we are entering the hour of the morning session in hong kong. Coronavirus blame game attention rising again. Back at u. S. Criticism tsonga Trump Administration is lying about the pandemics origin. Haslinda markets are mixed and oil holds its recovery from last month after the plunge. The best optimism from the fed. Is in force lockdowns are boosting you the numbers for video streaming. s rival thisix hour. This is Bloomberg Markets asia. Asia and japan looking mixed. Looking for some kind of fraction. There are jitters. Investors beginning to put a price on the dire Economic Data. That could put a lid on earnings recovery. China reacting for the first time between beijing and washington. Asia may be taking some kind of direction from china. The csi 300 down by half a percent. Only below its 200 moving day average. Chinas southern air china down. Chinas assets have had a slow month. Has been of the meeting starting in two months. The renewed tension with the u. S. The kospi also back from holiday. They are trading up. Samsung higher. Along with other tech shares. South korea fell by easing social distancing measures as it reopens the economy. The asia stride, hong kong lifted by tencent, and bank of china, also trading up this optimism. Hysteria about an economy thats reopening. The Economic Outlook does not bode well. Retail sales slumped 42 . Live. Get the bloomberg u. S. china relations continue to sour over flame for the coronavirus with President Trumps top diplomat. After the white house repeated lap,isease came from a they released the current criticism that secretary of state mike pompeo. He called him a liar and rejected his claim connecting the virus to a wuhan lab. The u. K. Is the most seriously they surpasstry as those in italy with almost 30,000 confirmed fatalities. It adds more pressure on the johnson government with critics saying it has been slow to respond to the pandemic. The Prime Minister said its later than other European Countries, and was slow to begin testing in the early stages of the outbreak. Malaysia cut its key rate by 50 basis points, the most since 2009. They slashed the overnight rate saying the outlook looks gloomy. Indonesia grew sharply. The weakest since 2001. A heavier toll is expected in the coming months. Indias virus lockdown saw the loss of more than 120 million jobs last month. Global news, 24 hours a day, on air, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Stocks in asia are mixed with investors weighing lockdown optimism. Many companies have abandon earnings as they deal with this pandemic. Our next guest said earnings revisions have lagged the rest of the world and not quite bottomed out. Lets bring in James Sullivan head of Equity Research at j. P. Morgan. Always great to have you. Its about optimism on it reopening of the economy, then you get that data, then you have the u. S. And china, where the rhetoric has ramped up a bit as well. Ken starr continue to detach from the fundamental can stock continue to detach from the fundamental . I would change the analogy to tugofwar. What we are focused on in Global Markets is recordsetting expansions of the money supply and overall credit revision on a global basis. Yourgans estimate is that will see over a 17 trillion u. S. Expansion in the global money supply. That is close to 20 of global 4 5 of that has not yet occurred. The amount of liquidity we have seen pumped into the global Financial Markets is only the beginning of the conversation. Down andriving risks overall stock market valuations higher. To your point, we are not seeing that with an earnings revision cycle. Years look several forward and you start to look at tradable contracts, like dividend yield futures, those contracts are estimating that dividends, two years from now, will be 30 lower than estimates this past january. Seeing confidence in the economic revival, even several years out. The markets are reacting off the bat. And thist reopening really unprecedented provision of liquidity by global Central Banks. You mentioned the earnings revisions we have not seen bottoming out yet. I cant even trust the earnings estimates is whats being said. What sort of measure it metrics are you focusing on for any kind of indicators . There are two conversations with investors. One in the shortterm and one longerterm. For the shortterm there is a view that short terms dont matter. What we are seeing as we go through the earnings seasons, stocks beating expectations are seeing positive performance. Stocks missing are seeing the opposite of that. Its clear that investors are trying to use the First Quarter earnings cycle as the first real data gauge that they can place on the amount of data that has been done, as well as potential recovery moving forward. To medium term is hard forecast. Our focus on the structural changes that we expect to see across Global Markets and Certain Industries as we work our way through the process. There are Different Reasons to shorten the longterm off the back of estimates. Primarily off of highfrequency fanatic things that we are having from the country basis. It shows that factories are already in a depression mode. Why shouldnt stocks go down from here . If they do, what kind of dip are we looking at . A great comment. One of the things we are focused on is analyzing as much highfrequency data to understand the reality on the ground. Global Factory Outlet continues to be depressed. The pmi statistics that came out continued to indicate more downside continue to indicate more downside. The data coming out of china is a different picture. Our view in china is that data has gone back to work, however, thats the only place they are going. Theou look at highfrequency data, traffic statistics for large name and cities has gone back to precrisis norms during the work week, but at the weekend they ressed levels. Thats indicative of the conversation going forward. A compelling narrative that once markets reopen, life will go back to normal. If likely that people will be very cautious with where they go. Consumers willt continue to be extremely cautious with what they spend, given the level of Economic Uncertainty and high levels of unemployment. Haslinda speaking of china, we saw sales jumped 20 in april on the year. Suggesting consumers are own g to have their pose lockdown. His auto a sector we should be looking at in china . And what should we be looking at . James its interesting, not are in china, but a lot of different asian markets. Including india, where we see longterm structural demand in the more economical four wheeler or car space. We are seeing a Strong Performance out of stocks specifically targeting the used car segments. As we hinted at. , we do see structural changes moving forward. Something important from an extreme sharing economy to one that moves towards personal ownership. The idea that people will be relatively riskaverse, particularly taking crowded transport systems, and will start to move more towards taxi sharing or their own private , we do think will be an enduring theme as we come out of the situation. Yvonne maybe tell us more about the timeline. You have been looking at the market in different phases. Owu are saying my nwo might not be the time where you look at these things were you rotate out of tech and value stocks. What are you looking at in terms of the timeline . Have developed a reopening index for every market in asia. That index is composed of a wide array of data points. Its not just about travel restrictions, its about eight range of statistics we have tried about a range of statistics we have tried to build in. Is that theer one jpmorgan market reopening index is tracking close to overall stock Market Performance on a country by country basis. It gives us some relief that if we contract that and better understand, that we can call it in country level markets. The other thing that i would say, so far, markets reopen after a peak in overall infection rates. At the moment, markets that are reopening and where we see a level above 50, which would be china, korea, thailand and vietnam, are not seeing secondary infection waves. That is something we will watch closely. One of the reasons you have this lack of earnings uncertainty, one of the reasons people have not been comfortable rotating into deep value cyclicals like financials is exactly that, we dont know what the economic earnings outlook will be on a 24 month basis. Once we get comfortable that secondary waves are not occurring and they continue to reopen, you will see in market andtions out of the winners what we call the obvious trades year to date. Tech and into the deep value cyclicals, etc. Haslinda talking about winners and losers, where would em markets span . Seek gain in recovery of the stock market . James its very hard to argue that over the short term. For one particularly compelling reason. 17 trillion of money supply is created on a global basis. The simplistic way is looking at this is the closer an asset is to the u. S. Federal reserve, the more it will go up because more it is leveraged. Em equities are far distanced from that. We do not cem markets leaving the first leg of this market rebound. Primarily because its liquidity driven. Once you start to see belief they are reoccurring are that secondary waves are no longer a risk, then we can start to see a Stronger Movement into risk assets and potentially em outperformance. That is six or 12 months down the road. Yvonne we have been asking a lot of our guests the question of the day about the blame game we see between the u. S. And china right now. Threatenedrump has tariffs, and may be pulling out of the space with trade deals. How will that impact markets and kelly live with this . James it clearly continues to highlight the geopolitical risks with mark with multiple markets moving forward. I would continue to focus on the positive steps of the chinese and u. S. Government to deal with the crisis. U. S. Perspective has seen the most fiscal policy support that we have really ever seen. 2008, the Obama Administration was debating whether it was politically feasible to put a 1 trillion package in congress. We have 1 trillion of fiscal stimulus with more on the monetary side. China took aggressive steps to deal with overall infection proliferation early on and is now one of the first markets to begin to reopen. If we focus on the positive effective policies that both countries have taken, thats a better rome that roadmap. The noise around the conversation will continue and entering into a political season, particularly in the United States. I would rather focus on the economics on the ground and the positive stance they are taking. Plenty more to come on the show. Its viruslls us about related troubles after announcing its quest to break even. We will see if the australian ipo is still on for the netflix arrival company. Blame game escalating. We will look at the implications for the u. S. President ial election in november. This is bloomberg. Yvonne President Trump continues to push the theory that the coronavirus originated in an escaped from a lab from wuhan. Sources say the evidence is less than definitive. Lets get to selina wang. Explain the different views and why we are seeing this divide on the origins of this virus. Selina even though trump and pompeo say there is strong evidence backing their theory that the virus came from a lab there are two sources that said the Lab Escape Theory is based on circumstantial. Vidence the u. S. Has Little Information to back that up. That evidence is based on public information, largely that the lab in wuhan was not adhering to strict safety protocols, and the fact that chinese officials made todifficult for officials investigate the outbreaks initial response. Wereab in question studying coronaviruses at the time of the outbreak, but there has been no evidence so far that they have the particular strain that caused the outbreak. The religious are in agreement that its highly unlikely that a lab caused the outbreak, and its much more likely that the virus jumped from animal to human in a wet market. What is clear here is that this outbreak has caught some off guard and the coronavirus, which has led to 70,000 deaths in america, has hurt the campaign in the u. S. Economy. Against this backdrop you have this increasing rhetoric shifting the focus on china and is so far unproven theory of the lab. Haslinda how has china responded to this criticism from the Trump Administration . Media hasinese state been playing this interesting balancing act and forcefully pushing back against the allegations of the virus lab, but without trying to cause direct confrontation with trump. He seems to unleash criticism against secretary of state mike pompeo, calling him evil and a liar. They are accusing him of spewing poison. It is really focused on how the u. S. Has failed to own up to its own missteps and the virus miss virus response. China said this is typical u. S. Bullying. They have avoided any direct attacks on trump. State media is taking a similar strategy that occurred during the trade war, which allows xi jinping to satisfy this outrage at home on having this commentary, but without pointing trump out directly. They are avoiding any risk of trump retaliating. The strategy is getting harder as trump is personally cheney blaming china for the pandemic. He is up for reelection. Haslinda our china correspondent selina wang in beijing. Still to come, we look at hong kong and south korea as authorities begin to relax restrictions. More of that, next. This is bloomberg. Progress in continuing the coronavirus outbreak is allowing hong kong and south korea to loosen social distancing restrictions. Stephen engle has been tracking all the developments for us. Lets start with hong kong. What is being opened . Stephen they have had two straight weeks of no new local infections in hong kong. Now the government will allow the number of people to gather togroups to double from four eight. Gyms and movie theaters can reopen. Bars also can reopen as a friday, but with capacity limits. No live music or dancing will be allowed, at least not yet. Schools to begin a phased resumption later in may, may 27 will be the first time some of the students will be there. Yesterday saying, i feel strongly that the time is now to lift restrictions. Haslinda will the relaxation give help, or is it just too late . Retail sales have taken a pummeling in addition to the seven months of protests that we saw in the runup to the coronavirus outbreak. Retail sales last month sinking 42 yearoveryear. The second straight months of declines of more than 40 . That is unprecedented. Private consumption and the gdp numbers falling 10. 2 . Its the 14th straight month of retail sales decline in hong kong. For smallmething hard to medium size enterprises. There could be many liquidations as the creditors come falling to get their unpaid bill. The bulk of these retail sales come from tourists. Inbound visitors in march fell by 99 . 98. 6 to be exact. Many of them main mine chinese mainline chinese that make up the bulk of that and retail sales in hong kong. Haslinda what about south korea . Translation korean to english is, every day life quarantine. It will be more casual distancing allowed for you to go about your daily duties and not necessarily as intense as the previous guidelines that were enacted for six weeks. The largest virus outside of china. Had 990, south korea cases in one day. Yesterday, in the last 24 hours there were two new cases. 10,806 cases in total. 255 deaths. There hasthe chart, been a definite flattening of the curve in south korea. City that had the big cluster of cases a month ago, a counts for 60 of all the covid cases nationwide. They had no new cases for three consecutive days. They will relax social distancing as of today. Stephen engle, our chief north asia correspondent. Lets look at chinese mainland markets, which reopened after a long weekend. Open lower. Opened lower. Some indices are now trading higher. The shanghai is slightly flat and china is higher by 19th of 1 . The most in over 30 years. Chinese brokers are gaining shares. It remains positive. Keep it here with us. This is bloomberg. Haslinda you are looking at live pictures of the lion city. Almost 11 30 a. M. In singapore. Of thein the middle trading day. Msci up by 1. 2 . Its index target is trading to 28 on the dire. Economic outlook. The singapore market slumping to a record low of 28, only in contraction. Singapore reeling from the virus outbreak. Retail sales fell in march by the most since 1998 year on year. We are seeing the dollar edging lower. The sei down by 1. 2 . Lets get a look at your headlines with Karina Mitchell in new york. Karina unemployment rose in new zealand and they slowed in the First Quarter as the covid19 pandemic started to push the economy towards recession. To jobless rate climbs slightly below what it was forecasted. With a in unemployment nationwide lockdown forcing businesses to make workers redundant. In the u. S. , the white house is discussing shutting down the Coronavirus Task force. Possibly as soon as this month. Vice president mike pence says it has achieved its goal. The u. S. Has slowed the spread of the infection and the administration is confident a can meet demands for medical resources in the future. Any decision would be based on conditions at the time. The venezuelan president nicolas heuro has shown evidence claims american mercenaries has tried to launch a coup. Two u. S. Citizens have been arrested after their armed group crossed the border from columbia and blamed washington. He claimed the u. S. Is fully behind the action, although the Trump Administration denies any involvement. Samsung they will reportedly apologize during the rise to the top of the conglomerate. Korean media reports they will address matters at a news conference. He has been criticized for a 2015 merger. Activist investor Elliott Management has been seeking more than 700 million damage 700 million in damages as a result of the merger. 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. Lockdown measures appear to be having a Significant Impact on online entertainment. Isdeo streaming rising. Iflix is available available. Active users have jumped in the last two months. Lets bring in the ceo. Can you quantify the jump for us . Thank you for having me. Is, we the jump for us are seeing users and usage double over the last two months. A phenomenal period. We are seeing it up 55 centuries of content. It jumped fourfold during that time. It has certainly been well beyond any expectations in the shortterm. In a lot of ways, we are seeing the acceleration and to what has been a messy trend for our generation. We have all been moving away and takingional tv away our Entertainment Experiences and being locked up for the last six to eight weeks has accelerated something that probably would have taken a few weeks to occur. That, yourespite work is a part of a costcutting plan. Give us a sense of the numbers that have been laid off. Like many other businesses during this time, we have had to make difficult decisions. That has passed, especially when it involves people. We have a responsibility to shareholders and our staff. Period, while usage and users are significantly up, revenue relies on appetizing market. Advertising market. The Advertising Market is down. While the ad market is down globally, we need to rebalance our cost phase to keep in line with the advertising revenues. The hope is that, over the next couple of months as restrictions get lifted, advertisements recover and then we will come out of that period. The rebalance is really to ensure that our costs remain in line for the business plan. Yvonne the company has been facing some money trouble regarding your debt. The company has mentioned this ipo may notplanned happen. We have heard from existing shareholders say that they may cash out of this investment by asking you to buy back its shares if this does not go through. Will this trigger more debt repayments for you . Are there plans to raise more capital . Company, iprivate would love to share all of our plans on financing, but i have a board and shareholders and they would probably prefer i did not share that with the bloomberg audience. But i would say we have a great register of shareholders. They are extremely supportive in backing the business. Any shortterm concerns with working through that with them. Yvonne no shortterm concerns. You mentioned about the job layoff and the exit markets like africa. Are you going to have to do more in terms of saving and preserving your cash and perhaps cutting more costs . Context, we have our business in africa with our partner. We have really focused our efforts on our core asia markets. There arent any other plans to expand geographies. We are confident that we are operating in the right territory. Usageian markets and the across our markets being indonesia, malaysia and the philippines, we have deep relationships with the local content partners in that region. There certainly arent any plans to exit any other markets. Havinga you talk about supportive shareholders, and your shareholders include mmc, yvonne talked about fidelity, how do you approach them for Additional Capital . We are in regular conversations with the shareholders. We are a private company. So i dont think they want me to talk in detail about what those conversations are two in audience as wide as yours. Haslinda is there a concern you could go into liquidation . The liquidation was sad to see. Quickly theyth how made the decision to walk away. It obviously did not end the way they wanted it to. Talks monthsose ago. We thought there was an opportunity for us to acquire that business. Put the pace at which they made the decision made it possible. I think it took a lot of people by surprise. Perspective, the aim was to try to help consolidate that market and provide customers with ongoing continuity. Of theworking with each content partners to work out what we can do with the content that no longer has a home and see what we can do to the industry and the ecosystem. We are hearing a lot of new competitors out there. The likes of not just netflix, but apple, disney . When it comes to content acquisition, is it a little more costly for you . Be a service we would listen to our customers over the last couple of years. Our customers are telling us loud and clear is what they want is local content. Local content is what works. It is the most consumed. Local content providers in the region. Our service is not aimed at the same audience as netflix were the large western services. We are a probably net market for millennials and we are free. We arent seeing any major changes given the audience in the content profile. Your 60 original content. In terms of content, have you been hit by the lockdown . Marc we have not yet. It depends on how long a goes for. We are fortunate enough that we managed to have a number of original productions already into postproduction. We have been able to continue on with that, depending on how long the lockdown lasts. There are a few projects on hold, but the hope is that the restrictions will continue to be lifted and we will be able to continue that. Allnumber one priority is of our employees and everyone in the industry. We will continue to respect put whentrictions and they are listed and get back into the production world as soon as we can. Once this pandemic is said and done, there are still a lot of questions for the industry. Does the Business Model need to change when you are spending millions, if not, billions of dollars generating content and you are charging subscriptions affordable to your users . How do you make money . Is it time to change that Business Model . Business model went through a significant pivot about 18 months ago. Are predominately an advertising led free service. Lead free service. We are optimistic that the more people we can give service do, the better the product you alls. Rather than asking people in the emerging markets to pay a subscription every month, we are offering a service that is free. They continue using the service and we monetize the content by advertising. That model has been a significant shift in usage and overall users. That is the motto we believe works best for this market. Free, advertising lead and mobile use. Haslinda your target was to break even by 2021. Are you on track . Marc yes, we are on track. Revenueered all of our and cross targets in q1. We are in line with the decline in revenue for q2. And have a very clear plan and forecast for the middle of next year. Iflixda marc barnett, ceo, thank you for spending your time with us. Theifys eeo is eyeing radio Advertising Market. They talked about apple opening following a complaint. I think, first and foremost, campaign ngoing canceling complaint in the European Union. Longterm, we do expect apple to open up and, we are very encouraged about being able to now finally use this as a wave to Building Support and also buildavailable to products for apple tv and apple watch. Something that we have not been able to do until very recently. I think it is moving in the right direction, but we still have many steps to go before we consider this an open affair platform. Apple has stopped releasing numbers, do you think their growth has slowed . Daniel i cannot speak to what their numbers are. My guess would be as much as your guests. Guess. We have said we are two times the size of our nearest competitor and we are three times the engagement that our nearest competitor. We think that means we should be growing faster. I wonder if you are surprised apple has not innovated more in an industry is dominated for so long . Daniel here is my take, we talk a lot about these Big Tech Companies, and we talk a lot about how you could be very good at building these Great Companies. They truly are phenomenal companies with amazing businesses. I think there is something about focus. This is something that i have said a long time. We are unique in the way that we are focusing all of our time and attention on this one opportunity. Its all about bringing audio onto the internet in a big way and moving it off of linear radio and physical formats. That is what this whole company is focused on. Everyone is passionate about our mission and they have a sure way of coming here. If you are passionate about music and audio, spotify should be the company you want to join. That was the spotify ceo speaking to emily chang. Lets look at india markets. They are just opening. Slow going. We are seeing modest losses. Similar losses for the nifty. The roof be the rupee is hanging on 75. 63. He saw a decent session yesterday. They talked about opening up. We have seen a lot of chaotic scenes from Migrant Workers heading out after restrictions have eased. They have slapped that 70 tax on alcohol sales after we saw trouble in soup. The india tenure yield is unchanged at 607. Looking ahead to earnings coming up. Disney takes a huge earnings hit from the coronavirus. And the worse is yet to come. This is bloomberg. Haslinda disney fell in after hours trading after reporting that profit lunch. And its profits were well over 1 billion. The pandemic has hit disney especially hard. Theme parks, movie theaters are all shut down. Su keenan has the latest. It does seem like disney is not the happiest place at the moment. Happy at all. The parks have been pummeled especially hard, and that has sent the profits plunging. If you take a look at how shares traded after hours, they were down almost 3 . Thats as the Company Announced it would take a loss of 1. 4 billion in the last quarter, and one billion of that alone is coming from the shuttered seen parks. Nearly every part of the business took a hit your it earnings fell by more than half to . 60 a share. Thee items were far below . 86 a share that wall street had. You can see the chart itself has shares way down from 30 year to date. Revenue rose 20 to 18 billion, but that was driven by the acquisition of 24 century foxs entertainment. You are looking at a few bright spots. They did do well in the units that had disney . Still waye disney behind netflix, which dominates. Lastly, in terms of the comments, which they said the worst is yet to come, one analyst said this quarter is like a black hole. They are just in the mode of getting through by september, perhaps they can ramp up. But a lot of what they do is social events, and all of those have been shut down. There was some good news, Shanghai Disneyland will be opening next week. This will be a test for them on where they can reopen other parts too, right . Sus the shanghai su the shanghai part was one of the thet park was one of first to go down. The ceo is seeing encouraging signs. I want to take a look at this pie chart. You can see the largest chunk is the revenue they get from these parks. That gives you an idea of just how bad a hit they have taken. The countrys dominant dominance in the parks and movie theaters has come back to haunt it because they had to close down. Shanghai property comes back online may 11. They are also coming to grips that, because the company is built on shared group experience, until there is global comfort healthwise, disney earnings are pretty much fundamentally impaired. Back to you. I remember those days when Tom Mackenzie got to go visit the shanghai park. Coming up, asian banks are focused as they take a hit. Impairment prices are tripling. This is bloomberg. Haslinda asian Bank Earnings are back in focus as they posted its First Quarterly drop since 2016. Later we get the results from indias yes bank. Lets bring in our senior Asian Financial analyst. Lets start with uob. How did they perform versus your expectations . Uobs profit is down almost 20 in the First Quarter. The key defenses from what i anticipated was on margins. They have seen a five basis point compression. We may have a lot more room. They might actually drop below the 1. 68 that they saw from the last time. They rose. Isions, i think they are trying to figure out how much government stimulus is. I think there will be a lot more coming in from the provision side and into 2021. Haslinda what are the problem areas for uob and the other two banks, which have the most stressed to deal with . Thata the usual sectors have been hit are oil and gas, aviation, hotels, tourism, retail, food. The biggest was oil and gas. The bank has 10. 2 billion exposure. 3. 5 billion is to traders. 2. 5 is upstream. Those are some of the key areas. The smaller businesses that they they areexposed to, more vulnerable during the crisis. That is something to keep a close eye on. Tonne yes bank is set report today. What are some things you are looking out for . Diksha yes banks bailout was interesting. Deposits34 decline in back in september and march. Will they be able to raise and keep deposits . They were able to generate sufficient recovery. That is the key thing that they are monitoring. The banks have been contracting its loan book. How is that done and what is managements plan around that . I am looking to hear from the new management on how they plan to turn this around. Do you see the earnings coming out from yes bank, will that have wider implications for sector . Ing diksha the one thing is risk aversion. Most of the banks are becoming more risk averse. The liquidity situation in the long banking Financial Sector. , banks are not interested. They are not looking to bring liquidity to that. That means the big banks continue to gain Pricing Power and get more deposits, but the weaker banks continue to weaken. Our Bloomberg Intelligence Senior Analyst for Asian Financials. That is it from Bloomberg Markets asia. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. The following is a paid presentation brought to you by rare collectibles tv. Announcer in 1792, the United States of america needed to assert its status as a new global power to the leading countries around the world. As a way to firmly declare to the world that the United States of america was now an independent country that would continue to propel freedom, the first president of the United States, george washington,