Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

Reaffirming its redline over taiwan. Coronavirus claims more deaths as cages cases approach ive million. U. S. Closing travel from brazil. Protesters to announce chinas security law in hong kong. Washington says it could be the death knell for asias leading financial center. How is that playing out across these markets . Declines from last week, there is a little bit of trepidation and caution across futures now. Your getting brent crude, pleasant surprise from the upside, nothing screaming higher. 29. 65. 2965. 34. 72 brent crude. Coming off weeks of sharp gains. Looking ahead you have more data that perhaps would give us more visibility on the path. We could get consolidation as we were talking about earlier in the program. Lets talkoned, about the renewed tensions between the chinese and the americans here with the foreign minister of China Morning the u. S. To give up warning the u. S. To give up Wishful Thinking about changing china. Saying some in america are pushing relations to a new cold war. We are talking about the foreign minister. What else he say . Sunday, partwas on of his annual briefing. He said some in america are pushing relations between the u. S. And china to a new cold war. He talked about financial flows and more. Listen to what he had to say. China has no intention to change the u. S. Replace position of the u. S. While it is impossible for the u. S. To change china, the u. S. Is not able to stop the historical process of 1. 4 billion Chinese People towards modernization. We must be vigilant some u. S. Forces are hijacking relations to push towards a new cold war. That downward spiral being exacerbated by the adoption of the Hong Kong National security law which would criticize analyze first criticism of china. They said this did not affect the cities agree degree of autonomy, reiterating that hong not is an internal a fair, cautioning the u. S. Not to challenge chinas red line. Pompeory of state mike but tradition bucked tradition last week and congratulate of the taiwanese Prime Minister on her second reelection. The chinese say there is no one who can stop unification. Tensions between the biggest economies are ratcheting up when it comes to the trade front as well as the Financial Markets front. Are we talking about entering a new era of the globalization even as the phase one trade deal supposedly is going to be upheld by beijing . Selina that is one piece of optimism. On friday china said it would continue agreement to the trade deal. The relationship here. But that announcement, the e [indiscernible] related to its plans on the National Security legislation and this from the senate has already approved legislation which could mean Chinese Companies are barred from trading on u. S. Stock exchanges. Barriers to trade and capital flows which our Bloomberg Economics says makes a bounce back from makes the bounceback even harder and comparisons to the Great Depression harder to ignore. And you have the world banks incoming chief economist saying only exacerbating that trend. Reminds me of our conversation last week with the u. S. Trade representative and she argued the world is becoming increasingly apolar as all the countries turn inward. To become desire hegemonic power. China correspondent with the latest. Lets get you caught up with first word headlines. Karina Hong Kong Police arrested 180 people after using tear gas and Water Cannons during a protest on the latest move to crack down on dissent. The biggest rally since the coronavirus outbreak came after beijing announced a National Security law the territories i passing its legislative council. The Hong Kong Government says the protest proof the need for new security measure. U. S. Coronavirus cases jumped 1. 3 in the past 24 hours below the one week average as a country poses in on the milestone of 100,000 deaths. President trump has banned arrivals from brazil. But the areas around the lawn which was the hardest hit in italy reported no fatalities for the First Time Since the outbreak began. Japanese media say the government will lift the state of emergency in tokyo and surrounding areas as new coronavirus cases decline. Nhk says the government will lift restrictions monday a week ahead of the original schedule. There were 14 new infections on sunday for the most since may 16 but the overall rate is below that set by the government to allow emergency to be lifted. Kim jongun is testing relations with the west, calling for a step up in nuclear capabilities. He told military leaders they should boost north koreas arsenal. He promoted a senior weapons expert. State media did not a witness meeting happened or what kim once the Nuclear Strategy to be. Strategythis nuclear to be. 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. Haidi still ahead we are discussing Health Care Policy as more a more more and more economies inch closer to reopening with the Menzies Center. And natasha joins us to talk about growing tensions between beijing and washington and beijing and canberra. This is bloomberg. Shery david welcome back to the program continuing that back to the program. Accusing currents what. S. Has been infected the by a political virus which leads to protect china. The Lowey Institute joins us now. Latasha, good morning. A lot of these things were not unexpected. How does this get worse moving forward . Thank you for having me. I can get a lot worse for we have seen u. S. China relations falling off a cliff. This is escalating so quickly. Seems like most of the initial trade agreement is not happening. Calling each other names is quite a convenient way to distract from domestic failures in both countries. We are seeing this kind of dramatic fracture and polarization happening, leaving a countries like australia in difficult positions moving forward. David i want to get your thoughts on the Chinese Foreign minister over the weekend. Should stop trying to change china. What do you think . Im am not sure the u. S. Was trying to change china. They like to say engagement failed. To be honest at the time i think engagement was driven by self interests. The United States wanted in the largest economy, but they did expect some level of change to happen. As china has become more capable and has grown in the way that it has, what should have been evident that maybe was not is the two systems that have in manyant mismatches ways. Now the United States says we have to change course. That is budging the narrative a little bit but suddenly we can is larger and more important and causing more issues and the united takes is currently constantly playing to china. Beijing does the same thing, focuses on the United States to demonstrate its system is better. In both cases, it is convenient for the other to be a scapegoat. That has severe consequences. David i think we are having audio issues with her. Lets continue i guess with the newest item on the agenda between the two which is hong kong. You have had, you were a former diplomat in china. Help us understand how we move back from the brink in terms of escalating tensions. Beijingrd to imagine backs off because that would be losing face. How do we deescalate . I am not sure it is possible. I think the Democratic Values many hong kongers uphold are seen as a threat to chinas system. It will push through this even though it seems incompatible with the agreements made about hong kongs future. I think those were limited because at the time china was weaker and reliant on hong kongs prowess. Now that china is stronger, beijing is empowered to act in this way. The United States has very few levers available to it. One is to revoke special treatment it gives hong kong. That is a nuclear option. To me it is hard to see this deescalate. I think Hong Kong Special status is not recoverable at this point. It is hard for the people who live there and for the world izes hong kong pr the way it does. Wish thinking the Wishful Thinking is chinas ambitions. It feels like they are trading control of the security over the state of hong kong no longer being a Financial Hub for global city. Is that being considered in beijing or is it something they are willing to give up . We have seen the tradeoff regularly. We have seen a focus on security sometimes with economic consequences, some with international reputation. In the end for beijing, the strong identity many hong kongers feel kind of uniting the Chinese People. Hong kongs success being based on the british legal system, it undermines showing it system is superior. So with the separatism, the issues they keep talking about, in their mind, it is worth it. Some people would argue it is the unintended consequences. Ultimately they dont want hong kong to be a thriving Democratic Free city. If they have to live with those, they are comfortable. Haidi we have seen president xi make this graph to consolidate grab toter shifting consolidate power after the shift of Health Response to china has done well and giving the rest of the world time. In the sense we are seeing this power grab, how risky is it for middle players like australia and canberra to be waiting and antagonizing the dragon by calling for this International Inquiry and being in the lead in doing that . Australia has been on the lead on a number of these issues. It was one of the first countries to exclude huawei. It passed foreign interference laws before others. It is a difficult balance to get right. Australia is dependent on china. Partnerclose alliance of the United States. I think this kind of inquiry into covid was about the fact australia was recovering from the crisis more quickly than others. I think moving into the next phase of preventing another pandemic of this nature. It was ever some politically populated decision to be out in front on this issue. We have now seen some version of this inquiry passed by the World Health Assembly and it is not what australia was calling for initially. I think australia will continue to make these decisions based on Natural National interests and not necessarily selfcentered because of the economic relationship with china. Was there a message in the Foreign Ministers speech over the weekend for everyone, all of the observers who want to see china as the new liberal, economic champion of the world, has that reality come crashing down . I think with these kinds of speeches there is something for everyone. He did talk about china commitment to multilateral system and how invested they are in global corporation. Cooperation. Country see them as the rising power. They can cling on to those words. And the rising antagonism towards china, they will look to the language on the u. S. , taiwan theirng kong and see what fears confirm. There is something for everyone but the message is that our clearest, i think they will confirm their worst fears about places like taiwan and hong kong. Right, always great to have you with us. Founderapital partners mark mobius sees a lot of profitable stocks in china despite the escalation in trade and diplomatic tensions. He told us which companies he is looking at. There is no question the tensions are rising. These are going on for quite some time. In the beginning with the trade war and other factors. We cant expect to be seeing any letup in this tension. Nevertheless there are lots of stocks in china that can be purchased, that are profitable and growing despite the problems we are seeing. We have to take it stock by stock rather than make a general picture of the chinese market. You understand how you screen stop by stock. Stock. Ck by we will not look at those impacted by the trade war. We look at them with global footprints. Obvious one or you have a global footprint and incredible market share. Number three we want stocks that have very strong balance sheets. Companiesage we have that are able to acquire other companies and game market by doing so. Can you give me some names . You hear about debt. For the normal investor, the names like alibaba would be the obvious one. There are a number of others that would fall into that category. We could be buying. I dont want to be in that position. Generally speaking any of these names like alibaba, like tencent, these are companies that we will look at. If some of those companies, like alibaba, gets delisted because of trade tensions, does that affect how you think about them . Not really. I know that congress will pass the bill about accounting practices. Companies listed in new york have depaul the u. S. Accounting. After that there will be no problem because come up with the right accounting practices. I dont see that is a big problem. What you have got to see is any of banksin the face and technology. Even there, if you look at the mc, theyy will ps will survive. They are supplying people locally including many menu u. S. Manufacturers. Are you worried we will see a supply chain shift accelerate, or does it not matter if you are looking at the right companies that would be immune . This is already taking place. It is not only the American Companies that have the supply chain problem but the Chinese Companies as well. They have to look and feel out of their own. To find out where they can get their own area to find out where they can get supply. Many chinese manufacturers are looking outside of china to manufacture in other companies other countries to get under the u. S. Trade barrier. That is another thing you have to look for. We are looking at such Companies Moving globally and have becoming more of a Global Supply chain company. Mobius, cofounder of mobius capital partners. We will have more analysis on china later. We are talking with barclays asiapacific. We are talking politics with susan kirk joining us on the program. You can get more on beijings war of words with washington on todays edition of daybreak. Dayb on your terminal. On the cellular phone, the bloomberg anywhere app. You can customize settings so you only get industries and assets you care about. This is bloomberg. Check of thek latest business flash headlines. Amazon prime aircraft will grow to 200 planes in the next few years, creating a new Cargo Service that would rival that of ups. Amazon is on an ambitious upward timetable. They prompted speculation they would create a Delivery Service to threaten ups and fedex. And skasked Samsung Hynix to guarantee chips given mounting pressure to isolate the company. The korea economic deadly daily said huawei has requested components regardless of u. S. Sympathy. Sk hynix spending 8 billion each year. ,rotests in hong kong are back and we will dissect what happened over the weekend and the latest moves out of china. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. China has become much more aggressive on the international stage. We should not call this a trade war. We should call this fullspectrum strategic competition. Type ofis exactly the confrontational development on both sides of the relationship, that you would expect, in a cold war. It is not only the American Companies that have a supplychain problem, it is the Chinese Companies as well. It really captures the challenges of the u. S. China relationship this year. Growing tensions over your political flashpoint, even as the two sides are trying to keep phase one deal intact. China is going to be a central focus and that u. S. President ial election. Both biden and President Trump have advocated a relatively hawkish position toward china and china trade. The u. S. And the u. K. Will take the lead on the hong kong issue. Is, you hear, increasingly, we have to draw a line. This time the line has to be firm. Some of our guests weighing in on mounting u. S. China tensions. Arrested as protesters announced china security plans for hong kong. Our chief north asia correspondent is watching these developments. Steve, where does hong kong stand now . It is very tense here, again. We have had nearly one year of street protests, with the only respite during the last couple of months when we had a coronavirus outbreak. It has been a very tense year. Now we have the prospect of escalation of street protests and potential violent retaliation from police as well, on the street. So it is from the frying pan into the fire here in hong kong with Police Firing tear gas in crowded areas of hong kong. They have deployed their water kennett truck to Disperse Protesters water cannon tracks to Disperse Protesters the npc into oppose beijing security statements. Hong kong still under social distancing requirements, that you cannot have a gathering of more than eight people. We do not know the exact number of protesters on the street. Bloomberg news puts the estimates in the hundreds and others have put it in the thousands. Nowhere near the middle of the summer last year when we had the estimated one Million People and 2 Million People marching to the street. It is a different scenario now, two months out of the coronavirus outbreak. And people staying at home. In the economic carnage, financial carnage, that has happened as a result. 180 people, according to police, were arrested, mostly for illegal assembly. At least for Police Officers were injured and multiple members of the public also injured. Renewed street clashes in places like house weight bay could be the norm going forward, as protesters say they will keep up the fight and perhaps take it further. Causeway bay. A prominent activist says we must stand up and fight. And that basing a we will never surrender. One of the Big Questions again, is how the u. S. Then responds to beijings move. We have an idea now of what that might look like . The u. S. Is still trying to weigh how to respond to this new security law. That is a broader tension has escalated between china and the United States. We do not have the implementation of the phase one trade deal either, which has clouded the uncertainty. And will hong kong become, and will the white house want to make hong kong a potential flashpoint in escalation of this dispute with china. Mike pompeo, he says, these new security laws that are being pushed through the legislature in beijing, would be a knelt for hong kongs autonomy. Knell for hong kong and tommy, those are his words. They could ban Sensitive Technology sales to hong kong. But a number of people are saying, if you do this and if you revoke the favored trading status for hong kong, that the u. S. Gives hong kong, that would hurt hong kong. More than beijing. Meanwhile, we are also hearing from beijing, the foreign minister spoke yesterday, trying to assuage fears that have arisen. We saw the market take friday in hong kong. He says it will not affect the high degree of autonomy hong kong enjoys, nor will it affect the rights and freedoms of hong kong residents, nor the legitimate rights and interests of Foreign Investors. Then he kind of made that statement that a lot of people rolled their eyes at, he said, everyone should have more confidence in the future of hong kong. And do not need to worry too much. Well, that is the issue here. The worry at the opaqueness of the mainland chinese laws, is what has everyone, at least on the prodemocracy side, very concerned. Mark critz at well, have a look at msci hong kong. Markets as well. Do not miss the interview coming up. Checking in on markets, u. S. Futures higher, still near session highs a the japanese open, 1 look at fair value for the nikkei open in 30 minutes. Oil is down 1 . We will flip the boards and have a look at treasury futures. Flat. R higher, and now gold futures have quelled a little bit and the hong kong seeing weakness now, given what we mentioned. Hkma saying they will continue to defend the peg. And have a look at where you are 7. 15 on dollar china now. Todi yes and as we continue incrementally get to reopening across more and more economies, we are speaking to Leslie Russell of the center for Health Policy about the slow policy when it comes to reopening around the world. And touching on issues related to the inequality of the pandemic as well as prospects of vaccine nationalism. Up next. This is bloomberg. You are watching bloomberg daybreak asia. With the first word headlines. China says it will never return to plan economy and will let the market decide his future. One minister says china does not want to change the u. S. And says the u. S. Should not try to change china. He denounced the drift toward a cold war and warned the u. S. Not to cross the redline that is taiwan. Thousands of businesses without power in australia after the strongest storm in decades. Winds of 100 Kilometers Per Hour and a storm a surge about to eight meters. Forecasters say the worst of the storm may not hit until wednesday, as the system moves across perth and heads south. Benjamin netanyahu has become the first israeli Prime Minister to face a trial while in office, denying a series of charges related to bribery. One week after being sworn in for a fifth term he appeared in Jerusalem Court to deny wrongdoing. He is accused of coursing media and other institutions to get him good press. Space x completed final preparations for this weeks lot, carrying two astronauts to the International Space station, americas return to the mystic missions after relying on russian rockets. The flight will be the first u. S. Man launch since the Space Shuttle retired in 2011. Russian soyuz rockets to send astronauts to the iss. Global news 24 hours a day on air and at quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. In the battle against the coronavirus pandemic, the u. S. Is suspending travel from brazil as the coronavirus pandemic worsens in latin americas largest economy. They are now the second worst hotspot in the world. Japan is set to lift tokyos state of emergency as new viruses tail off in that country. In the u. S. , the country is heading toward the grim milestone of 100,000 deaths. The menziesow from center for Health Policy in sydney is Lesley Russell. Advisora Senior Health under the obama administration. In terms of your experience not capacity, is the u. S. Handling the return to work, the reopening, and consistent way . Because we have seen even over memorial day weekend, a big contrast across some states versus others, in terms of whether restrictions are being lifted or being respected. In some places. [inaudible] dr. Russell . Dr. Russell, we are having trouble hearing you so we will try to get the audio issues fixed. We will try to get back on the program. That was dr. Lesley russell. In the meantime we are sticking with health care. Johns hopkins, the Bloomberg School of Public Health, spoke to us about how the medical community is dealing with the treatment of the coronavirus and challenges they face as more states are pushing to reopen. Been a focusic has of the medical community and of people, but we have to remember there are other things going on. Other Health Care Issues that need to be taking care of. Inorts this week about drops pediatric vaccination rates are a concern. Things that are not getting done now, will have applications later on in the year, maybe next year and they are afterwards. How serious is brazil . I looked at the per capita and the wonderful work the ft has been doing with Johns Hopkins university and the glide paths of brazil and ecuador are grim. Yes. The Southern Hemisphere is now getting into its late fall and early winter season. So there has been concerns about whether or not the covid19 virus would do better in cooler conditions. Havingand ecuador are tremendous trouble, in terms of controlling the outbreak, with huge nubbers of cases. Other countries in the Southern Hemisphere have been able to control that with very rigid and active surveillance for the virus. And testing for the virus. But several countries in south america are a concern. And the emerging problem in africa is also of concern. Kitse there enough testing and emergingmarket economies . Or is that a worry, that we do not exactly know what is going on . A number one worry those countries is the number of tests. Is then, behind that, availability of good laboratories that can run those tests in a timely manner. Those two things combined will make it challenging for some , intries to respond well terms of testing, isolation, and Contact Tracing that are needed to control the outbreak early. What can you tell us about the end of the lockdown . We are seeing a number of economies, the biggest ones in the world reopening. Some slowly some less slowly. Given the time lag of people ending up in hospital, when we have a better idea of the exact situation . This is one of the challenges with this virus. Weeks to one to two show symptoms, and your infectious for seven days. The lag between when cases start to come up, is significant. Spikes seeing some small , particularly in states in the u. S. , that are loosing their economy. Other states are doing better now. We really will not know until two weeks to three weeks from now, how these say start doing, with loosening Public Health interventions. Question, how safe will the beaches be this weekend . What are your thoughts on heading to the beach . Has economies open up, as some social distancing i should say, social distancing should still be in place. People need to really be careful about keeping their distance when they are outside. It is great to get outside and do activities. To try to enjoy yourself during these times. But social distancing and Wearing Masks is an incredibly important thing to do, irrespective of what your activity is. It seems odd to say that, on a beach. But maintaining social distancing is a critical thing as people get out. And get back into some sense of normalcy. That was a doctor from the Johns Hopkins Bloomberg School of Public Health, supported by Michael Bloomberg the founder of bloomberg lp and bloomberg philanthropies. Lets get you a quick programming note, beginning tuesday, join us for bloomberg surveillance. They will analyze todays days headlines and Market Sentiment leaders across economics, politics and finance. 7 00 p. M. Illance at hong kong and simulcast on tv and on bloomberg radio. This is bloomberg. Haidi lets get back to that Menzies Center for Health Policy associate adjunct professor Lesley Russell is with us. Professor russell was Senior Health advisor under the obama administration. Net capacity, i want to get your see of thet you safety of reopening measures we are seeing across the u. S. In that capacity. It is not consistent from state to state. You do not want to see consistency because, obviously, the situation in montana is very different than that in new york, is different from that in alabama. You do have to have that flexibility. But the real point is, the decisions about opening up and how that is done, need to be , theon the basis of data ability to test and trace. At on science, rather than on ideology and politics. Do you think that is the case, when it comes to leadership from the white house . You have heard from the president saying the reason cases are so high the u. S. Is because they are testing more. This as we see the death toll approaching 100,000. And the testing does the approachingtesting taking placeu confidence in reopening large parts of the country . That is the messaging from the white house. Is it the right thing to do . No it does not. From australia we look on with horror, in terms of what is happening. I think you will see the results, the consequences of this, and a couple of weeks. When there are new infections. It is problematic. While i understand the business and fiscal imperatives that are driving some of these decisions, anthe long run, that will be expense, not just in terms of cost to business but cost to productivity and costs to the health care system. And costs in lives. David one last question before we move things along, on the u. S. , is their case to be made, practical or otherwise, political will or the absence of political will, to impose strict state borders in the u. S. . As you are pointing out, things are improving at different rates. Is, if you usely the australian [indiscernible] where our states are somewhat larger, there have been very strict, and continue to be that preventions border crossing. And i do think that has made a very real difference. That and quarantine measures. And the willingness of the public as a whole to abide by that. Those have really made a difference. Have tofficult when you do business across state borders. I think for some cases for some states, that case could be made. Going forward, in terms of what we have learned and how weight construct policy how we construct policy surrounding what we have learned, the temptation is to take a lot of money and throw it out the problem. While that might be at the case if we are under invested in Public Health care facilities, where does that money exactly need to go . Terms of where you need to direct that investment . While, the basic Public Health perp para tory preparatory investment that needs to be made, needs to be ongoing. And it needs to be regularly checked and tested. Of thet was one failure Trump Administration. While much of the work had been underway under previous administrations, it was dropped under the Trump Administration. It is a new virus and youre never going to be totally prepared. Jumpstart andy to get going quickly, was lost. The difficulty about those sorts of investments are, that if you do not have a pandemic, you do not actually see what is happening. So it is money that is easily cut if the budget needs to be restricted in some way. You only see the benefits to those investments, if and when you have a pandemic. Whereas, there are a lot of other things that have an immediate return on the investment, so it is quite problematic, in terms of peoples willingness to make those rather hidden, longterm investments. Professor, i wonder in terms of the danger of a second way for countries that have gotten it under control, like australia and new zealand and even places like hong kong. Where they have nipped the second wave risk in the bud. Is the bigger risk to another wave of infections Human Behavior . In terms of a lack of social distancing . Or will the bigger risk come when borders and travel restrictions are lifted . I think it is both. I think the dangers to countries like australia and new zealand, is that we have done so well that we might get complacent. We have so few cases. And clearly people want to get on with life. They also are worried about their financial situation. Backeople do want to get into the economy, and back to work, whatever that new normal looks like. But we have seen clearly in australia, what the consequences are of not keeping our borders closed. So a lot of our cases, a good percentage of our cases, came from cruise ships. Deaths, and02 maybe 30 of those could be linked to cases that came in on cruise ships. So you do have to be very wary. I heard some one else on the program earlier say, one of the problem is that this virus has such a long incubation. You do not always know when your infectious. Matic. Can be asympto in australia we are seeing that the handful of cases we are having, 10 or so cases, perhaps half of those are people who have come in on airplanes and had been quarantined. So you have to be really relieved the quarantine system is working. It is not clear when australias International Borders will open up. Dr. Russell, we have to leave it there. We can continue the conversation next time. Dr. Lesley russell of the Menzies Center for help care policy. New zealand up. 5 and futures 1 higher with the fill very on japan. Not fair value on japan. Soul futures traded down 2 . Seoul. Haidi coming up in the next hour of bloomberg daybreak asia. A hong kong member about chinas National Security bill and the renewed process we saw over the weekend and people arrested. The market opens in asia, next. This is bloomberg. W . W . Uhiono david good morning from bloombergs asia headquarters here in hong kong. Haidi i am haidi stroudwatts in sydney. Major markets in asia have just started trading. Welcome to bloomberg daybreak asia. China rejecting a planned economy saying the markets will decide. It is also crashing down on hong kong and reaffirming its redline over taiwan. Oil slips as traders assess u. S. China tensions and the prospects for a postvirus recovery. Beijing warns washington against a new cold war. Japan is expected to lift the state of emergency in tokyo, with the virus simulate under control. Prime minister shinzo abe warns of a potential second wave. Do you reopen with that threat in mind and how do you reopen . We will talk more about this byetable and the method which japan is looking to reopen their economy. Meantime, consistently pointed out by futures were up 1 on both major benchmarks in japan. Japan is pretty much the only one left in terms of your earnings for today. Food runs a lot moss food runs a lot of hamburger chains. We will talk about earnings later. 10 year yield flat. South korea is opening as well. Take a look at the kospi decks. Index. One line from samsung, the company denying reports when it and chip supply requests. We will have the details on the story later in the program. The company sing in a text message there was no such meeting as reported by local report in south korea. Things are looking good at the open for japan and south korea. In australiad here either as a staggered open in sydney gets underway. We see the asx recouping losses from friday. We ended friday down. 9 and we are sitting. 25 in the upside in the early minutes of trading. Seeing and building on the gain of 1. 7 . Watching commodities, a ruling story indepth medic trade playing out between china and its trading partners. A bit of weakness for the aussie dollar and a bit of weakness for as wefshore yuan as well as we watch the political tensions relating to trade. And the Hong Kong Security bill measure as well. For new zealand we see trading underway for a couple of hours and upsides of. 8 . We heard from the new Zealand Government on offering temporary payment support for those being made redundant as a result of the lockdown in new zealand. A lot of things to consider across the board here. We are done with earnings season and know about centralbank support. It is time to Start Talking about reopening economies. What that means for your equity investments. We talk with the socgen head of asia equity strategy. Frank, early monday, what is top of mind for you this week . Week. Ot of things this you mentioned the economic tension between the u. S. And china. Some better news on ,he sanitary condition globally which has been the driver of the market. An we have a number of an we have a number of risks actually. So that is a [inaudible] david you be buying are recommending buying in 90 minutes . Is,he thing about hong kong you look at the last 40 years, in terms of valuation of the equity markets, you come back to almost the trust you have in the [indiscernible] 2016, thebeginning of beginning of the trumpet administration. Thehe hong kong market, at time when most economies are going to experience a vshaped recovery, though we have doubt on this ve, we have still another quarter of her session in hong kong another quarter of her session in hong kong. When we look at the 100 in the hong kong economy and hong kong market, we have some very sharp float slowdowns from the second half of 2019. That has been the there has been the trade war and some social unrest. Then you have the covid. So i would say you have low valuation but you also have risk on the market. Frank, your keen on china infrastructure stocks. Are you doubling down on that now . Targetbandoning the gdp and free to spend as much at to rebuild and recover . Packageso we have the which is abundant and it was something that was rather expected. Expectation, theres not that gdp expectation. The high we had an infrastructure stocks is remaining on. You have two legs to consider. One is on the socalled new Digital Infrastructure coming to 5g, to internet of things, to the charger and so on. And you have the more traditional infrastructure, in materials, in energy, in industrials, on which we are looking at the stocks with some stronger balance sheets. And which are much more domestic than international. And we think that is an approach [indiscernible] inflation you, see as a risk. Yes, it is very complex to find what is going to be the longterm impact of the covenantal. Of covid19. One of these is going to be some shrinking supply shrinking trade, and reorganization of the global value chain. And you have here, some risks at some stage. Inflation can come back, especially when you combine these elements on the supply side, with some very aggressive fiscal policy all of the world. Our we look in terms of asset allocation, we would like to have some inflation asset, inflation related assets, included in it. Frank, one of the themes you flagged, japan dividends as well. A lot of companies are still cautious with how they use their cash, whether capex or getting a back to shareholders. Can i actually trust these dividend yields icr published now . Dividend yields that i see published, that i will actually get them . When you want to look at the dividend yield you need to factor in that the dividends are not going to be as high as we see on the trailing yield. Having said that, the japan dividend is, indeed, one of the three we have highlighted in the last week. Is Japanese Companies have been holding cash for some time. And one of the reasons why valuations of some Japanese Companies have been lower than the rest of the market. But when we come in this situation, where cash is becoming key, this is where the dividend looks relatively more comfortable and more robust. We would see in the u. S. Or europe. See these, as you can two parts of the world, some changing in the regulations or even in the legal framework. Thatcontinue to believe japan is going to be a safer heaven for dividends. David i like how he describes it. Since you mentioned valuations, i want to get your thoughts on what you use now to measure evaluation. A lot of companies in the previous earnings season did not give us guidance. How do you validate priceearnings . Yes. You have two issues. The first one is, what kind of earnings you are going to input. As you said, while guidance is unclear. In that case, you tend to look ratios andaluation take the 10 year earnings instead of the earnings for the year and it can give you an indication of where we are on the longer term, especially relevant in the case of markets where you can have a long history, like japan or like kong. Is issue ofe, which debt. ,hen you have a lot of debt looking at price to earnings only is not the most interesting metric. We should consider instead, to look at the whole balance sheet, and to look at the enterprise ebidta. O eb dj in that case you would have markets, i am think about the european market, i culligan europes thats my colleagues in europe a more cautious. On this metric theyre knocking be that attractive on this metric, they are not going to be that attractive. My colleagues in europe are more cautious. Haidi frank, great to have you. Lets get you to first word headlines. Hong kong police arresting at least 180 people during a protest in hong kongs latest move to crackdown on dissent. The move came after aging an essay National Security law for the territory, bypassing its elected edges late of counsel. The Hong Kong Government says the purchase proves the need for the new secured a measure. Will likely pompeo be unable to certify that hong kong maintains a high degree of autonomy, and if that happens there may be sanctions imposed. It is hard to see how hong kong could remain the Asian Financial center it has become if china takes over. Here in the u. S. , coronavirus cases jumped 1. 3 in the past 24 hours, below the one week average as that country closes in on the grim milestone of 100,000 fatalities. Bannednt trump has arrivals from brazil which has the secondhighest number of cases. Italyrdest hit in reported no fertility for the First Time Since the outbreak began. North Korean Leader kim jongun is testing relations with the west, calling for a step up in his countrys nuclear capability, reappearing after several days out of the headlines, he told military leaders they should boost north koreas arsenal. He promoted senior weapons experts and state media did not say when the media when the meeting happened nor what he wants is updated policy to be. Benjamin netanyahu has become the first is really Prime Minister to face trial in office denying a series of charges. One week after being sworn in for a fifth term he appeared in Jerusalem District court and denied wrongdoing. Netanyahu is course of coercing is really media to give him good press but says the case is a scam. Global news 24 hours a day on air and at quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Coming up, outside china protests have returned in a big way here in hong kong over anger over chinas new security law. Japan, the state of emergency is nearing its end with new cases of coronavirus dwindling. This is bloomberg. Haidi reports out of japan say the government could lift the state of emergency later today. To buy risk cases continue decline with deaths below 1000. Emerge from the emergency. Sophie yes potentially one week ahead of schedule, as early as this monday. The government could make a final decision on whether tokyo, hokkaido, and three other prefectures can join the other 42 which have already exited the state of emergency. The weekly case cap in tokyo has stayed below the government even withf 70, sundays 14 cases, the highest since may 15. They could begin a three stage opening twostate starting with libras and museums, and then cinemas and theaters. And museumsaries and then stage two with cinemas and theaters and then allowing bars to stay open till midnight. Lowestas registered the number of cases in for tallies among the g7 despite restrictions on peoples movements. But the economy has been battered and per minister since abes handling has the handling of it by Prime Ministers since abe been criticized shinzo abe. David where else in asia can we or should we expect measures to be relaxed . Sophie in the philippines that quarantine has been eased in parts of the country since may 16. Saturday the government announced businesses can resume operations including medical supply manufacturers and Delivery Services. In india, travelers can start flying within the country from monday. One third of domestic operations are proved to start again after two month shutdown. Given that continued guidance, three states are pushing back against the plan to resume including maharashtra and west bengal, also mumbai and kolkata. Turning to south korea, sunday the market the country marked its Third Straight day of cases below 30. Schools reopening remains on track for wednesday while authorities stay on high alert with Soul University being flagged as a potential hotbed. The cdc has urged people to avoid bars, karaoke, and cafes to eliminate to reduce spread or cluster. The finance ministry is to sell nine header billing you want of 20 year bonds. Yuan. Won. To be ok is likely to signal more aggressive bond buying at is meeting thursday as president moon calls for a korean new deal to create jobs and boost growth. In singapore at Parliament Meeting tuesday is expected to announce a fourth to millis package that will target companies which are to remain on lockdown when the three stage rep and off june 2. The three stage reopening kicks off june 2. David coming up, the pandemic is not the only factor guiding economic data. We look at the arc it moving numbers this week from across the region and what has been driving them. Market moving numbers and what that means for your money. A roundup of stories you need to know. Dayb on your terminals or cell phone. Customize your Bloomberg Cap see you only get news on the industries and the assets that matter to you. This is bloomberg. David the coronavirus pandemic by the National Peoples congress in china, and rising trade tensions casting extra emphasis on numbers this week from the region. Asia bring in our correspondent to take us through what to expect and what is coming up. Or wednesday, industrial profits out of china. Yes on wednesday, david and that will be an important one. Looking for another doubledigit decline there. Thanis bad but less bad march when it dropped 25 year on year. Industrial production out of china is coming back and some people are talking about a vshaped recovery. But we also know theres a Chance Supply might get ahead of the demand in the economy. Demand is not heating up at the same pace. The other is industrial profits in china, deflation on the producer side, which is a negative, having deflation which would depress profits and make cost of repaying debt more expensive. This is expected to be another double digit decline. If it is better than that you may see narratives around chinas economy covering faster as recovering faster. Haidi the bank of create set to announce its Rate Decision thursday. What are the options on the table for policymakers there . South korea has managed to suppress the virus, without a hard lockdown. Yet the economy still remains in the doldrums, and the consumer side of things is in the doldrums as well. The bank has to do something. Cutctations are they might their central rate by another 25 basis points and they might metal with unconventional policies. Since april they have started to take steps in that area. They are providing loans to brokerages and insurers to buy Corporate Bonds and specialpurpose vehicles. It is not quite qe, but it is dabbling around the edges of qe. And there is expectations that banks will have to cut its rate in the may signal that they have to take other steps as well. Despite koreas success in finding the rossa the virus, addressing the demand story. Economics chief asia correspondent there in hong kong. Lets get you a check of the latest business flash headlines bain capital is preparing for second round of capital for virgin australia. It says it as the strongest position of remaining bidders, one of four in the race for the Class Airline which has been swamped by 4 billion of debt as the coronavirus hammers the market for travel. Administrator deloitte says it wants bounding offers for the carrot by the middle of next month. For the carrier. Unionin the european including germany one report saying left onset would face a threeyear deadline for repayment of any aid. Make a formalo offer this week but talks with list anza and the rp and commission are dragging on with lufthansa and the European Commission are dragging on. An air fleet to rival ups. It launched air cargo in 2016 was speculation it would create a deliberate service that threatened ups and fedex. Hopefully they get their deliveries faster. We are still waiting for the buck. For the book. Another conversation. Movers, two to five. Nissan out their earnings. If you have 14 billion can buy the whole company. The stock is trading at 29 liquidation value having to compete with earnings friday up the most in 11 years. Foodngs out this year mos reporting earnings today. Coming up here we will be joined of the Hong Kong Legislative Council to discuss the National Security law imposed by china of the weekend. We had it coming back not to the extent last year but nowhere near the levels this year. Hong kong markets down badly friday and we will see that how place out this week. We will flesh out the story and what that may mean for moving ahead. This is bloomberg. This is daybreak asia. China says it will never return to a economy and will let the market decide the future. Speaking on the sidelines of the National Peoples congress, china does not want to change the u. S. And wants the Trump Administration to stop thinking they can change china. He warned washington not to cross the red line that is taiwan. China has no intention to change the u. S. Or the position of the u. S. While it is impossible for the u. S. To change china, u. S. Is not able to stop the historical process of the 1. 4 billion Chinese People towards modernization. We must be vigilant that some political forecast Political Forces are pushed his push towards the new cold war. They will if the state of emergency in tokyo as new coronavirus decline. Government will lift restrictions monday, one week ahead of the original schedule. The capital reported 14 new infections. The overall rate is set by the government to allow the emergency to be lifted. Thousands of homes and businesses are without power in Western Australia after the strongest storm in decades. A cyclone and cold front bringing winds of 100 kilometers an hour, and a storm surge of eight meters. The worst of the store may not hit until later monday as the system heads further south. Hashe u. S. , spacex completed final preparations for this weeks launch, carrying two astronauts to the space station. Its americas return to domestic crude mission after relying on russia for the last nine years. This will be the first u. S. Manned launch since the Space Shuttle retired in 2011. Toy used russian astronauts be sent to the iss. News, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. David lets talk about hong kong. Of what iswind almost every weekend. There were antichina protests returning to streets. Demonstrators have a look at what we have, are now seeing this new security law from the mainland. They kept things quiet and swept through the city. A new law has yet to be drafted. Ae proposal of it led to scene of what you are seeing now on your screen. Is joining us now. He is with the Democratic Alliance for the betterment of progress of hong kong. Good morning, thank you for coming on the program. Holden i welcome the decisions made by the Central Government to carry on with these National Security legislations. Apparently, over the past 23 anys, we did not have National Security legislation. Mike article 23, we have not done it. Apparently there is a loophole in our National Security system. Us to, its necessary for have this National Security law. More obvious, if you look at for allpened last year, the violence, for all the chaos, things similar to terrorism, things have people have explosive weapons to kill people. These things must be cracked down, and we need National Security laws to protect the safety of people. I do welcome the decision made by the special government, given the situation in hong kong, with all the chaos that has happened in the last year. Havenk its time for us to this National Security law. This is to protect the safety of people. Its just one more thing to add. Thatnot name a country there is no National Security law. This is the time for the Central Government to fix this loophole. Indeed its needed, why do you think it is so unpopular among people . Holden i dont see it as unpopular. I have been on the street and i have been talking to people. Online andnched an signature campaign. We have had one day where we received more than 20,000 signatures. And when we talk to people on the streets, people welcome these National Security laws david holden, just a sec. There is support. Sorry to interject. We saw there is a big part of the population who doesnt think its a good idea. How do you explain that . Denounce also have to the violence of yesterday. People were throwing bricks and attacking the police. Ordinary man an because of different political opinions. A group ofen up by protesters. Its very cruel. These are all very violent behaviors. People, ifthing is, they opposed to this piece of National Security law, one of the reasons perhaps they dont understand the nature of these laws. I believe that the vast majority of hong kong people do not need to worry or concern. If you are not committing crimes like terrorism, or if you are in thisged organization, its only those who engage in those terrorism or organized crime. I think the vast majority of hong kong need not worry. Business groups, Interest Groups like the American Chamber of commerce, you cannot say that these are bodies engaging in butorism, as you put it, these are also organizations that have expressed concerns over the potential changes. If this isy worried just something that Hong Kong Society that people should not be concerned about . I would say ifw, people dont understand the ie of National Security think the Details Remain to be seen. I think when the Central Government has all the details, they definitely will explain to the public to address peoples concerns. Time, i talked to many other business representatives. They also believe that this National Security law is just to make sure that we could have a stable environment in hong kong. Of course, if you look at what allened over the past year, this violence and terrorist act, if it continues to carry on, no business can be done. This is also effective to make sure that be would have a stable Business Environment for Foreign Investors to stay in hong kong. Holden, i think Foreign Investors are concerned that this new law is an erosion of the semblance of independence. Including judicial independence. Is that a valid concern, and what you say about the argument that beijing is willing to change hong kong station as an international Financial Hub, staying separate from beijing in order to consolidate control . That. i disagree with first of all, i make that very clear. Enactment of this National Security law, the purpose of that is to make sure we have a safe environment in hong kong to protect National Security. If the violence for the mayhem continues to carry on, we will lose the safe environment, and nobody will be willing to invest in hong kong in the long run. Cow, they havemy they have done their National Security investment. Its just to make sure we have a safe environment. If people have concerns about , i National Security law would say, now the details are the National Security log remains to be seen, but im sure that the Central Government will explain to everyone. But given the chaotic givennment in hong kong, all these violent protests and terrorist acts happening in the past year, i believe that a lot of people are expecting the Central Government to enact these laws to crack down on those violent behaviors. Make sure they see hong kong people. Put it this way. The way things are shaking up, and we have to wait and see how this plays out comments is that this will be introduced by decree. I am going to go through the normal legislative process. Ofld you be in favor something being introduced in a similar way if it was not this . A lot of people have also expressed their concerns that its being implemented without a consultation of the hong kong people. To havea valid concern what would you say to those people . This lies in accordance with our basic law. In article 18 of the basic law, the Central Government does have the right to incorporate the national law into annex of the basic law. Its done in accordance with the basic law. I dont see anything wrong there. About consultation or public consultation, i think people could express opinion in hong kong, especially through the representative. We have a lot of representatives in hong kong. Receive this on the public. Im sure that the Central Government would be able to get hold of public opinion. I dont see anything wrong. Just one more thing just one more thing i have to add. His National Security law is the purposefor that, given the chaotic situation in the past year, people could not tolerate this very chaotic situation. Im sure that the safety of people is of prime importance. And there is a loophole that over 23 on years we failed the legislator article 23. So there is a loophole for our National Security. I dont think hong kong should be a loophole for the National Security for our whole nation. Holden, thank you for joining us. Will continue to bring you voices from all sides of the debate on hong kongs future on wednesday. We will be joined by the standard chair of the new peoples party. Coming up next we will discuss the Coronavirus Impact on demand. The bank analyst will be with us. This is bloomberg. David welcome back to the program. Youris a snapshot of equity markets. A lot of markets are closed, including the u. S. And u. K. Theightly higher start to trading week. We are looking at everything from gold and black gold, if you want to call it that. Keep in mind, we are almost double from what we had. Look at the spread between west texas and crude. Coming down 31 in gold and silver. Keeping it in the family. Lets go with commodities. Brazils coronavirus outbreak disrupted global surprise global suppliers. The infrastructure recovery push is pushing to an eight month high. Lets look at whether this is sustainable. I want to bring in the Energy Commodity analyst vivek dhar. Frier nor, given the expectations that china will double down in terms of infrastructure investment. Now the supplyside concerns from brazil. The Current Situation in the shortterm is positive. But we are seeing in the demand inventories and we have seen still males in china lifting steel mills in china lifting. Part of it is driven by what is happening. Its only temporary. E expect to recover more importantly, chinas demand. We saw on friday the it wouldent about what be. That on that we can see demand. And another 1. 45 rupees for the remaining seven months. That is critical. Iron or will fall by the end of the year on the back of that. Around 60 of chinas iron ore import comes out of australia. There has been increasing concern of the trade tensions and a titfortat. Beef as well as barley is on hot commodities. Steal makingthat supplier from somewhere else . Vivek it would be very challenging. It would hurt its steel sector. In our view, we think iron or is iron ore is this. Changes we fear are net positive. In our view, iron ore should be faced with this. Just to get our viewers an update on the new cases in china. 11 additional coronavirus cases. All of which china says are imported. Sorry to interrupt you. On iron ore, how does brazil factor in . See its very difficult to see how that ends in brazil, the story. Whats the supply disruption like and once you timetable . Vivek what we saw from valley what we saw from them was a downturn in production. Was that covid19 was added so that they could get maintenance the way they expected. A year is,ays out in eventually we will see more and more people come back. Iscourse the timing of that going to be difficult to predict. It is hard to say that the risks are now around it will persist in six months time. By the end of the year we should still see recovering. And chinese demand should ease. On oil, the david higher prices obviously you could make the argument, the lower the incentive for producers to stick to their promise. At what level of oil does the market need more attention to complaints . Compliance . Vivek i think between 40 and 50 you need to pay attention. The one thing that has change significantly has been the fact that russia and saudi arabia had that selling out. Back really brought opecplus together in the sense that they had to Work Together to save oil prices and oil markets. So i think that will keep compliance in check. And 50 a barrel, i would keep an eye on russian supply, supply from iraq, from nigeria, these are all please is who we previously saw noncompliance from with the previous opecplus. The main attention should be on u. S. Oil. We have seen their cuts have been very significant. The question is, at a very responsive on lower prices . Vivek, thank you so much. We have to leave it there. We will look at markets and how they are likely to open in hong kong, given attention from over the weekend. This is bloomberg. David one market we are counting down to is the open of hong kong. Massive, massive drop on friday. We want to forget about that, but can we . , wasis sophie a to tell us it overdone or will he continue . Sophia we saw selloff like this in hong kong before. Back in march when the index was we expected ar, buying opportunity and the hang seng index rarely trends below. It is only done that three times before in history. Now we got this. The concern is still very much there. Want to buy hong kong stocks now when you have the weakening yuan, chinau. S. Tensions. Companies generate earnings. We also have local unrest. People with the currency will weaken. We had a lot of activity on friday. We saw a huge spike in volatility on friday. I think that really shows that people are really rushing to hedge against further losses. Its sort of ironic. A few days ago we were talking about the boom for hong kong ipos. Is that now fading . Its anrnible] sofia its an sofia interesting dynamics of the currency market. There is a rush of Chinese Companies coming to rush in the city. That knocks off liquidity and supports the economy. We also have Fierce Capital outflows, which really puts pressure on the currency on the downside. It is a very tricky that to make right now. S ofi sofia, our china markets correspondent. Markets is next. This is bloomberg. It is 9 00 a. M. In beijing. Welcome to Bloomberg Markets china open. The planneds economy and says the markets will decide. Tojing does not wish threaten america, but reaffirms its red line over taiwan. Traders withs rising china tensions and a prospect for a postvirus recovery