Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

That investors will look at. We can change the board and have a look at whats happening in the fx raise. Index,omberg dollar marginal gains up over three days by about 7 10 of 8 . Turnarounde seeing a in the u. S. Dollar, but some of that will be contingent on the stimulus taking place in washington. We had a fix of 6. 9 and that is where it currently is. 6. 98 for your offshore currency. In terms of the aussie dollar, that is flat. The aussie decision is out today and expected to stay on hold. 117. Uro is at milan terms of commodity in terms of gold prices. Still has a forecast of potentially 3000 for spot gold, currently at 1975. Thats what your copper futures are doing. Nymex is down 6 10 of 1 . They have more oil onto the market with demand amid the virus being a question. There is your yield on the 10 year,. 56. Its get the first word news with Karina Mitchell in new york. The and added states remains the focus of the coronavirus pandemic, with several area starting to see faint in prove men. California and arizona reported positive trends, although they admit one week not change the overall future. U. S. Fatalities are over 155,000 global 155,000. The pandemic is adding one million new cases every four days. Melbourne enters new strip are locked down measures from midnight on wednesday. There will be a curfew from 8 00 p. M. Until 5 00 a. M. Large manufacturing sections will be shot, people are only allowed outside for one shopping trip a day and one hour of exercise. They reported 439 new cases on thursday and 11 deaths. There are now 5000 aussie dollars in isolation. Philippine markets are set to open at their lowest level in in weeks with metro manila severe locked as virus cases surge. The number of covid19 infections is above 100,000, best the second highest in Southeast Asia with residents far from all but essential travel. Economic officials oppose the lockdown say in the country cannot afford the disruption. Alibaba once a pandemic is allowing to track people more closely them before. The cofounder says the digitalization of information through ecommerce and other apps gives authorities unprecedented access to personal details. Speaking at the virtual launch of the syntax festival, they denied in tension of morphing into official control. Inflations picked up speed in as economiconth activity accelerated, despite rising virus numbers in the capital. Consumer prices rose for 10th of 1 , doubling the. 2 in may and june. Economist had forecast an increase of just 1 10. Core Consumer Prices were flat after falling in the previous two months. News, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Asian stocks are trading to the upside. The u. S. Is really helping things along. That meant that nasdaq reached a new high. We have tech emanating the headlines elsewhere, but tiktok is about to close its american operations. Microsoft remaining keen on it and wants to complete a deal. Thank you for joining us. On the face of it, and in it of does thehat repercussions of this deepening animosity between beijing and washington, and how much of a concern is it when you make an Investment Decision . We are definitely seeing a bit of protections happening. We see it in asia and in china for the past two years. That is being applied within the u. S. As well. What we are looking for is companies within Communication Services in the internet space, it is that valuation perspectives already. Maybe a cellat phone maker, when we look at some of the tech makers like apple suppliers, what we are focusing on is if there is a stretch when there is trade around 20 times earning. Thats what we will look for in the tech sector. Rishaad this in itself is causing these disruptions between the two sides. It really depends on what beijing does in response to that. What are you thinking along those lines . Its really tough to predict whats going to happen when we go through the tensions. Obviously there are going to be some pockets where it will be tough on pulled sides on both sides. Thats why you wanted stay clear of this sector for the time being. You know were there will be involvements from the u. S. And china percent of. If you do need to complete at the related age, the consumer on those that had the domestic in terms of their favorite model so that they wont be so caught up in whats going on right now. Does that mean a move away from tech is longerterm, and a move away from growth towards value . Something that we have not seen much of so far this year . In terms of diversifying your portfolio a little bit away from growth and tech does make a lot of sense. Most equity markets, whether its emerging markets, develop the markets or markets in china, when we look at Growth Stocks minus the value stocks, you are not trading above. As a result, they are looking very stretch in terms of valuation. So, having this as a diversification tool makes a lot of sense, because we are seeing the valuation between value stocks and Growth Stocks. Tom break that down for us. What sectors you like in the value space and how much of the portfolio do you want to have exposed, given the rate about performance in the last two to three years . Ken it all depends on what you are trying to achieve. Valuationery much on and Value Companies that are trading below their intended value will have his overall exposure to the spots trading attractively to the valuation perspective. You are looking at some of the sectors like financials, like the real estate companies. We do need to be within the tech space or within the hardware side. Even some consumer staples, given the fact that will we look at overall positive earnings over the past 45 weeks, we have started to see a bit of a positive uptick in terms of in terms of earnings provisions. The question of earnings, when do you expect earnings to start to normalize . Will it start at the end of this year or will it start in 2021 . Ken most likely 2021. When we look at places like korea and taiwan, they are starting off with a low base. 20 is looking fairly good. And these markets are gradually opening up. We look at more places like. Hina and taiwan and korea second half of 2020, earnings could come back. But other countries on growth will be a 2021 scenario. The other big theme has been the u. S. Dollar, which has weakened and has picked up in the last few days. But broadly there is a lot of dollar weakness. What is that give you in this region . Is there a concern that if we see a rebound in the u. S. Dollar there will be pressure on the corporate and . End . Ken during the time it was declining in 2008, we had form. By 2000 10 we saw 2010 we saw the dollar strengthened. Then asian market started to underperform. Given this latest decline in terms of u. S. Dollars, you think there is more room for that to happen . Emerging markets in asian equity markets can continue to benefit from this weakness of the u. S. Dollar. Tom we always appreciate your time. Still ahead, we are going to talk commodities with ubs executive director wayne gordon. He sees gold on the aussie dollar with more upside in the next 12 months. Rishaad President Trumps broadside against tick talk leaves further action from u. S. Allies. Well have the latest on that. Tom President Trump ordering the chinese owned video app tiktok to shut its operations in the u. S. By september 15, unless there is a deal in place with microsoft or another American Company. Bloomberg intelligence saying his attack on tiktok may spark similar action from some u. S. Allies, while other chinese internet firms face a growing threat of retaliation. Lets bring in our senior industry analyst. With the u. S. Actions against tiktok, what are the broader implications for china tech . Are two broader risks we can outline currently. The first one is that u. S. Allies need to increase on chinese apps. We can see that microsoft is buying the operations in u. S. , canada, australia and new zealand. These are companies that have been allies with the u. S. Broadeningrisk is the scrutiny beyond social media. Most chinese apps that include games and ecommerce companies. Speaking, expansion for Chinese Internet Companies is going to become a lot more challenging in the future. Challenging mobile apps is a new front for true political with methods and Collateral Damage is very long. Its easy to justify on National Security grounds. The thing here is, we have had huawei, now its tiktok , people are suggesting we chat could be next. How negatives is for all these chinese internet players. The nearterm revenue impact is quite minimal. The chineset internet companies, most, if not all of them, less than 10 of the revenues are outside of china. What is lost at this opportunity, and the opportunity is huge, for example, if we look at india, india has spanned since late june for a order class with china. Tiktok is number one in india. Its number two in the u. S. Where its now being forced to be sold. In this country, to talk links internet tiktok Links International companies. And yet a huge growth market. Revenue is low currently, book potential revenues in the future is very high. And the u. S. Is the biggest Advertising Market in the world. Far are far outweighs the nearterm loss. Tom which other companies have a target on their backs at this point . Most Chinese Internet Companies are focusing on the domestic market for many years, they are now beginning to look overseas for inspection with domestic market maturing. Tencent and alibaba. Tencent is looking to publish more games internationally. Its not clear whether its Companies Like super cell, riot ates, epic games could be risk. It does not look like the risk havegh because games dont as much user data as social media. But who knows. Exposure ina lot of the form of aliexpress. Like tiktok,nies which has operations in the form of sky scanner. Companiesen smaller like joy, they have big life overseas. All these could fit sensually could potentially be a risk on these companies. Rishaad always a pleasure. Our Bloomberg Intelligence senior editor. Are beating estimates. This is bloomberg. Heineken says the impact of the virus on beer sales deepened in the Second Quarter, but there are signs of recovery in june as lockdowns ease. Sales saw pickup in the late months. The ceo told us he remains cautious about the outlook ahead. We did see a sequential improvement in the Second Quarter. We wont be cautious looking too much into that exit rate in june. We expect them markets to remain very volatile. It will be really two steps forward and one step back. We have seen renewed steps in the South African market. Parts of mexico is closing down again. We want to we want to air on the sides of caution and remain and agile in ramping up ramping down, depending on the local market circumstances. Speaking of being cautious, you want to focus more closely on your expenses. Where do you think you will be able to make cost cuts . What is your focus going to be there . Duff i find it important to thats the promise we made to our 85,000 employees. We are doing an amazing job in the middle of this crisis. I cannot tell you how proud and impressed i am by our people who offered growth. That does not stop us from taking a look at local space. Billionout about half a , mostly in the Second Quarter, to really make sure we are rightsizing the business we needed and rightsizing the expenses where needed. We will continue to do so in the second half of the year. Its finding balance between minimizing impact on our people that is safeguarding the health of our people Going Forward as well. Talk to us about the second half of the year. What markets do you see upside . Where are you bullish see upside . Where are you bullish . Dolf its a tale of two stories. We see declines around 40 percent, 50 in year 40 , 50 in year to date. E see a lot of growth we see doubledigit increases in the european markets. Very strong. Trades asres any off we continue our premium nitrations with very good results. Muchpublicized trends that are looking for revival. Heineken is the most International Beer brand in the world. We are seeing very good results. For the lockdown, the brand would have been in positive territory. In 14 positive Growth Markets all over the world. Heineken is still doing fairly well with double digits growth in all of the regions. These are the parts were we will continue to assess the lean into the off trade business, the premium portfolio, the heineken. Rand and ecommerce in the beer category we see ecommerce picking up. Over the last years we have built a consumer platform. Beer will be doubling its revenue in the first half of the year. Order Million Consumers daily and weekly there. Be volatile, but there are a lot of good part in our portfolio. Both markets and brands that we will need to continue for testing. Ceo. Heinekens here is the latest business flash headlines. Videoconferencing platform zune is relying on fred fed Party Operations in china to reduce the chance of a ban in the u. S. America remains its biggest revenue market, and companies linked to china are under increasing pressure from the antibeijing dealing in washington. It is facing stiff competition in china where tencent and alibaba have more revenue and user numbers. There gameng maker Activision Blizzard is trying to see how to anonymously inre salary and pay rises the industry over wage disparity. Blizzard makes games such as warcraft. World of an internal survey showed employees were unhappy with their pay, and the company said they would enact to ensure fairness. Investigationer by the federal trade commission for using phone numbers uploaded for security purposes to target people with advertising. The sec alleges the social media platforms violated a 2011 agreement best to protect users personal data after was found to be misleading consumers. It may lead to losses of up to a quarter of a billion dollars. Lets have a look at whats going on with these japanese markets as we head towards the lunch break. 225. Gains for the nikkei there, 308 points. Wasdeputy Prime Minister talking and has said that japans goal is still to balance the year of 2025. No need to balance the budget now, saying the coronavirus has a negative effect on bankruptcies. They are saying any asset seizures by south korea would be illegal amongst the threats coming through from seoul, south korea. The yen is weakening. 106. 13 against the dollar. 106. 13. Against the dollar. On her weakness has come to an end. Dollar weakness has come to an end. This is bloomberg. Karina im Karina Mitchell with first word headlines. President trump is ordering chinese owned video app tictoc to shut down by september 15 unless theres a deal for microsoft or another American Company. Hes also demanding a substantial amount of money paid to the u. S. Government as part of any deal. Microsoft says it remains interested and has spoken directly with the president about the purchase. Gethe United States should a large percentage of the price because we are making it possible. Without us, i used the expression, its like the landlord and the tenant. Without the least, the tenant doesnt have the value. We are in a certain way the lease. We make it possible to have this success. Karina the u. S. Further raising the heat on china saying a type of computer malware is tied to the government in beijing. Is used by a variant cyber actors in china. Although they offer no information about the malware or who if anyone has been attacked. Cybersecurity i some cybersecurity forms say they have been declining recently. The u. S. Expects to raise almost 1 trillion in debt through september, more than 270 billion dollars higher than it projected in may. Then, coronavirus cases have surged, disrupting the fragile reopening and forcing congress to consider new fiscal stimulus. More senior fed officials are weighing in on the stimulus, saying another round of relief is critical for the u. S. Economy. A 600 enhanced unemployment benefit has expired and congress is divided on what to do next. The chicago fed president says any failure to launch new support would be hugely damaging. His dallas colleague Robert Kaplan says enhanced benefits have probably kept more people in work. Virgin galactic and arrow engine maker rollsroyce are teaming up to develop a plane that can fly at three times the speed of sound. Supersonic made the concorde and they want to make something cutting edge and sustainable. It would fly at the edge of space, carrying about 15 passengers in premium class. No known price tag get. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Rishaad the largest hong kong out with a 12 drop in revenue for the first half of the year as the lockdown measures took a hit with amanda early. We caught up with the ceo Richard Lancaster about challenges putting measures in place to ensure they can keep the power on for customers through the pandemic. The patents have changed demand patterns have changed with people working from home and factories closed down. It has been a dramatic change across markets. Overall consumption has been down by a few percent on average. For us, the impact has been more how to keep the business running and how to keep operations secure, how to keep staff and customer safe. We are not a business that can shut down so how do we maintain operations as normally as possible while still recognizing the health risk and looking after the health and safety of our people and customers . You had experience with sars as well. How do you gauge the Economic Impact not only in hong kong, but also on the mainland . When it comes to industrial production, when do you expect china to return to previrus levels . Sars compared to covid19 was relatively shortlived and we did see a bounceback in the economy. Hong kong was perhaps the hardest hit but it did bounceback and it bounced back relatively quickly. We have never experienced a prolonged lockdown weve seen like with covid19 but in different markets, we have seen different characteristics. In china, there was a strict lockdown, industry almost completely shut down. Once the virus was under control, we did see a strong recovery and bounceback around may. Sales counseling back. Here in hong kong, there is some impact, but we have relatively little industry in hong kong. People working from home have a much less Significant Impact on sales. Astralia, we are seeing second and potentially extended period of lockdown, particularly in victoria. It really depends on how the spread of the virus, how lengthy the lockdown is and the structure of the economy to do see any impact on electricity sales. Haidi you mentioned victoria and we have some more visibility on what Retail Services might look like. What is your best scenario on how that impacts the business . For us, we have to maintain the business. It comes down to how we manage keeping the lights on, power plants, keeping Contact Centers running, doing it in a way that reduces the risk. People still have to go to work in our industry. Do you see as the impact on power demands with the latest shutdowns in victoria . Weve already seen about a 5 reduction in demand for electricity in the electricitys market in the eastern state. Whilst the extent of the lockdown in victoria has been extended and is much stricter, we do see some reduction. Whether people are in their office or at home, they still need electricity and it is even the important when you have economy in a very fragile state that the Electricity Supply does keep its high levels of reliability that people expect. Imagine how disastrous it would be if the lights started going out and we started losing the internet. Thats where our focus has to be. About theres been talk growth in solar and wind capacity in australia, and it would bring forward coal plant retirements in australia. Do you see a risk of that . Climate change doesnt go away. D carbon icing the Electricity Supply is something we still have to do, even with covid19. Tom that was the clp chief executive Richard Lancaster. Ubs Global Wealth management expects gold to reach the 2000 mark before the end of the year. We get the outlook for commodities and fx with the executive director wade gordon. This is wayne gordon. This is bloomberg. Tom welcome back. You are watching Bloomberg Markets asia. Lets check in on the market. Some stress in japan. And the topix as up above 1 . Again, gains in tokyo are in focus. The future in the u. S. , a big week for data there. They are flat. Stronger manufacturing data coming out toward the end of the day in the u. S. Yesterday, with strength in the economy. Lets move on the board and look at some of the Southeast Asian markets as well. The philippines have had a tough week. The gold story has come off a little bit. 1977 is what you are looking at. Gold at potentially 3000 in the near future. In terms of silver, that is unfazed. Crude is focused on the opecplus and their decision to start pumping a little more oil and venturing into the demand picture. Gainedper, dr. Copper, 5 year to date, currently down 2 10 of 1 . We can get more on commodities and the fx markets with our next guest who recently lifted Gold Forecast to 2000 for the end of september and december. Joining us is wayne gordon, executive director for commodities and fx at ubs Global Wealth in singapore. When you spoke to us in march, you said to buy gold. You nailed that call. What is the trajectory now . Good morning. I think gold begins to have a period of consolidation while we work out what the next steps are for some key variables. There have been some mixed messages from the fed over the last couple of days and that is what is seeing gold consolidate around these levels. To see gold move materially higher, what we need to happen here is we need real Interest Rates in the United States. Dig deeper into negative territory than they are today. If you look at the 10 year trips in the u. S. , its around 1 or so. If real Interest Rates were to move to around 1. 6 , you could see gold moving towards the 2000, 300 mark 2300 mark. The other key is the direction of the dollar. The dollar is now on the back foot. We expect it will continue to depreciate against major currencies such as the euro. That will add further impetus to gold to move higher. Of course, we saw the eurodollar trading around the 125 or Something Like that. It would also be consistent alongside of negative real Interest Rates and that would also be consistent with a gold 2300. Round we have Gold Consolidating around that for now and then we need to see the key measure matrices from the Federal Reserve as well as the evolution of Inflation Expectations in the u. S. To give us a direction on which where the Interest Rates will go from here tom consolidation in the shortterm. If your investor doesnt yet have exposure to gold, what recommendations . Exposures to futures contracts or ets or the miners themselves . I think that is an interesting question. An overallm performance point of view, the key thing for gold currently and the reason why we remain bullish gold is because we see it is a very good edge against any uncertainty as we approach the u. S. Election, and potentially the risk of more actions by the dovish dove aside side, which would push gold towards the upside around the 2300. When we reflect on how the impact would be on gold equities, gold equities over the golddecade has lagged the price from a performance point of view. We are starting to see we like select gold equities, particularly large cap names, where we see that they have been very prudent and some of the investments they have made. This means they will likely make more distributions to shareholders over the coming year or so and that is positive for gold equities as we are Going Forward. But we have to remember that volatility of gold equities is almost double that of gold. The gold underline should be considered an edge against uncertainty in the market and other shifts whereas gold equities is very much a play on gold prices remaining around these levels if not moving higher from here. Some of the look at data out of europe or the u. S. When it comes to manufacturing, it seems like there are green shoots. How does that feed into views on base metals and whether there is more upside toward the end of the year . Performedtals have very strongly and many of them at precovid levels. Effectively, manufacturing has surprised to the upside in china. As you say, green shoots in the pmis and we expect the Global Recovery to continue into next year. We dont expect any broadbased lockdowns. There may be regional months. We are seeing spikes in various places where they are having to implement greater restrictions, but broadly speaking, we expect the World Economy to continue to recover. China is leading that recovery. China is one of the biggest importers of things like copper, nickel, and zinc. Consequently, manufacturing will continue to pick up in the second half of the year. We also expected trade which has been sluggish because of the delayed impact of covid19 in europe as well as in the u. S. , pick up asrade to consumers come back to the shops. Consequently, that is a positive environment for base metals. We would expect to reach further albeit we acknowledge the recovery has been strong to date. Saw dramatic moves with the dollar weakening, but a lot of people have said that. Acently it has made a bit of rebound. Is the greenback on a picnic at the moment or do we have to have further weakness in the pipeline . I would expect further weakness to come to for. Largely, its a little bit like the gold view. I think the u. S. Dollar has a period of consolidation. We have moved into a new trading range around 115 to 120. But drivers that have weakened the dollar should continue to weaken the dollar as we go through into next year. Those drivers are, as Global Growth broadens and the recovery begins to move into other countries, as we said earlier, the recovery begins to broaden now in the u. S. And europe. Moreover, also into other emerging markets. In particular asia. Are higher on investment in asia than what they are in the u. S. So you expect that as people become more confident that the recovery is well underway and potentially we have a vaccine for covid19 in the first half of next year, then we expect the dollar to continue to weaken as people look for alternate investments abroad. Say Something Like asian currencies should continue to strengthen against the dollar on a six to 12 month basis. Just looking at some of the majors and the euro, the euro has done pretty well against the dollar. Its unsurprising, it should have happened before. This chart shows how Asset Managers have piled into the euro, making bullish bets for the last couple years. Now we have a bullish bet, the highest on record. I guess that moves the needle. If the euro rises, how much of it is positioned with also optimism of the euro area getting together with this financial package they are talking about and perhaps Fiscal Consolidation in the countries that shared a single currency . Think generally speaking, europe looks like it is going to outperform the u. S. Over the second half of this year. I think thats the strengthen the euro that weve seen, that you would expect given the fact numbers ofvels of people who on a daily basis contracting covid19 tend to be lower in europe at the moment than what they are in other andtries such as the u. S. , that intel with the fiscal packages we have seen have given positive sentiment. What i would say Going Forward is that we could expect that the fiscal boost that comes in europe is actually more geared to the end of 2021 into 2022 than it is very much the shortterm. So thats where we see quite a bit of consolidation in the euro at current levels. And as packages continue to come into play, we expect did the euro can actually move higher from their. But at least at this point, you would expect some consolidation. Lets not forget at the same time that the u. S. Is showing policy differences on stimulus currently, so we would expect at some point there would be some , soement on fiscal packages consequently that is where we seek the eurodollar for example consolidating in the 115 to 120 range in the next six months. To you. Great talking wayne gordon from ubs Global Wealth management. Coming up, boeing has been given a lift of requirement and the eventual return of the 737 max. What it means for the aircraft maker and its customers next. This is bloomberg. Rishaad the federal aviation administrations requirement to the faa, the most extensive following an accident. Lets have a look at the key details here. One of the key details is system whichthe was basically at the forefront of the crashes we had both in africa and in indonesia. There will be major changes coming on that section as well. Previously they detected from one sensor, which ultimately led to confusing data and they changed it to have two sensors to detect and sense data. They are also sent training procedures so all the pilots will have proper training to detect if there are any problems with the system itself. Boeing is also revising some procedures in the flight manual. Some of the changes are sort of centered on the key system that was behind the major crashes that led to the grounding of the aircraft. The billiondollar question of course is when does the 737 max returned to service . What is the timeframe at this point . The faa has put it to the public for some feedback for the next 45 days. Aobably, we might see certification being issued for the return, probably around october 3 earliest. That doesnt mean the airplane will be coming back to service then. Theres also another procedure that the airlines have to take training not just the pilots but the Maintenance Crew and everything to understand the changes that have been required. Ultimately, it could take a bit longer than expected. Our asia transport reporter in singapore. A quick check of business flash headlines. Japan airlines has posted its biggest quarterly loss in at least eight years, as the fallout from the coronavirus hammers travel and demand and prompts termination of an interim dividend. The 89 million loss 89 billion loss was the most since jal relifted in tokyo in 2012 after emerging from bankruptcy. The other loss came in the january to march period this year when the pandemic took hold. Southwest airlines scaling back airlines cleaning procedures between staff flights as staff cutbacks have cut the average turnaround time to 45 minutes. They will no longer wipe down armrests and seatbelts as well as other areas coming into contact with passengers and crew. However, tray tables and laboratories will continue to be disc could disinfected between flights. Ahead, howill singapore is looking to revive the virus better tourism industry. We will speak with the tourist board executive keith tan, that and more coming up in the next hour of Bloomberg Markets asia. Stay with us. Stay with us. 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. He scores stanley cup champions touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Haslinda welcome to Bloomberg Markets asia. Rishaad im rishaad salamat. Here are the top stories. Equity markets up for a second day on signs of a new post virus stimulus. Recovering all of mondays losses and more with investors now enthusiastic when they werent about the deal with speedway. With aa President Trump new front and the tech war with china. Threatened took shut down in the u. S. Unless theres a swift sale to microsoft or another American Company. Rishaad top fed officials policymakers to do more to support the u. S. Recovery. We hear from dallas fed president Robert Kaplan. Haslinda lots to come. A check on the markets. Asia tracking the gains in the u. S. The nasdaq at yet another record. S p making its way to the record set in february. Positive data out of the u. S. Helping to boost numbers in asia. Up more asiapacific than 1 . The csi 300 was in negative territory earlier but is up. Keeping eyes on chinese tech stocks in particular. China is insisting any sale of tiktok operations would have to include a substantial payment to the u. S. Up moremp in manila than 1 . Jeff carter higher jakarta higher, half of 1 . Delaying the easing of restrictions to become the worst performing in asia this year. Of course, indonesian gdp you out tomorrow and expecting to shrink. Hsbc warning about a difficult Economic Outlook with a costly earnings season down, almost 3 . Cosco posco higher. The south korean port set to seize assets during the colonial occupation. Eps higher than 1. 5 . Making profit fall for a Second Straight Quarter when they release numbers thursday. Profit may drop 36 . Up more thanrently 1 after slumping 6. 5 yesterday. Canceling all domestic flights from manila after the government put the capital under lockdown again. Recovering some of those losses yesterday, up by about 1 . Rishaad lets have a look at what we have in terms of the india open, about 43 minutes away. The nifty contract in singapore and the futures contract up one third of 1 . Thailand just came up, the bangkok market just opened. Following the regional trend moving to the upside. Ty bonds have been seen as a haven amidst dollar weakness. The rupee at the moment a tad weaker. Market,at the indian the vst industries, b. Sc. And a tat technologies will be in focus pair they have quarterly numbers coming up after market hours monday. Lets look at the indian stocks themselves. We have them trading at the most expensive level ever with forward pes and certain standard deviations. Well above the historical average. Thats whats happening with the tech side of things. Are they overvalued . A lot to be said about that im sure. Haslinda speaking of tech, attack war. President s latest assault on tiktok has opened a new front in the trade war with china with restrictions from Tech Companies that could potentially have enormous ramifications for the economy. The president is insisting a scale of tictocs tiktok u. S. Operations would have to include a substantial payment to the government. The United States should get a very large percentage of that price because we are making it possible. Without us, i use the expression, it is like the landlord and the tenant. Without the least, the tenant doesnt have the value. We are in a certain way the lease. We make it possible to have this great success. Haslinda lets bring in our china government reporter in beijing. What has been the reaction in china . As you can imagine, the reaction has been one of shock. Thes a surprising move and ministry of Foreign Affairs yesterday, the spokesperson there called out the u. S. Saying they are stretching the concept of National Security without any , thence and today editorial in the china daily said china would by no means accept the death of a Technology Company and has plenty of ways to respond to the u. S. Actions described as a smash and grab. Definitely a lot of potentially fighting words in terms of possible retaliation. , bysignificance of the move taking this action, the u. S. Is expanding the scope of the u. S. Furtherade tensions expanding into tech, using a style that we would be more expect from the chinese side. Rishaad what about Chinese Companies . What is there thinking about all this . Reporter i think from the discussions i have had it would be that a lot of people are looking very closely at what happens. In many ways, this is sort of like an early indicator of potential further actions against other apps and indeed the secretary of state pompeo did mention there could be further apps beyond just tiktok. Of course we have Companies Like and a host ofhat, other less wellknown names that are still growing in popularity. That includes things like a tiktok rifle and also aliexpress. Would they have to ask themselves, what are the risks Going Forward . Haslinda so what does it all mean . What might be the longterm outcome of all of this . Are we potentially looking at decoupling as well . Reporter the longterm implications are obviously hard to decipher at this point. It goes back to the chorus issue, which is how the internet will be governed Going Forward. China has long been a champion and the sovereignty hall market being shut out like twitter and facebook and forcing foreign firms to work with local partners. There has been a shift in china recently. Of stepping back a little bit from that but people are saying countries should sit down and discuss the limits of National Security when it comes to internet governance. There are voices saying perhaps we need to have some kind of multilateral solution to this. But isaiah spoke to one person yesterday in the course of this story, she was saying to me that it is probable that this sitting down and moment of coming to the realization that we need to establish global rule for that will only come once the situation has bottomed out and it doesnt feel like we are there yet. There could be more twists in the story ahead. Much more to come. Our china reporter, paul murphy in beijing. Much more headlines. Alibaba wants to allow the government to track people more closely than ever. Thecochairman says ecommerce and other apps gives authorities unprecedented access to personal details. Speaking at the virtual launch of the Fintech Festival in singapore, he says initially benign intentions are morphing into official control. The u. S. Treasury has outlined how much it needs to borrow to keep the economy going for the next three months amid unprecedented spending on the coronavirus followup. It expects to raise almost 1 trillion in debt through september, more than 270 billion higher than projected in may. Since then, coronavirus cases have surged, disrupting the fragile reopening and forcing congress to consider new fiscal stewards. More fed officials are weighing in on the stimulus saying another round of relief is critical to the u. S. Economy. The unemployment benefit is due to expire and congress is trying to decide what to do next. Robert kaplan says enhanced benefits have probably kept more people in work. This hour, we are backyard explorers. Singapore looking to spur local spending in Domestic Travel to bolster the in trouble economy. We speak to keith tan later this hour. Next, citigroup joining us to as ther discuss covid19 pandemic continues to spread. This is bloomberg. Haslinda welcome back. One fed official is calling for an expansion of Unemployment Benefits despite concerns the aid is making hiring harder. Dallas fed president Robert Koplin says the economy will weaken if the stalemate in congress continues. He told us exclusively he sees a more muted rebound. It is still our view that we will contract for the year at about 4. 5 to 5 . It has been our view after a very sharp decline in the Second Quarter. We had a healthy rebound in the third and fourth quarter. I think that rebound is more muted in the United States now. It has caused me to think the Unemployment Rate, if we dont do a better job managing the virus, the Unemployment Rate is likely to be about 9 . We have moved up the unemployment forecast. I think weve got a rebound. Was much more muted than it and if we dont do a better job managing the virus, we will have lower growth and a higher Unemployment Rate so i have spent a lot of my time talking more about the virus than anything else because it is so critical. Reporter with the 600 unemployment bonus and the Eviction Moratorium are gone now, has that had an impact on the economy, and second, should we expect a wave of defaults that might affect credit markets . We have looked at it. One of the things thats unusual about the downturn is incomes have stayed relatively solid. A big part of the reason is the Unemployment Benefits. We are normally in a downturn, you see a drop in incomes. You havent seen that here. It is still my view that in some form, we will get an extension of Unemployment Benefits. Im hopeful that will continue, but if it didnt, you would see a further weakening of the economy. In particular because consumers would not have as much money in their pockets to spend. Reporter anyone in particular saying that the 600 was keeping people coming back to the labor force . A lot of Business People were telling me that honestly. They were telling me that it was challenging to hire people. We have looked at a number of studies. Weve done our own work. We dont see it as much in the data but i can tell you im hearing it from Business People. Whatever the right answer is, i think you still are going to need to see extension of unemployment. It may be restructured to some extent from the 600, but i think its important we see an extension of it. Increased incomes, although it may have made it harder for individuals to be hired, it helped create jobs because it helped bolster consumer spending. The net effect has still been positive for the economy and environment. Rishaad that was the fed president Robert Kaplan. Fed president s around the world are taking action to offset the economic losses from the pandemic. Manufacturing pmi readings in the u. S. , europe, and china have exceeded expectations. Inflation in tokyo and showing a sign of a pickup in economic activity. Data from asked leah, not rosie, especially data from australia not too rosy, though. Lets get the latest from johanna chua. Is there a chance we could see some more announced in terms of qed . The moment, no. Theres no need to do it. Right now the expectation is maintaining accommodative language, the commitment to keep rates low for longer. They already have a qe policy in australia. I dont think we are expecting big Game Changers today. Friday we will be interested to whathat happens to see macro forecasts will be revised in australia friday. We expect them to upgrade the earlier forecast which is negative. They may have to upgrade that now that australia got out of the locked down a little earlier and there seems to be more extension of the fiscal program. Rishaad the global economy, not stimulus,t is essentially its a lifesupport system more than anything else. Right. The role of Central Banks is to provide enough liquidity. It is again to help maintain the economic productive capacity of the economy, but capacity is that businesses will come from fiscal policy. A lot of the developed market including australia have announced much larger fiscal support programs so thats at the margin. Australia is still grappling with a new wave of resurgence so that will be a bit of a challenge, but we are forecasting q2 as the worst. Even locked down tough comeback in some places, and manycould be fateful for businesses who managed to survive their first one and many borrowed to stay alive. They have restocked and spent on virus related equipment only to have them close us down again. How many will get up a second time . That is the question. Thats a very big question and a huge dilemma. We still have the economies battling with the first wave. Likes ofexample the india, the philippines. They have very punitive lockdowns. Imagine the growth stock is persistent. We just had the philippines announced where metro manila is reversing to modify ec q and community quarantine. We are seeing some of that as well and hong kong. Big growthbe a challenge. I do think theres a bit of a rethink and i think of the first wave of the virus, there was broadbased lockdowns and that includes costs economically and there seems to be a shift towards more targeted lockdown them broadbased, simply because it incurs not only economic costs, but in some cases like poor economies, it is not practical. It will be with us for a long time. Even though we see inflation moving up a little bit, i wouldnt worry about inflation. The demand shock will be with us for a while and the Central Bank Accommodation will continue. Are a question of where you on the Interest Rate side. If you are closer to zero bound, you would go into qe. This week, we have thailand and india. We are not yet at the zero bound although thailand is getting close. Its a question of the timing of when they will deploy more monetary support. Some might come later. In india, there was a bit of an inflation uptick recently. No question, the direction of Monetary Policy is still accommodation. Inmate in the case of india, its one of the closest calls. The market is pretty evenly split on whether they are cut or not. At the moment, they expect they will pause for now. We do expect they will still cut by 50 basis points in the fourth quarter. Maybe they will hold because of the inflation. We are expecting some announcement ofo mo. The pressure on fiscal Balance Sheet is severe and at some point Central Banks may have to step in not just to provide liquidity to support businesses but also for deficit financing less well and it might be a story involving an into dutch india after indonesia did it earlier. You talked about the demand shock. Even for economies like china showing signs of recovery, consumers are not spending and governments cant make consumers spend. How much room is there for fiscal stimulus . How much more would make sense . It varies depending on economies. Clearly theres a lot of uncertainty about income and the pandemics have lasted consequences. You dont know when it is going to end. Im not sure it is wise to deploy resources right away. Later on, this might drag on and you might reduce fiscal bullets later on in the. Case of the u. S. , when you are the dominant reserve currency and the u. S. Treasury is considered the default asset, theres a lot more fiscal asset stability and Monetary Policy. But in some emerging asian economies, they have to be more judicious about how they use tools and what creates a multiplier effects. In the case of china, i think they will deploy more stimulus especially on the fiscal front, but we are expecting a little more on investment and infrastructure. The challenge is if you give consumer support, we dont know to what extent consumers will for this and it might not have as much of a multiplier effect. Whats important in china is we need to get a handle of the virus. So far, they have been able to manage all the waves so far. Even though they managed the vere virus, it comes at a cost. A lot of the Health Measures and precautionary measures related to pandemics will be with us for a while. So it may not normalize for a while. Haslinda johanna chua, Citigroup Global markets, thank you for your insights. Just ahead, an exclusive interview with the tourism ceo keith tan on how singapore could manage to save its travel industry. Stay tuned for that. This is bloomberg. Rishaad you are back with Bloomberg Markets asia as we check in with investment sentiment. A day where people are prepared to take a few risks. Regional equities moving to the upside. Work inill come back to five minutes. Monist rises. Modest rises. Tech fueled rally in the u. S. This is after the nasdaq set a record high. Microsoft trying to salvage a deal for operations. Looking at the asx 200. Under two thirds of 1 to the upside toward the reserve bank of australia rate decision. For now, lets go to whats going on in china. On lunch break in shanghai and shenzhen. We do have to note the yuan at lows we have not seen actually for six years or thereabouts. 5. 5 versus the year in the last six months. You are watching bloomberg. Haslinda almost 11 30 a. M. In singapore. In the middle of the trading day. Positive territory. On almost 5 of the highest in about two months. More than any fullday gain since june 3. Of course, we had sbh talking about winding up subsidiaries and such in challenging times. Sbh currently up by almost 4 right now. The slump in. H singapores economy, the Second Quarter the worst on record. One of the biggest drags came from the Tourism Sector, which currently contributes 4 of gdp. Joining us is keith tan, ceo of singapore tourism boards, the lead Development Agency for tourism. Good to have you back on the show. You talked about how you expect spending to dropped 20 to 30 for 2020. Is there a reason to rethink now that the pandemic has gone longer and deeper than we expected earlier . Agot seems like a lifetime when i made those estimates. It seems like obviously we are facing a much longer, prolonged situation and we would have to relook at all figures in terms of arrivals and tourism spending. Haslinda so how much more to the downside would have to be revised . Give us some estimates. It all depends we dont have firm estimates at this point, but it would obviously be a lot worse than the 20 to 30 signs from earlier. Haslinda how optimistic about a recovery we heard from Michael Eisenberg of accor saying the recovery is the market is not back up. Thats correct. It would be a long while more before mass travel can resume and that ultimately stems from consumer confidence, it stems from the availability of a vaccine or effective therapies to combat the fear and anxiety that many people have, even stepping on an airplane for example. So until that, those developments are ready and able to allay anxieties. We dont see a big return of mass travel. And because of that, singapore has embarked on a campaign to encourage stake s fornts for staycation singaporeans to fill hotel rooms. How much can that bridge the 20 billion gap that singapore tourism is looking at . There is a big gap and as you rightly point out, International Business is well over 20 billion. They spent over 27 billion dollars singapore last year. Expect the Domestic Tourism campaign to fill the hole left by international the absence of international visitors, but we do see it as an opportunity to support the industry and jumps in the Tourism Sector at this time by providing some cushioning and some demand generation. Hassingapore government already passed packages to deal with because issues whether it is rentals or taxes and salaries of workers. Theyre trying to do now is to support demand. We have to do what we can to maximize domestic demand. Give us a some tough the number of losses of jobs in the Tourism Sector and how many more before we see those jobs coming back . The number so far have been pretty modest. Haslinda define that. What is modest . I would say in the very low thousands so far. That is the scale we are looking at. I expect job losses to grow in the coming months, once the government starts tapering off and we expect more retrenchment along the way. Haslinda what has been the impact of the stimulus from the government . What are you hearing even if anecdotal evidence . What are you hearing from companies in the Hospitality Industry . Obviously they are facing a lot of pain. We have done what we can to support their costs. We are doing what we can now to boost command. Clearly for the Tourism Sector, the main demand relates to the reopening of orders and resumption of international travel. That for now remains a long way off. I think thats the main source of concern and angst. It is an existential issue for many of them. Haslinda what are the kind of visitor singapore would be open to . For instance, medical . Would that be given priority . We are willing to bring in travelers on a Central Business purposes and official purposes. We have started that are ready through the green lane arrangements and that has begun and we see a trickle of that. The government is open. We are working with the government on other archetypes and other possible groups. As we expand green lane arrangements and we look to how to reopen borders, what we are also doing is looking at ofhetypes, a broader range visitors, or small groups of tightly controlled leisure visitors. All of these are on the table. When a recovery does happen, we hear they expect Higher Quality travelers to singapore. What is being done to target this group of people, also the strategy adopted by thailand . For us, we always focus on quality tourism. Thats been the mantra. What we want to do does not change significantly from what we were pursuing. The main change is we see an to rate a lotw more exclusive, smaller and more be stoke bespoke experiences because that is also something consumers would want in the future. Than a group of 40 people, they would be in a group of 10. Localw do we get our operators and attractions to create products that fit and feel more exclusive and meaningful for a group of 10 people . We are doing a lot of Product Development and some of the assets we are doing are meant to that can flow into the International Covering and we can offer these as good products later on. Haslinda we know casino operators are bleeding like Las Vegas Sands and have stayed committed. Is it easy to believe some of their products projects will be delayed . There will be inevitable delays because of the Circuit Breaker we experienced earlier and there is an overall slowdown in Construction Activity because of difficulties faced by the construction sector and the challenges they are facing. There would be inevitable delay we expect. Both sands and counting have not faced commitments. I see that as a good sign of their faith and confidence in the longer term prospects of singapore. Haslinda glass halffull. The singapore tourism board ceo keith tan, thank you for your insight. Rishaad lets get the first word headlines. Back in severe lockdown after coronavirus cases in the philippines surge. The second highest in Southeast Asia. Residents are barred from all but essential travel. Financial and economic officials oppose the lockdown saying the country cannot afford the disruption. President trump ordering the chinese own video app tiktok to shut down in the u. S. By september 15 unless theres a year deal in place with an American Company and he also wants a substantial amount of money to be paid to the u. S. Government as part of a deal. Microsoft is interested and has spoken directly with the president about a purchase. The u. S. Meanwhile putting the heat further onto china saying a kind of computer malware seen recently is tied to the government and saying this variant is used by cyber actors in china although they offer no information about the malware or who if anyone has been attacked. Fireeye andty firms crowd strikes as it has been in decline recently. Thats your first word news. Coming up, more pressure facing bytedance. What a sale of tiktok would look like. Thats next. This is bloomberg. Rishaad microsofts attempt to acquire tiktok is looking increasingly complicated as President Trump now says the u. S. Should get a big cut of any sale for the companys american operations. But if it works out the deal could payoff, big lets go to our bloomberg economist. This could be microsofts deal of the decade if it goes through. Reporter i do think so. I think what will make it the deal of the decade is not so much how much they pay but how big a discount they get from the asking price. There have been reports around the bytedance shareholders believing that tiktok is worth up to 50 billion. Im on record of saying i dont think its anywhere near that much. If sati and idella gets the steal through washington and has to deal with the administration and other things to deal with, he has a good position to go to bytedance and say give me a discount, i deserve it. Haslinda who has the upper hand . Bytedance or microsoft . I dont think bytedance has any hands at all in this deal. I think it now transcends bytedance. They did do a deal a few years ago that helped build tictoc for what it is tiktok for what it is. It is all in Satya Nadellas hands. Him and the team have will have to deal with all the parties in the state department, the white house, the treasury and commerce to try and make them feel this is the kind of gets the American Administration where they want to be in terms of china. I think bytedance has almost no room to negotiate. They will have to take almost any price they are offered. Rishaad is it a flash in the pan . Will it be around for five years from now . Could it go the way of myspace . That has to be factored in here. Reporter i absolutely think so, it is very popular now. Almost 100 million users in america. It is going gangbusters. But if you look, it is an app that gets peoples attention and it gets a lot of attention now in the covid pandemic. However i would caution people to look at snapchat. They posted 600 growth in revenue the year before the ipo. The growth has stalled. It is not profitable. It is not the hip, young thing it used to be. Tiktok is the shiny new toy for consumers now, but theres a possibility a few years from now it will still exist, still function, but will not be as hot and that might be one of the reasons why any buyer, microsoft or someone else, will have a position to negotiate on price. It is hot now but it wont be forever. Bloomberg opinion columnist, tim culpan joining us from taipei. The indian open now. Modest move to the upside. Earnings and getting a reaction to that. The sensex up 7 10 of 1 . Nifty 8 10 of 1 higher. Haslinda reversing yesterdays losses. Still to come, counting down to the rba decision and expected to keep rates on hold. The stricter lockdown in victoria may hit forecasts. We will have a preview. This is bloomberg. Rishaad global coronavirus cases past 18 million with the pandemic adding one million new cases in the last four days. Even with the figures, the vice dean of johns top ends Bloomberg School of health told us could get worse when flu season comes around. Its a major concern. I think the world is hitting records in the total number of arenavirus cases so we really in the thick of the pandemic and we are seeing surges in the philippines and in vietnam, which have not had serious coronavirus outbreaks to date. Even japan has had the highest number of cases it has. I think in japan, the answer is clearly that they completely opened up. They acted like the virus was behind them. That is a mistake every country in the world make at its own peril. Other countries had been almost completely spared at the beginning and people wondered whether it was some special thing. It was probably a little luck and Good Public Health work and they will need those to get under control. Reporter how should we be looking at this . Is it better to be in full lockdown for a shorter amount of time to save lives, than the kind of open and not so open face for longer . I think the story is different between the countries. A spread and then when it comes way down, you cannot stay locked down forever, you just have to be prepared that a loss in vigilance or even bad luck will lead to a resurgence and then you have to have the capacity to respond to that. We are going to see the Public Health systems of vietnam and the philippines tested. That is not just locking down. All the tracing, the testing, all the things that have to happen. In japan, even though it is having a surge cases, should be able to respond. There are still relatively very few deaths in any of these countries. If they can respond effectively, they should keep it down. The key is whether people can beat back the surges. Reporter are the winter months in the Northern Hemisphere going to be much wheres . For the United States, it is getting hard to imagine much worse because the virus is in so many places and spread so quickly and the rates are so high. I think its possible it could be worse, particularly with the flu. If we are able to control the coronavirus through distancing, the flu season may not be so bad. On the other hand, we are not able to control it through distancing, so it may be even worse with the flu season. So we dont know. Peoplet that long ago were saying, it will be way better. I think we just need to focus on the severe situation we are on. Reporter what drugs work to try and cure the sick and which ones dont . The drugs with evidence are , immunoir, steroids modulating drugs. Andnow Hydroxychloroquine Azithromycin do not have evidence of working at this point. Thing that the other has a growing amount of evidence is more widely used soon convalescent plasma, using antibodies from people who have recovered to treat. There are some definitive studies right now, but there is emerging evidence from repeated study studies of a benefit. Sharfstein,shua vice dean of the Johns Hopkins Bloomberg School of Public Health, supported by michael bloomberg, founder of bloomberg lp and bloomberg philanthropy. The reserve bank of australia makes a decision later on rates for the First Time Since the crisis in victoria took a turn for the worse. Derby is expected to hold and economic forecasts may take a hit. Lets get to a preview with our economics editor in sydney. What can we expect from the rba today . Today,r for the rba ahead of the forecast on friday, as you suggested, no changes expected to the cash rate or the three year yield target. Given the developments we are asking for the second largest city where the state of disaster has been declared with the coronavirus, we would expect a more dovish tone into the rba statement. The extended lockdown and curfew will early have negative implications for the economy and the labor market. The question for the rba is whether these events overshadow what would have been better than expected outcomes across the rest of australia that we would have seen the rba laste a forecast that was updated in may. Economists are expecting around a. 5 percentage point hit to thirdquarter gdp on the situation in victoria. However, they are still expecting a growth from pentup demand with broader easing of restrictions stimulating activity in the quarter. The key concern for the rba is beyond the virus spreading acrossis the uncertainty the broader economy and if it weighs on sentiment. Give households confidence to spend the exponent extent of the recovery . This is what the rba will watch in the coming months. Rishaad the rba has been sitting tight on policy since the rates went down. Have had yield curve control introduced and it was implemented in midmarch. I have to ask, what is next for the reserve bank . Reporter the rba has been reiterating it does stand ready but they bond buying, are keeping the yield targets. This is what the rba had hoped for when they commenced the program and they are happy to stay on the sidelines while favorable markets continue. The rba says there is a higher bar for the policy measures and negative rates remain off the table but there is a growing discussion around Market Participants and what whether it might slow rates not at this meeting, but perhaps later in the year. We might see this if the economic recovery remains muted or if we stay at the move to greater stimulus from other Central Banks that put up with pressure on the Australian Dollar and it might draw the rba down this path. Rishaad thank you for that, economics editor in sydney. A look at business flash headlines. U. S. Aviation regulations giving boeing a long list of fixes to allow the 737 max back into service. Shares rose as they demanded upgrades linked to the ethiopian and indonesian creches that grounded crashes that grounded the plane. It is the worst performer on the dow jones. Same with aviation, Japan Airlines polka posting the biggest loss in at least eight years with the fallout from their coronavirus hammering travel demand and prompts termination of the interim dividend. The loss of 89 million, the most since jal relisted in tokyo in 2012 and thats after it emerged from bankruptcy. That is the only other quarter that it lost in the january to march period and the pandemic took hold. A big interview coming up later today. Beenll speak with ive mend of, one of the worlds of liquoroducers including Johnny Walker and smirnov. 2 30 p. M. In hong kong. Dont miss it. This is bloomberg. Manus this is daybreak number middle bloomberg middle east. Tictoc must close a sale. Thekicker, trump once government to receive a substantial amount of money. Fed officials talk up fiscal need as lawmakers bigger