Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

On in hong kong with china over the weekend saying the security law could override hong kongs legal system. We she we see shares on the hang seng. 23,469 for the hang seng. The csi 300 pointing positive. Showing the resilience across these benchmarks. The kospi as well, we did get those export numbers. A slump easing a bit. Not very encouraging when it comes to exports of chips. Only a gain of 2. 6 . We saw a 13 advance in may. Perhaps this recovery is in an early nascent sense. The p cop, lowered by 910s of 12 . A decision coming through bank of centro and the rbnz later this week. Later on when it comes to assets, the disappointment has been with the china lpr, which they did not do anything. Given the credit numbers we have gotten, perhaps it was reason to pause. The selloff in bonds, are we going to continue to see that change . Ozzie yen, you are seeing a perk up aussie again, you are seeing a perk up. The dollar is rising for a fifth day. We have seen some flareups in australia. The state of victoria extended its state of emergency. We see oil backup and it comes to brent. Linese have breaking crossing the terminal regarding the former National Security advisor. It is expected to be published. The South Koreans pushing back on some of the claims in that book. Nhap. Is according to yo saying that boltons book claimed the security advisor came up with the idea of a trumpkim summit in singapore and he reached out to kim jongun first. It seems the National Security advisor is saying that is not true. Some lines crossing relating to this book by bolton. There has been a number of explosive allegations and claims by that book. Its get more details on the National Security law in hong kong. China confirming the new security law will allowed beijing to override hong kongs independent legal system. The details had been kept under wraps until this weekend when a draft bill had been made public. Lets bring in our government reporter. For you, what were the Key Takeaways for the proposed bill that you read through over the weekend . Everyone had been waiting for details. It had been hanging over the city like a dark cloud. What are the most important things like you say, this law will trump those laws and override them. That is a serious blow to the judicial independence. One of the other important points is the new National Security law will allow china to set up a Security Bureau in the city. There has long been rumors that Security Forces were operating discreetly within hong kong. Some people have disappeared before. There will be allowed to operate openly. That is something that is very concerning to people here. China did confirm they will take over some cases they say in exceptional circumstances. Vaguell remains which cases would qualify to be lifted out of hong kongs jurisdiction. That has raised a whole bunch of concerns about extradition. Ideas in the proposed bill last year prompted more than six months of often violent protest in the city. There is a lot of concern about the law. Details have come out. They areme time, still very vague. There is no clear definition on what constitutes these crimes. A lot of the details are cleared up. Some questions raised some more. Yvonne the law also had some details about which judges would try the case. Where does that leave the judiciary . Exactly. The details that came out over the weekend specified hong kongs chief executive, which is now carrie lam, will be allowed to appoint individual judges to hear specific cases. That is something that is not common. Usually judges are allotted or assigned a more senior judges assigned by more senior judges in the judiciary. We talked to hong kong lawyers. They say this is an unprecedented assault on hong kongs independent legal system. It raises questions on whether the chief executive of the hunk of hong kong would be appointing particular judges with viewed favorable judgment for the government because they would be prosecuting protesters or opposition activists. There is a lot of vested interest. That has raised a lot of questions about the ability of hong kongs independent legal system to withstand the pressure from the new National Security law. Tom are the activists and politicians aligned . Where they take things from here . Much commonpretty cause with trying to resist the them for mentation of this bill. They will probably there will probably be more protest. At the moment, it is not clear what they can do to stop it. Obviously, they have been calling for international pressure. The u. S. Has threatened china with retaliations. Potentially even revoking hong kongs special trading status. There are a lot of things hanging over the air right now. Weeks,ave seen in recent the new proactive stance from the Hong Kong Police has meant that some people are a little afraid to show up some of these protests because the chance of being arrested is going up. Yvonne over the weekend, we saw the failure of the labor unions and students. Not enough support was gathered to strike against the National Security laws. That was our government reporter with an update on the National Security draft bill. Lets go to the first word news. Thank you so much. President trump is planning to restrict employment visas, which could affect up to a quarter of a Million People seeking to work in the u. S. Trump plans to put curbs on several visa categories including the h1b program and the l1 for managers transferring within their own company. Italy is preparing to seek a wider budget gap as the government draws up a reform plan to lobby for e. U. Assistance. Prime minister Giuseppe Conte will focus on Infrastructure Projects such as highspeed rail and may cut vat. He says a wider budget gap may be needed as italy does not have the resources to cope with the fallout. Singapore is positioning itself with a massive investment in innovation beyond the immediate support announced for struggling businesses. The government will set aside 14 billion u. S. Dollars to support research in high impact areas such as health and biomedical services. It is part of an r d plan being finalized. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Have plenty more coming up including beijing flexing its muscles with a proposed National Security law that overrides hong kongs independent legal system. We are going to speaking with who is a shi yinhong leading policy advisor to chinas state council. Yvonne governments are gradually easing lockdowns. Markets remain vulnerable. Pacific cio says how she is navigating right now. This is bloomberg. Yvonne trillions into the World Economy. Investors are setting their sights on what could be the next big thing. We are talking about yield curve control. We have seen it with the boj and the rba. Perhaps we could see it with the fed next. Joining us to talk more about markets is the conning asia pacific cio. Thank you for joining us. This whole prospect of yield curve control, do you think this could go global and you think it could be a good a bad thing for markets . Yes, there are times before that will make us feel we have to watch the strong end of the curve. We do not think for now this will be a threat. Is the easing cycles are not over yet. I think probably, we should not be expecting action in the near term. That has been a lot been done in a short span of time. The economy is going through a reopening stage. We will see how the economy reopens. Control. Cluding isending on how the economy formed. Yvonne how are you viewing risk at the moment . After this massive rally we have seen since march, we peter out a little bit. Do you think markets could correct more or do you think this is a pause in an uptrend . Siew mee for what we are seeing, the surge between midmay may and early june, that is unlikely you see a repeat. What we do expect for the next couple weeks as for the market. It creates more of a consolidation phase. Probably around five to 10. Beyond that, i think what is important will be whether we get more stimulus from the u. S. It is currently pricing in some of that to come in july. What is going to be interesting this sector is how the reactions pan out to be. This premium will be volatile. Isimately, very important the cyclical recovery, which is not expected to be strong for this recovery cycle. In that sense, i think markets [indiscernible] having highnot expectations. It is going to be key as a liquidity. Backdrop against what is going to happen. Markets can continue to climb. Tom continued to climb the wall of worries. If Central Banks continue to provide a backstop, what it is looking like i need a credit market . Is there still an opportunity and if so, where you want to be positioned . Siew mee [indiscernible] bonds being in negative territory. That is a big challenge. The u. S. Dollar credit market is happy to be positioned. An investment rate bonds. It will go down to how you create 6 . To backstop as a mentioned, the Central Bank Policies are the fed or the ecb. We are expected to be saving around 10 buric around 10 million bureaus policies are aimed at keeping Credit Conditions loose. And prevent unnecessary credit strains. Comfortable to be positioned. One driver you see is this attraction of Corporate Bonds globally, especially the slo bonds. Investors from japan and taiwan. [indiscernible] the u. S. Dollar credit more [indiscernible] and you think there opportunities in European Assets as well . Run us through the value gap between u. S. Assets and European Assets. What are you looking at in particular . Been europe has one of the overriding risks hanging over that area is the potential eurozone. If you look at how things have developed, that has become much more remote. [indiscernible] what is new and important is the fiscal integration we are getting. With the introduction of the new Recovery Fund. These are all very positive changes we see. Window opening up for European Assets to catch up. We have the opportunity across europe. They are nice pickings from equities. Also going to faced income among Corporate Bonds. Also looking into the Government Bond space. Tom we have to leave it there. Thank you for your insight this morning. That is conning asiapacific cio siew mee yeo. Coming up, an exclusive interview with the south korean wealth fund cie. He says they are prepared increase equity positions if there is another shock to global markets. This is going test this is bloomberg. Tom south koreas 157 billion wealth fund may add to its Equity Holdings if there is another shock in global markets. We spoke to the korea corp. Investment chairman about where he sees opportunity in the markets post pandemic. We believe that given the high equity valuation, we think there might be some limit for the market. Might be better to prepare another market location for the time being. We are more cautious at this stage. Run, ong [indiscernible] what do you think the next downturn or the next uptick in this market will be driven by . Obviously, most Market Participants think that maybe the second wave if we can prevent, fully overcome the coronavirus, then prevent the Second Market. Second market fallout. I believe due to the central backstop, [indiscernible] to be frank with you, we have no idea when is the right time. At this stage, we are happy about the current situation. Made have you made major changes to your report folio since the start of the pandemic . If there is a second wave, we obviously reconsider our location. If there is some other markets shock, it may be further developing in other locations for equities because you might see further potential in the equity market. Korean that was the investment corp. Cio heenam choi. The whole event starts at 1 00 p. M. Local time today. Im going to be interviewing charles lee from the Hong Kong Exchange ceo and ross mcewan. Lets get to the latest business flash headlines. And tendo is retreating from the 77 billion mobile gaming arena after disappointing results deflated its once lofty ambitions. The president said two years ago that smartphone gains would be a billiondollar business with growth potential. Last month, he said he is not looking to release mobile applications and will focus on the switch console. Bloomberg is told that softbanks chip unit arm fired the head of its venture after a set up an investing firm. Alpha ay he launched common move already had such a fund. Lets check in on how the markets are playing out at this stage. We have the details over the weekend on the security law in hong kong. You have the hsi done 2 10 of 8 . Small caps in china continue to perform strongly. The kospi, we have the trade data out of x export data out of korea for the 20th. We can move it onto the next board. Were looking at oil and gold as well as some of the currencies. Gold is up 6 10 of 1 . Oil also performing slightly better after concerns about demand. Plenty more ahead. Stay with us. This is bloomberg. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. It is 10 20 9 a. M. In hong a. M. And shanghai 10 29 in hong kong and shanghai. Coronavirus total infections now about 8. 8 million. Cases in several u. S. States jumped, with one Infectious Disease researcher warning of what he called a forest fire of cases on the horizon. Spain has been hardhit by the virus, but it is lifting restrictions. Early south korean trade figures show an easing of declines. Daily shipments fell 16 in the first 20 days of june from a year ago, which was an improvement from the 20 declines in april and may. Semiconductor exports increased by 2. 5 . The International Monetary fund is to further downgrade its view of the World Economy this week, just two months after predicting the deepest recession in 100 years. The rescission revision may be more pessimistic than aprils statement. The only bright spot is the feeling that some countries might have passed the worst of the coronavirus. Ina is to join initially stayed back from the treaty, but it has now decided to sign following president trumps decision to withdraw. More than 100 nations have signed the accord thus far. Indias virus lockdown saw oil reports imports slump. The lowest monthly total since february 2015. India is the Third Largest oil market in the world. Consumption dropped by up to 70 at one stage in april. Refiners normally import about 85 of their needs. Bybal news, powered journalists and analysts in more than 120 countries. Lets do a quick check of the latest of the markets. We are basically treading water when it comes to asian equities as we kick off this trading week. Slightly higher for asian stocks, pretty much flat. At least u. S. Futures have reversed the earlier losses. We are punching higher now. Nifty is heading the opposite direction. It could be a rough section it could be a rough session in mumbai. Theres a lack of conviction in the markets as we try to reassess this rally we have seen since march. U. S. 10year yields are unchanged, but we have seen four days where yields have ticked lower. The dollar is gaining a little momentum here. See some weakness in the rupiah, the korean won, still reactive to those export numbers out of south korea today. The export slump seems to be easing. Not as good as the main numbers may numbers. Oil higher by about 0. 5 . Tom lets get some reaction now from someone who has the ear of chinas leaders when it comes to their security law. China saying its new National Security law will allow beijing to override hong kongs independent legal system. That is shedding new light on a move that has stoked tensions with the u. S. And threatens the citys status as a top financial center. Lets discuss this and more with shi yinhong, a professor at min university of china. He recently took aim at the diplomats,arrior saying aggressive nationalism is driving the world away from china. Professor, thank you for joining us this morning. Your reaction to the details we got over the weekend regarding the security law . I believe that they have laid [indiscernible] National Security for hong kong. [indiscernible] [indiscernible] chinese Central Government [indiscernible] professor, a big question around this law is how it is interpreted and how it is put into place. In terms of the mainland and its own security law, theres a pretty broad scope, and of course weve seen lawyers and human rights activists and some journalists detained and punished here on the mainland. How broadly do you think the authorities will interpret this law once it is put in place in hong kong . The Central Government of hong kong [indiscernible] this should only touch a very small percentage of the hong which only, among minority a very small [indiscernible] as a could be interpreted against the chinese National Security in hong kong. [indiscernible] processis still in the of [indiscernible] chinesee that the Central Government and the hong kong district government [indiscernible] to define what kind of actions are a crime against National Security [indiscernible] maintain law and order. [indiscernible] yvonne where does that leave the courts, then, here in the city, professor . Are hong kong courts still independent . Is it reasonable for the chief executive and beijing to appoint judges . Is [indiscernible] the Central Government [indiscernible] it has not appeased the radicals. [indiscernible] [indiscernible] professor, you talked about these wolf warrior diplomats, at a time during the coronavirus, when they were seriously defending chinas response to this pandemic. China used to be more conservative in their diplomacy. Ambitions. Now we are seeing a beijing that is much more assertive. What do you think has caused this shift . Is [indiscernible] the covid pandemic in china and a global pandemic. [indiscernible] boosted by its [indiscernible] and also, these are [indiscernible] united states. Socalled war of words [indiscernible] professor, we will leave it there. The pandemic professor. Apologies, we are going to leave it there, professor shi yinhong, from chinas renmin university. Coming up, final bids for its seen as a key test for the worlds struggling airline industry. This is bloomberg. Tom welcome back. Lets bring you a quick check of the latest business flash headlines. American airlines is bracing its Balance Sheet with 3. 5 billion in new financing as it looks to shore up liquidity after the coronavirus. The carrier has sold millions of dollars of shares and the same amount in convertible notes. American is also offering 1. 5 billion u. S. In secured notes and taking 500 million as a loan. Passenger numbers for u. S. Carriers are down more than 80 from this time last year. Bailout is at risk after just 38 of shareholders registered to vote at the carriers meeting. Smaller numbers means the carrier now needs a 2 3 majority to approve the plan. The airlines biggest shareholder with a 15 stake has already said he doesnt like the plan. Dubai is to ease travel restrictions for tourists from july 7 as it emerges from lockdown. Visitors will be required to present proof to show they are covid19 negative or undergo testing at the airport. Emirates monday, the will begin allowing Foreign Residents who are stuck abroad to return under the same conditions. Outbound travel will be allowed from this tuesday. Staying on airlines now, potential buyers of Virgin Australia are set to commit to binding offers today. To secure a deal by the end of the month. The final bids will show the appetite for an industry battered by the pandemic. The World Airlines index, there has been index there rising. Why is there interest in Virgin Australia when the industry is facing challenging times from this coronavirus . Without Virgin Australia, it will virtually be qantas. I think it is the in the interest of consumers to have at least one competitor it is in the interest of consumers to have at least one competitor to qantas. Interest,eres a key given that the market can actually have two players. I think the other situation is that weve seen travel sort of come back, especially in the domestic market around the world, in the u. S. , china. Areink while there challenges still with coronavirus, the industry doesnt seem to be coming back slowly. Does seem tostry be coming back slowly. Given the market that australia has, it does seem to be attractive at the moment. Tom what are the key challenges that Airlines Face longerterm . I think the biggest challenge the Airlines Face is getting people to fly international. The theoing to be biggest challenge given that airlines have no control over borders. The other situation would be how confident people are flying long hours on a plane, given the fears of coronavirus and the lack of a vaccine. I think the biggest challenge is regaining the confidence of the customers, as well as the governments to open up their borders. Tom indeed. Thank you very much for that update, kyunghee park. And the german chancellor have warned European Union leaders that if they failed to agree on a stimulus package, the consequences could be dire. The Imf European Department director spoke to bloomberg earlier about the proposed plan to help economies heal from the effects of the covid19 pandemic. I think that its important that all leaders recognize that we need a forceful response and another forceful response at the european level. The details are still under discussion, but i think there is agreement there needs to be a forceful response. I think, going into the summit, that was hoped for. Getree it would be good to a deal before the summer break. Angela merkel and Christine Lagarde have fairly harsh words for their colleagues, both warning, if there is no agreement before the summer, the european economy will face dire consequences. A, would you agree with that assessment of the situation . B, how dire . So, i do agree that the proposed Recovery Fund is an important additional element of what has so far been a very forceful european policy response. Weve had a significant policy response at the national level. Early response , includingpean level support from the commission for labor markets, this additional, very large fund would complement these very strong measures we have seen so far. Indeed critically important. G aare still in facin significant downturn. You will see us revising down words further our numbers. It is too early to see how much. The european economy has taken a very severe hit, and i agree we need to continue with forceful policy stimulus. Package as well as the individual stimulus packages from germany, france, italy, spain, etc. , enough . That is a very strong response to how we see the situation right now, but the uncertainty is huge. There are some significant downside risks. Risk of hit and the some spillovers that we have not seen so far, thankfully, into the financial sector. More will be needed if these things happen. Thomsen, its been said that, if there is money to be distributed, that money needs to be tied to reform, not just consumption. Lets think about that for a moment. The american response has been very much to maintain and drive consumption. It is a critical part of what has happened in terms of the recovery in the united states. Is it a mistake at this point for chancellor the chancellor and others to suggest there should be Strings Attached to this money, or should the money be dished out to try and keep consumption going, to try and keep the velocity in the economy that has been sadly lacking . Thee have to recognize that European Union, the euro area is not a Political Union in the sense that you have in the u. S. We need compromise between Member States. It does involve some transfer from some Member States to others, so compromise needs to be reached. Im not going to go into the one or the other side of that, but the situation is different in europe, compared to the u. S. , politically. Thats one of the things you are seeing now. Imfs poult was the thomsen. Coming up, apples developer conference this year is set to be marred by a dispute with at makers and increasing regulatory with appmakers and increasing regulatory scrutiny in europe. This is bloomberg. Tom welcome back. Apples annual Developers Conference starts today, facing one of the biggest backlashes in the app stores history. The simmering dispute comes with apple under investigation from european regulators that could fundamentally change the way it kers makekers appma money in the future. Pavel, there are a few clouds marring the annual weeklong celebration of apple. What are some of the issues . The biggest point of contention between apple and the thirdparty developers, basically people who make most theye apps you see, is how get to charge money for the services they offer. Store takes a 15 to 30 cut of all subscriptions and inapt purchases inapp purchases. A growing backlash has been pushing against these particular terms, which some developers find to be user risk rous. Erious usu app that was rejected for not sharing revenue. Usurious. There have been investigations centering on this issue. Apple managed to avoid most of the backlash that hit facebook, twitter, and google recently. A democrat from rhode island called apples policy highway apples policy highway robbery. Yvonne pavel, what about for regular consumers . What can they expect that this years wdc . If you are not a developer, theres lots of things you can look for. [indiscernible] imacs would allow apps to be merged. You can buy it without having to buy it again. There are some minor upgrades to the apple tv. Watch user, apple there are some new faces and modes for kids. Speakers will get [indiscernible] you might be able to use it as a key. Theres another feature [indiscernible] asia tech reporter pavlik alipay has pavel alpeyev. There was the start to the session, a little bit negative. There is now green on the board in the mainland. The csi is up. Kospi si is flat. Futures in the u. S. Are looking positive. Hsi is down. We can move on to some of the commodities and currencies. Friday, getting bid on and you did see some pressure on wti. Gold, currently up 0. 4 . And you have the csrc saying you should internationalize the yuan further from here. Plenty more ahead. Stay with us. This is bloomberg. This is bloomberg. Its almost 11 00 a. M. In singapore and hong kong. Im haslinda amin. Welcome to Bloomberg Markets asia. Imn Rishaad Salamat Rishaad Salamat. Prodemocracy campaigners say they are preparing to go to jail. Haslinda global coronavirus cases approach 9 million with over 400,000 people dead. China holds portree halts poultry imports from a u. S. Producer. The worlds most populous nation the latest on indias border spat with china. Haslinda lets do a check on the markets. It is pretty mixed. A lack of conviction. Swinging between gains and losses. Investors bracing for turmoil. Concerns about geopolitics. Little reaction so far from the u. S. After the emergence of details to the Hong Kong Security law. The Msci Asia Pac index is currently flat. The hang seng is down 0. 3 . Its hard to say what the security law will mean. But they could look beyond that. Invesco saying hong kong could see upside in the second half, driven by better Earnings Growth from chinese companies. The csi index is up for a fifth straight day. Signs that bullish momentum is set to return with the china x at its highest years. At its highest in theres a lack of economic dynamism even as australia emerges from the lockdown. Take a look at where we are in terms of Southeast Asian markets. 0. 5 , down for a second day. Markets will hover at the 6200 mark this week. Policy decisions do on thursday due on thursday. The singapore sti is up. Singapore finalizing a fiveyear rnd plan to turbocharge innovation r d pl to turbocharge innovationan plan to turbocharge innovation. Were awaiting perhaps an announcement in the next few days, perhaps even later today, for when the election will be held. Rish . Rishaad lets check in with currencies. Have a look at whats happening with the dollar index. Pretty much unchanged. This is a broad picture of a word. The hong kong dollar is right up against the strongest part of its bound. We just have the open in thailand, and a huge drop for some of the banks. On friday, the commercial banks should be prepared for a Capital Management plan for the next one year to three years due to risk from the global pandemic. They should avoid paying dividends and avoid share buybacks. Dragging the Stock Exchange of thailand down by 0. 6 . Thats where we are with those dragging down the market. Moving to whats happening in new york. Taking a look at the first word news is karina mitchell. Karina coronavirus cases continue to rise around the world with total infections now about 8. 8 million, with 467,000 people now dead. Cases in several u. S. States jumped, with one researcher warning of what he called a forest fire of cases on the horizon. Spain has been hit hard by the pandemic, but is now lifting restrictions on visitors from the eu. Meanwhile, china is suspending poultry imports from the tyson foods plant in arkansas after hundreds of employees tested positive for the coronavirus. All products en route to china or already arrived will be seized by customs. This could undermine the u. S. China trade deal. President trump is planning to restrict employment visas, which could affect up to 250,000 people seeking to work in the u. S. Trump told fox news he plans to put curbs on several different visa categories, including the h1b program for high skilled workers. He says there will be very few exclusions. An early south korean trade figures shows an easing of export declines in june, helped by resilient demand for semiconductors and increased volume to china. Daily shipments fell 16 in the first 20 days of june from a year ago, which was an improvement from the 20 declines in april and may. Semiconductor exports, which are south koreas biggest source of trade income, increased by 2. 5 . Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im karina mitchell. This is bloomberg. Rish, dr. You. Rish, back to you. Rishaad details of the new law have been kept under wraps until this past weekend. A draft bill made public by the xinhua news agency. Lets get to our editor. What are the Key Takeaways . Everybody seems to be concentrating on this line that it doesnt supersede hong kong law it does supersede hong kong law, but what about the details . We got some light shed for us this weekend. The administration confirming the law would allow it to overwrite hong kongs independent legal system override hong kongs independent legal system. It said the Central Government will have jurisdiction over extremely small number of National Security cases under specific circumstances. According to the draft language, it said it will establish a new bureau here to analyze the security situation and handle National Security cases. Establish a new committee it also calls for hong kong to establish a new committee. What kind of response have we heard from the prodemocracy camp . They are worried. There are a lot of question marks for them right now. Activists in the opposition are saying the use of legislation in Mainland China to jail people like journalists and human rights lawyers suggests that they will also face the same threat or they will have to start operating like activists on the mainland. They could Face Criminal Charges for everything they do. In the short term , they are looking ahead to key Legislative Council elections in the fall. They are concerned about and theres here chances of winning a majority in september that would give them the ability to shoot down proposals from the beijingbacked government. There is an extreme amount of concern on their side. Haslinda speaking of concern, karen, the law also had some new details about which judges could try the case. What can you tell us about that . Karen thats related to this new committee that may be established under the draft bill to protect National Security that will be accountable to beijing. The chief executive here will oversee it as well as appoint judges to handle criminal cases under the law, and authorities in beijing will have the final say on interpreting that. A lot happening with the legal system that we will be watching in the coming weeks and months. Leigh in hongn kong. Still to come, we are joined by the chairman of Goldman Sachs asset management. Find out what sheila patel has to say about geopolitical risks facing the global market. We will also discuss ahead, chinas virusrelated suspension of some u. S. Poultry imports raising questions about the stages of the phase one trade deal. Details, coming up. This is bloomberg. Withad you are back Bloomberg Markets. The mystery surrounding missing money at a german payments platform is deepening. None of the 2 billion unaccounted for entered the philippines banking system. Funds ever arrived in the philippines. Pulling results for last year and the First Quarter of 2020. Oncerival to starbucks will be voting on the removal of board members, including the former ceo and the independent director, also part of the luckin audit committee. Bloomberg news is being told t softbanks arm any that set up a comp would compete with its own business in the mainland. Its a common move for chip firms to help fledgling companies, but arm and its partners already had such a fund. 157 da south koreas billion Sovereign Wealth Fund may add to its holdings. To a guest about where he Sees Opportunities in the market was pandemic post pandemic. Equity, wee high think there might be some limit for the market. It might be better to prepare another location for the time being. In the long term, [indiscernible] the market will fully recover. For now, we take a wait and see position for our assets. What do you think the next downturn or uptick in this market will be driven by . Obviously, most Market Participants expect that maybe the second wave if we can prevent, fully overcome the second wave of then we might prevent the Second Market fallout. But i believe that, due to the central bank and governments strong policy backstop, we can [indiscernible] have no ideayou when it is the right time. But we are happy about the current market situation. Have you made major changes to your investing strategy or your portfolio since the start of the pandemic . As i mentioned before, yes, [indiscernible] compared to the fixed income. Second wave,is a we obviously reconsider our allocations. If theres another market shock, you might see a further rebalancing of our asset allocations towards equities. You might see further potential in the equity markets. Was koreahat Investment Corporation ceo heenam choi. We will bring you some of the biggest names across finance, economics, and investing, including charles li and ross mcewan. Coming up, several rate decisions coming up this week. Eugenia fabon victorino insights, next. This is bloomberg. Welcome back. Hold left its rates on with recent strong growth al lowing it. Victorino Eugenia Victorino joins us. Triplerrr cut . When is that likely . Eugenia i would be expecting a move, and he moved from the pboc to ease the liquidity conditions any move from the pboc to ease the liquidity conditions. I would expect a cut in the soon, beforemetime july, when liquidity conditions are expected to tighten. Haslinda will that there be much more after that . Eugenia its hard to say, because, at this point, the pboc has been showing a level of ambivalence. The market is left wondering what it really wants to do considering the rhetoric has been supportive of credit growth and get the onshore Interest Rates have been less [indiscernible] in the last few weeks. It would seem that they would have prefer a mix of cuts in the Interest Rate, as well as targeted positions in liquidity, likely more asset purchases. We are seeingnia, bonds under a lot of pressure. Whats the outlook for china 10 year . It seems like its the widest since 2011. Eugenia indeed. Its not because of the u. S. Treasury move, but its really because of the type liquidity onshore. In the last month alone, there has been a repricing as far as the loan prime rate. Today, we have a steady loan prime rate. But when i look at the Interest Rate swap for the lpr, it is suggesting that the market has basically conformed to what the pboc would like them to do earlier in april. The market was pricing in at 10 basis points of cuts. Now it is pricing in around 3. 80. Its only pricing in around five basis point cuts. Eugenia, i want to have a look at some of these other Central Banks in this part of the world. New zealand, thailand, the philippines. The thai story is quite interesting, with banks under a lot of pressure after the central bank said the commercial banks should prepare Capital Management plans for the next one year to three years because of risks of covid19 coming back. How do these commercial banks handle this . To reiterate and the question on Central Banks as well. The thailandt now, policy rate is at 50 basis points. I think theyve already reached their comfortable level. Even with the latest cut, the b. O. T. Monetary policy group was divided in terms of delivering that last cut, so i dont think they would want to cut further. Focuss now that the would be on maintaining liquidity and to boost reddit creation credit creation. When you have weak domestic demand, its hard to see a Real Recovery in credit demand. Rishaad absolutely. What about the other banks i was talking about as well, the likes of new zealand and the philippines . Having a look at their monetary situation . I would expect them to stay on hold later this week. At this point, the Central Banks would prefer to have a weaker currency, but really when you have today, its risk off. But the big picture is still supporting risk. When you have a broadbased sentiment, it would be a waste of ammunition for them to try to talk down the kiwi from here. Having said that, i would still to maintain its Quantitative Easing Program to at least half the rise of the kiwi. As far as the Philippines Central Bank is concerned, i expect them to keep their policy rates for this week, but i still expect them to cut another 25 basic points basis points this year, just to ensure Economic Growth would recover. The philippines was one of the strongest economies right before the pandemic it hit them. Were talkingia, about liquidity here and ensuring that there is ample liquidity. How much of this liquidity has been driving equities, globally speaking, particularly in the u. S. , but i will keep it to the region . It no doubt has played a role in the search we have witnessed. We point being the surge have witnessed. The point being it does fade at some point in the economic reality will hit. Whats your view . Eugenia there is the economic reality and liquidity. The risks of second wave of infections, the risks of a long, drawn out path to full recovery they have always been there. Thats not new. And yet rishaad it seems like we just lost Eugenia Victorino. We will try to get back to her. We will have a look at whats going on with the markets as we try to reestablish contact. Our technical issues getting in the way there. Where chinesent markets are moving to the upside. The prime rate had been broadly predicted, one would assume. For the chinext. Positive picture. Haslinda, what are you looking at . Haslinda we are looking at thai banks. Should be said they making management plans over the next one year to three years. Thats weighing a lot on the banks. Down a whopping 6 . Down. Rn we have thailand under a lot of pressure when it comes to its recovery story. Theres limited space for the bank of thailand to add policy, rish. Rishaad lets have a look at the general market moves. Seeing all these different Asset Classes and what they are doing. The mongolian markets, the biggest move to the downside. The philippines up by 0. 5 as we await the Interest Rate decision this week. Japans yield going up 1. 4 basis points. Looking at the commodities space, not Much Movement for the crude picture. Cotton prices down about 1. 1 . Indo see a move for the csi terms of equity futures. Thats where we are at the moment. Looking at whats happening currency wise. The rupiah, an Interest Rate decision there. I believe that was last week. Thailand and the philippines and new zealand markets, in anticipation of Monetary Policy statements. Haslinda. Haslinda plenty more to come. Keep it here with us. This is bloomberg. W . W . Uhiono haslinda almost 11 30 in singapore. Were in the middle of the trading day, sti looking like this, i mixed picture across asia as investors marveled the significance of those virus cases, new virus cases, possibly the second wave. Some kindis awaiting of announcement of elections. We heard from the opposition party, suggesting that should be delayed because of concerns over the affairs. Now, for the first word news. Proposed laws its for hong kong will override the local system. With the u. S. And other western nations. The federal government will only have jurisdictions over extremely small number of cases under what it calls specific circumstances. China will open a new Security Office in hong kong, supervised by beijing. President trumps first lockdown rally failed to mobilize his base. New outlets say just over 6000 people turned out, less than one bokd of the be ok center center. Radicalaign said protesters were blocking the entrance, but they said it had little impact. Singapore is positioning itself for massive innovation. Beyond support announced for struggling business, the government will set aside more than 14 billion to support research and what it cause high impact areas, such as High Tech Health and biomedical ash Health Health and biomedical services. The International Monetary fund further downgrade of the World Economy this week, just two months after predicting the deepest recession in 100 years. The fund warns it may be more pessimistic in april statements when it saw a global contraction. The only bright spot is a feeling some countries may have passed the worst of the coronavirus. Rishaad the European Central Bank President Christine Lagarde and Angela Merkel morning European Union leaders if they fail to agree on a stimulus package, consequences could be dire. The funds director spoke to bloomberg about the proposed fromto help economies heal the effect of the global pandemic. I think that its important that all leaders recognize we response, andl another forceful response at the european level. Details are under discussion but there is a need, and going into the summit, that was what was hoped for. I agree it would be important to get a final deal before the summer break. Angela merkel and Christine Lagarde having harsh words for their colleagues, both warning that if there is no that the european economy will face dire consequent is. A, would you agree with that assessment of the situation . And b, how dire . So, i do agree that the proposed recovery front is an important additional element on what has so far been a forceful european policy response. Weve had a significant policy response at the national level. Also, some early response at the european level, support from the commission of the labor markets. Additional, very large fund, would complement these very strong measures we have seen so far. So, this is indeed critically important. A are still facing significant downturn. You will see us revising down words. Its too early to see by how much. [no audio] so, is it enough . Is that going to be enough . I think that that is a very strong response to how we see the situation right now. But there are some significant downside risk. We are aware of them. Ofecond hit, and the risk some spillovers we have not seen so far, thankfully, into the financial sector. These things happen. More will be needed. Thompson, austria has said that if there is to be money just to beat it, that money needs to be tied to reform, not just consumption. Lets think about that for a moment. The american response has been to make pain and drive consumption. It is a critical part of what is happening in terms of the recovery in the united states. Is it a mistake at this point for chancellor cook and others to suggest there should be Strings Attached to this money . What should the money just be dished out to try and keep conception going and the velocity of the economy that it has been sadly lacking . That, we have to recognize the European Union, the euro area is not a Political Union in the sense that you would have in the u. S. One willn need to forge a compromise. So, a compromise needs to be reached. Im not going to go into one or the other side of that, but the situation is different in europe compared to the u. S. , politically. Thats one of the things you are seeing now. Haslinda Paul Thompson speaking exclusively to bloomberg. A couple headlines. Has been received. Both bidders have received approval for the review board, again final optus offers have been received. They chose private equity firms bain capital and sarahs Capital Partners as the last two suitors for the airline. Well bring you details when we have them. Rish . Rishaad bloomberg invest dynamicrings the most thinkers, and one of the participants is joining us from wellington. And its sheila patel. Great to see you. Are. Us an idea of where we lets have a look at where we are in terms of your business s been happening at the market. Seeing lockdowns easing in some parts of the world and some reinstated. Sheila thank you for having me. So much has changed. We are in an interesting juncture. We are seeing clients shift from the immediate challenges of negotiating this crisis to really saying what are the longterm perspectives i need to think about for allocation and portfolio . What trends will be sticky from these events . I think work from home, changes to health care, processed around the world, the health care industry, obviously the adoption of new technologies, these are some of the trends that will be picky over time and clients are trying to make sure are captured within their portfolio. Thingd sheila, the other happening in your business has been taking control of your securities. Do you see that as a further move into china and perhaps meeting your commitment with china . And the way beijing and washington argue at the moment worry you . Beena well, weve involved at Goldman Sachs in china for many decades. To us, this just represents our commitment to our clients in the region and to global markets. From our perspective, obviously the u. S. China tensions are very worrying. Most clients i talked to, globally, expect thats the paradigm we should be living in for quite a while. Feweconomic superpowers, countries with quite a bit going on right now with this pandemic, and different viewpoints from time to time, yet interdependent, as well. From our perspective, while challenging, theres still a lot to be done with the u. S. And china and the relationship. Rishaad sheila, hasnt it baffled you that youve seen these rallies sometimes alltime highs for these equity markets at the same time we have a global pandemic, civil recession, has it left you scratching your head . Sheila its a head scratcher and theres underlying things that explain whats going on. If you look at real move in the markets we had several weeks ago and how most large global institutions came into that market, really many had raise cash at the end of last year. There were expectations of recession, though certainly not for this reason. So many were conservatively positioned. When youve got extreme decline in the market, they saw an opportunity and looked back at their experience in 2008 and 2009, and they said were going to do it again. Going to buy equities, increase their cash position. Not all of it. Today, as we see the rally extend, you have a lot more participants than in those early days. Show that the trend retail has gotten heavily involved, globally, as well. They been buyers, whether the etf markets or hedge funds. Seeing them as an attractive buy. Were expecting volatility, but those are the reasoning. Haslinda you touched on the u. S. China tensions, especially with elections, as november comes, how do you raise the risks from that, and you see that issue spilling over to broader assets at some point . Sheila yeah, look, we see these tensions continuing. In fact, i was talking to a global group of clients on friday, u. S. , canadian tensions, a number of Sovereign Wealth Funds in the region, and their gameplaying and expecting tensions to just continue for five to 10 years. What does that mean and what markets do they affect . If it continues to be various skirmishes on the trade front, it has the impact sector by sector, but overall preserves commercial interaction, a significant amount, between the two countries and a global perspective. If you get to a deeper level of crisis, is that precipitated by political events or other issues, then they start to worry quite a bit more. And i think the Global Nature of investment itself is something we have to keep on the radar, whether regulation in the u. S. Or china or elsewhere. Many people are also concerned about whether investments they have made over several years in the past become more restricted in future. Do they get their money . Everybody worries about that question. Haslinda of course, as you look for opportunities, do you see opportunities in the greater bay area . Look, as we look at opportunities, i think were very much driven about what is the post covid economy . Thats really where were headed. Blood companies have diverse supply chains that obviously could have negative impacts on china if people diversify away from putting their eggs in one basket, but certainly not solely based on that framework. We see advances in adoption, technology, and some of those are coming out of the greater region. And we also see many trends wed invested in, thinking they were important for millennials, such as some of the trends that have been happening in health care and using online shopping, etc. , have now extended to all generations. Many of those technologies and those initiatives are coming again from this region, so thats an advantage, too. Haslinda and sheila, in just a span of a couple of weeks, social responsibility has come to the forefront for investment conversations, everything from health, race, gender, income inequality. How are the social issues influencing investment strategies, using . You think . Fascinating. Its i had many people asking if is cheese would be thrown s esds would be thrown aside . Esgs have become more essential than ever. Very much go to the question of management. Whether its environmental, theres a disease, and more evidence of the fact that man and nature intersect in sometimes negative ways, and how does that need to be managed . And then lastly, and probably most prominently in the crisis, the question of social responsibility. We see Companies Held by investors to standards of how they treat every stakeholder group, employees, how do they deal with work from home, health care, physical and mental, how are they interacting with governments and communities . Are they taking funds . If so, what are they doing with these funds . Today, it seems a lot clearer. And whether its those big institutions or retail, where we have seen a huge appetite for esg in this crisis, with bloomberg demand for mutual fund related to esg up over 100 . I think this is a trend that is here to stay and more than a trend. It is a way people want to invest. Rishaad sheila, always a pleasure. Thank you very much. Just going to get to Indian Markets getting the trading day underway there, a few stocks were watching out for, what was supposedly a positive start to the session. Up atgetting 6 10 of 1 the moment and having a look at the banking index. That is surprisingly on the way up. We have had nine banks cut having their outlooks to negative. Moving to the upside. Thinkers sold part bankers sold part of their state there. Weve got them in focus, as glenmark, as well, ark jumping in the session after getting approval. Covid treatment here, as well. Designed to treat covid patients. So there, thats what you have at the moment with markets in mumbai. Haslinda staying with india, fitch cutting its outlook on nine indian banks to negative. Plenty more to come. Prime minister modi faces backlash on rise after announcing no more in indian territory in the dispute with china. Well have the latest. This is bloomberg. Rishaad this is Bloomberg Markets. The indian Prime Minister modi facing domestic pressure to take a harder line against china over the border dispute. He has been facing criticism after contradicting his foreign ministry, which said china tried to erect a poster on their side of the boater border. There have been conflicting statements coming out of delhi. Has that complicated efforts to deescalate tensions with beijing . Yes, it has. Certainly its opened the door for china to claim victory over india or in those clashes and say yes, modi agrees with this. Indian soldiers were outside the border. Modi clarified his statements later but by then it was too late. Wasisurrenderstochina trending on twitter. You had Army Veterans and longtime diplomats accusing him of conceding indian territory to beijing. Haslinda thats a trilateral meeting to take place between india, china, and roscoe moscow tomorrow. What can we expect from that . Ruth the defense minister was heading to moscow today, attending the victory day parade on wednesday. We know india has decades long midyear military ties with russia and moscow is emerging as a key player, although both new delhi and beijing have revealed no details about the meeting. From both india and china will participate in the parade. Haslinda south asia governor editor ruth in new delhi. Still to come, the wire cut saga continues as the german payment cup company withdraws, suggesting the missing money likely did not exist in the first place. This is bloomberg. Haslinda the mistress renting missing money at a german payment platform deepens. The central bank saying none of the 2 billion unaccounted for ever entered its financial system. Su is looking into this. What has they said . Su well, they are now conducting their own investigation. This is becoming clear and the Central Bank Governor says the initial report is that no money, no wire cart is missing 2. 1 billion ever entered into the philippines. They now believe the 2. 1 billion probably does not exist. Now, as you may recall, on friday, bpi and bdo, the top philippine banks, revealed they did not have any relationship with wirecard and it has now indicated that the documents that indicated the presence of some funds in those banks were bogus. They were saying the International Financial scandal used the names of these banks in an attempt to cover whoever the perpetrators was, is trapped. The missing bonds, which make up recorder of the german tech from the Balance Sheet prompted the wildcard ceo to quit last week and the stock to plunge. Wirecard is saying it is withdrawing Financial Results for fiscal year 2019, as well as the First Quarter of 2020, and it is in construction with lending banks. Rishaad quite extraordinary to have 2 billion last and not knowing where it is. What have we learned . What is bloomberg learning about shares in the company . Looks as if this is where the focus mako. Right now, marcus braun is in a very difficult edition. Position. Hes reportedly unwinding his financed stake he has by borrowing against the stocks value. The value has clearly plummeted if you look at the charts. It is down 72 as of last week. Again, that was after it was made clear that the money was missing. Now new details the money never existed. He was named ceo in 2002. The loan was in 2017, with deutsche bank. Deutsche bank is not speaking. Braun is not speaking. And to give you idea of the status of this company that was once viewed as the future of germanys financing division, it has been cut, the Credit Rating six levels by modi, to know one step from the lowest tier of junk. Clearly, there are more details to come, but clearly an unusual scandal. Back to you. Rishaad thank you very much, su keenan joining us. Lets have a look with regards to these markets, having a look at a mixed bag, the lows of the day in essence, regional stocks kicking off on low values. It does create more volatility there. The hang seng, for instance, in hong kong, were seeing those of one third of 1 lower. The sensex ended a while ago. Elsewhere, people are mulling the impact of coronavirus outbreak in countries essentially, a lack of conviction out there. Were white were why getting these paltry volumes, as it were. Haslinda thats right, has to do with a second wave of the virus. Well, that is it from Bloomberg Markets asia. Bloomberg daybreak asia is next. 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