Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

Businesses are failing, tourism has collapsed, and confidence is shot. Sweeping new security loss for hong kong later on tuesday after imposing visa bans on americans it says are interfering in its affairs. Look at the take a set up after the u. S. Paring back some of the gains. Betterthanexpected housing data overweighting these continued can turns and continued resurgence. Continued returns and continued resurgence. Sophie. Sophie futures are pointing higher. Chinese pmi is expected to show some stabilization from manufacturing while Services Face a setback. From south korea, we are getting a may industrial output. That was a bigger contraction than the expected 4. 5 via well vol that was seen in a survey. Nikkei futures in chicago heading higher and this is adding up the topix for the best quarters 2016. Since 2013, for the last of market rights, raising concerns with heavy concentration on japanese growth stocks. The yen wrapping up a sleepy quarter. Valuations as cheap as they come with a changing corporate environment into be a boon. Jumping into the terminal, asian stocks are set for the best quarters since 2009. This after rising nearly 30 for the march low but they are still underperforming the s p 500 with 140 billion dollars in outflows for the region. Asia did beat the u. S. On returns for june as you can see with the chart on the terminal. Hong kong very much in focus given the headwinds clouding the outlook for the city stocks in light of the economic and political risk, so the hang seng trading at the lowest level relative to global stocks in nearly 20 years. Shery thats stay with hong kong. The u. S. Moved to revoke Hong Kong Special trading status. Putting their future into greater doubt. Wilbur ross cites chinas sweeping security bill and the risk that sensitive u. S. Technology might be diverted to beijing. Chinas top legislative body prepares to approve the security legislation later today. Kevin cirilli is on the line from d. C. As i said, the law has not even been enacted as of yet for hong kong, so this timing preempting even this move. It seems really interesting. Kevin a preemptive move on behalf of the United States and what has really been a rare area. F bipartisanship in america this also comes just days after a measure was passed with support from democrats and republicans in the senate that would allow for the United States to issue some type of sanctions against chinese officials who do business with the communist party that has been supportive of the National Security measures, socalled National Security measures for hong kong. I am told by Top Republicans that the house of representatives this is just one of the many tools over the course of the next few months that the United States will issue, again with bipartisan support, but the next round of legislative measures really coming into effect in october. Going how likely is this to play into the continued trade relationship between the mainland and the u. S. , particularly as it is such a playbook going into november . Kevin from the administration standpoint, President Trump and his top economic advisers have forecasted that they are willing to divorce covid19 and the lack of transparency from the communist party with the International Community from the u. S. China trade relations, whether or not china upholds that same type of an agreement as it relates to hong kong, we are going to have to wait and see. But you cannot look at u. S. China trade relations or even the u. S. And hong kong as an issue in a vacuum. It is part of a broader term to u. S. Policy shift away from the geopolitical outlook from the u. S. Perspective as it has dealt with beijing that over the long term, based upon my reporting on conversations i have had with officials of both parties, has suggested to me is going to dramatically change in the long term. Shery just quickly haidi kevin let mejust quickly, ask you about the trade relationship between the u. S. And hong kong. Hong kong really imports a lot from the u. S. The u. S. Would lose a lot if hong kong actually loses its special trading status. What are your thoughts here . Kevin i will keep this very quick. Two quick points. The u. S. Chamber of commerce issued a survey in june of 2020, 64 of respondents of business dealings in hong kong. Part of the chamber said they were very concerned about the hong kong about hong kong losing its status. It is a marathon and a sprint by officials who are close to this and the u. S. Could shift some of its investment to another area, may be singapore. And even over the longerterm, look for investment in india. Haidi kevin cirilli. Still ahead, and Investment Management company says the Global Recovery we are seeing may stop by august. Frances donald will be joining us, next. New Economic Data from japan out this hour. How these numbers may affect sentiment with the strategist. This is bloomberg. Haidi karina you are watching daybreak asia. Several states in the u. S. Are reimposing restrictions as infections surge. Florida reported a jump in its already double digit infection rate. Tokyo is seeing a rise in cases while iran reached record fatalities and austria has its highest level since midmay. The World Health Organization says the worst is yet to come. India is to further ease restrictions even as infections continue to surge there. International flights will be allowed. Schools and colleges will remain closed until the end of next month. Deaths reported. The Philippine Central Bank says it sees no need for a rate cut at this time as it watches previous moves filter through the economy. The governor says he is unlikely to act in the foreseeable future, adding Monetary Policy works with a drag. They lowered their key rate by. 5 points last week, bringing the reduction so far to 175 basis points. Fitch is raising its outlook for the Global Economy based on monthly increases in retail sales in the u. S. , the u. K. , and in western europe. The agency sees world gdp falling by 4. 6 this year with u. S. Growth dropping by 6 . Fitch is raising its outlook for china, announcing gdp rising 1. 2 from its earlier forecast of a rise. 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. I am Karina Mitchell. This is bloomberg. Shery. Shery we have talked extensively about the stock disconnect with the economics and earnings fundamentals. Here is one where one more way to show it. This shows the s p 500 in white, forward earnings in blue. It may be a long time before the two lineup. Lets get some perspective from the global chief economist and head of global macro, frances donald. Us. T to have you with will these two lines ever lineup as long as we have the fed aggressively supporting the market . Not only the fed, but basically global Central Banks. Frances Central Banks are a key part of the story, but from my perspective, where we are getting the real policy put on the fiscal side of the picture, and because of that, i am a little bit more worried about how stocks and broad risk sentiment are going to be performing. We know Central Banks have the capacity to write more stimulus, to stay on hold. They are going to do that. What seems less certain to us is a significant segment of the rally. Do we get packages out of the United States . That is less certain. More and more over the longerterm, depending on who wins this u. S. Election. That may be the key as to whether these lines join or not. Shery we are getting a little bit more certainty on fiscal stimulus coming from the u. S. Right now as we speak, we are getting the latest comments in secretary mnuchins testimony. To starting that talks a supplementary relief legislation are going to get started. He expects anymore virus aid to target Certain Industries that the u. S. Is in a strong position to recover. Thenuchins point that virus aid will target Certain Industries, does that give you food for thought on perhaps some of the sectors that could benefit from this ongoing fiscal stimulus push, especially as we continue to hear about the potential infrastructure bill here in the u. S. . Frances absolutely. That will address the supply side of this economy. Where i get even more worried and what is more difficult for us to figure out is the demand side of the picture, particularly in an environment where covert cases are rising. If we do not have Unemployment Insurance at the same extent it has been, if people are afraid to grow go out and use services that have been reopened, then we have more of a problem. We can support industries and airlines, but if people are afraid to use them, then we are at a standstill. Fiscal policy has to address this from both sides of the picture. It has to do a lot to shore up actual Consumer Confidence. It has to get people to go outside their homes, go to movie theaters. The Consumer Confidence data is not giving us the same sort of readout. Where they are in concert in inconsistent. You can have governments everywhere mailing checks and paying people to encourage them to go out and spend, but is it more likely that we are going to see an environment that is conducive to deflation or stagflation or whatever you want to call it that leads to actual price pressures . Frances you have nailed it. This is what we witnessed in april in particular. We did see this globally. We tried to cover some of their financial distress and it went into savings. Typically what we see in these types of environments this is an extreme environment. Precautionary savings start to rise. Step one is making sure people have that money. Step two is making sure they go out and spend it. You nailed exactly the problem. How do we get people who have the money to go out and spend it . That is a confidence issue. It is extraordinarily difficult for policymakers to support. Of a terrible landscape economically, globally, where do you see the biggest recoveries and the most robust recovery . Frances interestingly, while we have been focused on u. S. And looking towards china being the first in, first out, where we are seeing more aggressive recovery is in europe. There has been some really good Economic Data is there. More of an aggressive vshaped recovery. Unemployment data has not been as aggressively drawn down in the europe area asit has been in the u. S. This may be a period where we might see an opera performance in a region of the economy that had been dismissed for a long period of time. Increasingly becoming part of the global Asset Allocation decision i suspect we will see a lot of people saying may be u. S. Exceptionalism is not where we want to be. Nonus stocks, nonus assets, may the the next big leg of the rally. Still stretched too extreme, but in the next tactical period, three to six months. We have more opportunity, less concern on the valuation front then we see in the United States. That is where we need to be shifting our focus in the next couple of months. Global chief economist and head of global macro fronts, frances donald. The who says the worst is yet to come as confirmed virus cases race passed a 10 million globally. We will be discussing the virus trajectory, next. This is bloomberg. Haidi the World Health Organization is a warning that the worst of the coronavirus pandemic is still to come because of a lack of global solidarity. Lets get more on that now with bloomberg opinions max nissan in new york. Youre coming up on six months since the w. H. O. Was made aware of the coronavirus. It is troubling to think that the worst is yet to come with the destruction we have seen, the deaths and number of infections climbing, and the w. H. O. Says this is down to political factors within Different Countries . I think there is something to that argument considering that we are a good ways into this pandemic with Public Health experts having a better sense of how the virus spreads and how to contain it. Theres still these big outbreaks of turn in the United States, in india, in brazil, and seemingly, less little will less political will to contain manageableg it to a level in the long term as we try to develop a vaccine so it is sort of a disheartening and difficult moment. Hopefully one that will get on a better trajectory in the next month or two. Shery we might see challenging times for this legislation passing the house as well. The first broad Health Care Measure to be put forward in a while. It might be dead on arrival in the senate, but what message would it send . Bill designed to expand the Affordable Care act. Individual insurance subsidies and medicaid. It is sort of a bill that makes sense in the moment. If there is any time to bolster the individual Insurance Market to make sure the people have a good option if they lose their job, it is right now. What the bill does is draw a rather firm contrast with President Trump, who not only is having a difficult time in the pandemic but actually wants to get rid of the law entirely, which covers more than 20 million americans in the middle of the pandemic when insurance is more important than ever. On healthling down care issues. Something that should be to the advantage of the democrats, most likely. Shery max newson. As we continue to see the infection cases rise across the United States, texas, florida, and california, reversing reopening. Our guest spoke to us about plans to pause the listings of lockdowns. I cannot tell you exactly how many but i think we are seeing the beginning of that right now arizona, and florida, among others, reversing some of the initial decisions ohat were made to hastily to hastily to reopen and rethinking the idea that young people are invulnerable to this disease. What exactly happened . Did we open too quickly in certain states or did we open badly . Joshua we opened too quickly. It was obvious. Even the white house guidance was not being followed. The number of cases should be going down. Things should be moving in the right direction. And the capabilities to respond to outbreaks should really be in place before you start to reopening, you know, each level, one on top of the other. The states just plowed forward and there was sort of a moment where this was the right thing to do. The virus was sitting there, ready to do its thing, and that is what the virus has done. You get people into bars and the virus is going to spread quite a bit. We understand from the u. S. Health secretary that the window is closing on halting the spread. Is it too late . What measures need to be put in place now to get a handle on the situation . Joshua i am not sure we know exactly what the secretary is talking about. He should have been much more vocal when states were doing the wrong thing. I think the federal response in terms of communicating clearly about what is happening, what needs to be done, and, you know, how to fix this, has just been terrible. From the beginning, it has been way over politicized. We have not heard from the cdc. My view is that, yes, we can get a hold of this. Theres things that every country that has been successful has done and we just have to focus on doing them. How do you reopen correctly . That the famous rnumber needs to be below one, at least measure how many people are getting the disease by one person or what metrics would you look at . Joshua that is a hard number to calculate in realtime. It is best to look backwards to you need to have a dashboard with lyrical outcomes. Number of people in the hospital, number of people in the intensive care unit, and you want to see that they are very clearly going down, and then you want to open slowly, and certain things, you know, we are learning, and the world is learning, really are not that safe to reopen, so you are never going to get to completely open until we have a vaccine and can really control the spread of this in indoor settings. Shery are there states that are getting this right . Joshua there are states that are really locked down, they have controlled the spread, but now they are starting to reopen. The right question is, have states been able to reopen without having this big explosion of cases . It is a little too early to say that right now. We are seeing certainly pretty good control in the northeast now. Rhode island, massachusetts, even at new york, but the key is going to be, as those states reopen, whether we can stay vigilant, whether we can reopen slowly, reopen everything, whether we can take precautions, and whether individuals will take precautions. This is about flattening the curve, saving lives, and then carefully reopening. When you see the resurgence, will it influence how other parts of the country behave . Joshua that is a good point. I think hopefully it will. There has been an incredible ability that places have countries as well as estates to say what is happening over there, that is not going to happen here. Time and again, we have heard that. That is not what happens and she lay, that is not chile, that is not what happens in texas. Sure enough, the virus is the same. It is important for the state that have now, you know, overcome their initial surge in infections. Not many people have been infected on a population basis. There is still plenty of opportunity for this virus to move around and vigilance is absolutely required. That was the vice dean of the Johns Hopkins school of health. That school is supported by the founder of bloomberg lp, the Parent Company of this network. Lets get you a quick check of the latest business headlines. Planet fitness slumped on reports that more than 200 people may have an exposed to the coronavirus at a gym in west virginia. One person tested positive, raising the possibility that other users were vulnerable on june 24. Planet fitness says it is working with local authorities and the gym is closed for deep cleaning. The stock is down 17 this year so far. But curtin may be coming down on cirque du soleil, which has filed for bankruptcy after the coronavirus terminated shows around the world. The montrealbased company has more than 1. 5 billion in debt and has entered an agreement with shareholders for a 300 million injection. It has led off 95 laid off 95 of its staff. The billboard advertiser has renewed and extended deal with china for the next 20 years. Jp deco has agreed a new contract with the beijing metro major lines. They have launched a new joint venture with an exclusive advertising agreement. It would have significant influence at the end of the period. Coming up next on daybreak asia, deals in memo. Exclusive interview with the Goldman Sachs global thinks mna on when he activity might pick up again. This is bloomberg. Berg. W . W . Uhiono haidi breaking numbers coming out for japan. The jobless rates coming in slightly higher than expectations. 2. 9 for the jobless rate for the month of may. Worse than expectations of a survey to 2. 8 percent and picking up pace from the 2. 6 in the month of april. Late may, the state of emergency in japan was fully lifted. We are likely to see the impact of those virus containment and lockdown measures being played out when it comes to the labor market. We also continue to see pressure from the external front as well, dampening job losses across manufacturing. In may. Ell 30 in japan we are waiting for some of the other details to come out as well but the jobless rate, a little bit higher than expected. Joining us now from tokyo is the japan strategist. With broadt off thoughts pad how well positioned to do you think japan is to recover compared to the other economies around the region . I think it is an extremely strong position in first of all, extremely good handling of the coronavirus. Is moreover, the handling sustainable. Come back on that in a second. It has got tight labor markets. We will see what the job to applicant was in the last month through 132 jobs for every 100 jobseekers. Giving confidence to consumers. It has got a fact cash cushion. The markets are dirt cheap. It is a very good position for this. When you look at fatalities per capita compared to the population, even germany is 11 times japan. The u. K. Is 85 times japan. It has handled it extremely well and it has done it not with lockdown, but with contact tracing. Exitdown, there is no plan for lockdown had once you stop the lockdown, the cases start to pick up again. Japan, if you look at the numbers for tokyo, if you identify the source for your disease, 50 of the people on the day the pcr tests come through, they are well on top of things and able to find out who were the super spreaders, what is the very center of each cluster, and lock those clusters down. For investors, does japan prove a little bit more beguiling . Both from the sense that you have company sitting on enormous piles of cash, they have been criticized for deploying the cash to shareholders, but when you take a look at valuations, the topix is not looking stretched at all to other developed markets. Are right. Think you obviously, numbers for the next 12 months would be a little bit difficult to use. Look at next year or the year after. It is on 12. 2 times against 16 times for the u. S. The market is absolutely dirt cheap. It is strange. People are not fully taking it, just how well the country has handled the coronavirus situation. We are out of lockdown. Office todayin the at lunchtime. I wandered downstairs to the restaurants which are still open. There is a little bit of unease in tokyo. Recently, we have had 40 to 50 new cases a day, but 50 new cases a day for a city of 13. 9 million are more likely to be hit by an asteroid than i am i getting hit by this disease. To seethat is a good way it. When it comes to japanese companies, we have seen increasing focus on a shareholder return. Not so much now that cash piles are really good to whether this coronavirus pandemic. When can we expect this narrative to return . Nicholas sure. As i am sure you would know, share buybacks are up around 70 year on year in the last fiscal year. Not surprisingly, we got to may, the reporting results for companies were saying, for the time being, we are going to sit on this money. It was Something Like a 75 drop in buybacks year on year for that month. Theres a few tens of billions of dollars worth of share buybacks going on, which is not chump change. I think we will get to november time, assured themselves and isnt aders that there serious second wave going on and start to release the money. The thinking in japan on share buybacks has absolutely changed. I think they are wisely sitting on that cash for the time being just in case. Shery i am hearing more and more about this structural weakening of the u. S. Dollar. As this continues, what does this mean for the japanese and potentially the equity markets . Nicholas when a lot of foreigners think of japan as a andet that is mercantilist produces in japan to sell a weak yen, needs that is not the case, obviously. The u. S. Complains about it, but the yen dollar has gone from 360 in 1971 to 107 or so at the moment. Japan actually makes more money historically. It has made more money when the yen is strong rather than a week because it tends to be strong when the economy is strong. Think of a company like toyota and it is making the majority of its profits offshore, and i almost two thirds of japanese profits are ultimately generated overseas. A weak yen would be slightly better than a strong yen, but it is important not to overemphasize that. We have been talking a lot about this seemingly inevitable shift enter values from growth globally. It is yet to take hold. What is the catalyst when it comes to that happening in japan . Think peoplel, i have rightly been generally looking for growth at the moment for Quality Companies where earnings are not tightly tied to the business cycle. Increasingly, im getting clients asking about the banks, for example, and i think the answer is probably you would be better off burning a quarter of your money then putting into banks at the moment. You have still got the worries about the bank of japan trying and depressing Interest Rates again. Thattill have the worries we will have loan costs. Obviously a lot better than most countries. You have still got to think about that. I am not sure the banks are the right place to go. I am not sure value generally is the right thing to do. If i were going to go into an auto company, obviously, it would be toyota. You might get a better entry point than at the moment. We were seeing the market rolling over at the moment and generally, the market globally has had a great run, but you are seeing new cases pick up very sharply in the u. S. What is the outlook for structural change and for Structural Reforms in japan given it has been so blow so slow going for the last arguably 20 years . Is the pandemic going to be an excuse to drag their feet even more . That peoplethink who have not looked at japan in a long time and missed the actually pretty strong outperformance of japan over the abe years looked to say japan never changes and i can afford to avoid it again. Because it is not the almost half of Global Markets that it was when i started in this industry, then they say i can afford to be wrong on japan. It is a pitiable way to look at things. We had very considerable change in Corporate Governance over the last few years. I dont think that particularly changes if abe steps down. I dont think that ends. The job of abe is to get things executed, but they are not all his ideas. In fact, when he came into power, the opposition was complaining it had stolen their ideas. Of none of them were part the ideas. They were the bureaucrats who had been working on this for a long time. What we need is a new leader after abe, just to be confident he will be replaced by another person who could get things done. I think there is no problem with momentum. It has been improving and presently impressively under abe. , thanknicholas smith you. We have that final number out of japans job market. Now, the job applicant ratio coming in at 1. 20. The estimate was for 1. 22. 100 openings for 100 applicants. Lets turn to Karina Mitchell for the first word headlines. With eyee start raising news. Iran issued an arrest warrant for President Trump and 35 other people for the killing of a top general in january. Iran says the suspects include officials over the assassination of custom soleimani. The charges include murder and terrorism and name the trump as a prime suspect. Iran is requesting a socalled red notice from interpol. U. K. Government is indicating it wants trade talks with the European Union to be wrapped up by the end of september with negotiations ceasing to exist from then on. The news comes First Time Since march and a bid to break a deadlock over terms. Government spokesman said the talks cannot go on forever and that u. K. Business must be able to prepare for what happens at the end of the year. India is ramping up tensions in china, on National Security grounds. It includes tictoc and others from alibaba, baidu, and tencent. New delhi says it is acting because of unauthorized storage of user data. It follows the standoff that left dozens of indian and chinese soldiers dead or injured in recent days. 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. I am Karina Mitchell. This is bloomberg. Haidi. Hong kongs fate as a Global Trading hub looks to be in jeopardy after the u. S. Preferential status. We get more on that with the Eurasia Group founder and president. That is up next. This is bloomberg. Shery back to our top story. Hong kongs future as a leading finance and business hub is a new doubt as the u. S. Says it is this is spending some trade benefits to the city. We are joined by the Eurasia Group founder and president , ian bremmer. Great to have you back. What do you make of the timing of not only the u. S. Pushing through with the revoking of this special status but also china trying to push through this legislation so fast . Initially of course, the guidance was the Chinese State was going to be around august, and they have push it up because they want to get ahead of any major demonstrations on the ground in hong kong in commemoration of the handover. Once that happens, the United States the Trump Administration is not doing well in an election period. As im sure you now. 40 in their blended approval rate for all the polls they are well down on biotin. Double digits, national polls, significant thing will digits in swing states, and the managing of coronavirus is going badly. The blame for that for the Trump Administration is firmly on china and they do not want to get rid of the phase i trade deal, at least not yet. You saw that with trumps response, snapping back peter navarro. He had the cnbc interview last week that sent futures diving. On every other issue, on hong kong, on technology, on south china sea, en taiwan, you are seeing strong bipartisan opposition, and no one is going to look askance at President Trump for whacking china over unilaterally changing the terms of hong kongs peschel status, hong kongs autonomy. The americans are not changing the status here. The chinese are. The americans are only recognizing it. Spoke to kellyly crafton. She kept insisting that the hong kong issue was a human right shoe. We have seen the Trump Administration despite the fact that tensions have risen over the past few years, they really refrain from touching the human rights problem. We have seen the Trump Administration signing the legislation against oppression of uyghur minorities. Is this now somewhere we are going given the escalation now between the two sides . Nicholas i mean, not really. You mentioned the legislation but trump himself did not want to push that. Once it passes overwhelmingly in congress, it was not his legislation. He was not demanding it. You can either sign it or you can veto it. It will come back and override your veto. It was not something he needed to get into a fight with his own republican legislators over. I mean, trump personally, his interest in human rights is close to nil in the context of american president s, but he is strongly focused on being tough on china. Can talk about the human rights issue. Chinese humanof rights aggregations in the past but if you ask why President Trump is taking the decisions about hong kong that years, and ultimately, these are being decided by the president. It has nothing to do with human rights. It has to do with slapping back the chinese on changing the legal status that they had afforded and that they were committed to continuing to afford the hong kong residents moving there. Of course, they are Going Forward and it will be difficult. This National Security legislation is very, very vague. It will provide the Chinese Government the authority to as theyjudicial rulings see fit. Depends on how they define National Security, how they define sedition. How they define threatening the government of china. Thatkind of ruling means anyone who is seen as problematic to chinese patriotism is in legal jeopardy on the ground in hong kong. That is very far from autonomous rule for the hong kong government. Shery supporters of the bill have repeatedly told us that they are they have consistently said that this adds certainty when it comes to businesses, when it comes to the economy, and in terms of the application, it is very narrow in scope. Does a piece of legislation like this gave some certainty to hong kong, which has suffered economically, socially, with these ongoing protests . I dont think so. I think the application of this legislation could be extremely broad. I think the answer is we do not know. It depends on how the chinese decide that there National Security a parade us is going to be set up on hong kong. Intelligence sharing and collection they believe, only they can provide, as opposed to hong kong. How broad the cases will be in actuality, and what kind of a Chilling Effect will it be that you dont even need to bring a case . You can tell someone you are monitoring, you have to act differently, or we will ring a case. That or else, those consequences, will themselves change. They will police the behavior of many erstwhile democratic protesters on the ground in hong kong, so i do think this is a game changer for hong kong autonomy and longterm, i think if you are a western investor and you are wondering whether or applies in hong kong, independent Judiciary Authority implies hong kong, and can you still count on that to maintain your presence there and the presence of your expats, the answer is no. It is not weather, but when you decide to make a change. That is pretty clear now to everybody. The move today was interesting because we know that President Trumps base probably does not care about this issue, but it folds into his play buck getting tough on china as we hurtled towards november. How does it play into maintaining the trade deal . Ian he needs to blame someone for 200,000 americans dead before november of coronavirus, which he said was going away, it would be a miracle, and it would be a win if it was over 100,000 dead. It is hard to blame just the democrats, especially when red states are making mistakes now, avoiding cdc guidance. People are not wearing masks, and now, your own republican governors are saying we need to close bars, we need to close gyms. You can go after de blasio and cuomo. It is newsom. It is really hard to go after desantis and abbott, the republican governors who have been so popular on the gop side, so you are blaming china, and blaming china in terms of the original sin of covering up one month of the virus, both with their own people and with that w. H. O. , and you are blaming them for the fact that they do not accept a level Playing Field with western corporations. Those positions, you can say its not that trump space is not very trumps base is not very interested. Those are popular positions across the american spectrum. Frankly, even though i find it abhorrent, even the antichinese racism trump is starting to traffic in directly, personally, is pretty popular beyond just trumps base. And he needs things that are popular beyond his base. If you look at how he his polling visavis biden, the only thing he wins on is how he handles the economy. He is well behind on every other every other thing. White house advisers told me they do not think the trade deal will stay in place but they do not want to kill it now because the impact on the market are going to be negative. You want to wait on that until the election is much closer. Off. Ets are understand if we pull the trade deal lost, trump can say the chinese are paying for the tariffs, but you bandai in the audience you and i know that the americans are paying for the tariffs and they do not like paying for the tariffs. You get run of the trade one phase deal, they will be paying a lot more for the tariffs at a time you have doubled digit unemployment. Shery before we let you go, i want to ask about china and chinese ambitions. Tohave seen it really try exert its influence in the south china sea. Belt and road initiative. Is hong kong just a start . Ian hong kong is just a start. I think this is absolutely going to get worse on both sides. We are seeing the decoupling of relations between the u. S. And china. There is no trust between the two countries. You are hardpressed to find a cultural,ue, social, travel, tourism, education, economics, military, you name it. These relations are getting worse. The fact that we can still hold onto the fact the relatively limited phase one trade deal is holding on by a thread. It is all we managed to have between the worlds two largest economies in the middle of the worst crisis in our lifetime. That is not a good backdrop. Shery ian bremmer, always great having your thoughts, founder and president of Eurasia Group. We will get more reaction on washingtons move in the next hour. We will be joined by the former u. S. Ambassador to china, max baucus. For now, breaking news out of japan. We are getting the may factory numbers. Fourth straight month of drops when it comes to the main industrial output. A contraction of 8. 4 month on month. The estimate was for 5. 9 . Figure contraction than was. The year on year number, 29. 5 contraction, much bigger than expected. The jobless rate we got from japan, slightly worse than expected. When it comes to industrial numbers out of japan, worse than expected. Not only japan, but today, we had south koreas main Industrial Production as well. Not as great as they were expected. Haidi. Haidi also a tick up in the japanese jobless rate as well in may. Thats get you a quick check of the latest business flash headlines this hour. Chinas bank is seeking to raise just sort of 1. 9 billion in its hong kong ipo. They will begin taking orders later today. Around 3 billion shares will be put to market at a price range 4. 75. En four dollars they will start trading on the Hong Kong Exchange on july 6. The worlds top minor has shed a light on future trading, using Digital Technology to sell iron ore for the first time. Aey use blockchain to run trial sale of 14 million worth of ore for delivery later this month. Bhp says its reliance on paper has been exposed during the coronavirus. The blockchain sale was the technologies company. Pinterest has hired a law firm to investigate the Workplace Culture over claims of racial determination. Theyegal team will how pay their workers as well as complaints of harassment, retaliation, and discrimination. Earlier this month, two black women left the company, alleging unsafe pay and racial bias before posting their complaints on twitter. Shery lets get you a quick chat about check up on how markets are trading. Kiwi stocks unit 1. 6 percent. Stocks gaining ground for a third consecutive session. This as we see the kiwi dollar also adding to those gains that we saw the first that we saw, the first weekly gain. Take a look at asx futures at the moment pointing higher. A gain of 1. 5 when it comes to futures. We have seen the aussie dollar also strengthened against the u. S. Dollar. There was a lot of pressure on the aussie earlier because of virus concerns. At the moment gaining ground. Make a futures also higher. We got worse than expected factory numbers, job numbers out of japan. Kospi futures pressured to down 1. 25 . Coming up on the next hour of daybreak asia, China Student pmi data due out later. Deutsche bank thinks we will see a much stronger expansion. Have sp nexiss representative to talk in the second half. This is bloomberg. Good evening from the Global Headquarters in new york. Sydney. m in asias markets have just opened for trade. Welcome to daybreak asia. Our top stories, hong kong faces more uncertainty with the u. S. Revoking the special training status. Washington says chinas grip and are not undermines the traditional autonomy. The city has been battered by protests, the pandemic, and fallout from trade tensions. Businesses are failing and tourism has collapsed. Confidence is shocked. Beijing is expected to confirm the sweeping new security laws for hong kong later tuesday after imposing visa bans on americans they say are interfering in their affairs. Shery japan, south korea, australia coming online. Lets get over to sophie in hong kong. Are seeing boost to the upside for japanese stocks after falling to the lowest in two weeks since monday. Index has pulled back from the june peak along with topics renewed great concern. Holding a four day decline as we digest the latest numbers out of japan showing a deep contraction in Industrial Production for may. In contrast to mondays date is showing a pickup in retail sales purchases. Y online study steady. It has been stuck in arrange this quarter given the pandemic risks. We are seeing moves to the upside and aussie share market gaining ground after the asx fell to a twoyear twoweek low. Dollar best performer this quarter. Data of chinese pmi expecting to show manufacturing extending for a fourth month. , dollar Index Holding steady. Watching the treasury space after seeing the fiveyear yield to match a record low monday. Holding at 53 basis points at the start of trade in asia. Get more as we get into the trading day for the first half of the year. Mark is on the line. In terms of the second half, when it comes to the trajectory of the virus and the start of the second wave, we have more certainty about the Monetary Policy and physical teacher fiscal picture. Mark one thing we can say with problems will not have a strong second half as they did in the first half, government bonds performed well because Monetary Policy around the world was accommodating and there was a large degree of liquidity particularly in major markets. Fantastic first half but that will be difficult to replicate in the second half now that yields have fallen so far and most Central Banks have gotten shortterm rates close to zero. Not much upside for government bonds from here. Corporate bonds, possibly. Still room to improve on a selective basis. Gold did well in the first half and might continue to perform well in the second half as the u. S. Dollar softens of it. So much of what happens from here will be related to the equity market. So much policy is geared toward helping the stock market to some to helpecause they want the economy to push people into the equity market. Its a situation on the outlook that looks reasonable for people to continue retail spending and consumers being confident. No major risk of lot down while looking toward equities but that is where volatility will likely be. If things go wrong, if we have setbacks on a major second wave, equities will take the brunt of it. Most volatility in the second half will be on the Global Equities space. News the u. S. Is defending some trade benefits for hong kong that it enjoyed as a special trading city. What do we expect to be the reaction . Weaknessht see some first thing with hong kong equities. Certainly some Foreign Investors will see this as being a negative thing and they will be concerned about what is going on. A lot of people follow hong kong closely will not be surprised because they would have known there are these dangers ahead and it will not be a total shock to them. China has been working on a new security law which is partly why the u. S. Has responded in that way. That is not new. Howore significance is that will hong kong people respond . Will there be more street protests or the threat of a strike . Some of these things we saw last year were damaging for the hong kong economy but they have been less of this year. And then you have the flow of money. Money has been flowing consistently from chinese investors. We just had 12 days in a row where funds have flowed through the connect system money coming from china into hong kong and for most of the year chinese investors have continued putting money into the hong kong market. So although the headlines might a scary and there might be negative response from foreigners, you can see that on the ground hong kong and china, the money flow has been reasonably good for the hong kong market. Pragmatism will probably outweigh Everything Else and hong kong stocks will get back on the same trend to rest of asia is setting itself up for in the second half regardless of what happens in the geopolitics that stocks can probably recover from that. Insight. Rk with his you can follow more on the story and the daytrading on the bloomberg. More renewedahead, uncertainty for hong kong with the u. S. Revoking the special trading status. Gripngton says chinas undermines the traditional autonomy. And the second look outlook for the best tech performance so far. We are told what to expect. This is bloomberg. You are watching daybreak asia. Several states in the u. S. Are reimposing virus restrictions as number search. New jersey is halting plans for Indoor Dining and new york might do the same. Tokyo is seeing a rise in cases at iran reached record fatalities and austria has the highest death level since midmay. The World Health Organization says the worst is yet to come. Virus has some dangerous combinations. , ands it is fast contagious. Second, it is a killer. It can exploit divisions between us. India is easing virus instructions as infections continue to serve. They will permit more domestic flights and that curfews night curfews will be lifted. Schools and colleges remain closed until the end of the month. India has more than half a million virus cases with 16,000 deaths reported. The philippines Central Bank Says it there is no need for a rate cut at this time. The governor says he is unlikely to act in the foreseeable future , adding Monetary Policy works with a drag. By half aed the rate point last week bringing the reduction to 175 basis points this year. Theiris gently raising outlook for the monthly economy based on sales in western europe and the United States. They still see world gdp followed by 4. 6 this year with the u. S. Growth dropping by nearly 6 . They are raising the outlook for china announcing gdp rising 1. 2 from earlier forecasts of a 7 10 rise. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi hong kongs futures looking more precarious now that the Trump Administration revoked some of the cities special status. Prepares toive body approve the controversial security legislation later for the day. Lets go to selina wang in beijing. Interesting timing given that no one has seen the text of the legislation. What does the removal of the special trading status mean for hong kong . Further undermines hong kong status as an International Business capital by suspending export license exceptions this would restrict Hong Kongbased companies from sourcing sensitive projects which would remove one of the advantages of the Business Location over china. Has been treated differently by u. S. Law when it comes to Financial Transactions and trade so tariffs the u. S. Places like china are not placed on hong kong and we are starting to see the u. S. Role back some of the benefits. Wilbur ross said with the ins position of the law, it increases the risk sensitive technologies could be handed over to the Chinese Government. Surpriseot come as a us the Trump Administration has signaled it would take the step but is controversial given that it damages the economies on both sides and senior officials have told us this is part of many steps in terms of punishment of china over their treatment of hong kong. The Senate Approved a bill that would sanction business and individuals that undermine hong kongs nutonomy and visa bans have autonomy and visa bans have been opposed. China has said they will impose a visa ban on u. S. Citizens who are interfering in hong kong. What does beijings new security law for hong kong say . The National Peoples Congress Committee is wrapping up the three day meeting and when it wraps up tuesday we expect the security law to be enacted. It would come just in time for the july 1 anniversary of hong kongs return to china. It is a symbolic date normally marked by mass protests. Last year more than half a Million People participated in a largely peaceful margin hong kong. Despite that, protesters might liker in smaller groups they did june 4. Chinese officials have said the law that punishes access to is necessary for stability in that it would only impact an extremely small number of people but that has not reassured democracy activists or foreign governments who are concerned the law could be applied broadly to crackdown on dissent. Shery the last governor of hong kong under british rule says beijings imposition of the law will be intolerable for the people and eventually for business as well. Ares patton told us most already legal but not in the way acceptable to the mainland government. Its not a question of it being passed, it will be imposed upon hong kong. One of the many breaches of the declaration and law. An ann effect and attempt to end the two countries one system. And thehes the covenant agreement hong kong has a high degree of autonomy. This demonstrates what i am saying. Executive while saying he is in favor of it has not seen it. It is absolutely crazy and it is designed to ensure that the hong autonomy regarded as being guaranteed are being for theid of in order chinese equivalent of the kgb to be able to run hong kong however they want. So it is bad news for hong kong. Why theher example of Chinese Communist regime. So you see this as an opportunity for the communist party of china to establish in hong kong . Thats what they say they are going to do is establish a National Security office in hong kong. Chinesebe run by the security agents and what they will want to do is target anybody who disagrees. We do not know because they have kong,ld people in hong even though there are posters all wrong hong kong saying its a great law for hong kong, we do not actually know the details of the proposal. Them to pursue people retrospectively for things they have done . How would it define issues like sedition and subversion . How would it deal with peoples contacts with outside bodies, whether engineers or churches, that alone journalists . National security provisions are outlined in article 23 of the basic law which has not been implemented as constitutionally required for 23 years. Would you say beijing Authorities Say because they did not pass article 23, we had to do it ourselves. Do you buy that . Not remotely. Most of the things they talk about are already legal under hong kong law. You can go through their Crimes Ordinance or go to other pieces of legislation about treason and terrorism. They are already made illegal. But they are not made illegal in the way china wants because china wants to be able to find those things in a way that runs counter to most views around the world on human rights and International Human rights law. There is no shortage of law on public order in hong kong. Case, how come over 10,000 people have been arrested for demonstrating . Many of them peacefully over the last few months . Hong kong has those laws. What china wants and wanted in 2003 is the sort of law that can be unacceptable to people in hong kong to take away some basic freedoms. That is what the argument is about. Not about a National Security law. That was chris patton speaking with stephen engle. Up next, chinese manufacturing is expected to pick up in june as economies reopen. Pmiill get inside that released from Deutsche Bank. This is bloomberg. Shery new industrial data from china is due later and Analysts Expect a strengthening expansion in manufacturing needed by the gradual reopening of the economy overseas. Lets bring in Deutsche Bank Greater China Macro Security just. Inside manufacturing is doing well. Sector seen the surface being impacted with the upper again beijing. China reporting 19 new coronavirus cases on monday. Seven in beijing. Me. Hank you for having june pmi to indicate recovery of chinas domestic economy. Data shows generation growth in june accelerating engine one 1. 1 yearoveryear. Fiscal spending picked up since may which should help stabilize investment consumption. Shows recovery to 50 of last years level plus the rebound of global pmi recently suggests recovery with exports. In beijing,cases containment measures have been effective in terms of checking patients. Impact hase growth been limited to the beijing growthso we expect broad recovery to continue. Perhaps that is why fitch also raised their cheat they china gdp forecast from a previous forecast of 0. 7 . What is your Growth Outlook for china this year . Revised our 2020 growth forecast after the may macro data and the current forecast is similar to what we discussed earlier with forecasting chinas growth at 1. 1 positive year on year. We look for growth to accelerate to 3. 5 in the First Quarter and both one Fourth Quarter year on your terms. We have lowered our expectation for the fiscal stimulus package and we expect monetary easing to slow down. Currency has been uneventful. Weyou see dramatic moves as go into more volatility before the u. S. Election . I think for the time being, the impact of the election is perhaps more on the exchange. Ate volatility we expect the Exchange Rate to appreciate by the end of 2020. Still supportive. We do not expect trade tensions to escalate before the u. S. Election in november. [indiscernible] broad trend of dollar weakness against major currency traders. If there is trade war escalation expect thewe domestic macro policies to shift toward more stimulative. Thank you for joining us. We will get reaction on washington revoking Hong Kong Special trading status. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Stocks, lets get the latest from sophie and hong kong. In hong kong. Sophie after mondays sale of dutch selloff, some stocks looking attractive. Especially asian stocks still looking fidelitys Catherine Young says over the longterm, relatively cheap valuations and more policy headroom could drive asia. Movement of over 1 across the board. Improving equity could be a boost. Business confidence and south korea halting a fourmonth slide, a boon for global manufacturing. We also got numbers from japan and south korea. Marcus taking the latest of element on the hong kong political front in stride. Yuan ticking holler ticking higher or staying steady. Has stepped up pressure on china after its crackdown on hong kong. The u. S. Commerce department saying if yours ago it is suspending hong kongs special trading status and the measures that come along with that, including making it more difficult to export Sensitive Technology to hong kong. Joining us to take the temperature of these increasingly chilly relations is a former u. S. Ambassador to china and former senator. He joins us from montana. Wonderful to have you with us. Does the timing of the move surprise you in the sense that it preempted we know the legislation is set to be passed later today. No one has seen the text of it that we have spoken to. It is somewhat surprising but not completely, because essentially the administration, including secretary pompeo, are looking for excuses to blame china. I think it is probably campaign rhetoric, but if you look theely at the actions Commerce Department took, they are dealing with the sensitive arguablyies that are exports to the u. S. , arguably going into the hands of the prc. The security action by the u. S. Is not great, that significant but significant. Haidi weve been talking about how this plays into the Campaign Playbook toward november. Especially linked in the president s remarks on the origins of the coronavirus and the blame game there. How tenuous is the relationship now and what kind of response would you expect from china . Mr. Baucus china will respond. It will not be a major response because this is not really major action taken by the United States. China has to save face. It will respond. I think it is important to remember that hong kong is not nearly as important to china day as it was back in 1997. Back then, hong kong was when he 5 of chinese gdp. Itay it is less than 3 was 25 of chinese gdp. Today it is less than 3 . Tracked thea has moves in the handover law and theres not much the u. S. Can do about it. The u. S. Takes will hurt hong kong and china may be a little bit, not a lot. They dont care that much. The sanctions will not change behavior at all. Frankly, because xi jinping knows that, he will not change his mind and he knows the u. S. Will not take major action. That makes the u. S. A little weak. The u. S. Does not have a lot of leverage. Shery and yet, are these actions justified coming from the Trump Administration given they are framed as new security legislation on hong kong, curbing the freedoms of the country . The Trump Administration keeps saying this is a human rights issue. Mr. Baucus they say that, they do say that. [applause] [laughter] they dont do much about that. I think pompeo statements are not based on human rights infringement in hong kong. I think its based on economists and Technology Going through hong kong to china. Closerare they one step to acting against beijing to curb their grip on hong kong . Stepaucus well, it is a in that direction. But frankly, this action is not going to change chinas behavior at all. At a summit i attended between obama and xi jinping in 2014, the one point xi jinping kept stressing was hong kong. He will do whatever it takes to keep hong kong under control of china. It is one of the three or four core chinese interests. He will do whatever it takes to keep control over hong kong. Said, you you just let it slip, taiwan. I think theres a growing concern that hong kong is just the start. We have seen beijings hardline stance coming against not only hong kong and the United States. We have seen banning of imports from australia. Canadians detained over the past year. Is it time to act against beijing . If you act,well, you have to ask yourself, what kind of action . And what will be beijings response . This is not an easy question. Joined. And kind are together at the hip economically. We need each other. Australia and china economically need each other. Essentially we are at a point in World History where a rising power in china is rubbing up against the establishment of the u. S. And the western world and causing great anxiety in the western world because we are not used to this. We americans are not used to having another country rising up larger than the u. S. Andave to figure out, china the United States, how to work with each other. The backandforth issues causing deterioration, causing problems. Of wise people with gravitas and their heads on for us to work together. China is not going anywhere. We have to figure out how to deal with china. We keep talking about this is a great strategic competition about time. How has the pandemic changed this and essentially it sounds like youre saying theres not much anyone, including the u. S. And allies, can do about the ascent of china. Mr. Baucus well, theres a lot they can do about rising china, a lot. We have to first of all the strong at home. The best Foreign Policy is a strong Economic Policy at home. Second, we have to work with allies. China is very good at dividing and conquering. Weve let that happen the last four years. We cant let it continue to happen. Third, we have to cross some lines. We have tell xi jinping privately where the lines are, and if he crosses them, there are consequences. We have to convince china that if they do cross the line, we will stand up a hind those consequences. We have done this in the past and other areas. I can name examples. China will keep coming until it is internally or externally. Muchnnot check them internally, but we can do a lot externally, and thats working with allies and western countries and figuring out whether we can work with china or not. That way we get chinas respect. It comes down to respect. Lets get to the point where china respects the United States and the western world. We are not there yet. I think to be honest they somewhat disrespect the United States. They see President Trump as mercurio mercurial and changing his mind and that he has contributed to the u. S. Decline. Im not making a political statement, just talking to my friends in china, that is what they tell me if you we have to tell me. We have to stand up in a concerted way. Great to havedor, you with us and we appreciate your time. The former u. S. Ambassador to china joining us. We will discuss the Business Impact of washingtons decision to revoke hong kongs a special trading status later on with crowns worldwide chairman. We have breaking news when it comes to the delivery sector, onr making an offer postmates according to the new york times. According to people familiar with the matter, saying companies could reach a deal soon but talks are ongoing. Any takeover offer was not given. We also heard that postmates is reverse is revising its u. S. Ipo plans. Lots more to come. This is bloomberg. Our next guest says Chinese Internet Companies are taking a positive approach to the impacts of the coronavirus. More aggressive acquisitions in a Southeast Asia cross fintech and entertainment are some of the focus areas for the second half. Lets bring in our guest. It has been difficult, to say the list, when it comes to chinese tech and the environment they are operating in. Have the pandemic and some dislocations thrown up opportunities . Absolutely. I think the Chinese Companies are taking a positive approach in the post covid world. Seeing aggressive actions lately. Especially in the tech space. They are setting up a 1 billion fund. [indiscernible] tencent made a requirement from Southeast Asia. I think we are seeing in the post covid world, there could be opportunities. I think the last couple of months, there has been a bit of whoggle for some startups were trying to raise cash. I think there are opportunities and chinese are getting aggressive in terms of acquisitions and opportunities in the post covid world. Do you see consolidation taking place across the sector as well . Fintech is an area where there is opportunity. Paymentif you look at. In some countries [indiscernible] which we dont think is logically obtainable. Fintech there could be consolidation opportunities. Entertainment is an opportunity acquisition the media landscape in Southeast Asia. I think were seeing some level of consolidation in the cloud. Thats an area where we think there could be more consolidation. There are a lot of players out there right now. So we could see some consolidation. Geopolitical tensions moving into the tech space. Weve seen the Trump Administration targeting chinese firms, but most recently, india from china,9 apps including tictoc. How does this bode including tiktok. How does this bode in the long term . Ajay india is a market with a huge opportunity. [indiscernible] atecially when you look spending, india is just under curve. There were some hoping to enter the area in a big way. [indiscernible] we will see. Geopoliticala issue more than a tech issue. We will see something in the Fourth Quarter. These tech giants from china, given the government push with the made in china 2025 vision, are they pretty safe no matter what the global macro environment is . There might be some Companies Like i do that u might bee baid relatively safer. If geopolitical tensions become larger, there are ramifications. Other countries have had similar challenges for chinese companys. Companies. [indiscernible] , that isok at alibaba a focus area. They are hoping this segment will remain a little bit more resistant or not be affected as much as the core businesses. There are segments they are trying to make sure will not be in other countries. Companies could be concerned if other countries start doing something similar. Shery great having you with us. Ahead, our exclusive interview with new zealands finance minister about the governments fiscal stimulus plans. That is coming up. New zealands finance minister says hes keeping options on the table when it comes to further fiscal stimulus but socalled helicopter money is not in immediate plans. Earlier, he told us that the countrys road to economic recovery is also unlikely to include the return of foreign students this year. I think again, it will take time. The strategic advantages. In time, there will be a strategic advantage for new zealand and pursuing international education, but setting up the processes of that , growinge confidence capacity for quarantine and we have absolute confidence and required facilities that will need to be welldesigned and used. At the moment, our capacity is being stretched by returning new zealanders. Moving to the International Student market will take some time but we believe it is possible. Second semester or second trimester in some cases. Thats not going to happen. What about the idea of direct Cash Payments to households or socalled helicopter money . Youve been a bit vague on this in the past so im wondering if we could clear it up. Are you considering that . Weve been considering a range of options and i think while i respect the fact that you call it vague, i would say that we are dealing with uncertainty. We continue to keep options on the table as to whether fiscal stimulus is needed beyond what weve already done. And what is the best time to deliver that. What i can say is it is not in our immediate plan, but we continue to keep all of our options on the table. Ok. Lets look further ahead. Theres no real end to the pandemic insight and is starting to look like our border will be close quite some time. Inyou are reelected september, are you prepared to increase your physical response beyond the understanding . Mr. Robertson i think the 20 billion buffer we did was important, and for the time being that is the extent of our physical response. But you make the point yourself s story isrus still being told and if you look at places like the u. S. , seeing the highest rate of infections and a reemergence and china. Even australia with Community Transmission back in the state of victoria. All of those things point two the fact that we need to keep an open mind. We believe the size of the physical passage fiscal package is good for our needs now but it is a dynamic environment. And a little more between now and the fiscal needs will leave us a buffer to work through the second half of this year. It from ato come at slightly different angle. Aboutdget forecast rising 54 gdp. Do you have any qualms about going higher than that . Mr. Robertson what the new zealand treasury has said to us is they believe, and this was written a little before the covid period, is they see us in the 50 60 range. New zealand obviously is a small country and prone to natural disasters and other shocks. We need to have a prudent level of debt. We need to elevate the levels of debt from where we have been for some time. We still have to be careful. I will continue to take advice on that but im comfortable with where the levels are. Shery uns finance minister. Ninedayore, with a Election Campaign kicking off today with candidate nominations. Our reporter is on the line. The ruling party expected to remain in power. What makes the election noteworthy . Happy nomination day. The most intriguing part of today will be to watch the current Prime Ministers brother , he was threatening to run with the opposition party. That could energize some of the dissatisfaction to the ruling party. They are bringing up a potential business tax hike down the road and if theres enough insurance for jobless out of the pandemic, and we know that after four stimulus budgets, singapore has more than 70 billion in stimulus. Theres a lot of discussion as to whether that was enough, too much, how it has been directed and who is getting the benefits and whether it has been effective. Ns beginnally, pap wi the elections, but they might need to change tack on the virus response. Haidi what do we know about the likely next Prime Minister . Michelle that is the deputy Prime Minister. Theres been a long discussion over the years of who might be the next leader. All but 14 years since singapores independence, a Single Family has run the country. This would be a big moment, the fourth leader. He is a career Civil Servant and politician so we know a lot about him. It was once said he was the best , butipal private secretary there is much discussion about how he is not a sizable fellow, softspoken and an active listener. Maybe that has worked against him in terms of some people saying he is not assertive enough and this is a dynamic time for the singapore economy and we need someone aggressive on the international stage. Largely, he is seen as a steady hand. He has a hard worker and famously after he suffered a stroke a few years ago during a Cabinet Meeting, he woke up from, and asked whether there was another Cabinet Meeting that day. He has a lot on his mind in terms of what he wants to do as leader, and theres a big test ahead for him. Shery our senior asia economy reporter with the latest on singapores election. Before we hand over to china open, lets get a check on the markets. We are seeing japanese stocks rally at the moment, the nikkei up 1. 6 , this after it fell the most in two weeks. We have some concerns as virus cases spike. Today, tech is a set for the best quarter since 2012. We have some negative ecodata out of japan, factory output as well as job data missing estimates. Everywhere else across the region, we are seeing up signs who sees theguest National Bill is a stabilizing factor hong kong. Also, pmi data in a few minutes. We get insights. This is bloomberg. Its not 00 a. M. In beijing and shanghai. Welcome to Bloomberg Markets china open. Im tom mackenzie. David we are counting down to the open of trade, hong kongs future looks even more uncertain with the u. S. Saying china is undermining its economy