Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

Wave. S fears of a second the u. S. Seeing 16,000 cases a day. Hong kong in the third wave right now. All youll futures elevated. You are seeing a risk off move today. Focus on the chinese story. We are seeing a down day even when it comes to chinese stocks. We will see how this plays out. Lower by 6 10 of 1 for the shanghai composite. Asia had their best Weekly Performance in five years. The csi 300 large caps, ada percent of the index has been overbought. Thats the highest on record. We are seeing profittaking here today. Shenzhen, more of that robustness. The most overbought on record. That is still going higher by 1 today. It seems like the bond market is at mercy with this rally as well. Bonds at 306 right now. Yields falling. Bnp paribas saying that 10 year yield could rise to 3. 4 . We are watching other markets as well. Hong kong is a focus today. We saw a Record Number of local virus cases, the most since the pandemic began. They tightened distancing rose again. 150 points lower on the hang seng. Jakarta is flat at the open. P, and a lot down. You are seeing a little bit of an asia fx selling off today. The dollar yen is at 10703. Offshore renminbi holding at seven. The korean won weakening by half of 1 . We are talking about the very hot ipo market in hong kong. Ipos pricing the hong kong new the bottom of the range. We know that Chinese Companies counted for a record 95 of first timeshare sales in asia in the second quarter. Headlines first word for you. The virus is flaring again in parts of asia with hong kong and tokyo reporting record new spikes despite seeming to have control the pandemic. Both recorded single day highs. Hong kong with 34 local cases. Tokyo was 224. The news comes after weeks of normalized activity and raises the possibility of renewed social restrictions. Scientists say covid19s ability to spread is still not fully understood. The u. S. Continues to set records in new cases, toppling 16,000 in a day for the first time. Arizona reported the new infections in one day. California saw a Record Number of fatalities. Global virus numbers are now above 12 million. Deaths rising at least 550,000. Covid19 is bankrupting American Companies at a relentless pace. The greatest threat we face now is not the virus itself. Leadership. Lack of and solidarity at the global and national levels. Each and every individual should reflect. Haslinda voting is underway in singapore in an election. The Peoples Action Party has led singapore since independence in 1965. The Coronavirus Response and economy are among the biggest issues. Voters must wear disposable gloves and they have five minutes to vote amid strict social distancing rose. The u. S. Is sanctioning a top member of Chinas Communist Party and three other officials for human rights abuses. As sanctions are being debated by the Trump Administration over hong kongs economy as well, global banks risk being caught between those measures and beijings retaliation. Lets cross to selina wang in beijing for more. How can banks navigate measures from the u. S. And china . Selina this is a massive challenge. They have to find a way to mitigate risks of a potential breach of the Hong Kong National security law while implementing those potential u. S. Sanctions. Violating those laws could result in Companies Getting find or losing their licenses to do business. Some lawyers have said that this could force Financial Institutions to choose between doing business with the u. S. Or china since that National Security law in hong kong makes it illegal for these companies to comply with u. S. Sanctions against hong kong and china. Sanctionse time, u. S. Would penalize foreign Financial Institutions that knowingly do business with sanctions individuals that are deemed to undermine hong kongs framework. Some Bank Executives were a bit more sanguine. They say the followup may be limited to the most senior chinese officials since the u. S. Is unlikely to take any action that would significant disrupt trade or hurt the Global Economy. Weve learned that foreign banks are assessing a variety of options including having offshore entities rather than local units implement those sanctions. That may not work since hong kongs law claims extraterritorial rights. Yvonne how much exposure to these u. S. Banks have when it comes to china . What does this mean for citigroup in jpmorgan now . Selina citigroup, goldman, j. P. Morgan are all walking a tightrope between the u. S. And china over their operations in hong kong and their ambitious plans for china this year. China chose to retaliate over these possible u. S. Sanctions, that could put plans with china into question. Ail and corporate ranks banks with a presence in hong kong could be more exposed to risks from the bill because of their sizable transactions done 302 units. Through local units. Bankers and lawyers are rapidly poring over this legislation to figure out how can they dodge the most major consequences. That was our china correspondent in beijing. Still ahead, a bit more about fiery chinese stocks and the Health Care Sector across asia. Korean stocks in particular benefited from the easing of lockdowns. Will the resurgence of infections globally be a dampener for the markets . Up next, we speak to Access Partnership Christopher Martin about the challenges that Companies Face in hong kong due to the new security law. This is bloomberg. Yvonne tiktok is no longer available to download for i iphones or Android Devices in hong kong, exiting the market days after the passage of a new National Security law by beijing. It grants sweeping powers by policing online content and has drawn opposition from internet giants. Our next guest has advised the Tech Companies on their strategies here in the reason region. Here is Christopher Martin. Thank you for joining us. Youve written about fair tech in this part of the world, especially china. Im curious what you would be telling these Tech Companies right now. Is there more to gain from going against china and leaving hong kong or doing business the way china wants . Istopher yvonne can you hear me . Christopher i can hear you now. Can you hear me . Yvonne yes. My question to you with this. Is there more to gain for these Tech Companies going against china and leaving hong kong versus doing business the way china wants . Christopher i think it will depend on the tech company in question. This is not a unique situation. Every tech company has been thinking about this as they approach the chinese market, going back decades really, since they began their opening. The questions they faced before the hong kong situation arose, in terms of whether they operate and engage in china, are going to start to extend into hong kong, given the new law and its implications for hong kong citizens, users, and businesses operating in the territory. Yvonne putting a halt on Data Requests is one thing. Some say its a shortterm fix. Are there any ways to guard against this law . Are some of these Tech Companies going to have to move their data elsewhere . Christopher yeah. I think some probably will move elsewhere. I think it will come down to two things for companies. One, its a value question. , some ofrnet companies the ones youve artie said, they will not remain they will not adhere to any type of data request. That puts them in the crosshairs, especially american ones that are likely and potentially implicated from not just the lot itself but the ongoing tensions between the u. S. And china. Others, a cost issue. Not just for tech firms, but all companies that use tech like the big Financial Institutions that you have been talking about. For them, they built systems under the assumption they can move data in and out of hong kong freely. It will remain a question whether they can actually keep doing that in some measure, or if the new law is going to curtail their ability to move data in and out, or other parts of chinese data policy architecture, if they are transferred to the territory, will inhibit them enough or make a costly enough that its not worth it from a business perspective. They will move their business or some of the back end Cloud Services that service the business out of hot hong kong. Haslinda to extrapolate from that, it does mean that in the longer term, its untenable for big tech to stay in hong kong. Even workers are at risk of being sent to jail. Christopher yeah. An unnerving question for any executive or employee for one of the Big Technology companies. Especially American Technology companies with staff in hong kong. It willnk that some of make a value judgment that it will not be worth it for them. Others will say, it will be worth it. We are starting to see that split begin to emerge right now. Theres a calculation on the side of the chinese government. They recognize the value hong kong has played as a bridge from the rest of the world to hong kong. That some level of that will remain. They want to see that happen. While hong kong will not remain as it was, i think that it may not go completely to the level that you see in china. That difference may allow some companies to continue to operate in the market. Thats a decision each will make for itself. Haslinda theres a clause thats pretty interesting. It says, providers may be excused for failing to comply with the law if the technology is deemed necessary and not reasonably available. How do you interpret that . Who stands to benefit . Christopher it will be an interesting space to watch. Necessary in the user, your Civil Society member whose active, will be difference different than what might be necessary of the perspective of a Hong Kong Authority or a mainland chinese authority. Instance, some of the technology weve been using more and more during the covid19 crisis like online communication platforms. Zoom is a good example. Mind, from my memory, there have been requests for taking down the meetings that included people from the mainland. Now,s just in hong kong will those same types of meetings be removed . Will zoom comply with government request . How will they comply . Technologye of a deemed necessary as we are all working from home . What are the applications for that . It will very much be designated by both who makes that decision and how the companies decide to comply or not. It seems like, at this point, it will take time for us to find out where those red lines lie. Talk to me about tiktok. They went ahead and pulled out of hong kong. They have been cod in the middle between the u. S. China tensions, theyve been banned in india. Can they separate themselves from the mainland while also pleasing beijing at the same time . Christopher yeah. Tiktok is a good example of a question that a lot of companies maybe a lot of strategy a strategy that a lot of companies have been considering in china. You have your system that operates in china. And then you have your system that operates in the rest of the world. Has made that decision to remove itself from hong kong. Continues topp operate in hong kong. Thats one of those things that you may see more of over the coming months and years. Specialcompanies build sister apps that can operate in hong kong and mainland china. This is a question that lots of Companies Face. Do we build something that is new and different for china . Google just has been one of the companies thinking about this with project dragonfly, a specialized search engine. It was abandoned given the repercussions inside its own ranks and concern about what it meant to operate that type of a sister at. Those are very real questions that every tech company has contemplated as it relates to mainland china. Now they will become completing as it relates to hong kong. ,aslinda Christopher Martin thank you so much for your sentiment today. Singaporeans are heading to the polls with social distancing measures. Little doubt of the outcome of the vote. How big of a win will the Prime Minister see . This is bloomberg. Haslinda voting is underway in singapore under strict social distancing measures. Polling stations close at 8 00 local time. Results should be clear by late today or early tomorrow. Lets bring in our Southeast Asia government reporter. What is at stake today . Think, than you might considering the php has won each of the 12 elections that have been held since independence. You have a growing field of opposition parties. Themare trying to deprive of their two third majority that is used to amend the constitution. They are contesting every single one of the 93 seats that are on contest today. Yvonne tell us more. Im looking at the video of Wearing Masks and entering to put in their ballots. What restrictions are in place right now to make sure that voters are safe . Philip they will be doing temperature screenings. There will be a special voting our for those on stayathome notice between 7 00 and 8 00. There will be increased staff and sanitation procedures to help move that along. Haslinda is there any clarity about having a strong mandate . What are they referring to . Philip we are looking at the worst recession in singapores history here. Government is expecting a 7 recession this year alone. At a time when the crisis, the pandemic has infected more than 45,000 people, mostly migrant workers. These situations need to be dealt with. They are looking for a clean mandate in order to achieve that. Keeping key things to watch. Will they get that two thirds majority . Will that be a better result than 2015 . We will watch that later on today. Lets get your latest business flash headlines. Tiktok has experienced technical issues. All likes have been removed. Difficulties come a day after President Trump says he was considering banning the app for reasons of National Security. Tiktok is owned by a chinese internet giant which is working to fix the problem. Indias second bigness biggest state run lender has reported another fraud of almost half 1 billion. The money involves a loan paid to a Property Finance chair which was seized as a regulator in november. Its the fourth scandal they have faints faced in three years. Tesla skeptics remain undeterred by elon musks confidence. The stock is about to be the first ahead a Short Interest level of 20 billion, according to a researcher. Tesla is a candidate for a short squeeze where skeptics are forced by a rising price to close their positions which drives shares even higher. Markets, riskhe off. Mainly red across the board. Markets consolidating. U. S. Ive sentiment in the among concern of the spread of the virus cases. That may derail the economic recovery. We are seeing the virus starting up again in parts of asia including hong kong. The msci asiapacific index down. Almost all sectors in the index are down. Emerging markets getting hit today. The csi 300 index lower by 7 10 of 1 . Not a bad thing given it has been in a performer. It had eight Straight Days of gains. The shanghai, at the highest in about five years. Saying down by 0. 5 . The market has been boosted by china traders for a 19th day via the stock connect. The kospi down half a percent. Looking out for president moons announcements about a korea new deal next week. That could shed some light on the countrys economic recovery. Look at the trending debut in hong kong. Hong kong has raised billions of dollars this week, highlighting how crowded the ideal market has been has Companies Compete for investors. Look at that. 100 gain in one day alone. This is bloomberg. Haslinda it is 10 29 a. M. In shanghai. U. S. Is sanctioning Top Communist Party officials over human rights abuses in a chinese progress a chinese province. China is accusing the u. S. Of using lies and fake news, calling on secretary of state mike pompeo to stop spreading a political virus. He claims beijing for covid19. Pompeo has been concocting fake news to discredit china and sow discord. It exposes his cold war mentality and zerosum thinking. Lies are still lies, even after being repeated 1000 times karina the bank of japan issued a gloomy report days ahead of its next policy meeting. The survey shows the economy reeling from the coronavirus upheaval. The boj is lowering its assessment of all nine regions, current forecasts across the board for a second straight quarter. Ireland has beaten spain in the race to lead eurozone finance minister. Pascal donahue defeated the candidatend also the of luxembourg. Donahue campaigned as a centrist who could arbitrate between fiscally conservative northern nations and southern governments who want looser post virus rules. Chinas leading Auto Industry group says the sector may recover faster than expected, with sources telling us 2020 sales are revised to a list severe drop of 10 . Less severe drop of 10 . The provision would still put deliveries at their lowest since 2014. Tales have been declining in china for two sales have been declining in china for two years. Global news 24 hours a day on air and on quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im karina mitchell. This is bloomberg. Yvonne taking a look at markets, we could be ending this week on a negative note, but still mostly higher when it comes to asian stocks. Strongest in a month. You are seeing some consolidation. U. S. Futures are lower. 1 for down close to some of your mainland benchmarks. There are reports Chinese State funds have started selling when it comes to their holdings, a sign the government wants to slow down this rally. Warning signs today. Also the news that china was cracking down on margin financing platforms. The pcomp also lower by 1 . In terms of other asset classes, the u. S. 10 year yield ticked lower overnight. We are steady around 60 basis points. The korean won is weakening the most among most asia fx. Brent crude is slightly lower, but oil set for a third weekly decline. We have seen this crazy run in chinese stocks. On the other side, you have seen what is going on in the bond markets, this rout that continues to get worse. Take a look at this uptrend on the chinese 10 year yield. In the last couple weeks just this week alone we went up 20 basis points for your chinese 10 year, preaching the 3 level. Breaching the 3 level. The chinese 10 year yield the cheapest against chinese equities in two years or so. Take a look at your movers today. We are seeing a lot of red, but some upgrades from a lot of banks. China Tourism Group dutyfree. This is raised to a buy at goldman. A recovery we are seeing in the auto sector in china. Tsmc. Watching the report june sales not up. Aomi. Ing xi biotech stocks have boomed in south korea since regulators banned shortselling in march amid the Global Pandemic selloff. Many surged after announcing plans to develop treatments related to covid19. Our next guest is warning Retail Investors could pull out of the andions equity market chairs are vulnerable because hopes for a virus care makes them expensive. Lets bring in james lim, Senior Analyst at dalton investments. South korean biotech shares trading at 80 times forward earnings. Bubble may be bursting. James i dont think anyone can is goingll when there to be a burst in the bubble. The momentum has been pretty strong. H the shortselling ban for the ban by the korean government, it is difficult to know. We are not saying the bubble is going to burst. We are not short sellers, so we dont benefit from this. The i am worried about is the healthansion of care sector has been somewhat concerning. Covid19 stocks going up, logically i think it is quite stretched. If all the covid19 treatment manufacturers do succeed, then that would mean there is not going to be a lot of outside profit for any specific company. On the other hand, if just very few companies succeed in this treatment or vaccines, then probably the other Companies Might see downward pressure in their valuation. To us, the valuation is certainly baking in a lot of hopes. Highlight it is time to be more cautious on these stocks. Haslinda evaluations aside, there is a lot of money sloshing around. Suddenly moms and dads are coming into play, supporting these bioTech Companies. Surely there is plenty more to run. Flow and theney momentum following that money flow can certainly continue to go on. Othere seen this in sectors to some extent. The internet and mobile Platform Companies have been surging over the last few days. Ev related names have been doing really well. We are seeing such a big polarization in the korean market. All the other sectors that are not included in those three main categories have now been suffering greatly. Some of these other companies too have quite good fundamental momentum. Enlarging polarization is something that an investor should be mindful. Perhaps you would like to take a look at the other side of the momentum. Yvonne james, when the coronavirus was the worst, regulators did ban shortselling for up to six months. Come september, is that what is going to trigger a correction in these Health Care Stocks . Is an at this point, that uncertainty, but i think the likelihood of delaying the shortselling is higher. Shortselling,ume then perhaps that would certainly work as pressure toward these very highly valued stocks. In the nearterm, the possibility is probably higher on extending the shortselling ban. It doesnt have to be that shortselling ban. Or two other success cases from outside of korea in covid19 treatment, or in theee a slowdown death rates related to covid19, then perhaps the excitement over covid19 treatment could also die down. Perhaps that is another factor to consider. Lets talk about Corporate Governance as well. You hear it a lot. There is that korean discount. It is a cheap market, but it is difficult to find companies with robust Corporate Governance. Fore do you see this push activism in south korea getting traction . James the main thing is we see some of these large, Stable Companies a few of them are actually changing their behavior. That is a positive phenomenon that we are observing. Isdont think the market giving enough credit to that change. The conglomerate discount in korea has widened to historic levels, whereas some of these companies in terms of paying out dividends, unlocking value through ipos, playing back andes buying back shares having more independence on the board, those changes are starting to happen in a few select korean companies. In the long scheme of things, i think that is an area investors might want to keep an eye on. Yvonne james lim, have a great weekend. Thank you for joining us. Coming up, a shift in focus from korea to china, which has been pulling back on what seems like an unstoppable rally. Are we headed for a spectacular fall . Details ahead. This is bloomberg. Haslinda you are watching Bloomberg Markets asia. Lets do a check on mainland chinese markets. They are under pressure. Consolidation is the theme of the day. Csi 300 index currently down about 1. 3 . Definitely session lows at this point in time coming on the back of being at the highest level in five years. We had chinas regulator cracking down on margin financing platforms. The stock market booming. Yvonne state funds are reportedly trimming holdings. They are trying to stop some of this margin financing, so there are signs that perhaps regulators are thinking this is looking too heated. This indicator shows things are looking greedy now. This is the fear greed indicator gauge. It measures this ratio of buying to selling strength. It is at the highest the secondhighest level on record on thursday. That is where you see signs of euphoria. Shenzhen has been on fire. It has reached the most overbought level on record in terms of chinese tech stocks. In terms of volume, you have margin debt. That has also been taking up ticking up. That rise to 2016 highs. Still not quite what we saw in 2015, but has remained elevated of late. Alleems like we are scratching our heads, wondering if this is a repeat of 2015. You say there are some key differences. What is it . Hi, yvonne. It is true when china stock markets rally, it goes crazy. That value started after the pboc started its rate cutting cycle. This time i think people are playing more into fiscal stimulus. This time, local governments of governmention bonds into the new intrastructure plan, basically building up 5g, ai, so forth. That is why a lot of investors were haslinda lets talk ipos. Yesterday a new ipo stock gained 1000 on its first day. With so much new supply coming in, should we be worried about these new ipos causing the Broader Market to tumble . Think it is like 2015. , the hope was ipo the market would tank. Ipos, i think a lot of money is sitting around. The ipos will drain liquidity out. Yvonne why do you think we are seeing regulators now cracking down on this margin financing platform . Is it a sign they are not too tolerant of this risk rally now . Shuli can i make a bad joke . There was a joke where the guy chinas is saying the stock market is like a crazy girlfriend, i dont know why she is mad. Regulators want to slow down. China is having a geopolitical war with the u. S. We see the world has migrated from trade war to geopolitics to capital flow. Incentiveina has an to have a boom market this time, way more than 2015, in fact. Haslinda thank you so much for that. Asna large caps dropping state pension sells. Seems like there is some consolidation happening. Maybe too much too fast. Lamborghinis new roaster is its most powerful car ever and it is a hybrid. Its ceo tells us about the future of the brands Combustion Engine next. This is bloomberg. As mentioned about what we are seeing in chinese markets, large caps are selling off close to a little more than 1 for those like csi 300. There are some reports that the state funds in the mainland are at least trimming their holdings, a potential warning sign for those along these markets. Given the stunning rally we have seen, it looks like beijing is getting a little concerned about cappingme about some of the risk we have seen. This shows the rollback of funds in the china landscape could trigger a correction. Csi 300 down 1. 2 . Haslinda what a run it has been. Chinese stocks adding 1 trillion of value alone this week. Itsorghini is set to expand supercar as customers show limited appetite for full evs. Ceo Stefano Domenicali told us about the pressure facing luxury carmakers amid the pandemic. Stefano we had to close our factory for some weeks. Operational iny order to fulfill the requirement of our regulators. The atmosphere here is really positive. In the last months, we have launched digitally because we could not do anything physical to mobile. Twowheel drive. This roadster behind me. Despite the situation, we are here to spread energy with our brand all over the world, because this is our nature. This is our dna. We try to stay focused on our objectives, which are the same before the crisis. When will we see a fully electric . Youve got that hybrid behind you. Lamborghini love naturally v12 aspirated engine. You know the trend is going to electric. When will we see a fully electric lamborghini for sale . Stefano you will be happy, because the v12 will stay as a model for the future. It will not be alone as the model for the future cars. We will have hybridization. To see a fully electric lamborghini, we have to wait a little bit. We believe in our sector we have to be in accord with what our customer wants. The trend is confirmed in the Group Strategy of being hybrid. This is what we are going to do very shortly. Full electric is too premature for us. When will we see a new flagship v12 . One model is getting long in the tooth. It is still an aweinspiring car to drive, but it wouldnt hurt to get a new transmission in there. The line . Xt in aefano that model represents unique success. The first was launched in 2011. After 10 years, the car is selling solder late very well solidly very well. We have new models. A new car that will be super beast. We have new ideas we want to share soon with our customers. We just had dinner meetings through web and digital connection. We have just discussed that with them. They are very excited. Yvonne that was lamborghini ceo Stefano Domenicali. Bp has paid 1 billion for a stake in the retail field business of indias Biggest Company reliance, marking its entry into one of the worlds fastestgrowing energy markets. Bp will have 49 of the business, and reliance the rest. Reliance mobility plans to add 5,500 fuel stations to its Network Within five years. Wells fargo is preparing to cut thousands of jobs later this year, setting a bleak precedent for an industry that has so far resisted layoffs in the coronavirus. Bloomberg understands tens of thousands of positions could go from its workforce of a quarter of a million. Wells fargo reports earnings next week and could post a first quarterly lost in decades. A bankrupt company is said to have a competing offer of finance that would keep it running during its chapter 11 process. It is not clear who was behind the bid. Brothers had a range of 75 million loan. We are told the new offer has lower fees and provides more liquidity. Haslinda it is consolidation in the asian market. Asia tracking losses in the u. S. Investors back to worrying about virus cases in parts of the world, including the u. S. , japan, and hong kong. Msci asia pac index down. Almost all sectors are down. Brent crude trading at about 42. 12, headed for a weekly drop. The virus impeding efforts to reopen the economy. Level. Tures above the 18 ray dalio like in gold. Csi 300 index down by 1 . Largecaps leading the declines caps leading the declines. Chinas regulator cracking down on margin financing. Hang seng also lower by 1 right now. Yvonne plenty more in the next hour of Bloomberg Markets asia. This is bloomberg. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Haslinda it is almost 11 00 a. M. In the lion city and hong kong. Welcome to Bloomberg Markets asia. Rishaad stuck in the middle. Global banks risking being caught between u. S. Sanctions and chinese regulations. That as relations between washington and beijing breakdown still further. Haslinda asia headshaslinda mainland stocks may end an eight day run. Rishaad voting is underway in singapore in an election overshadowed by the pandemic. Disposable gloves are obligate tory are obligatory. Getting to the markets. Here it is. A day where chinese stocks particularly under pressure. Lets look at the msci asiapacific index down. Looking at s p active futures lower. Gold futures moving to the upside, five dollars above the 1800 an ounce level at the moment. No trading in singapore because of those elections. Lets kick it out to what is going on elsewhere and look at the hang seng, at the moment declining 1. 1 . Asx all under pressure at the moment. Bangkok, tearin. 5 . 0. 5 down. Checking in with chinese markets, seeing them under pressure. Shares in china opening down on the shanghai composite at 1 lower. Csi 300 around a 1 move to the downside. Many of these mega cap shares head south after the government wants a slowdown on this rally. 10 year yields on the chinese note, 3. 04 . Is tensioningu. S. A top member of Chinas Communist Party is sanctioning a top member of Chinas Communist Party over human rights violation. Global banks risk being caught between those measures and beijings retaliation beijings retaliation. Lets cross to selina wang. How can banks navigate the measures from the u. S. And china . Selina they face a massive challenge in terms of mitigating the potential risk of breaching the Hong Kong National security law while also complying with possible u. S. Sections. Violating those laws could result in losing their license to do business, or hefty fines. Some lawyers said this could face Financial Institutions to choose between doing business in the u. S. Or china. Essentially the Hong Kong National security law makes it illegal to comply with u. S. Sanctions. Some Bank Executives are more sanguine. They say the initial fallout is likely to be major since the u. S. Would want to avoid significant economic damage or destruction to trade. Foreign banks are assessing a variety of options, including having offshore entities rather than local units implement those potential u. S. Sanctions. It is unclear whether that would even work, since the Hong Kong National security law claims extraterritorial rights. This u. S. Sanctions bill, not yet signed by trump, would penalize foreign Financial Institutions knowingly doing business with sanctioned individuals deemed to undermine hong kongs autonomy under the one country, two systems framework. Rishaad what about these u. S. Banks . How do they fit into all of this . Talking about the likes of citigroup or jp morgan . Selina they all are walking this tight rope between complying with these laws and not losing their potential extremely expensive Business Plans in china. If china decides to retaliate over u. S. Sanctions, those expansion plans in china are at risk. You have retail and corporate banks at risk that could be more exposed to risk, especially when it comes to sizable transactions done through these local units. Rishaad thank you. Selina wang, our correspondent in beijing. Lets head to the first word headlines. Coronavirus flaring up again in parts of asia. Hong kong and tokyo reporting record new spikes, despite seemingly having control of the pandemic. Both cities recording single day highs. Tokyo with 224 daily cases. The news coming after weeks of normalized activity. Scientists say covid19s ability to spread is still not fully understood. The u. S. Continuing to set virus records with new cases topping 60,000 in a day. Arizona recording the most new infections in six days, while texas, california and florida seeing a Record Number of fatalities. Global virus numbers are among above 12 million. A new report says covid19 is bankrupting American Companies at a relentless pace. The greatest threat we face privacy threat, rather it is the lack of leadership and solidarity at the global and national levels. That is why i say earlier each and every individual should reflect. Rishaad the u. S. State Department Approved the sale of new warplanes to japan as tokyo strengthens its airstrike capability. It is valued at some 23 billion. The approval coming as what change in as washington seeks to counter chinas ambitions in the pacific. It may be another year before the deal is formally signed off. Voting underway in singapore in an election that is almost certain to return the ruling party to power. The Peoples Action Party led singapore since independence in 1965. The Coronavirus Response and economy are among the biggest issues. Voters must wear disposable gloves and will be given five minutes to vote amid strict social distancing rules. Haslinda still on singapore, still to come with polling underway in the lion city, we look at key issues the city and government will face in the coming months. Mary nicola how she is playing the market. This is bloomberg. Rishaad lets get you a bit more on the coronavirus pandemic. The new jersey governor saying his estate will need to bring in more revenue his estate will need to bring in more revenue. Speaking exclusively to david westin about the impact economically. The toll has been on normas. Over 13,000 confirmed deaths and a couple more thousand suspected to have passed from covid19. That is the awful tragedy. Our numbers have gotten a lot better. As they got better, we made the decision, based on the facts and the science, to begin stepbystep reopening our state. We knew when we were doing that responsibly, that we would take on more risk in terms of increasing the potential for transmission. We were comfortable with that risk. What we were not expecting was the explosion in cases elsewhere in the country. The rate of transmission has gotten uncomfortably high. Today is improved slightly. Witht it with put in new york and connecticut a travel advisory to quarantine if you are coming from a hot spot. We are now requiring face coverings outdoors. Steps we have taken over the past 10 days. We have held off on indoor dining, which brings me no joy, but it is clear this virus is a lot more lethal inside than outside. We are watching this minute to minute, trying to make the decisions at every step based on the facts. David we have to get through the summer, but we have the issue of school in the fall. President trump really pushed to reopen the schools. To what extent already planning on people actually being in the classroom as opposed to Remote Learning . Gov. Murphy our department of education and department of health put out standards a couple weeks ago. Very comprehensive, largely defining the parameters and basic principles and leaving it up to our districts to develop their plan and come back for our common agreement. Kids backs to get into the classroom, but we have to do it responsibly. Is toughest nut to crack going to be preventing the unwitting passing of the virus mptomatic healthy kid to an older administrator with Underlying Health challenges. The whole notion of capacity, social distancing, face coverings, lots of hyper hygiene, etc. , doing things outdoors whenever possible those will all the elements of what we think it will look like. David you said you are desperate. Give us a sense of that desperation. I understand your budget is balanced through september 30. Gov. Murphy it is balanced because it is a constitutional requirement. But to have our balanced budget for only three months, we had to cut millions of expenses. The nut for new jersey, we estimated between mid this year and the end of 2021 is 20 billion. Thisis how overwhelming crisis has been, both in expenses that exploded and revenues that have fallen off the table. David are you going to have to borrow money . What does your access look like to the Municipal Bond market . Gov. Murphy we will have to borrow money. We will have to put some revenue raisers on the table as we develop our next budget. The first place we will go is the Federal Reserve special program set up. That will be the first port of call. We will go from there. This will be and both. Borrowing in the building in the billions and cash assistance. We are not alone. We are seeing this virus explode around the country. The other states are in our prayers. We wish nothing but a speedy resolution, but it is a reminder we are all in the same boat together. Haslinda new Jersey Governor Phil Murphy on the efforts to curb the virus outbreak. Patient stocks are slipping, paring this weeks gains. Concerns that rising virus cases will hurt the Global Economic recovery. Rishaad lets bring in mary and portfolio vp manager at pine ridge investments. Investments. What message are they sending out, in your view . Mary the focus is looking at fundamentals and where the market and economic recovery is headed. Markets in the meantime they will be wobbly in terms of what is happening with headlines. There are concerns about cases reemerging and rising. Obviously there is going to be a wobble there. As there is more of a steady stream from the data side, it looks like the economy is improving. Rishaad but is it . Weve got central bankers essentially focusing on liquidity, trying to push that organ of support solvency. We are in the process of perhaps suspension in the reality phase of this. Pitt could prove to be a vicious circle it could prove to be a vicious circle, could it not . Governments longerterm will have no choice but to scale back on subsidies. These huge outsider subsidies, things could get from bad to worse. Mary our view is over the next nine to 18 months that government will have to step in. We expect to see another package from the u. S. They will need these packages to support u. S. Households, to support businesses. As we heard from the new jersey governor, they need packages to support state and local governments as well. This will be essential to getting the economy to the other side. We will see it in terms of the fed stepping in until it ensures that we dont have as many bankruptcies, disruptions in the markets. This is going to be crucial. Rishaad it certainly is. Is it a dawn of realization that things are not great economically, to put it mildly . We are getting some view of fundamentals now as opposed to a oneway bet for equities. Mary it is interesting. Initially we saw some of the highfrequency data, like some of the mobility data the market has been focusing on, has shown improvement. Even some of the hard data is showing signs there is an improvement in the Global Economy. We do think the Global Economy is reaching a multiyear recovery. We dont think we will see a doubledip. Doubledips are unlikely. It usually happens because of a Central Banks have deployed a lot of measures and will keep doing it until we get to the other side of this. Haslinda mary, you say one of the biggest risks in the market is fiscal stimulus expiring. How real is this risk when governments around the world have said they are willing to do whatever is needed . Mary that is our view as well. Our view is we wont see these fiscal packages expiring, but it is a risk. You could see politicking around these times. For example, in the u. S. , both sides Start Playing off each other in how the physical package should shape. You heard from some u. S. Lawmakers that they did not see we were ready yet for another package. Thever, we believe that market is going to push them, and in general, how the economy is going to shape up, that policymakers around the globe will have to deploy more. We are actually expecting the u. S. To deploy another package 2 trillion. Ion to we think it is needed. Haslinda speaking of the u. S. , how much has the market priced in the u. S. Election in november . Mary it looks like the market has still yet to fully price in what is happening, given the focus has been on a lot of other things. Market seems to be quite shortsighted in terms of focusing more on the highfrequency data coming out on hard data. They are focusing more on what is happening in terms of how covid is evolving. Potential second rounds of shutdowns, rather than the u. S. Elections. We do recognize, over the next few months, it will be a risk. How it plays out, that is going to be crucial for markets, especially in terms of who wins and the cabinet formation. It is not only president ial elections, but Congressional Elections and how it shakes up to be, to see how further we can ensure that policies are passed to make sure we get to the other side of this. Haslinda speaking of elections, it is election day in the lion city. How much correlation is there between singapores stock market and the elections . Mary the focus in singapore is more on how the government is handling covid. It has been applauded globally by how well it handled the covid situation. That is the key, how the economy evolves, how everything shakes up and the stability of the economy. That is quite crucial, especially for us in the markets and investors as a whole. They have opened up gradually. They have tried to ensure proper measures in place. Key thing is the government has ensured they will deploy as much measures as possible to help the economic recovery. That is critical. Haad mary, very quick 1 getting to the whole idea of this recovery, with these d, you arebeing ease bound to get a rebound. A rebound is different from a recovery because we have so many structural issues in place. Mary you are right. You will get a rebound because you have base effect. He went from no Economic Activity to some Economic Activity. The whole key thing is there is a trajectory. We know a lot more now about the virus. We know how to contain it better. We have seen measures in japan and taiwan. Taiwan never shut down. Korea never shut down. They were able to tick along. These examples are showing globally that you dont necessarily need to have another lockdown, you just need to impose more things like masks and social distancing. So you dont technically need a total lockdown. That is what these countries have shown us. Moreoks like, with knowledge of the virus, that we could be headed in that direction as well from a global standpoint. This would help the recovery. Haslinda mary nicola, thank you. Plenty more to come, including assessments of singapores elections. Stay with us. This is bloomberg. Haslinda lets do a quick check of the latest business headlines. Wells fargo, the largest employer among u. S. Banks, is prepared to cut thousands of jobs later this year, setting a bleak president for an industry that has precedent for an industry that has avoided layoffs so far in the coronavirus. Tens of thousands of positions could go from its workforce of more than one million. Wells fargo could post a quarterly loss in decades. Has seen ahers competing bid. It is not clear who is behind the new bid, but a better offer good overtake the financing plan already lined up. Brooks brothers arranged a 75 million loan. We are told the new offer has lower fees and provides more liquidity. Tesla skeptics remain undeterred by elon musks confidence, with the amount of shares being sold short, headed for an unprecedented milestone. It saysg to research, tesla is a candidate for a short squeeze with skeptics enforced to close their positions, which then drives the shares even higher. Rishaad lets have a look at recent markets as we head to the chinese lunch break. Mscing a look first major asiapacific index. Busy day in hong kong. Hong Kong Stock Exchange seeing a lot of initial public offerings, but seven companies coming to the market today. Asx 200, in australia we have equities under slight bit of pressure. Not falling back as far as some of the others. Weve got the Prime Minister Scott Morrison talking. He has been talking about covid in the country, talking about reduction of Inbound International flights by one half, saying they are conducting a review of Hotel Quarantine procedures, also saying the situation in melbourne is of chief concern. They are looking at a pressing issue in the capital of victoria of tracing capacity. The news out of victoria state itself is concerning. Looking at chinese equities. China state funds selling. This is putting a kibosh on a rally that has gone on for eight Straight Days. We were looking at nine days of gains. We are seeing declines across the board. The bond market also in focus with yield on 3. 05 . That is where we are at the moment. A lot more coming up. This is bloomberg. What this election is about. Whom do you trust to get you through very difficult time . I think you will see some of the opposition parties coming together and coming up with a common message. Meeting people, talking to them. You know, we think that many problems which we have tried to highlight. How singapore can we have continued to work with things like 5 g. Our businesses will transform. Be internationally. This election is going to be not so much about what has happened already but what is the anticipation of the future . Plans to come, to deal with the future of this crisis as well as our country. Singaporian politicians and Business Leaders talking about the key issues ahead of todays elections. Ts continue the discussions with Honorary Research associate who specializes in Southeast Asian politics. Good to have you with us. He said this election has the makings of a watershed election. Do you agree . Yes. I think it does. Even irrespective of what the outcome is because over the nature of the campaign and the scope of issues and the public discourse. Dr. Hebert when will the votes what are the indications so far . Well, i think the came into this election with an expectation of confidence as a sult of the performance in covid19. Hoping that the voiters would lack of safety. I think they are likely to get the majority of voters to do that. At the same time the campaign itself has been very negative. Pap has been on the defensive. The issues that have been raised will be thing pap has to grapple with. Keep in mind in order for the opposition to win, it has to win significant margins of swings. Over 15 in many of these areas. The results will be one indicator. The other indicators are the issues with the rate and tone over the discussion. I think it puts the pap very much in the hot seat given the fact that they have not controlled the election narrative. Haslinda now talked about the tone. Is there a sense of insecurity and paranoia . Has it been surprising that a party that has been in power for 55 years, it seems very uncomfortable with criticism. It is seeking its 15th consecutive mandate. This is the longest serving party in the world. The defensiveness has become very engrained. Who should the leadership be . What sort of Economic Policy should they face in terms of reform. Whether or not they are willing to accept alternative voices. I think this is what the focal point to have opposition, calling for more checks and balances and voices for alternative issues and i think the pap is grappling with these issues of identity and its internal struggles and we have we talk haslinda about this election and the level of support it will be gth getting from singaporians. Is there a sense if it falls short, if it is closer to 60 that perhaps what we think the leadership or maybe the timing of that leadership transition . I think we have already seen in the campaign mixed signals sent. When he will be leaving. This is something that has been already put on the table. What i also think is important to look at are particular swing voters in singapore history. Those are to do with Younger Voters have to do with Younger Voters. Younger people. Ethnic minorities. These are the groups that i think are going to be very important in this election. The nature of the campaign, being on social media has had a much manufacture impactful role. I do see that there are going to be changes that are going to have to come about and responses by the pap, irresponsive of the seats won or lost because over the way they carried out the campaign and because they themselvess are put on the table the issues over the leadership and they have already said that this lks was about leadership change and the fact that they have indicated that the older leaders are staying around for a while. Rishaad bridget, having a look at the fact that there is no independent election commission. You have to have five for any candidate wanting to take part. Is this a Fair Election . Look. Scholars across the world look at singapore and recognize that the deck is stacked. Heavily stacked in the context over the pap and we also have seen the use of the bill to address would have been used in the campaign extensively compared to previous campaigns. So i think there is a sense that this is a very Difficult Campaign for the opposition to win. That has been even to win seats. There is no discussion of whether or not they would win the election but whether they can get representation and a small number of seats. The reason for that has to do with the fact that the deck is actually won one that is not fair. It also points to the reality that the system has very much protected itself over the years. And they dont recognize the need for checks and balances. The pap sees itself as the leadership and they dont want alternatives. Rishaad i think one of the worst results the pap had was in 2011. Do you see any chance of 2011 being as you repeated here . I think there is a sense of campaign definitely. The pap is going into this campaign in crisis mode during covid19 and i think and this timing is very important because it has been able to use its resource and build on its strengths which includes issues of governance and science and technology. I think the momentum of the you saw in 2011 in term turnovers campaign, on the ground, rallies. The opposition has lacked that this particular election. It may not reach that level of 2011 but the problem is we cannot fully judge this because in social media campaigns such as the election of the United States in 2012 where donald trump 2016 where he came in and we see the situation where we cant measure the individual interaction with social media. It is difficult to assess thouch campaign has had an impact. We will know that later today. Rishaad do you they essentially what has become a oneparty state in many ways, countries of ways actually. That is something that cant be healthy overall surefully the longterm . Well, i think the pap sees itself as this is the best of the nation. They feel that they are based on selection and choose the best and what we have seen from 2011 is the oppositions have been putting up very keble candidates that have a lot of professional credentials and we saw that in this campaign as well. There is a lot of talent in the opposition in the different parties. I think this question is how healthy it is for singapore is something that singaporians are deciding. Do they want to have some sort of check within the system . Do they want to have alternative voices . And voices that they are willing to accept. The campaign has a lot of personal character issues. Opposed to the nair ravet has been higher than that of the issues of the broader questions but i think that the voting will choices, to the bigger what is right for singapore. Irrespective who they vote for, the pap or the opposition they will be voting with where they want to move the country forward. 2020 election differs from the 2015 election sharply. This is an election that looks forward. Is it healthy to not have alternative voices. I think we saw in singapores cove response. The failure to imbrace alternative responses hurt the response. The choice of whether or not in terms osst of putting in parliament, this will rest with ingaporians. Haslinda we thank you so much for your assessment today. We are bringing you pictures of the lion city where the election started at 8 00 a. M. This morning and will end at 8 00 p. M. And of course it is a very different election being held against the backdrop of a four g leaders led by the deputy Prime Minister who is also the finance minister. The ruling party calling for a strong mandate meaning anything closer to 60 which is the worst showing it ever had could be a disappointment may prompt the ruling party to review its policies and perhaps reviewice leadership and do some kind of soul searching and also talked about how the ruling party has never won anything less than 93 of the seats in parliament over the years. Now back in the we want to make the comparison, the pap had a mandate of more than 80 . That went down to 60 two elections ago. Clawed back to 69 in the election just before this one. Of course we heard from the opposition, playing a bigger role. 10 opposition parties. How did they do . That remains to be seen. Soon enough we will know. Rishaad we will soon enough indeed. The aving a look at australian Prime Minister is talking about the travel bubble between new zealand and australia. There is no starting date for that to kick in but he is there lking with the new zealand Prime Minister. They will reduce Inbound International flights by a half. The news coming out of victoria strait, the lockdown is very concerning and talking also about Community Transmission in the capital of victoria in melbourne being a concern. That is Scott Morrison talking in canberra. The u. S. Is sanctioning Top Communist Party officials over human rights abuses. In china, a major escalation in the intense rivalry between washington and beijing. China is accusing the u. S. Of using lies and fake news calling on the secretary of state mike virus to stop spreading a and he blames china for spreading the coronavirus. Mentality. Es the lies are still lies. Even after being repeated 1,000 times. Haslinda the u. S. Supreme court has backed the grand jurysiest for President Trumps financial records. They will block them for now but it might lead to their public release. It will probably spare him from scrutiny before the election. E bank of japan has issued reports days ahead of its next policy meeting. The economy is still reeling from the virus upheaval despite a garagal pickup was lifted in may. They are cutting forecasts across the board for a second strait border. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 127 countries. This is bloomberg. Haslinda coming up, the fallout from the pandemic. Official economic stats. Google may be giving significant clues. That story next. This is bloomberg. Rishaad we are back looking at the indian open. At the moment. Opening with a move to the downside by about. 4 against backdrop of the economy being hit and hit hard by the pandemic. Also in the absence of official data, it has been pretty hard out there to map what is going n on the ground. What are these measures and how are they actually being used . It is becoming very hard to map the data. Part of the reason is the strict official data collection. The government failing to publish, headline inflation for april and may and the abblingtry output factory output last published in march. What happened is in absence of fficial data, they are falling to power consumption data. The jobless numbers mongs others. These are the data that more and more economists are turning to make a better sense of how much india is recovering from the virtual lockdown that was imposed in the last week of may and april. Haslinda can they without another round of help from the government . A very good and the i. M. F. Last month downgraded india on those prospects and expects the contraction of 4. 5 . Bloomberg economics expects a 6 contraction. That is very sharp. If you see the government has in very parsimonious stimulus measures. There is growing speculation that they may have o step in with a round of financing so that the government can fund the budget and spending for the programs but it is unlikely to be finalized by the second half of the financial year. Demand is likely to be absent. Haslinda still to come on show, investors should worry bout the worry in chinese this is bloomberg. Rishaad blackrocks former head is warning investors they should worry about chinas surging market rally. The chinese economy for a long time, one of the few places uncertainty about the future can get expressed is in the equity markets. The credit slice of the cap tal structure has been kind of fixed. They dont let a lot of corporates fault. The government sort of anchors that and therefore more of the volatility is going to show flu equity markets. The chinese equity markets have been pretty volatile over the last 15 years. You referred to the most recent past episode. I think it is worth thinking about that. Investors have a short horizon, when the future is uncertain. We dont know about the future income. Ople focus on a very short horizon. Yes, i think it is time to worry a little bit. Authorities did crack down on some margins financing. The rally then still continued. Also copper still at its highest level in overia year and gold in over nine years. To me it says Something Different like maybe they are really recovering from covid and a growth scare. Yes, we dont really know but you allude earlier in the show to everything rallying. Buy everything. Maybe that is the case, with we have been depressed. Buy everything. We dont know what the future path of corporate revenue is. And the rally in the United States and in china and elsewhere around the world. We in the u. S. Havent had the kind of stability to have virus that you would like to see to start having confidence that the path of the economy. So i would like to emphasize i think it is sensible for a certain set of investors to focus on the very short run. That is speculative activity. Peter fisher, professor we want to show you pictures of the lion city. The Prime Minister is heading to the polling station. It is polling day here in the lion city. The Peoples Action Party, the pap, has been in power for 55 years. It has not lost a majority all that time. This election of course is pretty significant though. Some people say that it is being held amid unprecedented circumstances given the pandemic. The rhetoric has been this election sets the stage for the next generation of leaders. Looking to step down by the time he turns 70 and that is in two years. But there are indications so far during the campaign period, possibly suggesting he may delay that if the economy remains challenged. Ingapore experiencing since independence in 1965. This is only the second time in singapores modern history that all seats in parliament will be contest and that says a lot about how challenging it has been for the Opposition Leader to make a dent. Currently 10 opposition parties competing this time around. The only way forward for them is to Work Together but that a that has not happened in a meaningful way so far. Each party pretty small. They complain about having to compete against a state machinery. A few Opposition Leaders have been fined. Sent to jail after being sued for defamation. One pornte to note is the government or ruling party is not looking to form a government. They are looking to deter. The ruling Party Getting a 2 3 majority once again. That is to ensure checks and balances and also a healthy there is a sense in singapore that perhaps new voices are needed. Greater transparency is needed as well. The debate online has been very vigorous during the nine diverse campaigning. Not without controversy. Preventing misinformation. Online and correction orders have been issued, not just to opposition parties but also several media groups. In fact five media groups were given those correction orders. It is a pretty tough environment in singapore where criticism may be taken to task in a very heavyhanded way. Rish . Rishaad ok. Victoria state premier speaking in melbourne asking people to wear masks when they cannot socially distance. This is on the heels of Scott Morrison saying he was very concerned about what is going on in that particular state. 288 new cases in the last 24 hours in victoria state. They are curbing the number of returning citizens. They will awire 2 million reusable masks here as well. Haslinda quick check of the latest business headlines. B. P. Has paid a billion for a stake in the retail fuel business. India marking its entry into the worlds Biggest Energy market. B. Plmbings have 49 of the business and reliance has the rest. Eliance plans to add 5500 fuel stations to its Current Network of 1,400 within five years. Indias second biggest state lender hit by scandals has reported another of half a billion. The money was seized by the regulator in november. It is fourth scandal they have faced in three years. Including one where it said it as swindled out of 2 billion. Rishaad monday, going to be speaking with the chairman of disney parks, experiences and products discussing the roping of disney world in florida. That is coming up on day break australia monday morning. That is it for Bloomberg Markets. Equities across the board under pressure. This is bloomberg. Announcer the following is a paid ram. Announcer the following is a paid advertisement from time life. Some stars are beautiful. Some stars are talented. A precious few are icons, and only one is cher. Aint nobodys business aint nobodys business aint nobodys business announcer from the sequined