Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

The u. K. Does a uturn and bans huawei the u. K. Does a uturn and bans huawei from its 5g network. Shery breaking news out of south korea. We are getting the Unemployment Rate for the month of june coming in at 4. 3 . Now, this is lower than the estimate of 4. 5 . The Unemployment Rate falling from the previous month. We have seen a little bit of strength in the south korean economy with more positivity coming from that ramp up in government job creation efforts. Still, we have those negative effects from the pandemic with the hardhit hospitality and Retail Sectors continuing to reel. South korea losing jobs. Those removed in june from a year earlier. Still, the Unemployment Rate falling to 4. 3 . Lets get a quick check on how markets are trading at the moment. U. S. Futures rallying. We have after the market closed more positive news when it comes to the vaccine front from motor and a. In the regular session, we saw u. S. Stocks posting their biggest gains in more than a week. 7 . This as we continue to see those concerns over the infection surge in tokyo. We are expecting the boj Rate Decision in japan expected to keep policy unchanged. We have a few policy decisions including the bank of korea and the bank of indonesia as well. For the moment, we are seeing a stronger chinese yuan. This after President Trump signed an executive order ending the u. S. Preferential treatment for hong kong and also signing the hong kong autonomy act. When it comes to treasury futures, trading at that level. Haidi. Trump hassident formally terminated hong kongs special status with the u. S. , citing legislation that would sanction chinese officials responsible for cracking down on political dissent, the latest escalation in tensions between the two rivals. Tom mackenzie joins us now from beijing. It is getting a little bit hard to keep track of the titfortat, the responses to sanctions and vice versa, so what does it actually mean in practice given that this was widely expected from washington . Tom absolutely. Two key components. One of them, as you say, is the removal. Toered by President Trump end that special trading status. That hong kong has enjoyed since the policy act was signed in 1992. We will have to wait to see the material impacts. Already of course, the u. S. Has restricted the sale of Sensitive Technology and some military equipment to hong kong. There may be further measures in the pipeline. The other part is signing off on a bipartisan bill that would sanction and penalize u. S. Banks and other foreign banks that deal with chinese officials that are linked to this Hong Kong Security law. It would give the president the power to seize assets and block travel and restrict travel for some of those officials if they are seeing to undermine the one country, two systems policy that has been put in place. Take a listen to what President Trump had to say specifically about ending this special status for hong kong. Pres. Trump we will watch what happened. Not a good situation. Their freedom has been taken away, their rights have been taken away, and with it goes hong kong, in my opinion, because it will no longer be able to compete with free markets. A lot of people will believe in hong kong i suspect and we are going to do a lot more business because of it because we just lost one competitor. Latest inis just the a flurry of actions between beijing and washington over issues ranging from technology xingjiang. The one thing that seems to be consistent is the phase one trade deal and that is something that investors are watching very closely indeed. On that Technology Front, it seems the Trump Administration got a big win with the u. K. Banning huawei from their 5g networks. Tom absolutely. A little under six months ago, the u. K. Came out with a position on huawei that would cap the amount of Technology Used in its 5g infrastructure. It was seen as something of a middle way and huawei officials were hopeful it was a system or a play that can be used in other countries like germany and canada. Now, that has changed. The u. K. Coming out yesterday and squarely banning the technology in two phases. By the end of this year, Telecoms Companies in the u. K. Will no longer be able to add huawei equipment to their 5g networks, and then by 2027, they will have ripped out all of huawei kit from their 5g infrastructure networks, so this is a big uturn for the u. K. And it comes after the u. S. Imposed sanctions, additional sanctions on huawei that restricts them from buying chips and importing chips from companies that use u. S. Equipment and that is what changed the equilibrium and decisionmaking from the u. K. And its security officials. It is likely to cost the Telecom Companies 2. 5 billion dollars and push back 5g rollout in the u. K. By two years to three years according to the u. K. Government. Now the focus is going to switch to germany and canada in particular to see how they respond to the question of whether or not to allow the implementation of huawei equipment in their own 5g networks. Shery Tom Mackenzie in beijing. Do gethead, in fact, we the huawei reaction to britains decision. We will hear from the u. K. Executive Vice President jeremy townsend, who is urging the government to reconsider. Major u. S. Banks are making bigger provisions for bad debts. Highlights from our interview with the wells fargo cfo, next. This is bloomberg. Karina you are watching daybreak asia. I am Karina Mitchell with the first word headlines. The United States continues to suffer as the epicenter of the coronavirus outbreak but new cases are rising around the world. Florida has reported record new fatalities, and arizona, the most infections in 11 days. The u. K. Is warning of 100,000 covid19 deaths while hong kong is under tightening social restrictions and japan says a new state of emergency is possible. Meanwhile, sidney is on high alert for a largescale coronavirus outbreak as cases linked to melbourne seems to have moved across the state border. Confirmed cases in australia have now passed 10,000 with 283 new infections on tuesday. 270 of those are in the state of victoria, which went back into a sixweek lockdown on the weekend. Australia had hoped to ease most virus restrictions by the end of july. China reports gdp data on thursday with economists expecting a return to growth following the coronavirus slump. Ddp is forecast to have expanded to. 2 in the june period, reversing the historic 6. 8 decline in the First Quarter. China remains vulnerable to slowing growth and declining asand elsewhere as well fragile domestic consumption. Supreme Court Justice Ruth Bader Ginsburg has been admitted to hospital with an infection after undergoing endoscopic surgery. It is expected she will spend a few days at Johns Hopkins in baltimore, getting antibiotic treatment. At 87, she is the courts oldest justice and has survived cancer four times. She was appointed to the court by bill clinton. 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, i will send it back to you. Pandemic continues to rage across the u. S. , here is what executives from jp morgan, citi, and wells fargo had to say about the outlook for their economy. We cannot forecast the future. We do not know. We are in a completely unpredictable environment with no models to point to. A much murkier economic environment Going Forward than we had in may and june. The pandemic has a grip on the economy and it does not seem likely to loosen until vaccines are widely available. We expect the impact of covid to negatively impact our earnings until we see a clear trend of meaningful improvements in unemployment and gdp. Executivesbank flagging a worsening economic outlook. Lets discuss all this with allison williams, the senior Analysts Covering Global Investment banks and asset managers. Not seem toanks do be looking at a vshaped recovery for the economy, especially when you look at how much they have set aside for bad loans. Ifison and time will tell these are conservative, but certainly, they do seem significant, and i do think, especially for jp morgan and citigroup, really strong trading helped to fund these provisions, and so, we are at levels that are sort of 50 to 60 of loss ratios that were used in the 2020 stress test scenario. In a matter of two quarters, we built up those reserves across the big banks that i cover, which also includes wells fargo. And i do not think it is surprising that the banks are saying that they do not know. I think it would be more surprising if the banks said, you know, that they did have the answer at this point. Theres obviously still a lot of uncertainty out there. And for banks and especially for bank investors, you are going to want to be conservative in terms for the potential loss. The provisions are estimates of potential losses, so we really have not seen those start to come through yet. His Consumer Credit really the segment we need to be watching . Saw a what we actually caught our eye a little bit was sort of more on the commercial real estate side this quarter, so last quarter, card was sort of the biggest driver of the reserved building and this time around, it was a little more broadbased. Especially within the commercial area, banks were very conservative in reserving for loans in the areas you would expect, so Retail Consumer discretionarys and es, especially tied to retail like you would expect. You will see that to some extent. Investors are anticipating this. The two key drivers of lending year loss ratio and your Net Interest Margin are going the wrong way after going sort of the right way for a long time. Redit costs Getting Better at this point in the cycle, it is going the opposite way with extreme interest margin pressure and the higher loss ratios. We saw Loan Loss Provisions higher than back in 2008. I want to throw up this chart. Aboutreally lower since 2008 and 2009. Given that this was originally seen as a different type of recession that did not originate within the financial system, is there a better prospect for the stock recovery story . Alison i think, and that is an important point in terms of the banks really lagging the market and why that is the case, i think a lot of that may relate to dividends, but to your point, this is a very different cycle, and to the extent that investors are worried about dividends, it is really not about the capital adequacys, so in the prior cycle, banks were not wellcapitalized as compared to their risks and they actually needed to raise capital, needed to cut the dividends, and preserve capital just a sort of be adequate. In this current cycle, the banks are really part of the solution, and i think it is more about having the capital to lend if the economy gets more distressed. And the fact that most banks really have paid out their capital return in the form of buybacks and those buybacks have been paused, it helps the banks to conserve capital and fundamentally, the banks generally are in good shape in terms of looking at their forward earnings, looking at their excess capital position. Risk, part of it is to regulators, political risk. The other part of it is, you know, in the case of wells fargo, very distressed earnings and a higher dividend payout ratio than the peers coming in. Haidi Alison Williams joining us there. Lets focus in on wells in a bit more detail. The cfo says the lending industry is changing in the bank will have a smaller footprint in the coming years. Up to solvetaffed some of the problems we have been dealing with over the last couple of years and in part because banking is changing and we will have fewer branches. We will have many thousands of branches but we will have fewer branches in the future. We have got more activity happening digitally from front to back, meaning how our customers interact with us and how we deliver capabilities happening more in a more tech driven way. All of those things will lead over time to a smaller headcount base. We have 270ish thousand people our sizeher banks of managing to operate at even higher revenue levels with similar Balance Sheets with a substantially smaller footprint. That will happen over the course of the next few years. There were some relatively positive commentary when it came to the consumer and some of the credit cards. I am curious how much that is actually positive underlying fundamentals versus government intervention, you deferring mortgage payments, extra stimulus or Unemployment Benefits we have seen, and when those run out, are we assuming inevitable losses that have just pushed out later into 2020 . Credit card is recovering, but it is still way down from where it was in the First Quarter in the middle of the First Quarter. Debit card spend, we have the largest debit card network by payments. We are back up 10 yearoveryear. Which is where we were before the shelterinplace went into place. It is not the same payments to the same payees but consumers at least are spending at that level. Undoubtedly, it is supported by the level of stimulus that is being received through direct stimulus payments, through extra Unemployment Benefits and because banks and others are deferring required payments on loans so people do not have to pay their credit card loan if they opt not to for a period of time, and that is causing more Free Cash Flow to be available for people really at the lower end of the income spectrum so that is by design. It is having that effect. But when it debates at some s at some point, unless we have come up the other side of the v, there is likely to be some reckoning. In terms of coming back and giving yourself the perspective, the clarity come on when you can start rewarding investors as well again, it is notable the cut you make in your dividend to tencent. Some think it could go to zero. Do you agree with that . Is that something you might have to look too if that vshaped recovery is even further pushed out into the future . John we do not have an expectation of it going to zero. The level of our dividends has more to do with our longterm medium to longterm earnings also, some recent requirements that were put in by the fed that govern how big of a dividend banks could have, anchoring it to be no more than the trailing four quarters of profitability, the average of the trailing four quarters of profitability. Between these allowance bills, we had a big legal settlement a couple of quarters ago, trailing four quarters of profitability is relatively low. So we have struck a dividend proposal that is beneath that so there is little risk of it going down from there. In economy could zig or zag a way where it is impacted by it is not expected to be that way. The dividend approach really does not it assumes, as we do today that we have ample capital. We closed the quarter actually with an increase to capital level. That is the constraining capital ratio for big banks. 9 today. 10 point our requirement is 9 . That is about 23 billion worth of extra capital on top of the regulatory requirement, so dividends in particular are more about earnings right now for bigger banks and a little bit less about capital sufficiency because between these big allowance bills that we have all had and the relatively large cushion in equity that has been built up since the life crisis mast crisis, there does not seem to be confusion over levels of capitalization. Shery the wells fargo cfo, john shrewsberry. Plenty more to come on daybreak asia. This is bloomberg. Haidi australias Largest Companies are expected to slash dividend payouts by the most since the Global Financial crisis according to bloomberg analysis. Payments from asx 200 firms may plunge as much as 40 this year. Its get some perspective from the tribeca investment portfolio , who joins us in sydney. Great to have you on again. Is this your expectation in terms of the destruction and dividend payouts . Ian dividend payoffs . In dividend payoffs . As companies have hinted to the market and we have seen consensus already pricing that income absolutely. They will have to cut their dividends. What does that mean for expectations of australia continuing to be an out performer . Jun bei when the dividend cut comes, it will be a deferral of dividends, so once we passed the peak of the pandemic, we should expect a lot of those dividends to return. If you look at our banks, they are still sitting on very large dividend yields even though for the shortterm, in the next six months, you will not see much of a payout. They still update dividend payout. Our market is continuing to look reasonably on the longerterm view, it wants dividends pretty high and also the amount of stimulus government has pledged to our economy. On a virus basis as well, we are looking to be a little bit better than the rest of the world. Shery what sector will be the biggest beneficiary of stimulus . Stimulus,ook, i think we already have seen that the Retail Sector there has benefit some of the retailers have benefited quite a bit from it, as their earnings upgrades recently have indicated that. Consumers are spending, even though they are not allowed to be locked inside their houses over the last quarter or so. Then we expect beneficiaries also across some of the tech sector as well just because of the usage of the Technology Platforms and the like. We are definitely seeing improvement across those earnings as well as, you know, Consumer Staples sectors should be a pretty good earnings bounce in this reporting season. Shery most people we talked to continue to say that when its really not disputed at this point is that the rest of the really played with uncertainties. We are expecting to see more volatility. You would think that in a way that would lead to more defensive positioning, perhaps even cash. Ray dalio speaking earlier today and in the event, saying cash is actually the riskiest asset, not the safest. What are your thoughts . Jun bei i absolutely agree with that statement. In thech high volatility market, cash is actually a very volatile asset because, you know, because cash is not productive at this point to the cycle, and we can see cash is becoming cheaper and cheaper globally given the Interest Rates. Some countries have negative real Interest Rate now rates now. Cash will not return in any way. It might be going back and real value. It is important for investors to be deploying that cash to protective use. Because i am an equity market investor, i see an incredible amount of opportunity, and this is the best way of generating longterm returns. Shery great to have you back. Tribeca investment portfolio manager. From at bans huawei sign g network. Huawei and china hit back. We hear from jeremy thompson, next. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Karina you are watching daybreak asia. I am Karina Mitchell with the first word headlines. President trump has ended Hong Kong Special trading status with the united dates. This moves United States. After chinas crackdown on muslims in xinjiang. The legislation would penalize banks for doing business with chinese officials seen as undermining one country, two systems. Pres. Trump not a good situation. Their freedom has been taken away. Their rights have been taken away. And with it goes hong kong, in my opinion, because it will no longer be able to compete with free markets. A lot of people will be leaving hong kong, i suspect, and we are going to do a lot more business because of it because we just lost one competitor. Karina despite that news, sources in the white house tell us President Trump has ruled out any u. S. Move to weaken the hong kong dollar tag amid worry it could ultimately hurt the u. S. Against such a move. The news comes as washington and beijing wrap up tensions with disagreements over hong kong, the treatment of Uyghur Muslims engine jong and control of the south china sea. The Trump Administrations backing up a highprofile fight with harvard, m. I. T. , and other colleges over foreign student visas and online teaching. The government is rescinding a controversial policy that would have required International Students to go home if they cannot take physical classes amid the coronavirus. It follows legal action by several colleges, states, trade groups, and big is next. 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. Will bearina, huawei banned from the u. K. s next Generation Mobile networks in a sweeping crackdown on the Chinese Company that will in turn delay britains 5g rollout and hit businesses with billions in extra costs. In an interview with bloomberg, the executive Vice President of always u. K. Business says the decision was disappointing but he will urge the government to reconsider. It is a very disappointing decision and i think it is bad news for everyone in the u. K. With a mobile phone, but the government have been bounced into this position by huge pressure from the u. S. We have had a steady stream of senators, congressmen, and various others, and the draft announcement made by the department of commerce, the foreign direct which are in draft at the moment, made the u. K. Reconsider its decision to allow huawei into the u. K. Networks in january of this year, so we are very disappointed that they have bent to that pressure. We feel that we are urging the u. K. Government to reconsider and give us more time to identify the mitigations to the sanctions that the u. S. Implemented and we feel later on this year we will have some mitigations and we would like to talk to the u. K. Government about it. The decision todays disappointing and bad news for the u. K. In the meantime, what does it mean for huawei . How much money do you guys stand to lose . We have not worked it out precisely. Clearly, this comes into effect if not immediately then by the end of this year. U. K. Is a key strategic market for us. We have two huge devalued customers in the u. K. That we work with globally. We have not worked out precisely what that means. That is 1 es are of always global revenues. However, the impact u. K. Decisions have tends to have a , bound by the united kingdom. It will take us a few days or so to work out what this means for us. But disappointing. The fed seems to be that there is concern in the u. K. That once u. S. Sanctions kick in, a lot equipment that is going to be built into haveis 5g kit is going to a chinese derivation, as a result of which, it becomes harder to verify the security of the equipment and potentially, it makes it harder for the equipment to kind of deliver what the Network Operators here want. You say you would have been able to provide remedies. How would you have gotten around those concerns . It is fair to say we have had long and good relationships with the american tech sector. And we have made a virtue of including americanbased technology and our equipment the recentears, but actions of the u. S. Administration mean that we have to diversify away from american thereed components, and is a growing market for nonamerican components that will go into the technology of not just huawei but other companies, countries, that no longer want to have the vagaries of the american administration, risk their investments. So it is not just china, and i fully understand the requirements of the u. K. Verify theto alternative components. We think we need time to do that. But there are french, israeli, other alternative companies that have this technology. The u. S. Do not have a monopoly on the invention in this space. They are way ahead of many others, but others are catching up very quickly, and there is a growing demand for a more diverse supply chain which does not rely on american technologies. That will take time to develop. Thompson,emy executive Vice President of huawei u. K. Joining us now for a broader look at how the u. K. Decision will affect huawei as well as 5g technology, lets bring in Bloomberg Intelligence Senior Technology analyst which and how intelligences Senior Technology analyst appeared are there any beneficiaries here . Thank you for having me on. Partieve your last actually touched upon it. The u. K. Gh huawei only represents 1 of huaweis total revenues, it can expand to other 5g decisions to other regions. We have already seen some decision coming out of europe. The big when i am looking at right now is Deutsche Telekom. They may make a decision later this year. Deutsche telekom was a big huawei user. We could potentially see a very diminished view or diminished footprint of huawei where they have about 30 of the european Global Network market, so there are other opportunities now for u. S. As well as european vendors. Names that come to mind are cisco, kia. On the larger side, companies such as juniper as well as cno. They will find opportunities from this decision as well. What about the impact in terms of this latest u. K. Decision in terms of creating a possible domino effect for other european 5g decisions . We are watching the situation in germany very closely as well. Right, so germany is that when i am looking at fairly closely right now. We think about how Deutsche Telekom uses huawei, they are the largest user of huawei today. Roughly 40 ofe the network is huawei based and they use erickson as well as they use quite a bit of erickson there. That could be a opportunity for expanded opportunity for erickson, nokia, and one company we should take a look at as well up and comer on the 5g networks. If we see your always footprint demented if we see huaweis footprint diminished, there will be other opportunities. Shery british officials had to reassess a decision that Boris Johnson made already in january about green lighting huawei into their 5g networks because the u. S. Banned huawei from sourcing microchips using u. S. Technology. How important is this factor and ken huawei actually procure these sorts of technologies resort toving to Insecure Technology like british officials had worried about . Woo jin sure, so theres a couple of things there. I do think that theres a little bit of strongarming by the u. S. In the revised decision or the reversal of course by the u. K. And Boris Johnson. Secondly, i think theres a couple of things there. From the components decide, huawei actually does make quite a bit of components when we start thinking about the optics as well as sources from japan and israel as well. The one issue is that it is not as good as armando the u. S. Components that supply to ericsson and nokia and also the inhouse chips that they make, so the issue is that, now, we have to start thinking about supply chain reliability and if we start thinking about building out 5g networks over the next three to five years, will huawei be able to have technology that is good enough to compete against nokia and ericsson . Number two, in their supply will thatrity equipment not be disrupted from sustained political tensions in the future . , senioroo jin ho Technology Analyst for Bloomberg Intelligence here. Theng up next, a preview of upcoming boj meeting with bank of america has resume evaluate izumi. What to watch on these policy settings, next. This is bloomberg. Haidi lets take a look at how we are setting up in midday session in asia, about to get underway in some of these bigger markets. We will get across to Sophie Kamaruddin in hong kong. Sophie taking a look at the board, risk assets are picking up early in the asia session. There was scant details from the white house on the specific repercussions from the u. S. Ending hong kongs special status. S p bk futures are climbing while the dollar is losing ground with a focus also on update. S covid19 the yen trading study. No change expected. We are waiting for any clues that virus stimulus programs will be expanded or extended. Pulling up the terminal, market stability has also been a focus for the boj and it has kept dion study, backstabbing shorter jgb spirit in the u. K. The spread between twoyear gilts and jgbs briefly inverted which could signal that japanification is becoming more of a base case than an outlier. Australias yield curve control policy has fueled the steepest curb among major markets with a at 64tween the 2 and 10 basis points. Making for an attractive carry trade opportunity. Pulling up the board today, jgbs likely will be in wait and see mode with the focus on the bojs remarks on the superlong sector. If there is any tweet to kurodas june comments, that may spark a bull flattening in the space. Into that bojelve decision. Policymakers set to meet later and while it is widely expected to keep its main policy settings unchanged, attention will be focused on the Quarterly Economic projections. Joining us now is bank of america global head of research, izumi devalier. Always great having you with us. What are your expectations for the decision and also, does the boj need to do anything else right now, given how much they have done already . Izumi good morning and thanks for having me. In terms of the boj meeting today, we think it will be a nonevent. Keeping keyoard policy targets unchanged and we think so because if you look at the june summary of opinions, it did show the boj felt they had done enough for the time being. In terms of responding to the coronavirus shock, it was basically carefully monitored. The impact of the facilities, while also trying to get a be longterm economic outlook. If you look at what they have done, they have set up a lot of corporate financing facilities. They are supporting banks and extending loans, vulnerable corporates, buying corporate bonds, corporate paper, and continuing the risk asset purchases. On the bojs side, they have pretty much done everything they can to support recovery for the moment. Shery you said it. We are seeing perhaps a second wave of infections. Tokyo could be raising their covid19 alert to the highest level. What does this really mean for consumption . And that small rebound we saw back in june . Izumi in june, we actually got a fairly strong opening rebound because of demand going up during the state of emergency and also the fact that the Government Center these checks to households, about 1000 u. S. Dollars each, and that is helping things. With all these negative headlines and concerns around the second wave outbreak, our concern is that while we dont think the government or local leaders are going to reinstate the types of very aggressive restrictions on activities we made cause fort households to stay at home again and all this uncertainty is not going to help for the capex and spending outlook. Haidi are you expecting, in terms of the nuances of this decision, that there will be any kind of change or mind in mindset on the superlong en d izumi i dont think that it end . Izumi i dont think that is something they will mention. You are talking about the bojs management of the yield curve beyond this 10year sector. If you look at how the boj has conducted their purchases over the past couple of months, they have obviously kept the zero to 10 year space, basically the two pivot points of the year close target. Curve control they have adopted a relaxed attitude for the long end, and there is a steepening of the curve concentrated in the superlong center. The key will be what kurodas on said kurodasan said in the press conference. We are unlikely to get explicit messages, but kurodasan may reiterate his belief that actually he does not think that superlong yields are overly at overly elevated levels that would be of concern to the central bank. Haidi we have been talking a bit about this japanification of the global bond markets, where really, you are seeing a number of global Central Banks take on similar extraordinary if you can call extraordinary when everyone else is doing it Monetary Policy and yield catching up globally. Does that have any implications for the bojs next step . Izumi yes, i think it is interesting that you mention that. When is policy unconventional when everyone is doing it . The key for the boj, there is not much they can do, right . That is something we have been talking about before the coronavirus crisis. But they are not going to take rates into deeper negative territory. In fact, i think it is a bit of a relief that the federal reserve, which is by far the most important centralbank globally, has basically ruled out that option, so that actually gives a bit of a breather to the bank of japan because you are not going to see a situation in which the fed is cutting rates deeper and deeper into negative territory, forcing the bank of japan to do the same. I think the question is, you know, in terms of the fence next steps, whether they are going to introduce whether they will do the enhanced forward guidance, tying their target to average inflation, things like that, so the boj will be in wait and see mode but overall, they are pretty happy with their policy framework right now, and counting more on fiscal to help stoke the recovery at the moment. [no audio] izumi devalier, bank of America Global Research head of japan economics, joining us as we count down to the bank of japans policy decision. Lots more to come on daybreak asia. This is bloomberg. Haidi we will get you a quick check of the latest business flash headlines. Elon musk has taken to twitter again to question a ruling in germany that says tesla is wrong to promote its assistance program. A munich court ruled that the company can no longer advertise its part in having the full potential for autonomous driving or claim they can self navigate because that is not the case. Musk says autopilot is a term industry. Is said to be in talks with mainland state funds before the swiss Agro Chemical Company Chemchina has approached the silk road fund as it looks to raise as much as 10 billion in a preipo funding round. Chemchina bought the company for 43 billion dollars in 2017 and it is targeting mid 2022 for the offering. Start Petroleum Says it expects to book a 3 billiondollar loss for the first half after the coronavirus demand for an price of oil and gas. Energy majors are being forced to lower the value of their assets around the world. They have delayed a multibilliondollar expansion project after market turbulence saw prices turned negative in april. Shery we will be watching brent crude when it opens at the top of the next hour. Wti extending these gains but continuing to stay close to the 40 mark. Su keenan is watching this and traders are saying oil is stuck in aurora. In a rut. Su even though we are seeing oil extend gains, the electronic session driven by the positive news ahead of and opec plus meeting on output curves. It is having a hard time breaking above the 40 mark. If you look at the price chart, west texas intermediate bounced back ferociously after falling below zero shortly after the pandemic again here, but traders say that rally is effectively flattened out and prices are pretty much range bound or stuck in a rut for now. Brent crude is a similar story. It is showing if you look at the price chart signs the rally is petering out. The focus is now twofold. You have the opecplus Committee Meeting later wednesday to discuss relaxing the record supply curbs that helped the market recover. It is expected that opec, which does plan to taper the cuts, will soften the blow by demanding extra production cuts from the socalled cheaters, the members that missed their targets, were overproduced again in june. News of this idea to have compensation cuts is what helped boost the market. In the latest session, they could shrink the supply increase by almost half and then finally, analysts say opecplus is likely to comply in softening this blow because it is hard for them to ignore the second wave of infections hitting the u. S. , the weakening economy here, and the surge. We have seen record increases in u. S. Supply. The latest u. S. Inventory data will be out a little bit later. What are we expecting to see, and how does that drive, i guess, the next wave of momentum . Su the word on the private supply data is a bit bullish. However, theres often differences between the private report and the government report. If there is a drawdown confirmed by the government, that would be the largest draw down since september. If we get yet another record building supply, the market could selloff sharply. Longerterm, opec expects demand for crude oil to rebound next year. If we go into the bloomberg, you can see that demand pretty much fell off the cliff at the beginning of the pandemic related shutdowns here in the begannd it only just turning upward in june. Opec sees demand rebounding by that would, and surpass levels seen before the pandemic. There are some analysts that believe that is a bit rosy but it is helping to prop up oil prices for now. Back to you. Haidi su keenan. Coming up on the next hour of daybreak asia, we will be speaking exclusively to singapores minister for trade and industry as the city state works to recover from its worst orderly contraction on record. Plus, up to 25 million jobs may have been lost across southeast asias biggest nations as a result of the virus and knocked down. We discussed that with our guest in the next hour and the markets open in sydney, seoul, and tokyo. 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. Haidi good morning. Asias major markets have just open for trade. Shery welcome to daybreak asia. President trump escalates tensions with china, signing a bill that ends americas preferential treatment for hong kong over beijings security law crackdown. Singapore battles recession after a damaging coronavirus lockdown. We assess the potential recovery with the trade and industry minister. In vilest infections continue to spread around the world. Sydni on alert for a wide spot sydney is on alert for a wide scale outbreak. Australia coming online. Upside forng broad japanese stocks, getting about 1 on the nikkei. Every sector on the nikkei in material led higher by and real estate. We have a boj meeting today, expected to keep policy unchanged, the yen holding at the same level. Looking at korea at the moment, the kospi gaining more than 1 as well. This as we continue to hear more about Government Spending plans. They are expecting to double to 133 billion to deal with pandemic. By kospi led higher utilities and Consumer Discretionary stocks. We also have the jobless rate for south korea unexpectedly falling to 4. 3 . Although when it comes to the number of unemployed, weve seen the largest number since 1999. Seeing, despite the geopolitical overlay of President Trump signing into law that legislation aimed at hong kong and beijing, we are seeing risk on action when it comes to trading in australia as well as on the currency front. We are seeing them up pretense of 1 in the equity session so far. For thes bracing biggest dividend cut in a decade. We are expecting payments from firms on the asx 200 to clench 30 to plunge as much as in 2020 as they continue to reel from the impact of the pandemic. The aussie dollar trading at 69. 92, a little risk on when it comes to trading in affects on the news of a potential breakthrough in the Moderna Vaccine trial, and when it comes to new zealand, upside of 7 10 of 1 . The Prime Minister saying it is inevitable that some cases will cross borders and they will go back into lockdown if that is in fact the case. Also watching aussie bonds. Into a turning australia haven for carry trade. This is what were saying when it comes to the futures contract, firmly of 910s of 1 , despite the u. S. China tensions. The blumberg dollar index have been weaker over the session the blumberg dollar index had been weaker overnight. Our live team says theres some upside on the euro when it comes to asian fx. The marketsre on with mark cranfield. We continue to see the roller coaster flexing vaccine roller coaster vaccine anticipation, then hold your horses. We are seeing exuberance spreading through the asian session. Mark indeed. Securities markets wanted to believe in an early vaccine. You already had huge stimulus from governments and Central Banks. If you add a vaccine on top of that, it will be a very positive factor for Financial Markets across the board. Thats what you are seeing here. Even though there are some concerns, if you look at the reports on this particular vaccine, it is by no means the Silver Bullet for saying it will cure everybody. It may be a little too much optimism. You can see the direction people want to go. They want to believe that an early solution is coming, and thats why you are seeing this positive move across the region. No more so than with currencies. The euro above 1. 14 against the dollar when you consider they will try to bring together a stimulus package 27 nations have to agree. It will be difficult to get through even though Angela Merkel supports it. A big deal for the European Union the euro is behaving as if they believe the deal will get done. It is impressive. Ae flipside of that is it is negative signal for the u. S. Dollar across the board, for major currencies and asian currencies. Shery we had heard from the bridgewater founder that the u. S. Is risking its status as a reserve currency. What are your thoughts given that we continue to see tensions between the u. S. And china, not to mention that we are in the middle of earnings season . Changing reserve status is a longterm story and he may be is it is the weakening of the u. S. Dollar status but there is no sign that its really losing its status yet. We are gradually seeing Central Banks around the world increase weighting of other currencies but not at a fast pace. U. S. Dollar is still the major currency, no doubt about that. But if the trade action the United States has taken, where they are dismantling some of ande Global Trade Networks becoming more isolationist, that will impact the currency over the long term. The countries have to do bilateral measures amongst themselves or smaller regional groups and that is a weakness for the u. S. Dollar over the long term. It could be that the u. S. Dollar has already peaked as a major reserve currency. Whether a single currency will ever replace it is a different question, whether the euro or you on yuan would be big enough to compete, it will be a long time before we know that. Be that several currency share the role rather than one currency. We are used to the u. S. Dollar being the only major reserve currency. Maybe over time it will be split. Shery our strategist, mark cranfield. You can follow his commentary and the days trading on the bloomberg. Estimates that 25 million jobs could be lost around the asiapacific due to the pandemic. Next, an exclusive interview with singapores minister for trade and industry. We will ask whether there is a need for more fiscal stimulus. This is bloomberg. Haidi and check of the first word headlines this hour. President trump has ended hong kongs special trading status with the United States, the move coming after weeks of highlevel criticism of agings handling of the coronavirus and its growing influence of hong kong, and a crackdown on muslims it would muslims. Companiesenalize doing this with hong kong. We watch what happened, not a good situation, their freedom and rights have been taken away and with it goes hong kong because it will no longer be able to compete with free markets. A lot of people will leave hong kong and we will do more business because of it because weve lost a competitor. The Trump Administration is backing off a highprofile fight with harvard, m. I. T. And other colleges over foreign student visas and online teaching. They are resetting a controversial policy that would have required International Students to go home with a cant take physical classes amid coronavirus. Action fromlegal colleges and trade groups. The u. S. Continues to suffer as the epicenter of the coronavirus outbreak. Florida has record new fatalities and arizona the most infections in 11 days. The u. K. Is warning of more than 100,000 covid19 deaths this winter while hong kong is under tight new restrictions. Japan says a new state of emergency as possible. Sydni on high alert for a largescale coronavirus outbreak as cases linked to melbourne seem to have moved across the state border. Cases in delhi have surpassed 10,000, cases in australia have passed 10,000. The state of victoria went back into lockdown over the weekend. The state australia had hoped to ease restriction by the end of july. They in a sign of the pain pandemic is causing, singapore seeing its biggest contraction of gdp on record. Lets go to haslinda amin. Haslinda it was a devastating contraction, 41 in the second quarter. The trade and industry minister says the recovery will be uneven. Lets bring in the trade and industry minister who joins us this morning. Always good to have you with us. Given the massive contraction in the second quarter, is it fair to assume that for a four year gdp, were seen a contracture contraction closer to the 7 projection . Thank you. There are some downside factors we need to watch closely. The biggest Downside Risk at this point in time will be healthy Global Demand for production will be pure will be. You have seen in earlier issues, there are more with economics because of coronavirus and we are anxious there will be a second if not a third wave or recurring waves of infection across the world, which will cause the demand for economies to further strengthen further shrink. The contraction we have within singapore was largely attributed to the lockdown measures. It has exceeded expectations. What we cannot control is the situation beyond singapore and how it will have repercussions on singapores economics. Haslinda so it is the external environment. Is there a sense of when singapore . Singapores gdp can turn to the positive and expand . Mentioned, the greatest has to do with things out of our control. It is difficult for us to state when the upturn will come about. What we can do is position ourselves positively for the eventual recovery, and that is what we will continue to do, to position ourselves for a safe as a safe harbor for investments. But i think we need to make sure we maintain trade with major economies. Will supply our markets and supply sources of material. Likemindeded companies to have a Global Trading system. Internally, we will have to continue to make sure we support our businesses and help them transform we will continue to upgrade skills of workers so that they are ready for an eventual recovery. Think digital will be critical for our eventual recovery if we do all of this recovery. If we do all of this well, we are well poised for recovery. Haslinda is there a need for another stimulus package on top of the 20 of gdp that has been announced . Mentioned, the Downside Risk at this point in time is global external demands been i dont think fiscal measures alone will be the most appropriate for this challenge. Concerned thatou there is thinking out there that singapore is becoming less attractive for expat workers . We saw that some workers had lost their jobs and less the visa to work in singapore because of just one infraction. Singaporeconcern that could be less attractive . Not at all. I think singapores attractiveness to Global Talent is dependent on multiple factors and not just one political factor. For example, we are a safe harbor for tenants because we respect intellectual property. This is part and parcel of the entire gamut of things that make singapore attractive. Could you talk to us about your expectations of unemployment . Right now there is an expectation of unemployment to reach as high as 4. 5 . Is that too high . That is entirely within our expectation because when Global Demand falls, it will impact on some of the manufacturing. This is part of the shift in demand. There is another factor that requires us to work closely with our companies to save jobs, and that is that some of the previous Business Models may low longer no longer work and new Business Models for example, in tourism and aviation, mining, we need a new Business Model to overcome the crisis. We think the demand will pick up again for some sectors. There also sectors where we need new Business Models. Whatever it is, we are trying to prompt businesses to transform so they can get on with their businesses and make sure the jobs are safe. Haslinda i want to touch on the apcent elections, ruling p its weakest performance since independence. The party has talked about needing to do some soulsearching. Theaid exactly that after 2011 watershed election as well. How is the soulsearching this time different . First maybe a point of correction. I dont think this is the weakest electoral performance by the ruling party since independence. That technically is not correct. We achieved about 62 of the vote share. It was higher than 2011. After each election we do a postmortem and hope to do better. Sector caused it is the result of multiple factors. For us, is not been an easy election because of the covid19 situation where many people lost knew from the we onset it would be a tough election because many businesses anxiety about and the future was enormous. Haslinda i should correct myself, the weakest performance in terms of number of seats won. Will the results change the composition of the next cabinet . We have ministers that have retired and there will be some thates to the cabinet, but is in the Prime Ministers division. What about a sense of leadership succession . What can be expected . At this point, we are entirely focused on helping our businesses survive difficulties and save jobs. So when the time comes, i think will be raised. At this time, where making sure we are taking care of singapore. Someone was saying he acknowledges there needs to be better diversity in parliament and the discussions, thats what people are wanting. Doesnt mean the does it mean the pap will treat the opposition differently . We also want we always want to treat the opposition parties with respect. We all have to Work Together to transcend the challenges of the moment. Opposition will also join the pap in making sure singapore remains united and cohesive. The challenges we are confronting is not between the pap and opposition, it is as one country, how do we ride out the crisis and become stronger . Haslinda one of the other challenges is also deteriorating relations within the u. S. And the National Security lobbying and post on hong kong. Do you see any capital flows or even flows of people from hong kong as a result of that . I think there will be capital flows from hong kong to other ofts of the world because this legislation, but i dont think it is only flowing to singapore. To step back, i think with or without this legislation, because of the pandemic and the u. S. China issues, even prior to this legislation, i think many people would be considering the option of how to diversify their portfolio to make sure they can beingagainst what is brought about by geopolitical , including the possible bifurcation of Global Trading relationships and spending. Haslinda always appreciate your insight. Singapores minister for trade and industry. Back to you. Haidi a great conversation. Have another exclusive interview later on bloomberg. Santos tells us what he sees for singapores startup scene and where he plans to put his Venture Capital to work. This is bloomberg. Erg. Have have progress on the race for coronavirus vaccine. Moderna says they could have final test within the month. Lets get the lettuce with jodi schneider. Vaccine . Can we get a that remains unclear, even though moderna has said they have success, producing antibodies in all patients tested in an initial safety trial according to several ischers researchers, it an important milestone and raises hope, but a number of patients experienced side effects and some were severe. This means the vaccine hooves into a larger, late stage trial this month to determine if it is approved by regulators. How soonit depends on they can get it through the regulatory process, and the manufacturing process. No one is really thinking we will see this in 2020. The earliest would be 2021, but again, a number of steps still to go. Stopstn this kind of art effort at reopening, we seen hong kongs tightening restrictions again as cases are rising. Jodi thats right. In some ways this is a cautionary tale to the rest of the world because hong kong had done very well with a virus, especially given that it is next to mainland china, where it started in january. In the past six months, hong kong has had more than 1500 cases and eight deaths. Now we are seeing what they are calling a third wave of cases. 240 or so in the past week or so. This is concerning local officials and also because they think there is local transmission of this. Seeing various restrictions put in place, gyms,ng bars and being cautious of what is going on in the city, requiring masks on public transportation. We are hearing from big banks that they are encouraging employees to work from home. People have been going back to the office. It is kind of a stopstart approach and i think we will see this in a number of countries, even countries that have done well with the virus. New zealand already warning they will go back into lockdown if international cases crossover. Jodi schneider there for us. On daybreak europe we talk with aout ceo. This is bloomberg. Shery haidi weve got the Consumer Confidence index from westpac for july. A decline to 87. 9 from month,sly 19. 37 month on a contraction 6. 1 . Worse thanthan the gain we saw of 6. 3 . A little concerning on Consumer Confidence, given that would wouldlace when we expect a recovery in consumer comments. Consumer confidence. Sophie we are seeing the aussie dollar push back below 70. Ssiee stocks content au stocks rising this morning, joining the broad risk on tone. The cost adding 1. 3 . Fromatest jobless numbers korea, they picked up. The new deal announced by president moon, 1. 9 million over the next several years in south korea, and the spinning plan has more than double to 133 billion. Therisk on mood reflecting being reflected. Australian bond traders waiting to see if the rba will resume bond buying today after a twomonth break with a three year yield at a march 25 hi. Spreadn, the jgb 1030 widening a touch ahead of the boj decision. We will watch for clues on the central bank. Checking the currency space, the dollar extending declines as the market assesses vaccine development. The euro trading above one spot. The hong kong dollar study while the offshore yuan has strengthened back below seven dollars. It is coming back from the losses we saw from china, placing sanctions on Lockheed Martin. A little in the way of an adverse reaction to the latest from the white house. Ondi i know the sanctions Lockheed Martin are part of a broad array of these development we saw overnight. President trump hit back at china, stripping hong kong of its preferential status with the signing a bill over beijings Hong Kong Security crackdown. No one has been tougher on china in this administration. We imposed tariffs and stood up to chinas intellectual property theft at a level no one has ever come close. We confronted untrustworthy Chinese Technology and telecom providers. Us with someg reaction news, our guest. President trump said this effectively means hong kong is treated exactly the same as mainland china. We know this isnt technically true because that would have Nuclear Implications for the hong kong dollar, for example. What does it actually mean . Richard we dont really know yet. First of all, the message in this announcement is in the clip you played, which is no administration has been tougher on china than this one. We are getting set for the china election in november, the first thing. We dont have the details of what this means, the abolition of hong kongs special status, but i think that is coming. It simply means it will be treated as china, if this goes through rather than separately as hong kong. Furthermore, i think all of these announcements that mr. Trump is making now, there is a new foundation for the bilateral relationship from november onward. Biden will, mr. Inherit them and probably stand by them. Haidi the titfortat between beijing and washington has been like a really long tennis rally the past several weeks, intensifying. Where does it had from here . Head from here . Talking abouter any kind of phase two trade deal. It only were a long tennis rally. This will go longer than five sets. [laughter] you are right to make the point phase twone will not go ahead, trump is not interested, but phase one is being turned upside down in any case by the economic damage caused by covid19. Difficult to reach anyway. Finish withven phase i and phase ii phase two is not go ahead. Lows in thisng new relationship. Shery of course President Trump also announcing he signed the hong kong autonomy act, coming on the back of him already ning last month the euchre ue wigger human rights the hghur human rights policy. Richard chinese officials sanction recently for alleged human rights violations. They are unlikely to travel to the u. S. Hong kong is more interesting. If it is whited to include hong kong officials. You will not expect chinese officials to travel to the u. S. But hong kong is different. Sanctions unleashed by the u. S. , and tentacles spreading further than it once would have. It poisons the well. China has to retaliate in some way. Sanctioning Lockheed Martin is fairly toothless, but they want to show they can play the game. China weve seen announcing sanctions against marco rubio and ted cruz. Why the u. S. Went ahead with the sentience against chinese officials, including the global magnitsky at and not the human rights policy act . And given what theyve done in the past, what is it mean for the hong kong autonomy act . Will they go ahead with sanctions on that front . Richard i would be surprised if hong kong officials were sanctioned under the magnitsky act, but im not sure why in washington they made that distinction and why they are using one or the other. I think in some respects, the medium is the message. The u. S. Is going to respond in a highprofile way and target china on multiple fronts, through the magnitsky act or another ax. If mr. Ipartisan, and biden wins, he will inherit this and the relationship will start from the toughest position in november, whoever wins. Beijinghe reaction from reflexive desire to save face and rouse nationalism. , theow at least in part move on hong kong as part of broader consolidation of what has been a criticized handling of the pandemic at least in the earlier weeks. What do we expect from beijing in terms of how heightened these tensions are . Richard i think theres going to be a lot of surface noise, a lot of headlines. I think the crucial thing in the term in the next year is the strength of the economic recovery in both countries. The relative strength. At the moment, china is looking better than the u. S. Because of the u. S. And ability to handle covid19. Whatever you think about how china messed up early on in the coronavirus, their brutal quarantine still worked. China is better positioned economically than the u. S. , and i wonder whether that will beat into u. S. Resolve at all or through policymakers a little off course when it comes to china and they have to focus on their own economy. I think that has to be considered as part of the calculus. Shery richard, finally, just to get a sense of all of the tin the to and tat between u. S. And china, we have the sanctions over human rights, the sections over hong kong, you have the Technology Front and the ban on huawei. What is next that the Trump Administration could use to hit china . Richard thats a good question. Let me see what i can think of. I think the most important thing is neither side is looking for an offramp at the moment. The u. S. Thinks it is playing up toup with muscling china so theyre looking for more weapons to hit against china. We could see more tariffs, we could see something on Technology Like huawei. We could see more pressure on Chinese Technology and that is starting to bear fruit. If you look at the u. K. Overnight with huawei. , china under xi jinping will not take a backward step, so we spiral downwards. Shery richard mcgregor, thank you so much for your insights. Lets get a quick check of some movers in seoul. We are watching steelmakers, they are gaining ground at the moment. You had some gaining more than 9 and another up as much as 13 . This after Nh Investments said it expected the stocks to bottom on improvement on chinas recovery. Coming up next, the virus may have led to nearly 25 million job losses across southeast asias biggest economies. Our guest tells us what she thinks the recovery prospects are. This is bloomberg. Im Karina Mitchell with the first word headlines. Sources of the white house say President Trump has ruled out weakening the hong kong peg. The president came down against such a move on monday. This comes as washington and beijing rampup tensions with disagreements flaring over hong kong, the treatment of muslims and control of the south china sea. Despite growing tensions, china continues to buy Farm Products from the u. S. The department of agriculture says the castille the latest deal on corn is the fourth largest on record. The usda says china has ordered about 130,000 tons of soybeans for delivery in the next month. The news comes as President Trump says the phase two trade deal is not imminent. Ofna is accusing organizers an unofficial primary vote in hong kong at the weekend, seeking resolution revolution. Beijing said it was illegal. The vote aimed to unify the opposition ahead of the election scheduled for september. Final results have been delayed under fears that beijing could prosecute or disqualify figures. China released adp data on thursday gdp data on thursday. It is forecast to expanded in the june period, reversing the 6. 8 decline in the First Quarter. However, China Remains vulnerable to slowing growth and declining demand elsewhere as well as fragile domestic consumption. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. We have breaking news out of japan right now. Nissan motors returning to the yen bond market for the first priceince 2016, aiming to ¥70 billion in three bond offerings. Sweetening the japaneseon, offering investors higher coupons as nissan seeks to seal the debt sale after its biggest lost in 20 years. Now we are seeing it return to the yen bond market for the First Time Since 2016. We will talk about the companies broader future with the company ceo later. Continuesus outbreak to spread around the world, arm says investment shut downs could lead to a loss of around 25 million jobs among s biggests asean economies. Great to have you with us. The key question seems to be whether the job losses in the millions will turn out to be temporary or more permanent. Lee thanks for having me on the show. You are right. We are looking at around 25 million jobs. Recovery willobs lag behind gdp recovery. We are looking at gdp to recover to prepandemic levels only in 2022. The jobs recovery could take longer, around 24 years. This is what we saw in the u. S. And the Global Financial crisis. Gdp took a while to normalize. The employment rate took longer. It has a more permanent impact on capital and jobs in certain sectors like hospitality, vel, recreation did recreation, retail. Shery which countries will suffer the most . Lee we think that countries with the largest job losses will be the philippines, 8 million job losses, and thailand, at 6 million thats more than 10 in those countries. Of theally because lockdowns. [indiscernible] itsland is more because of seeing delays in the reopening of borders that would help with the labor market recovery. Haidi i was just going to ask you come on the other hand, where you see the biggest recovery . In terms of the job recovery, we think it will depend on a number of factors. We try to construct a scoreboard and we look at factors like the duration of lockdown and length of the lockdown and government Financial Support and labor market flexibility. Based on those factors, we think jobs recovery will likely be less in singapore and malaysia. Theyve been ramping up fiscal measures with subsidies, loan support, things to help businesses. They created the National Jobs council aiming to create job opportunities. Thailand has been successful in finding the curve but the job recovery will likely be slower for slower. Malaysia and the philippines have faced a longer lockdown and are struggling to find the curve. Terms of the actual demographics of some of these countries, we have long talked about how the younger demographic has been one encouraging aspect does that give aspect. Does that give them an advantage . Lee i dont think that gives them an advantage. Vietnam has a younger demographic population than but i think employers see them as more adaptable. The workplace would really have to change. There will be some skills workers,for older especially in certain sectors tech. Ravel, i think the younger population has an opportunity. Haidi that was our guest talking about the impacts on the later market labor market. Hong kong police have arrested the Democratic Party chairman, according to reporting. We will get you more details on that but we understand it may be yeared to the siege last as part of the broader protest. This coming on a day where the u. S. President donald trump signed into legislation a bill backing sanctions against connies officials chinese officials and control of the National Security legislation and its rollout. We will get you more developments. Be back after the short break. This is bloomberg. Lets get a quick check of the latest business flash hairlines headlines. Airbnb saying it is seeing signs of recovery. Guest booked more than one million nights worth of future stays around the world since july 8, the first time in more than four months that the one million mark has been reached. Airbnb cut 25 of its workforce and raised more than 2 billion in debt to survive the pandemic. Even morehest man is wealthy today after attracting another bigname investor to his ecommerce platform. Google is said to be ready to pour 4 billion into geo platforms. Is wideningey interest in indias growing market. To is the focus of a plan transform reliance Energies Industries away from energy and into a domestic giant. Tencent is said to be interested in a stake in french game developer voodoo. 25 , worth be for about half 1 billion. Voodoo has other suitors and we are told there is no certainty tencent will reach a deal. The deal could value voodoo at around 2 billion. Huawei has been formally banned from 5g in the u. K. As the government reverses its formal position amid u. S. Pressure. Operators will not be allowed to add new huawei components to networks after the end of the year, and huawei equipment must be removed by 2027. The man is expected to cost u. K. Wireless operators as much as 2. 5 billion dollars in additional expenses. Todi before we headed over china open, lets get a look at how asian markets are trading midweek. We are seeing optimism carry through that we had when it comes to u. S. Stocks. The nikkei to do five up 225 up. Looking for nuance when it comes waiting to outlook, hear from the boj. Tokyo alert level has been raised to the highest and that could play into plans to loosen restrictions for large gatherings. The kospi is up more than 1 , sydney despitein dividend payouts expected to climb as much as 40 in 2020. In new zealand, modest upside, 7 10 of 1 despite the Prime Minister saying it is likely that International Borders will mean new infections for new zealand and they would go back into a lockdown if that was warranted. Shery lets get a quick check of futures. We are seeing u. S. Futures gaining 9 10 of 1 . Big upside, we seen positive headlines after the close on a potential vaccine by moderna. Taiex future up. We are seeing some strength for the offshore yuan, coming at a time where we continue to see the rally in Chinese Markets but at the same time, we have seen the escalating tensions between the u. S. And china. We continue to monitor what is happening on that front, with President Trump saying he has no the chineseak with president after having signed that executive order on hong kongs special status. Not to mention the hot tongue the hong kong autonomy act. The open of mainland markets. An overheated really failed to reach a 10 trillion milestone. Outlook amid the vaccine optimism and rising geopolitical tensions plus, nissan launches a new electric model. We will talk about that and the companys broader future, that is at 1 15 p. M. Hong kong time. China open is next. 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. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music it is 9 00 a. M. In beijing and shanghai. Welcome to Bloomberg Markets china open. I am Tom Mackenzie. And im david ingalls. Lets get to your top stories today. U. S. China relations souring yet again. President trump signs a bill that ends americas preferential treatment of hong kong as punishment for