Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

Smartphone sales. Details about the beijing security law. Shery this is quite a reversal from the deficit we saw in the previous month. We had seen south koreas current account falling to deficit for the first time in about one year but the numbers have recovered and we are seeing a rebound with our current account surplus topping 2 million. When it comes to goods, the trade surplus coming in at 2. 5 billion for the month of may. This is quite a recovery given that we had really fallen to the lowest level since 2008. Good trade surplus numbers. A much better than expected number out of south korea when it comes to the current account surplus and also the goods trade surplus for the month of may. Lets see how markets are trading at the moment. We are seeing now nikkei futures unchanged. Same for u. S. Futures. This after we had stocks here in new york jumping following the holiday weekend. We had seen five sessions of gains for the u. S. Now unchanged at the moment. The japanese yen Holding Steady at the 107 level. Sentimentd risk boosted by the stockmarket rally in china so the japanese yen has declined against its major peers and that has helped the nikkei and japanese stocks which have gained ground for the past three sessions. Not a lot of movement either for wti crude. Upside above the 40 per barrel level. The head of the Eia Crude Oil Inventory data coming out later in the week. World stockd the rally for the last 24 hours all started in china and searched in in chinesesurged shares. The biggest advance is 2015. Take a look at this, when it comes to overbought, overextended, we are seeing gains when it comes to other Major Chinese markets as well. These parabolic moves point to levels not seen since the melt up, and then we have to ask what comes next. In 2014 and 2015, there was the pop there. We want to bring in our capital cio and founder. What does this tell us about valuation bubbles around the world . In the same session where you also see amazon topping 3000, tesla is just on that streak as well. Nasdaq hitting another record high. Usually, when you see these levels for stocks, its more of a warning than a bull signal. Agree and disagree. Thank you for having me. We have been bullish on china tech especially. We see the growth of gdp accelerating for the next few quarters in china so while there has been obviously a lot of challenges around the coronavirus globally and the time i think it took for, whether it is human dealing with the virus or industry in supply chains, what you are seeing is actually an x on the ration that , in particular, china will manage well relative to the rest of the world. Does it help that the government has been buying securities . Does it make it temporarily overvalued . We are optimistic that china would be on a relative basis a good place to invest. What does it mean for china as an anchor . Nadine sure. You have to look individually. Not going to be like when there was the massive industrial stimulus which ended up benefiting countries like brazil. This is a little bit different in terms of who will benefit, so we like specific em and specific developing markets that will benefit some of the growth coming out of china. Australia, after a difficult Second Quarter, should look well for a few quarters. We also do like russia. We think a little bit of inflation could be trickier. The em thates in should also benefit such as taiwan should do well. Mixes a little bit of a for south korea. Indonesia should do well. That should dos well based on this so we would losers,winners versus going long or long and short, to be able to play who is the benefit out of this acceleration. Sectors,en it comes to are there some sectors that no matter the region you are in will end up benefiting just because of how the pandemic has worked out . Nadine it can be broadbased. I think one of the fallacies is that you should just pick a sector but really, we like to get under the cover. There might be data centers in australia or in europe that should benefit from the increased move to the cloud, working from home, remote work, and less travel. Trends going on. We like food businesses. Whether it is frozen food out of europe or singapore, businesses that are selling certain food items that could chemicals. About eight to 12 themes. You can play these throughout various sectors of types of businesses that will benefit from the changes in supply chains, the changes in the way people are working or traveling or not traveling. You have to look at across sectors to be able to make those types of plays. Us thathat does it tell volatility tends to be pretty high with the vix around the 27, 20 eight level, when we have pretty Strong Equity returns . What is that telling us and how do you trade it . Nadine its a lot higher a few months ago. This time isdo at say what is implied volatility look like in terms of option markets for certain things . On a long position, you want to protect it, maybe it is a cheap way to put on protection at this time. We have Seen Technology in all places because volatility has come down so much. It is a great way to protect the position if you want to continue to believe in it. By puts into short buy puts into short in certain areas of tech. Go along ball in other ways. What we know of the Earnings Seasons coming up, we believe volatility should pick up. We can benefit and go neutral. Haidi you look at amazon passing 3000, tesla, 40 of the fiveday rally, what do you like in that space and what are you thinking, that is definitely peeking peaking . Nadine it is not either of those. We like to look at businesses that are not held by anybody because the problem you have did i trim it today . Versus a small position three years ago where we had it. Say, well,e to do is what is a little bit off the beaten path . Its much more important to have those names in your portfolio because any sort of dislocation where does liquidity get pulled . Number one, it gets pulled from those names. Places theys from have made money. Could be Something Like gold or treasuries. You have to be careful in those widely held positions. Nadine always shery always great having your insights, nadine terman. Still ahead, new tension between beijing and london as china refuses to rule out locking hong kong citizens from taking up the u. K. s offer of citizenship. Details, next. Plus, malaysias finance minister has just marked 100 days in the job. He joins exclusively to discuss the countries rate decisions. The latest on the 1mdb case. This is bloomberg. Karina you are watching daybreak asia. I am Karina Mitchell. The u. S. Remains the focus of the coronavirus pandemic with countrywide cases rising by more than the past weeks average. Hardhit florida and arizona saw new infections below recent levels but new jersey saw the rate jump to its highest in 10 weeks. Senate Majority Leader Mitch Mcconnell expects congress will pass one final virus rescue package later this month, saying the country needs another boost. Hasu. S. Supreme court upheld the decision to close a controversial Dakota Access oil pipeline by august fifth while an appeal is held. An Environmental Review could run into next year. The decision is seen as a big win for native american tribes at the expense of the Trump Administration and oil industry. Saudi arabia is raising prices for august Oil Shipments to asia, the u. S. , and Northern Europe amid times that Energy Demand is recovering from the coronavirus collapse. Aramco lifted its initial price for a Third Straight month. Although by less than expected. It raised its price to the u. S. For a fourth month. The kingdom is asking Oil Producers to keep Cutting Supply to rebalance the market. Iran admits the fire at its nuclear site caused significant damage and will slow the development of centrifuges. Security body has said the cause of the incident will be announced later amid local reports the class may have been hit by a cyber attack. Torontos it will replace the damaged building with a bigger one that has more advanced equipment. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Haidi. , hong kongs government has published Additional Details about the National Security law. An official goes there to revealing sweeping new powers for the citys police. It follows the meeting of the committee for safeguarding National Security led by carrie lam. Selina wang in beijing. What have we learned more about the National Security law . These new regulations were cited to safeguard National Security led by carrie lam. Alsohief in hong kong attended this capacity as lams National Security law. Hong kong police concerts premises without warrants, order Internet Companies to remove content or seize their equipment, and demand information from political groups operating outside of the city under these new powers granted by the National Security law. It the belief that failure to comply will result in a fine of to two12,900 and up years imprisonment. Some of the details here, it says that during an investigation into a possible offense of endangering National Security, a Senior Police commander may authorize officers to Enter Properties without a warrant, to search for evidence in urgent situations. The secretary for security could free someones property if they have reasonable grounds to suspect it is related to a National Security offense. Police officers may ask a magistrate to require a suspect to surrender. Travelender their documents to stop them from leaving hong kong. U. K. Is standing by his promise to offer a path of citizenship for almost 3 Million People in hong kong. Chinas ambassador has refused to rule out locking hong kong citizens from leaving the take up the u. K. s offer, criticizing the British Government for gross interference in beijing we have toying decide our countermeasures in accordance with the actual actions taken by the british some also criticizing politicians in the u. K. For maintaining what he called a colonial mindset. Shery we may get more tensions with google, facebook, and twitter, now saying they will halt responding to Data Requests from Hong Kong Government. Selina thats right. Google, facebook, and quit her said they may not last as user Data Requests from the Hong Kong Government amid concerns that this new security law could criminalize protests, other types of free speech. Facebook typically works with Law Enforcement to follow local laws where the Company Operates but has said it has paused this practice with hong kong authorities while it conducts a human rights assessment so that pause applies to all facebook property including its core social network, instagram, and whatsapp. Twitter and google said they paused all data and information requests immediately when this National Security law went into effect. It is unclear exactly how this is going to play out and what it means for information that is stored in servers overseas but if Police Suspect an electronic message may endanger National Security, authorities can ask the Network Service provider to remove or restrict access to it. U. K. Is, as we reported, preparing to phase out the use of equipment made by huawei as soon this year. We have seen a pretty abrasive response from china. Selina we have seen quite strong rhetoric from china in response to this with chinas ambassador to the u. K. Saying in a video call with reporters that we want to be your friend. We want to be your partner. But if you want to make china a hostile partner, you have to bear the consequences. The ambassador added if the British Government bans huawei, it shows they cannot follow an independent Foreign Policy and that such a move would punish britains image as a supporter of free trade and damage trust between china and the u. K. This is in response to the news that the u. K. Is potentially making a uturn on huawei after earlier saying this year that huawei would be allowed in the u. K. s 5g network. It is now reversing that decision. Beijing. Lina wang in you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. This is bloomberg. A manager is setting up a 3. 5 billion dollars fund with the aim of sweeping up debt and equity in Companies Hit by the coronavirus pandemic. Bloombergs Erik Schatzker spoke exclusiven an interview and started by asking about signs of distress in private credit markets. We have to be careful that we dont conflate the markets and the real economy. While the technicals and all of the liquid markets at the fed has been supporting are fantastic, if you peel back and look at the fundamentals, the recovery is uneven. I think we have to make sure we do not confuse a rebound for a sustainable recovery. Is the federe liquidity not reaching . Michael we have been able to find distressed opportunities in firstorder covid impacted Industries Like travel and leisure after advertising, meeting entertainment, things like that. You have to look at it into places. One, where is the liquidity not finding its way . There are certain markets that have not been supported, some small business. Some middlemarket corporate loans, private equity backed loans. There are a number of pockets of the markets that have not benefited from the fed, a natural place where we can come in with its own liquidity and provide that support. Seen, even though the liquid markets are functioning, they are a whole host of private companies who have never prepared for a situation or world where theres zero revenue. How you build a branch to the health and economic crisis. We have been a big capital provided to the companies. Erik you started out with a 2 billion target and you exceeded it by raising 3. 5 billion. Why not more . The reason i ask is, as you are well aware, firms that compete with you are raising multiples of that. North of 15 billion. Why wouldnt it want to raise a bigger font . Fund . Michael we are. We tend to be more diversified. To 7 billion of new capital. Publicly announced in the Second Quarter. We phrased an additional 6 billion of new capital. 3. 5 particular strategy was billion dollars but it raises at a healthy clip. Most of the strategies we are seeing for accelerated fundraising are able to play the market dislocation in some way. Erik any idea how much you think you will be able to raise over the course of the calendar year . Michael we had said precovid we expected to exceed our record year, which was a year ago, by 36 billion. We are about 25 billion run rate and as we talked about in our First Quarter earnings, expectation is we will be somewhere within that range. Erik there is a significant gap between the performance of your thecorporation and highyield market. We can chart it. The highyield market has almost come back. It is just the level it started the year at. Capital Corporation Like many other bbcs, still trading at a significant discount. What explains that . Michael it is an example of what i just articulated, the difference between the technicals and the liquid market. What is going on in the fundamental economy. Looking at the market and effectively saying i am buying or expressing a view on middlemarket credit. What they are missing when you corporation,apital we as an Investment Grade company with billions of dollars of liquidity and a pretty solid Investment Grade liability structure are very wellpositioned to form through this kind of distress. A quickets get you check of the latest business flash headlines. Top says it will not process user Data Requests from the Hong Kong Government amid concerns that security law could criticize antigovernment protests. Facebook says it will conduct a human rights assessment. The move applies to the social network as well as instagraming whatsapp. Twitter says it has raised lawsns about the intentions. Amazon shares top 3000 for the first time, climbing as much as 4 to 63 . The average price target of 2800 dollars and fewer than a quarter of analysts seeing more than 3000. Amazon has jumped 80 from that much low. Of 1. 5 market cap trillion. Tesla jumped after three analysts lifted price targets by 43 . The boost to 1500 from just over 1000 comes after tesla delivery more model three and model y cars than expected. Delivery members are not out yet but jmp says it thinks tesla is on the right road in the u. S. And europe. Deutsche bank is raising its price targets. Coming up next, we have an exclusive with the finance minister of malaysia. We will be asking him for his outlook into 2021 and whether he is planning another stimulus package for the economy. Lots more to come. 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. Haidi we are getting breaking data out of japan when it comes to wages and Household Spending. Labor cash earnings coming in year on year for the month of may, a contraction of 2. 1 . That is worse than the estimate of a contraction of 1 , worse than the previous month. April saw a contraction of. 6 . When it comes to real cash earnings year on year from may, we are seeing a contraction of two point 1 there as well, also worse than expected. Household spending also contracting much worse than expected. We are seeing a fall of 16. 2 . The average estimate was a contraction of 11. 8 sent when it comes to Household Spending. We had been expecting those declines when it comes to household expenditures narrowing in may. Remember the full listing of the lifting of the virus containment measures and the state of emergency was only taking place towards the end of may. We are still yet to see any impact on Household Spending which fell over 16 in may. Shery lets get a quick check of the first word headlines. The Hong Kong Government has published more details about the controversial security law imposed by beijing and the official gazette says Police Investigating possible defenses under the law will be announced. They can Search Properties without a warrant in what are called urgent situations. The report said suspects could be forced to hand in travel documents and assets may be frozen. China is refusing to rule out blocking hong kong citizens from accepting the offer of a new life in the u. K. , slamming london for what beijing calls gross interference in mainland affairs. The u. K. s offer to about 3 Million People has further soured relations following the imposition of a new security law in hong kong. Downing street says it is a serious breach of the 1984 handover treaty. U. K. Confirms it is reviewing any role huawei may play in its 5g networks, saying the country cannot be left vulnerable to state vendors. In january, ministers allowed huawei limited participation, ignoring u. S. Warnings that washington would sever intelligence ties. Thatials are reassessing decision following u. S. Sanctions imposed on huawei in may. I have also determined that the u. K. Should not be in any way vulnerable to a highrisk state. We have to think carefully about how we handle that. We have to come up with the right to technological solutions. Huawei we believe that to embrace huawei, to improve just in thes not interests of china. It is in the interests of the u. K. The central bank is set to decide Monetary Policy on tuesday. With the economy set to shrink and no end to the virus impact, we are expecting the easing could stay after delivering 100 basis points of cuts this year. We are expecting another 25 basis points today. The government rolled out billions of dollars of stimulus measures to shield consumers and businesses from the impact of the virus. Our next exclusive guest. Sophie. Sophie joining us exclusively from kuala lumpur to discuss malaysias Economic Outlook is the finance minister. Zafrul aziz. Great to have you on the show. You have passed the 100 a milestone in office. A milestone for you with challenges aplenty, given other downside challenges for the economy. Indicators for the malaysian economy hinting at a gradual recovery, back to the nationwide lockdown, was relaxed. We are expecting a contraction in the Second Quarter. The world Bank Forecasting that annual gdp will shrink 3. 1 this year before rebounding next year. With that assessment, what is your forecast for growth in 2020 and 2021 for malaysia . Going yes, we have been through a challenging time here in malaysia, like what is happening globally. For malaysia, the forecast for this year for 2020 is between 0. 5 and 2 , which is in line with what analysts are forecasting today but as you rightly said just now, the expectation is for it to perform better. This year, it will probably be between 0. 5 to negative can you give us the number for that growth target . Zafrul 2021, we have not officially announced any target but if you look at the Analyst Consensus numbers, its around between 6 to 8 gdp growth. S p have recently announced the forecast for 2021. Sophie you are to present your maiden budget to parliament on november 6. You have spoken of the need to future proof the economy when they are grappling with increasing unemployment. Will the 2021 budget be bigger than the last . Zafrul yes, we look at what we have done so far. We have packages totaling 68 billion u. S. Dollars. Forthink about the budget november. The budget announced in november. The focus is to get the economy back up. We have seen a number of people, a number of factories open again. We opened the economy. For 2021, the focus will be on ensuring that this growth is sustained. Far is have shown so that malaysias economy is resilient so far today. In that budget, will you skew towards more spending or costcutting . Zafrul its the early days, sophie, but what is important is we need to stimulate the economy. If that means spending, it means we do have to invest for the future. If we look at the deficit levels, it is still manageable. The forecast is around 5. 8 percent to 6 . We still have room. We have room on the Monetary Policy. The focus is really to get the economy back up. The focus is on the people, the business, to stimulate the economy. Sophie is there another aid package in the works . Zafrul the last package that was announced in june that agilee is a dynamic and package. Should we need to have another package, then we are ready to do so, but we will see how it goes. In todays world has to be a dynamic one. We will see. The economy is picking up so we are quite optimistic we not need one anytime soon. Ahead of the policy decision, we have seen the bond curve steepening on that easing bias. We are seeing longer data yields and elevated as markets are seeing clarity on fiscal policy. As you just affirmed, you are expecting the fiscal gap to widen to 5. 8 to 6. 8 this year, the biggest gap in a decade. How will this be financed . Deficit washighest actually into thousand nine, around 7 just now. 5. 8 to 6 probably this year. It will be financed, but mainly by internal borrowings from the local domestic market, which has liquidity. Year . Are we heading next we look at the kind of stimulus packages we have announced so far. Oneoff in nature. Youll see that again. You should expect that to go down. We managed to get visits to go down. We have done that before. In 2009, when it was around 6. 7 . It wit down went down below. Sophie will there be capacity for foreign borrowings with this . Zafrul we still have room and or the limit. Foreign currency up to 35 billion ring gets ring gets ringgits. The plan to fund the fiscal stimulus is through domestic borrowings. Case, wouldhat malaysia even need to consider debt monetization . Zafrul no, we are not considering that. You just said your target is to bring the deficit back below 4 . Can you give us some more details on how exactly that can be accomplished with a more concrete target for 2021 . At the if you look fiscal discipline we have, firstly, our current account is. Ot funded by borrowing it is funded through our revenue. Before, we had fiscalbillion ringgits nearlyon, and other every measure we announce is temporary in nature, oneoff. Mathematically, the borrowings will go down. As we discussed, the analysts are forecasting malaysias gdp to grow between 6 to 8 last year. Therefore, the deficit will go down. Trend, i amat the optimistic. Within the next three years to four years, targets, like i said earlier, to achieve deficit of below 4 . Sophie on the subject of government revenue, Sluggish Oil Prices have been a challenge there. What are the plans to stimulate more Revenue Generation . Will taxes be increased . Malaysias economy is a diversified economy. If you look at the contribution from oil, it is less than 20 so 80 of the gdp of revenue for the government is not dependent on oil. It is still a sizable number. We are mindful of that. Going forward, the focus is really to stimulate the economy. The last thing we want to do is to burden the economy with more taxes. Today, the focus is to stimulate the economy to help the people and to help the businesses. Joined last month, s p fitch in lowering malaysia Rating Outlook to negative, citing caution around the debt burden what is being done to avoid a rating downgrade . Engaging onave been the International Rating agencies. The concern is really around what is happening globally and not just to malaysia and if you look at what we have done, the economy has picked up and the rating has remained not been downgraded. The outlook has been downgraded. What is important is for us to have that fiscal discipline and the commitment to reduce the deficit when the economy recovers. That is the key point in the rating agencies are looking at as well. Sophie turning to Market Sentiment in the face of various risks, we have seen them getting closer to turning positive for the year. Investors do remain on guard with malaysias parliament set to convene on july 13. The prime minister, he could ace a noconfidence vote and snap election could be in the cards. How ready is the economy for this eventuality . Zafrul the focus is really on the economy. Should there be a snap election, what is key is investors and the economy want to see certainty and stability, but having said that, i am quite confident that we have the majority in the parliament to ensure that whatever policies we have announced so far is implemented as planned. You met with malaysias National Financial crime center recently, which is part of the Warren Beatty 1mdb task force. What is the latest on the 1mdb Recovery Efforts . As of april, malaysia recovered over 600 Million Dollars in 1mdb funds. How much more can be expected . Zafrul that process is ongoing. We are still engaging with the relevant stakeholders including Goldman Sachs. The plan is to make sure that malaysia receives what is due to them, what was due to us, malaysian citizens and for the government. So that is ongoing. I cannot reveal the number, but recovery will is proceed smoothly. Sophie can you give us more details on malaysias case against goldman on this 1mdb case . Zafrul that case is still ongoing. Theeave it to the courts, process is taking place now. As you know, we are also engaging Goldman Sachs on any possible sentiment as long as its a fair number for the Malaysian Public and government. Sophie goldman is set to be nearing a settlement with the u. S. Department of justice. Will malaysia continue to pursue a separate settlement . How much potentially are you seeking from that . Zafrul we continue to discuss with Goldman Sachs. The settlement numbers, i cannot reveal them yet. What i can say is it has to be a number that is fair to malaysia. Thank you so much to nadine terman, the malaysian finance zafrul aziz, the malaysian finance minister. Haidi we are just getting samsung numbers, a pulmonary update preliminary update. Second quarter operating profit coming in at 8. 1 trillion won. Second Quarter Sales number won,g in at 52 trillion beating the estimate of over 50 trillion won. We are seeing samsungs operating profit beating the highest estimate on the back of the lead we had when it comes to coming off that first base when it comes to phones. We are expecting a bit of shortterm impact when it comes to smartphone plungers when it comes to shipments in the Second Quarter teacher covid19. Strength in that chip sector from the work from home situation continued demand when it comes to sammys really driving some of those numbers there. We will get analysis when it comes to that beach for the Second Quarter for samsung. Up next, the Senior Research manager joins us next. This is bloomberg. Shery breaking news out of samsung. We have the Second Quarter preliminary results with operating profit coming in at 8. 1 trillion won, and it is really a 20 jump from last years numbers. We have seen samsung say that this is also reflecting a oneoff gain related to their display division. Lets discuss the results. Joining us now from singapore is manageror research man kiranjeet kaur. Second Quarter Sales beating estimates paid operating profit topping 8 trillion won. This is related to one of gain given their display business. What are your thoughts as we just get the topline figures that are so much better than what analysts had expected . Kiranjeet i think this is great news for samsung, and again, because of this home work from home situation, theres been that. Demands for the demand for dram has seen a spike in q2. I would question that, you know, like for some, it is not the same across the board. Other mobility, they have not had the same luck in supply issues and also due to the weaker demand. Shery to your point, we do not necessarily get divisional breakdowns with these polymeric results, but does it could be more confidence that perhaps their memory chip business, now with the boost working around the world, perhaps has helped offset some of the weakness we see in handsets . Kiranjeet probably some of the other businesses, as you have mentioned, they have compensated on the mobile side. This can be positioned for this. Even with this result, do you expect samsung, along with competitors and rivals, to be pretty cautious when it comes to the expansion production side . Theyjeet i would say would probably be very slow on the mobile side and smartphones account for a large share of revenue and profits. Positive. t look very demand is very uncertain. We can expect some of the demand shifts as the countries come out of lockdown. Thanks for the smartphones pickup. Antichina sentiments. Samsung could have shortterm gains. The rest is already uncertain. In terms of demand and supply side smooths out. Haidi what about a demandside boost from huawei . Have already seen some for samsung. Been launching. Most of the markets, starting in , in the next few months as well. That is going to help samsung during this time both against huawei as well as other chinese players in markets. Shery we have seen a little bit of softening in the swap market. What is your outlook for the price recovery we have seen so far . Kiranjeet we already saw the price stabilizing in june. Price goingw that up probably because a lot of companies were struck they were stockpiling the chips. They should slow down now and we should not see any further increase in the price. Shery in other news related to samsung, we really have seen those headlines coming fromj riley and bribery jay y lee and bribery. Does that have an impact on their performance at all . Kiranjeet i would not say its going to have a direct impact over the last couple of years. There is obviously, you know, they have someone in place to keep their business running. I would not see any direct impact as of now. Haidi really appreciate your time. Kiranjeet kaur from idc asiapacific going through that samsung beach. We will have more analysis on those results when we are joined by the Semiconductor Analyst later on. And another big tech guest is coming up. The founder and ceo will be joining us for an exclusive interview. That is at 11 30 a. M. Hong kong time, 1 30 in the afternoon if you are watching from sydney. Lets get you a quick check of the latest business flash headlines. China suffered its first major developer bond fault. They failed to pay a 210 million local note due on monday because of what it calls shortterm liquidity problems caused by large debt and higher borrowing costs. Household defaults is the first since the offshore bonds in 2015. It said the coronavirus has affected sales. Over thee than half next three years and encourage as many as 80,000 after work from home. The company is one of japans biggest employers and describes the move as a worklife shift for the new normal. Fujitsu will off her a stipend to help set up and maintain work space at home. Factory workers will not be affected. Air asia posted a record quarterly loss for the three months through march as the coronavirus slashed worldwide travel. Asias biggest Budget Airline lost 188 Million Dollars compared to a profit. It is the toughest challenge since air asia launched in 2001. The group has cut costs by more than 50 this year and applied for loans to boost liquidity. Shery lets get a quick check up on how markets are trading across asia. ,. S. Futures gaining. 2 brought upside as we had the s p 500 seeing its longest winning streak since december. He restocks gaining. 8 . We have seen a little bit more strength in the kiwi dollar alongside the aussie dollar as we have or risk on sentiment given the rally that we have seen in chinese stock markets. Sydney futures up. 8 when they close. We are again expecting the rba rate decision. Not much expected on that front. They are expected to keep their main policy programs unchanged. When it comes to nikkei features Holding Steady, we have seen some weakness for the japanese yen, which is trading at around the 107 level. Riskon sentiment again translating to the japanese yen. We did get there may Household Spending. Disappointing to the downside. When it comes to the kospi, futures looking like this. We have seen there may current account surplus coming in much higher than the previous month. Thate are now hearing south korea could be seeking to bond, 84 financing trillion won. According to local media. Coming up on the next hour of daybreak asia, Market Analysis with the head of global investment. Plus we will be joined by the orient capital researcher, andrew collier. Do not miss the interview coming up later. Deutsche bank ceo joins us to discuss his plans for germanys biggest lender. That is at 4 00 p. M. In hong kong. Terminal subscribers can see that conversation at live. This is bloomberg. Haidi a very good morning. Asias major markets have opened for trade here for trade. Shery welcome to daybreak asia. Our top stories this hour. Asia looks for a quiet start despite triggering a rally that listed bubble stocks. Big tech drove the nasdaq to a record. The s p 500 on the longest winning streak since december. Samsung in the spotlight. Second quarter profit and sales smashed expectations. Demand for smartphone spirit hong kong reveals new details about chinas security law including passport seizures and the power to muzzle social media. Haidi lets get straight to Market Action with sophie. Sophie after the global risk rebound on monday, we sell chinese stocks jumped the most since 2018. 1 nikkei 225 off a third of after a threeday gain with the wage data today just as well as Household Spending, which fell by a record in may. Jgb expected to rise. Open, stocksn the are resuming gains after following on monday. The aussie dollar Holding Steady after a sixday advance ahead of the rbas decision that it is expected to stand pat. Consensus is for malaysia to cut the rate to a record low. Downside risk for the economy. Hong kong assets on watch after more security law details were published following the first meeting of the new National Security committee. Hong kong stocks entered a bull market on monday. Lets check in on the open in south korea. Earnings from lg electronics. We are watching companies with industry revenue falling for a fourth straight month. Trading atyuan 21. 11. Samsung reporting a betterthanexpected earnings. Shery lets stay with samson. With samsung. Daniel, always great having you with us. We have seen samsung beating the highest analyst estimate. Gainis also due to one of related displays. Not to mention the gtv chart on the bloomberg showing how we have seen the memory chip price recovery we saw earlier in the year start to soften a little bit. What does this spell for other chipmakers in the region . As you said, the numbers are coming in betterthanexpected. Quite sizable he better. If you look at the operating profits coming in at 22. 7 year on year growth, 8. 1 trillion. The estimations were around 6. 5. Clearly much better than expected. As you said, in terms of the chip prices rising, softening up a little bit. I think it is related to the covid19. It might last much longer in terms of the economic recovery. It might take longer than expected. It is putting some pressure on that. Nevertheless, if you look at any sectors that are showing any kind of improvement in terms of , semiices or sales conductor related, the equipment size as well as the dm side as well. Yes, the concern is there. Nevertheless, if you look at electronics valuations, it is one of the cheapest stocksy relative to any other chipmakers globally. Therefore, we think Samsung Electronic can be reasonably attractive Investment Company at this point. As for the other companies, in terms of the earnings, we think it is attractive still. Chipmakers asu. S. Well as the taiwanese and various other Companies Including the semi conductors, the equipment side. The attractiveness is very high relative on the valuations. There is too much concern about this. Shery what about when you look at it regionally . How do you feel about markets like taiwan or the Shenzhen Exchange that are heavily veered toward tech . The same time, you are seeing the 14 day relative index in overall volatile territory. Yes, but i continue to focus on the growth related sectors. Covid19 is actually affecting the industries, the growth rate of the tag businesses are rising rapidly. That results into Strong Demand for the semi conductors side as well as Manufacturing Base countries. If we look at the country that looks attractive on valuations and the income model, we look at taiwan, vietnam, china, shenzhen and korea. Including the kospi. These countries the emergingmarket countries that shows a strong Manufacturing Base. Particularly relates to the crow segment the growth segment. These countries look attractive in regulatory on a relative basis. For a market with dependence on raw materials, they do not look good in terms of the valuation. Haidi what kind of permanent changes when it comes to industry you expect to prevail after covid19 and what are the companies that will trade well going into that . Clearly, if you look at some of the sectors that were theious, any sector that tech business is rising. For example, Airline Companies or hotels and travel agencies, etc. Whereas, if you look at the u. S. June, which is basically staying at home and then trying to do the businesses. In any sector related to that shows a strong growth rate. This covid19 affects the energy industries. If you look at the stock prices that are rising rapidly, it is Companies Like tesla anything with electric cars versus gasoline cars. The Environmental Issues are there. Everyone is aware of what is changing after the covid19 incident. Changek that kind of should accelerate rather than decelerate in the future. If so, we continue to focus on those sectors that relate to the covid19 beneficiaries rather than one that get affected negatively ones that get affected negatively. Haidi we have seen apple, facebook and twitter trying to assess the National Security law in hong kong. Are you concerned about the geopolitical overlay this has on global tech . Yes, i am somewhat concerned about that. Nevertheless, i think it is more important what the Chinese Government does in terms of boosting measures. I have been bullish on Chinese Markets since the end of 2018. Particularly, i have been bullish in the shenzhen market. There is a fight between the u. S. And china. That results in scrutinizing the chinese tech related. In terms of cost side for even u. S. Companies, you need a chip cost equipment over basically, components. Into a strong growth rate for the shenzhen companies. The small and midcap companies. We think that the growth rate for this segment is trying to win this war between the u. S. And china in regards to the Industrial Revolution industries. You continue to put more money into it, invest more and put liquidity into the system. That is what is happening to the chinese economy. They are trying to boost the economy by putting in a lot of fiscal policies. Now, they are adding the Monetary Policy, which they were slow to do relative to other countries. We think the liquidity driven rally could continue for the chinese equity market. Yes, there is negative news for the hong kong because of the political situation, but he feels way it the overall but if you look at the overall market share, we think the shenzhen market can take over a bit of that concern. Haidi really appreciate your time. Asia,ahead on daybreak chinas hardline on the u. K. With beijing threatening consequences in response to Boris Johnsons citizenship offer to hong kong residents. Plus, Orange Capital Research Says the security law is having a Chilling Effect on the citys legal and corporate financing systems. This is bloomberg. Shery softbank propelled by a series of share buybacks that have seen the stock recruit the losses seen during the coronavirus market. The stock has advanced more than 20 year to date. We are seeing the stock at the highest level since march of 2000. We have not seen these levels in about two decades. Next turned to Karina Mitchell for the first word headlines. We will start here in the u. S. Where it remains a focus of the coronavirus pandemic with countrywide case is rising by more than the past weeks average. Arizona so and factions below recent levels. New jersey saw the rate jumped to its highest in two weeks. Mitch mcconnell expects congress will pass one final virus rescue package later this month, saying the country needs another boost. Malaysias central bank is expected to ease rates either tuesday. The finance ministers says there is still room to move on fiscal and Monetary Policy. The focus will remain on supporting Economic Growth instead of burdening companies with additional taxes. He says malaysias government is committed to getting the deficit below 4 of gdp in the next three to four years. The focus is to get the economy back up. We have seen a number of factories open again since the fourth of may. 2021, the focus will be on sector his growth [indiscernible] President Trump is that to be preparing new executive orders on a range of issues including china. Mark meadows says the white house is looking at how the u. S. Could liaise with china. Meadows said other issues include manufacturing incentives and tighter rules on immigration. The president later tweeted, china has done great damage to the u. S. And the world. Tensions seem to be easing on the disputed himalayan border between china and india after a deadly clash that left several soldiers dead or wounded. Both sides say forces are pulling back. The june 15 clash was the most serious incident in 45 years i the line of control in cashmere. Delhi say they will respect the current border. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Hong kongs government has published Additional Details about the National Security law, revealing sweeping new powers for the city police. A follows the first meeting of the committee for safeguarding National Security. Lets get the details from selina wang. What more have we cleaned from these details . Selina the seven new implementation regulations that were decided at this committee for safeguarding National Security underscore the extent of the National Security law with some critics arguing the rules may be more alarming than the security law itself in terms of undermining freedom of speech and communication. These regulations state that hong kong road Hong Kong Police can search premises without warrants under exceptional circumstances. Authorities can block suspects under investigation from leaving hong kong and free property belonging to suspects. Authorities can demand empty candyman information from political groups operating outside the city. They can order Internet Companies to remove content or seize their equipment. The u. K. Is standing by their promise to offer a path to citizen ship for 3 Million People. China has hit hard back with the China Ambassador refusing to rule out that china could plug homecoming citizens from leaving to take up the u. K. s offer, criticizing the British Government for interfering in affairs. Also criticizing some politicians of the u. K. For maintaining what he called a colonial mindset. Shery we could be seeing some more tensions with u. S. Tech giants. Google, facebook and twitter saying they will pause responding to data ruth to Data Requests from the Hong Kong Government. Selina google, facebook and twitter saying they will not process the user Data Requests from the Hong Kong Government. That is amid concerns that it could criminalize protests. Apple says it is assessing the law and has not received any requests for user data since the law kicked in last week. Facebook typically works with Law Enforcement to follow local balls. It says it at to follow local laws. It says it has positive as while it conducts what it calls a human rights assessment. That applies to the core network, instagram and whatsapp. It is unclear how will play out for the u. S. Tech giants. According to the new details, if Police Expect an electronic message will endanger National Security, 30s mask the publisher to restrict access to it. Haidi the u. K. Is preparing to phase out the use of equipment made by huawei. We have had a stern rebuke from beijing. Relationsk. China continuing to sour over the National Security law and huawei. The chinese ambassadors saying if u. K. Chooses to make china a hostile partner, they have to bear the consequences. Adding that if the British Government does banwell way, we would news that response to the u. K. Would be making a uturn on huawei. It is preparing to phase it out in the 5g networks as soon as this year. This is after a report from the National Security center concluding that the sanctions mean that huawei will have to use a trusted technology, which will make security risks impossible to control. Shery our china correspondent selina wang in beijing. Coming up next, the ceo of a saudi chemical giant sees the recovery from the pandemic. It is not this year or the next. Our exclusive interview in a few minutes. This is bloomberg. Shery the head of Saudi Basic Industries says a recovery from the pandemic may not come until 2022. The company is prepared to weather the storm. In an interview with bloomberg, the ceo said they have a strong Balance Sheet and can cope with current challenges in the Global Economy. The g20 leaders, especially the finance leaders and Central Banks, have been extremely practical coming with a stimulus package to support the economy. I would like to highlight the important element. We should not load all of the challenges on the Global Economy on the pandemic. We have to experience some slowdown. The pandemic has accelerated the slowdown in the Global Economy. A sudden shock to the system. A positive response from regulators and the g20 leaders, specifically the finance leaders and Central Banks where they have learned from previous crazies and took their from previous crises. The issue is not on the stimulus package. We need to look at fundamentals of the Global Economy that enable us to look at structural changes related to digitization, related to our ability to have free trade and more importantly, we should not use not lose sight from key principles. Sustainability and development. I think it is very important we do not lose sight of them because normally through a crisis, people forget about those longterm issues including of course, integrity and compliance, which is important. We have rededicated a special task force to address compliance. Can i ask you to put on your other hat . Those of the global issues, what you are running one of the most preeminent pieces of the Global Economy. You talk about the slowdown began before covid. Give the world a sense of what kind of recovery you are seeing in terms of demand and the shape of recovery that is coming across your desk. Let me just start with a positive remark. People are talking about a second or third wave of coronavirus. What we have seen, all government have been able to lock down their system. In order for them to see how this is going to unfold, but to build a capacity to deal with the crisis. The entire world recognizes they cannot lockdown the economy. They need to go back to normality. They have to build the resilience in their systems and citizens. I see despite the fact of any secondorder aired wave, which people are talking about, is not going to push the economy to a complete lockdown based on our previous experience. In terms of the outlook for the economy, if we need to look at positively positive data that 2018, thatnce to will be on the first or second part of 2022. We will have this year and next year, a year of recovery. Be positioned with those challenges. Do you think from the business side and this is the company you suspended new this year. Is this do you think youre going to have to do more given what you are seeing . We need to look at this the on capex. Duty tocompany have a make sure we have a strong and reliable, safe assets to secure the safety of our people and society and community surrounding our assets. Us. Is the top priority for then we go into a mode of understanding, how can we protect Balance Sheets in addition to having clear support to our dividend policy . That needs to be driven with our Growth Strategy to come up with how we are going to manage. What the entire economy is facing will require a discipline on how we are going to bridge from today to 2022. Has a strong Balance Sheet that will enable us to cope with the current challenges. From our first half of this year, we have announced the first half dividends of 1. 5. That is clearly showing us how resilient the Balance Sheets and our ability to cope with the challenges are. Abici that was the sound ceo. Coming up, our interview with the malaysian finance minister as he discusses a settlement with Goldman Sachs. Plus, we get another exclusive. Aliens of indian users are growing homegrown social media platforms after new delhi band chinese apps. New delhi banned chinese apps. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. This is daybreak asia. Im Karina Mitchell with the first word headlines. The Hong Kong Government has published more details about the controversial security law imposed by beijing. Police investigating possible offenses will be allowed to Enter Properties without a warrant in what are called urgent situations. The report also says suspects could be forced to hand in travel documents and assets could be frozen. China is refusing to without blocking hong kong citizens from accepting an offer of a new life in the u. K. Slamming london for what beijing calls gross interference in mainland affairs. The u. K. Has offered to open the door to about 3 Million People. That has soured relations following the imposition of a security law in hong kong. Downing street says it is a breach of the 1984 andover treaty. The u. S. Supreme court has theld the treaty to close Dakota Access pipeline. It follows a ruling in lower court that orders the shade the site be shut down and Environmental Review. The decision is seen as a big win for native american tribes at the expense of the Trump Administration and the oil industry. Buy indonesia has agreed to billion dollars the by billions of dollars to finance the budgetary response to the virus. It will take 27 billions of bonds for the 7day reverse repo rate. Ministers will also issue 9 billion of bonds to support business with part of the interest borne by the bank. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. We are just getting some breaking news out of china. According to the beijing daily, beijing has reported no new virus cases on july 6, which are be the first time no new virus cases have been seen in beijing since june 11. We are seeing some strengthening when it comes to the offshore yuan. Removing someg is of these restrictions on movements after the outbreak from the fruit and Vegetable Market in beijing. Is reserve bank of australia expected to keep its policy settings unchanged. Concerns grow about a second wave of coronavirus cases. What are we expecting to hear from the rba today . Paul in terms of policy settings, not much. The cash rate is going to stay at a quarter of 1 . The three year yield target is behaving itself. It is. 27 . The 3 10 spread is where the rba once it to be. We are looking for commentary. We might see something around the aussie dollar. That is knocking on the door of . 70 u. S. Right now. 30 insie has rallied the last quarter, which is the most since 2010. The rba as unlikely to want to see that go much higher. We have had some encouraging data over the past few weeks. The trade balance, retail sales were both a beat. That is a sign of confidence returning. The key concern remains around the unemployment rate. We will get the june numbers next week. Risks remain. The disturbing resurgence we are whatg in the tory obtain sort effect in victoria. Shery what sort of Economic Impact are we expecting . Paul victoria is a sizable state. 5 Million People almost living in melbourne. It relies heavily on services tourism, migration and international students. It is not have the resources other states have got to the manufacturing as a shadow of its former self. We are seeing unemployment down 7. 6 on the prepandemic numbers. That is the worst of any of the australian states. Victoria still contributes a quarter of australian gdp. A weak victoria is not ideal for the country as a whole. 12 postcodes in lockdown. Nine towers in lockdown, which are home to 3000 people. We have the New South Wales victoria border to close at midnight. That points to a greater concern the resurgence in pretoria there is a risk that could spread into the rest of the country. That is something Health Authorities do not want. Coming up next, a surging dollar, bond defaults i Chinese Companies are highlighting the increasing pressure the countrys firms are under. We will discuss with andrew collier. This is bloomberg. Haidi a luxury residential developer has become the First Chinese builder to default on a bond in five years. Monday, the company failed to repay the 210 million note, saying the Virus Outbreak had affected sales. Joining us is andrew collier. On the one hand, we have been saying for years that marty fought as a sign of healthiness and a market oriented market in china. How bad does this get as a result of the disruption we saw from the pandemic echo andrew what we are seeing the pandemic . Andrew what we are seeing in china is the markets are racing ahead as the locked down the virus goes away. We are still seeing significant increases in stress among companies, particularly Smaller Companies and property developers. It is a very schizophrenic situation. The Chinese Government is willing to allow a certain amount of defaults because they do not want to build up a debt bubble the way the United States had in 2007. What they have been trying to do is a strategic fiscal stimulus where they try to feed cash into parts of the economy they think will generate job growth, which will be small businesses. That has not been terribly effective because the banks are not willing to lend to small businesses. As a result, and obviously the trade war, the overall economy slowing and now the coronavirus, you have a situation where you are going to see more defaults. In some ways, it is healthy for the economy. The problem is once they are deft the ones that are defaulting, it tends to be the private businesses. According to bloomberg research, there is probably around 70 other firms facing the repayment pressure. Is this also an issue when it comes to the ineffectiveness of Monetary Policy and fiscal transmission . Exactly. Monetary and fiscal policy in china is different from the United States. The United States, it loosens the cash. The banks disperse it throughout the economy. In china, a lot of lending is based on political decisionmaking. A lot of the stimulus is bonds for local governments or bonds for independent companies. A whole bunch of targeted measures. The problem with these measures is they tend to end up falling for the state system. You get state property developers. You get the steelmakers that our lord back into that are lured back quickly because of the virus. Even though there was an effort to get loans to small businesses, they were unable to do a significant job. It has been a somewhat ineffective stimulus plan. Shery just a speculation that beijing will be less generous with credit easing during this crisis has led to borrowing cost jumping and domestic bond sales getting canceled. Is this going to be a continued trend when it comes to debt sales in china . Andrew i think it will be because the government, because up a lot of smart people in the pboc, for the last three or four aars, has said we cannot have systemic crisis if we throw too much money at the problem. Only in the past six months has the fiscal stimulus started to be fairly significant. We are going to see a lot more stress in the economy. One of the theses i have been pushing is the winner and loser idea. Shery when you look at the broader credit market in china, we have seen the 10 year Government Bond yield surging at the moment. Where do you see the level at now past 3 . The government can control the Government Bond yield. That is a function of their ability to manipulate credit in the overall banking system. They may be allowing a certain amount of Interest Rate increases to squeeze credit 20 get rid of the credit to get rid of the partial borrowers shaking. I do not expect skyrocketing Interest Rates as we have seen in other countries. Haidi over the years, especially recently, we have certain we have heard more overtures about beijing wanting more foreign investment. We are now hearing they want Aircraft Carrier class securities firms to ward off foreign competition despite also denying the merger rumors should does this all mean the merger rumors. What does this mean when you overlay it with a threat of judicial transparency and independence facing hong kong . Andrew that is a complicated question. Big entry by the foreign system into china was the wto in the days of 20 odd years ago. There was a great deal of power. They could push the state firms to back away. China talks about letting foreign banks and security firms coming in. It has been fairly modest. Recently, jp morgan, but it is not significant. In the banking system, it is not going to be significant. In hong kong, the Security Issues are way more important than market access. China gets a lot of capital without going through hong kong by selling bonds overseas. A lot of bank loans can be directly accessed. Xi jinping made the calculus that the Security Issues are way more important than scaring the foreigners. We have seen that markets are up. Maybe he was right. Maybe it does not matter that much. Shery that was andrew collier. Thank you for that. Lets get a check of how markets are trading across asia. A little bit of a mixed picture with the msci asia index at the highest level since february. The nikkei is down to tens of 1 . We continue to see a little bit of weakness around the japanese yen. It is holding at 107. Aussie stocks are leading the gains at the moment. We are seeing autos weighing on the markets in tokyo with the nikkei down and the rest of the markets gaining ground. Take a look at some individual stocks. Softbank touching the highest level since march of 2000. We have seen a series of buybacks that have seen the stock recoup some of the losses suffered during the coronavirus pandemic and continuing to gain ground at the moment. Samsung was under a little bit of pressure despite the fact that the Second Quarter operating profit beat estimates, coming in at 8 trillion yuan. It has been fluctuating between gains and losses. Metatalk, look at that search. A u. S. After they won trade dispute. Indexoomberg dollar extending losses for six consecutive sessions. We had seen the dollar index at that weak level that we had not seen since early january. The hong kong dollar unchanged. Keep an eye on the offshore chinese yuan as we have continued to see strength. We have seen the stockmarket rally in china. The ringgit holding onto the monday gains before the expected rate cut later today. Galatians finance ministers exclusiveophie in an interview earlier. Have been going through a challenging time in malaysia. Just like what is happening globally. The forecast for 2020 and 2 , which isnd in line with what analysts are forecasting today. Expectationnow, the is for 2021 to perform better. This year, it will be between 0. 5 to 2 . Sophie can you give us a number for the 2021 growth target . 2021, we have not officially announced a target. If you look at the Analyst Consensus, numbers are around 60 to 8 gdp growth six to 8 growth. Sophie to present near maiden budget to parliament, you have spoken of the need to future proof the economy at a time when the country is grappling increasing unemployment. Will be your key priorities and will the budget be bitter be bigger than the last . If you look at what we have fixedo far, we have now packages. U. S. Dollars. If you think about the budget fornovember, that is ready 2021. The focus is to get the economy back up. We are seeing a number of factories open again since the fourth of may when we reopened the economy. 2021, the focus will be on ensuring this growth will sustain. Is the have shown so far malaysian economy is resilient today. Sophie during that budget, will you skew toward more spending or costcutting . Days. Is early what is important is way to stimulate the economy. If it means spending, we do have to invest for the future. If you look at the deficit level today, it is still manageable. It is forecasted to be around 5. 8 to 6 . We still have room on the Monetary Policy. The focus is to get the economy back up. The focus is on the people in the business. That will stimulate the economy. Aidie is there another package in the works . The last package that was announced early june. That is a dynamic and agile package. Should we need to have another package, we are ready to do so. We will see how it goes. The plan has to be a dynamic one. Lets see. The economy is picking up. We are quite optimistic we perhaps would not need one anytime soon. Ahead of the policy decision, we have seen the bond curve steepening on the easing bias. We are seeing longer data yields staying elevated as markets are seeing clarity. Biggest gap inhe over a decade. How will this be financed . Highest deficit was in 2009. I was around six or 7 that was around six or 7 . 5. 8 to seven this year. It would be financed mainly by internal borrowing from the domestic market, which has enough liquidity. For where we are heading this year, we would look at the kind of stimulus packages we announced so far. You will not see that again. You should expect that to go down. Haidi the malaysian finance minister speaking to sophie earlier. Coming up nice, chinas market mania. To their highest level since 2015. All major benchmark its in territory. Well be discussing what to expect at the open and beyond. This is bloomberg. Haidi lets get you a quick check of the latest business flash headlines. Air asia posted a record quarterly loss as the coronavirus slashed worldwide travel. Asias biggest Budget Airline lost 188 million. That compares to a profit of 22 million a year earlier. It was called the toughest challenge since it lost in 2001 since it launched in 2001. They applied for loans to boost liquidity. Fujitsu plans to cut office space by more than half. Japanmpany is one of biggest employerss; just japans biggest employers. Fujitsu offer employees a start up stipend to set up work from home. Longer says it will no process user Data Requests from the Hong Kong Government amid concerns the new security law could criminalize antigovernment protest. Facebook says it is conducting a human rights assessment. The move applies to core sexual network as well as the to core social network as well as whats up. Shery china strongest rally in years has investors questioning if the bull run can last or if it will collapse in an epic fashion. The shanghai composite is the most overbought since 2015, harkening parallels to the bubble that boost that burst soon after. Sophia is on the line from hong kong. This comparison with 2014 and 2015, given what we have heard from state media, encouraging investors to get into the stock market. What are we seeing . Exactly. Quite an exciting day. Data, look at any kind of we can compare it to what happened in 2014 or 2015. I was calculating the market cap that we gained. Almost half 1 trillion u. S. , which is the second biggest increase in shareholder wealth in history. That shows the extent of yesterdays rally. Striking a today is bit more they measured tone. And were stoking the rally coming out with all the cases for why you should own stocks. We have not seen commentary like that. On tuesday, two newspapers are urging investors to be rational and be mindful of the potential risk in the market and not use it as a way to make a fortune overnight, which is what happened in 2014. The market is aware of what happened in 2015. There is also an element he do not want to miss out. Leverage is increasing, which shows people are taking on more debt to buy stocks. My sense is that it will continue. We had a huge surge in stock Index Futures at the close on monday. 9. 1 in a cage of large caps. The momentum is increasing. We do not see it collapsing anytime soon. What are the implications for hong kong yucca hong kong . Sofia whenever the market gains in Mainland China, that does spill over to hong kong. To sevenis close dollars. Strengthening quite a bit. That helps Chinese Companies listed in the city. A stable stock market always looks good. It is a good distraction for Retail Investors to drive the majority of turnover not only on Mainland China but a lot of Retail Investors are invested here in hong kong. It goes to show that hong kong is a financial hong kong as a Financial Hub can be stable. We had the National Security law imposed barely a week ago. The market has done really well since it reopened after that. It does strengthen the case that hong kong is stable and that a can thrive. Haidi our china markets team leader. Maybe this time it really is different when it comes to the exuberance we see in chinese equity markets. Taking a look at the bond market, we are seeing chinese bonds spread over treasury. Hitting an alltime high at the moment. That is one to watch as we go into the start of trading in shanghai, shenzhen and hong kong. Chinese bonds are coming under pressure. That chart on the bloomberg showing that 10year spread over treasuries hitting a record high. That is a for daybreak asia. Our coverage continues. Were looking ahead to the start of trading in hong kong and mainland. The china open is almost upon us. This is bloomberg. Tom it is 9 00 a. M. In beijing. Welcome to Bloomberg China open. I am tom mackenzie. David i am david ingles. We are coming down to the open of trade. Lets get your top stories, this tuesday. This bullish move, asia triggered a global rally, maybe running out of steam. Equities are flat. Also some initial