Which saw the brunt of the fallout. Billion but in60 the positive this tuesday morning. And now performer coming up by 1. 2 at a 52week high. Samsung among gainers. Numbers we sawp today, 42. 9 declines, a long road to recovery for the singapore economy. Malaysia up 0. 2 . Look at where we are in terms of the dollar, showing a little strength today, up for a third day. Forging rising risks holding the dollar with the november elections approaching quickly. Down 0. 4 , still close to a record last week. Good to see the tencent recovery, but not close to making up for all the losses we saw the last two sessions. Our top story with the u. S. Tensions and china retaliating with sanctions on u. S. Officials. And ahead of those trade discussions. We did a phase one deal, it was a wonderful deal. All of a sudden it means very little, that will never pay the loss of life in our country and around the world. We view china differently than we did eight months ago. Yvonne looking at china differently, the sanctions we saw from china that came last night. Lets get the latest from Stephen Engle who joins us from hong kong. Lets start with the sanctions we have seen on the china side. The strategy seems to remain where you retaliate but do not escalate further. Stephen that is right, donald trump talked about how things are viewed differently with china. A lot has happened including the sanctions. The yunnan states on 11 chinese and hong kong officials, including the chief executive carrie lam. Now china retaliating with sanctions of their own on 11 americans, including marco rubio , the republican senator, also ted cruz and tom cotton. Plus, pat toomey, a member of the house of representatives. And the Human Rights Watch executive director, kenneth roth. We do not know the extent of the sanctions. The u. S. Sanctions on hong kong and chinese officials would include the freezing a Bank Accounts and Property Assets if they had them in the United States, putting banks based in hong kong in a bind, who have to comply with u. S. Sanctions and the National Security law of china. A lot of banks in hong kong are reviewing their client lists and figuring out how to assuage the fears of those nations. Basically the Chinese ForeignMinistry Spokesperson saying they had to do the sanctions in response to what they call the wrong behaviors of the United States, who behaved badly on Hong Kong Related issues. Haslinda speaking of review, we learned some banks in hong kong are scrutinizing accounts of city officials. What do we know . Stephen we know according to people familiar with the situation that citigroup and other banks has begun stepping up their scrutiny of bank clients in hong kong. We need to know how far they can follow theseo to u. S. Sanctions which do not have a grace period. Comply rightave to away. He lenders, more they gray area, bank of china, they are vulnerable because of their need for u. S. Dollars. We will have to see how this plays out. People close to the matter are saying banks like citigroup are looking at the accounts held by some of those 11 individuals that were sanctioned by the United States. Another flashpoint is the visit to taiwan of Americas Health secretary, alex azar. What can out of that . Stephen obviously aging is not happy with it. The Foreign Ministry reiterating their displeasure with that, calling the taiwan issue the most important and sensitive one in u. S. China relations. Taiwan being the top of the list according to beijing. Official, thethis highestranking u. S. Official to visit taiwan in four decades, meeting with the president of taiwan, it makes beijing look bad. Hailed taiwans democracy as an inspiration to the region in the world. It has been a strong example of how to contain the coronavirus said it isit was regrettable china has blocked taiwan from participating in the World Health Assembly in response to the pandemic globally. Stephen engle in hong kong. ,ets get the first word news singapores economy fell more than estimated in the Second Quarter, signaling a long recovery head. It fell almost 43 on an annualized asis. Annualized basis. Exports were hit as global trade we can. President trump is considering a cut in Capital Gains. Help thet would not middle class, but he says now it will provide more jobs. Advisors say he could issue an executive order on a unilateral change. You will be hearing about and in the upcoming weeks, i think it will be exciting. , a lot ofgains tax people will be put to work, and there will be a cut in the Capital Gains tax. Yvonne joe biden is that yet to be ready to name his running mate this week. His team has spoken to the top candidates and may make an announcement within days. Biden has said he wants a female candidate, and is under pressure to pick a black woman. Speak tooming up, we an expert in media law. Fears that press freedom is dead in hong kong. E will speak to sharron fast haslinda why chinas tech sector is prepared for a u. S. Decoupling. By jim be joined mccafferty, joint head of apac equity research, nomura international. This is bloomberg. Haslinda asian stocks are firmly higher as investors assess the tension in washington and beijing. Says it will sanction 11 americans in retaliation from sanctions imposed by the u. S. On friday. It does not include any members of the trump administration. It is seen as a technical distraction for u. S. Policy ahead of the election in november. Lets bring in jim mccafferty, joint head of apac equity research, nomura international. The noise for the moment is just noise . I think one of the big challenges investors have now is to try and determine what is noise and what is substance. The noise factor is escalating and will continue to escalate over the next you months. Have a senior u. S. Official in taiwan, that is not pointed at all. This is coming at a time of the u. S. In china are trying to agree phase one of trade talks, at a time of the u. S. Is which areg companies their in china to improve security. We have a lot of noise, but if you look at the substance in terms of the facts, were seeing the data in terms of company data is better than market expectations. Our view is that asian markets have done well and will continue to do well through this uncertainty up until the election. Haslinda what you do in terms of strategy . Do you stay the course. Recoverys point to a in Growth Stocks . Should you be thinking about that . Jim one of the things investors ink about, and are investors singapore, you have to talk about growth at a reasonable price. In asia we have more stocks that fit into that category relative to the u. S. The divergence in wh and in the asian equity market is big. We are looking at asia trading at about 14 times earnings, but be mindful asian markets are trading some big stocks. China we have alibaba and tencent, 30 of the index. These companies are growing at a fair pace. I would say companies in asia dear to that growth model of these evaluations, where in the u. S. If you want Growth Stocks, [indiscernible] yvonne it brings up the momentum trade. Has further room to run. At what point do you start to look at the value trade again . That has not played out most of this year. You are seeing signs of real yields picking up. Gold underperforming a little bit, and the dollar on the stronger side. Are those indications for you of a trend reversal . Jim the good thing about asia, it is a wide market with multiple geographies. We have done quite a bit of work looking at dividends and investing in equities for income. The traditional model of Asset Allocation is nearing obsolescence. 60 andds would prove equities and 40 and the bonds. Given that Pension Funds are bonds are nornment. Onger giving you any coupon for that reason, investors are having to consider equity. The market we think is incredible value within asia is japan, and japan has strong balance. If you look now at government debt, governments around the world have had to raise more money. If you look at that analogy in terms of japanese corporates, they have strong balance. They are increasing dividend payouts, and from that perspective, if you look at value trade, Japanese Equities are attractive. Geographically in asia, you see korea on a tear, up 70 in dollar terms of the lows in midmarch. That is second to the likes of argentina. Australia is close as well. Do you continue to chase some of these markets . Jim korea was always an has been a cheap market. There are structural reasons for that. Also a very cyclical market. If you are looking for a market that is inexpensive that has longterm structural things which will help it, i was a china is probably the most exciting market to look at. In china, it is perceived historically as a Market Driven by exports. Are veryxports important. That has changed. The composition of the market has changed. Ago, chinaa 10 years was about banks, telcos, oil and gas. Today it is about internet and consumption. Dependent on the domestic consumer, little exposure to International Markets like the u. S. And europe. You have this noise around the u. S. China trade tensions, but these companies have their own customers who are oblivious to what is going on, and they will continue to deliver. China is the market most attractive from that perspective. We have to leave it there, great to have you. Up, more on the state of the Hotel Industry with hotels,ican ceo of jll that is up next. This is bloomberg. Haslinda the Hospitality Industry yvonne earlier, bloomberg spoke to the american ceo of jll hotels and hospitality, and got her view on the current state of the industry. Demand one pentup the lesser side, we have had and if yous look forward, our expectation is we will see a modified version of corporate business coming our way in september. Mark isquestion businesses, and it should be coming back. It will depend on what a vaccine is widely available. Lets focus on that piece of some hotels are managing to capitalize on this vacation trend. People will check into a hotel in their own city for that experience. There are ways to get that revenue back. Before we get planes back, how do you get the Corporate Travel revenue back in the system . We are eagerly awaiting to see what will happen from a inernmental perspective september. Ease of travel, any restrictions, corporate policy. We are traveling, starting to travel to client meetings. It is interesting in terms of provided in a disruptive environment. We are seeing the corporate demand come back in a modified version. People need to travel. For us to grow, we have to get people out on planes. The corporate side and the group side, there is pentup demand. You think about the social catering business and weddings that have not happened. Tore is goodness to get back hotels once we are able to. We are waiting for a vaccine to theidely available for convention and exposition business to come back. The way people book things, will that change in the sense i will not book a year out if the virus may come back in a certain country, but i might book for next week. Well people change their habits . Absolutely, the booking window has gotten shorter, and with prices it has gotten shorter. The window could go from a day, a week, a month. Some corporations are looking at what to do with the groups they have with 2021, and the reality of 2021, second half all of us waiting for a vaccine. Windows andooking hotels are being flexible with penalties as a consumer you have to pay if you have a cancellation. What additional costs is the industry facing in terms of safety and cleanliness to lower back those willing to travel lure back those going to travel . It is all around the labor cost. We are paying a lot of attention ,n hotels located in markets the labor structure is firm and dictated by the labor union. There may not be as much flux ability. I think the cleanliness standard comes at a cost but not by much. We are paying attention to bigger corporate clients who invest in technology, given the future travel experience. That was americas ceo of jll hospitality. We have asia expanding gains today. Despite rising tensions between the u. S. And china. Just noise in the runup to the elections in november. Csi rising for a second day. Up 0. 2 . S plunging, 2. 9 annualized. Q3. Omies should improve in likely to be in semiconductor and biomed. Cases backin virus from a threeday holiday. In terms of the market movers, we are keeping an eye on digital, surging by 162 today. It surged 334 yesterday after slumping 70 in the morning. Investors urging to buy the stock in a show of support for democracy. More to come, keep it here with us. This is bloomberg. Vonne 10 29 in hong kong. Here are our headlines. China is hitting back on sanctions and stopping short of targeting people close to the white house. And those include senators rubio and cruz and they say they have behaved badly. Not sure what the sanks would mean. And retaliate against washingtons recent moves. Recent covid cases. The death approaching 750,000. The rate of the increase seems to be slowing. Ountries are trying to order quarantine with three months jail refusing. Greece is requiring travelers to have a negative test. The third of which are unknown origin, 4,000 cases of covid19 with three new deaths and take that number to 55. Japan has 761 new cases on monday taking the total to 50,000. The Approval Rating is jumping on the pap and worst support since he came to power in 2012. Australia has 331 new daily virus cases along with 19 new deaths. Record set the day before and new cases are falling from their peak and under strict lockdown, the Northern Territory has announced is going to be shut off for another 18 months. And government of lebanon has resigned after last weeks explosion in beirut. The blast is now response i will for 200 deaths and destruction of a large part of the city. The Prime Minister said it is the biggest disaster and plamed corrupt political elites for sabotaging his administration. Lets look at where hong kong stocks are right now. Posting a biggest increase. We have hong kong stocks up by more than 2 right now. Hong kong stocks have been the brunt of escalating tensions between the u. S. And china calling it collateral damage. And relative to its global and Asian Financial crisis and it is down 11. 5 . Chinese and u. S. Stocks are doing way better. Blow to s been quite a tocks two day loss and 66. That stock is higher. And over the two days we saw on friday and on monday. That came after the stocks was 70 and valuable company. And i want to show you the chart as well and shows you. And under a lot of pressure and among the weakest performance so tech has been upfront and center. The executive order which was igned and indiscernible] yvonne bloomberg intelligence. They are mapping out the worst Case Scenario if it goes beyond other parts. Meantime, lets stick to hong kong. A chilling message to jourmists and broadcasters to the city. The founder of apple daily and most aggressive action under chinas new National Security law and what might come next. Our next guest is a lecturer at the university of hong kong. We had you a month ago. We have seen a lot of activity since then. Given what we saw yesterday, same time yesterday same time, we saw police around 200 around the apple daily headquarters. What do the optics tell us about press freedoms now in hong kong moving forward . The optics is clear and cant be understated. Hong kong is not only indiscernible] we witnessed hundreds of police, over 200 police did he sending on the news room coming from dozens of vans coming in to execute a warrant to search the offices of several individuals charged. But thanks to the live reporting of the apple daily reporters on the scene we saw police breaching the terms of that optics nd i think the are important, because you know when the police insist on handcuffing the leader of this walking him in handcuffs, i think what it lays bare is the hollowness of the statements of the Hong Kong Government in the provisions of article 4 which provides for this protection and press freedoms. You cant look at the images in his own news room and look at the behavior and sheer number of police to go conduct the news room raid without having a very clear understanding that it would be intellectual dishonesty of the Hong Kong Government to maintain the press freedom is protected in hong kong in a way it should be under the terms of our basic law and international reaty signatories. Yvonne police say they would not target the Editorial Department or reporters. Is there a sense this is only targetting him under this National Security law he was allegedly clueding with western forces and doesnt have that much impact when it comes to press freedoms . The police did say i should start by saying there are two types of warpts in hong kong. For the police to be able to see jourm is particular materials, they would have required a second warrant. Police engaging and interfering with jourm is particular materials. And one of the Police Spokesperson telling us they were seizing 250 boxes of documents from the news room on the basis that it happened to be located on the second floor and therefore on the second floor where the seven individuals who originally formed the charming of National Security offenses where their offices were located. It is a clear overreach. And we have Police Tweets and the news desk being interfered with and materials being removed. And the search hong kong courts have recognize this is a draconian mechanism. Search warpts are not given to further investigation but a mechanism of last resort. The materials that were seized on the day a lot of it was to induce fear to go after hong kongs largest prodemocracy organization through this fear to make other organizations, you know, very reluctant to publish any information that might be onsidered in defense of or contrary to things that the communist party wants to epresent and that includes democracy. We will see some legal challenges on scope of the warrant, the appropriateness of the search and whether the police breached any of the terms of the execution of the warrant, which i think there is a lot of evidence to suggest we can answer that in the affirmative. Is there an abuse of the process, whats the recourse . Next recourse is in the couple of days. The lawyers the material itself will not be made available to the police. They will be sealed in a room where they will have access for purposes of investigation initially and that is on the basis that i believe the lawyers ill probably be review and challenge the hundreds of boxes of documents that made their way out of the office. So, right now, the recourse is those materials are sealed and that the lawyers go in and try to appeal the decision of the magistrate or at least refine what is contained in the warrant that was granted. E know there is just not National Security laws engaged here. There are additional laws because the Police Brought some additional charges related to the use of the building and some corporate fraud on the basis of the occupiers license to use the builder. We dont know whether the warrant was granted on the basis of occupier liability or the warrant was granted for the purpose of investigateing the National Security law. If its the latter, we have to get the court review. How far the police are allowed to go in that overreach. Can a warrant cover things as wide as the personal documents and notes of journalists to their desks and materials that are constitutionally protected in hong kong and require a separate warrant process. Its not the case that a warrant that is issued on the basis of criminal charges in hong kong would include journalistic material. That would be a separate warrant. Vonne this reflects whats to come, do you see what you saw yesterday embolden the Hong Kong Police . Unfortunately, i do. This moves the Hong Kong Police as we have seen the past 14 months are dangerously emboldend. We saw Police Telling international and local Media Organizations they were not allowed to discuss the news room break. Police making statements they would determine which Media Organizations were allowed to cover it and suggesting to other journalists and other organizations that they need to watch the Facebook Live stream. It is basically a good journalist would play the propaganda or live stream the police of what happened during the raid. And we know this is not against the case. And the idea that the police are very aggressively swiftly moving into an organization on officers during a time when hong kong is facing a third wave and limiting of groups, this is a very aggressive move. And then at the same time refusing to allow or individually finding which media gets to report and say they have new tricks. And new tricks to determine which Media Organization would be allowed to enter pressers and to ask questions about something as important as the press freedom and something as important. We have seen several events not just in apple daily. There are reports of the immigration side of thing. The Department Setting up the National Security unit to vet for more sensitive visas and we got reporting with beijing calling for the seizure in hong kong to stop denigrating this National Security legislation. What are the red lines that are being drawn right now and hong kong journalists will have more press freedoms than those in the mainland . We didnt see it in the past and not just in the news room break. We have last night a freelance reporter has been arrested under National Security law and broadcast stations very early in the morning and Immigration Department that has been set up. Series of events so swift and severe that its very, very clear what the focus of beijing is in meeting this National Security law and that is to put such fear in the media whether locally or internationally that reporting people ong will will be afraid to come to hong kong. I think it is unfortunate because right now our reporting in hong kong that the media more critical to the cause of press freedom and in a city which has been under 24hour attack will be seeing so many arrests and micro aggressions against the media and reporting in hong kong. Sunlight ed is more and that is the disinfectant. We dont know what the red line is going to be. And [indiscernible] we have run out of time. Specializing in media law. We will talk about what we are seeing here this morning. The stocks have seen a sharp fall. We have plenty more to come. Yvonne lost billions but today at least for todays session and the selloff was of president trumps doing business. Nd estimating that the apps gaming assets are at risk. Lets go to singa poor. His ban, how is it putting businesses at risk . I think its not clear which transactions are banned between u. S. Businesses. That is an executive order, but the secretary of commerce, wilbur ross, will 45 days to determine the precise transactions that are banned. I think it is safe to assume the use of weechat in the u. S. Will not be allowed and it would cost inconvenience for communications between Chinese Students in the u. S. And their families and u. S. Business and their counterparts in china, their suppliers, for example. That in itself wouldnt hurt the financials because they dont make money from weechat. U. S. Broad ban goes to usinesses outside of the u. S. , wechat be aloud and walmart continue to be able to use it in china . It goes to that level. I think its likely that the u. S. Businesses will be hurt ore because i think most chinese users would choose wee chat over an iphone. Restrictions on that are executive likely and order. Its whether a potential tick tock forced divestment of assets would be executed and on that front, they have several gaming assets in the u. S. League of legends and epic games which owns 40 is another key asset. We have much more to come on the show. [indiscernible] continuing in this knee jerk risk. China paving the way of mainland and lifting hopes of a recovery after Third Quarter by 50 . The move from consumer reporter. Lets start with the details of this. So actually there are two travel. Anges of both individual and group tours for mainland residents to travel to mmp acaw. And and contains the spread of coronavirus. But officials made it clear this is the first step. What works well, they will extend it to the other parts of china. The two weeks quarantine imposed to return to the mainland from tomorrow as well. The quarantine as previously only removed from the province last month. Another step for a recovery. What does it mean for the gaming industry . Its a very big good news and Bloomberg Index went up as much as 6. 9 and lifting of quarantine makes way for the revival of the gaming industry. Without chinese, the revenue plunged over four consecutive nths and 15 million daily in expenses. Now we are at the moment that is at its worst time. In terms of the rebound, and macau . L it arrive in the drop is too significant bout 95 for several months. Mac arch us revenues are shooting up. And the news of recovery wont be that smooth as the economy is hit during the Virus Outbreak and social distancing is expected after consumers come back. And also there is one constraint and given the economy in china isnt doing that well either. And expect revenue to be to pre covid revenue. Great news for those stocks up by 4 in the quarter. Thank you so much for that. Still more to come. Do stay with us. This is bloomberg. Haslinda its almost 11 00 a. M. In singapore and hong kong. Welcome to Bloomberg Markets asia. China, hitting back at u. S. Sanctions on hong kong, targeting republicans like marco rubio and ted cruz. Beijing steers clear to people close of close to donald trump. Son had mush igo see record losses in may and a slump in his vision fund. That may change. Hammered theic global economy, but it has been good for top glove. Stocks have been on a rocket. It is a risk on tuesday. Asia already much brushing off escalating tensions between the u. S. And china, the msci in positive territory. We have the composite index rising for a second day. Another stock is rising for the shanghai comp, volatility on the msci china index outstripping that on the asia pac index for the most in five years. The gap could widen more. Investors, not looking for trouble. The kospi up by 1. 4 , at a 52week high. Korean stocks outperforming global peers, stocks riding the wave as foreign money flows in. Some say it could be front and center in the asian rally this quarter. 0. 3 , rushing off gdp numbers, Second Quarter gdp dropping 42 point 9 , signaling a long road to recovery. The gdp set to shrink 5 7 in 2020, not looking pretty for the lion city. Rishaad lets take a look at what is happening in thailand. We got the opening in bangkok, 1 ,benchmark up by about student protesters stepping up pressure on the military backed government, calling for greater democracy and less power for the monarchy. That is a potentially explosive demand. This, against the backdrop of a terrible economic crisis for the country. The set up by 0. 9 . Like aa, stocks looking 0. 4 gain. A bad economic picture, as it is globally, Economic Indicator monitors in india flatlining months after we saw signs of them returning to life. Inwing growth plateauing july, and elsewhere, other highfrequency indicators indicating the same thing. The rupee pretty much unchanged. Looking at the bloomberg dollar index, down a fraction, and this against a backdrop of bearish dollar bets, a pervasive negative sentiment for the greenback. President says he is unsure if he wants to make a deal with china. That is ahead of trade discussions this week. And itid a phase i deal was a wonderful deal land all of a sudden, it means very little. That will never pay for the lossoflife in our country and all over the world so we are, we view china differently than we did eight months ago. All of this, as china retaliates against sanctions imposed by the u. S. Over hong kong with sanctions of its own. Lets get to our chief north asia correspondent. What do we know . Donald trump took aim at china on multiple fronts in the News Conference this morning. Referred, theyou virus. United in must be condemning how the virus came to the world, a veiled threat against china. Also, he did mention about the sanctions, the retaliatory sanctions from china. He said we have already responded in many ways. To outline how china is responding to the u. S. Sanctions, which were revealed last friday, putting sanctions on 11 chinese and hong kong ,fficials including carrie lam over the National Security law and alleged curtailing of Political Freedoms in hong kong, china lashed back with sanctions of its own on 11 americans. Mostly lawmakers on capitol hill, not in the administration necessarily of donald trump. Marco rubio, ted cruz, tom cotton, all republican senators. They have been sanctioned by china over this. Pat toomey is a house of representatives republican. Also, Human Rights Watch executive director kenneth ross, who was also blocked from entering hong kong in january. We dont have the specifics on what is in the sanctions, but the Foreign Ministry spokesperson in beijing says this is in response to what beijing is calling wrong behaviors of the United States, who behaved badly on the Hong Kong Related issues. We will have to see how this plays out. Some people in hong ofg scrutinizing accounts city officials, they dont want to violate u. S. Sanctions. Caught in between, like many of us in hong kong, between the pressure from the United States and the realities of the new National Security law. We are hearing from someone familiar from the matter telling bloomberg, citigroup, obviously an american bank, is taking steps to suspend accounts linked to some of those 11 targeted individuals. We are talking about the 11 individuals that were sanctioned by the United States. We are hearing standard chartered, a londonbased bank, is reviewing whether it has relationships with any of the officials and they will monitor their transactions. Standard chartered, declining to comment to bloomberg news. It is a precarious situation for the banks here, which are multinational in intent but they have to play by the local rules. Also, they have to perhaps abide by those u. S. Sanctions. Another flashpoint in the u. S. China relations, the visit by alex azar to taiwan. What has come out of that . Beijing is not happy. This is the highest ranking u. S. Official to visit taiwan in four decades, a cabinet member of the trump administration. He is there to talk about the coronavirus and taiwans lauded response to containing the took the but alex azar opportunity to hail taiwans democracy as an inspiration to the region of the world. The president of taiwan met with alex azar, and took the opportunity to lash out at china for blocking taiwan for participating on the coronavirus in the World Health Assembly. Stephen engle there. Lets get the first word news with karina mitchell. Economy fellpores more than estimated in the Second Quarter, signaling a long recovery ahead. Gdp fell almost 43 from the previous period, and the economy, which is in recession, is falling between 5 7 for the full year. The coronavirus hammered retail exports as, and hit global trade weekend. Meanwhile, another sign the chinese economy is recovering come auto sales rising more than 16 in july compared to a year ago. Pent up demand held back by coronavirus field some of that. Car yards sold just over 2 million vehicles for the month, which beat earlier estimates. Shipping from wholesalers to dealerships increased 8. 5 on the year. Issident trump says he considering a cut in Capital Gains, a move he dropped last september because it wouldnt help the middle class. He now says this would create more jobs. The president cant actually lower the rate without congress, but some advisors say he could issue an executive order, a unilateral change would likely trigger legal challenges. You will be hearing about that in the upcoming few weeks and i think it will be very exciting, so a Capital Gains tax is going to be, a lot of people put to work, and it will be a cut in the Capital Gains tax. Karina the government of lebanon resigned after last weeks devastating explosion. The cabinet quit amid rising anger at the blast, which is responsible for at least 200 deaths and the destruction of a large part of the city. The Prime Minister said it is the biggest disaster in recent lebanese history, and blamed corrupt political elites for sabotaging his administration. Global news 24 hours per day, onair and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im karina mitchell. This is bloomberg. You. Ad thank still to come, the top of its game, and exclusive with a managing director about a malaysian rubber glove maker. Haslinda on the defense. , as morell continue corporations review the extent of the damage. We will discuss how they are navigating the markets, next. This is bloomberg. Coronavirusbal infections have topped 20 million, a sobering milestone as the pandemic continues to spread. Its impact is felt across the board in manufacturing supply chains and equity markets. Our next guest remains positive on stocks. He is Portfolio Manager at tribeca. Thank you for joining us. How can you be positive on equities . I know it has probably been a reverse psychology up until now with what is going on out there with the possibility of a second wave of this pandemic in various corners of the world. It is always good to be here. There are so many things to be positive about. First of all, equity has never looked so much cheaper compared to the fixed income and the like. If you want any return, and yield, any income or growth, you have to go to equities. Looking under the surface in terms of equity markets for some sectors, that has been impacted by the virus and the lockdown and the like. They are trading at some of the cheapest valuations. These include some of the companies that have premium assets, and some of the businesses with the highest qualitys nest strategy and business model, and they are trading at a fraction of the price before coronavirus impact. Actually, equity market has never been so exciting and for some of those businesses, the opportunity is probably once in a decade. We have geopolitical tensions at the forefront and it seems like a war of words, a war of actual titfortat is getting worse between beijing and washington. Is this really being played out on equity markets . Doesnt seem to be. Why are investors living in pollyanna . Look. This certainly means risk for equity markets. At this point, the equity market how we recover from the coronavirus disruption. Geopolitical issues will become a bigger issue as we head towards november during the election, and by then, the volatility expectations will be higher. For now, it is about reopening, how we can get on with our lives and return to normal levels of activity. Rishaad that could be a way off. What is next . What are we looking at with regards to perhaps Asset Allocations within equities . Are we seeing a move at all from growth towards value in any sense . Growth seems to be selling off a little in the last few weeks. However, my view is that you always want to run a balanced portfolio. You want to have some of those structurally growing businesses because when the world becomes volatile, that is the only place you can generate returns. At the same time, we need to take advantage of shortterm price disruptions for some of those high quality assets, shopping centers, airports. You need to buy them because these are defensive assets. Once we move past the lockdown you will see those delivering significant returns over the next few years. It is important to have both of those in your portfolio. Haslinda haslinda we are looking at health care, infrastructure, how does a balanced portfolio look . Give us a sense of that. You might laugh when i talk about it, but it is about a bit of everything. Diversification is important at generating consistent returns. You want to buy some gold because it offers great diversification and although some of the companies have done so well more recently, you want to hold some growth businesses and you want to buy some of those asset value businesses. Together, all three will give you a good consistent return through time. Thingda is there such a as a biden portfolio as we look towards the election in november . It is interesting, there has been some Research Done on what the equity markets looked like. In the last few months, or the last month or so we have seen a rally of defensive assets, growth and offensive assets. They have outperformed value, like you said earlier, on the one month or two month view. These are actually perhaps more towards bidens portfolio, however, if we start seeing the odds turning towards trump you will see more of a cyclical portfolio start outperforming, just given the possibility of more stimulus, the talks of more stimulus and the like. Junbei, the dollar is the most ever sold in 40 years. As is it time for is it time for consolidation . Would that hold back equities Going Forward . Junbei not necessarily. I think the Dollar Strength is a reflection of risk appetite. Theye equity markets, if become stronger and people are looking to go into the emerging market as well as the more cyclical names, you will see the dollar weakness, and that is assigned sign the Global Growth perhaps, or expectations are picking up. Havee flipside, if we experienced more volatility, nervousness about the length of the second lockdown, you should see the strength return back to the dollar. Liu, always abei pleasure. Still to come, we are watching casino stocks, which continue to soar on the back of chinas plans to resume issuing tourist visas to macau. Keep it with us. This is bloomberg. Rishaad the chief executive Financial Advisory has warned second wave of bankruptcies could be on the horizon. Speaking to bloomberg, he discussed the pressures of rising debt on economies in the socalled tech cold war between the u. S. And china. Through a been massive first wave of restructuring and i think the second wave, which i believe will come, really depends on what we were talking about, that many of the weaknesses at Many Companies have been disguised or hidden by significant government support. As the support is withdrawn or not continued at the same rate, the pressure on many corporate will become more manifest and unfortunately, i personally think we will see another significant wave of bankruptcies across Corporate America as that plays out. As an investment banker, people want to talk about the work you are doing with corporate clients but this year alone, lazard has had significant sovereign advisory work. Lebanon being one of them, argentina being another. Can you explain the disruptions you are seeing for sovereign debt . What kind of demand do investors have to invest in countries that have these issues related to the pandemic, but all of these other addon issues that are arising, as well . What is happening in many countries, some of them that are lazard clients, they had previous preexisting conditions exacerbated by the pandemic. For a whole set of other countries, the pandemic is causing a lot of fiscal pressure, just like it is here in the United States for state and local governments and we are seeing a substantial increase in the federal deficit. Revenue declines, you need additional spending to cushion the blow from the pandemic and the result of that is a significant increase in public debt. Unfortunately for many sovereigns across the globe, they are not in a position to handle the Additional Debt and that causes a debt crisis. We are having some promising signs about creditors and governments coming together in argentina and ecuador and elsewhere to reach agreements to deal with these problems before crises, andoutright we will have to see whether the spirit of cooperation can continue into what inevitably will be other sovereign debt problems over the next year or two. The issue of more sovereign debt problems arising, how do you think of that . These are countries with much weaker financial positions but what becomes of the United States as our debt level starts to swell . The Congressional Budget Office came out today with a report on the deficit for the first 10 months of the year. It is more than double what it was last year and that is not surprising. We are running a significant fiscal experiment, but it is one we absolutely have to run because the alternative of not providing support to the economy during, to offset the impact of the pandemic, would be much worse. It would cause longlasting damage to the economy. So yes, debt is increasing in the United States am a but that is ok. You also have a birds eye view about how Corporate America is reacting to a lot of these tensions that are being created between the u. S. And china. What is the chief concern to your clients right now . Relationship with china is complicated. I would say in the Technology Face in particular, you are tension, moref rapid deterioration in the relationship, and what many people call the Technology Cold war. In other aspects of the relationship, we need to remember the relationship with china is bigger than what you read about in the newspaper or on bloomberg. Flashpoints are in technology that has been building for a while, and it has accelerated over the past several months. There are Many Companies that are concerned about the implications. We will have to see how it plays out. Groups that was lazard ceo of Financial Advisory. The latest headlines. Haslinda indias Largest Airline is looking to raise money to write out the trouble from the covid19 crisis. Indigo has approved a share placement. Indigo reported a 380 6 million loss for the june quarter. Profit ofres to a 160 million. Mcdonalds is suing its former ceo, accused of having affairs with multiple employees and covering them up and arranging for one worker to win a lucrative prize. Mcdonalds is looking to recompensate tens of millions of sovereigns after the ceo was fired for a consensual relationship. It argues he shouldnt have been paid because he lied and concealed evidence. Back to the markets, lets have a look at what is happening in hong kong. Getting a lift from casino stocks, visa restrictions being lifted. We have the macau government saying a neighboring province will resume tourist visas to the mainland. That put a rocket under casino stocks. 6. 2 to the upside, sands china. To the warwick the wider we do have a hang seng 2. 1 to the upside, we have a nikkei that is being helped along nicely by a weaker yen, 106 handle on the yen against the greenback. Gold down a fraction. Driver ofis the chief good gold prices. New york crude, higher by 0. 7 , wti adding a boost from an upbeat assessment from aramco on the oil market. Lets have a look at the Major Chinese markets as we head towards their lunch break in three minutes. Gains for those benchmarks. 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. 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 pictures of the lion city, almost 11 30 in singapore, the middle of the trading day. The nci eking out some gains, up 0. 3 despite gdp numbers. Gdp plunging, down 43 annualized, it could be a long road to economic recovery. The lion city, in a technical recession. Forset to shrink 5 7 2020. The ministry of trade and industry said there is improvement in the Third Quarter although there are a few downside risks, investments likely to be in semiconductors as well as in biomed. 0. 2 . I higher by about lets get you the first word headlines. China announced the highest level u. S. Visit to taiwan in decades as washington turns up the heat on beijing on a range of friends. Alex azar saluted the taiwanese democracy see and its handling of the coronavirus, drawing criticism from china. Us twilio reported 331 new daily virus cases in victoria along with 19 new deaths. The fatalities equal the record set the day before. Falling from their peak, with melbourne under lockdown and several borders closed in the Northern Territory. The Northern Territory will stay shut off from the rest of the country for another 18 months. The Health Organizations miss to identify the start of coronavirus will start in wuhan. The who said they will study individual exposure in peoples daily lives before they developed symptoms. The Organization Says it will it took years to identify the origin of mers in 2012 while the genesis of sars in 2000 three has never been established. The rbnz meets wednesday, as the economy performs better than expected amidst the coronavirus. And policymakers will have to weigh the strength againststic picture rising unemployment and the global closedown. Six of nine economists expect. He rbnz to hold its qe limits the others say an increase. Rishaad we get the reopen after the lunch break in tokyo, we up as we went into lunch. What we have is the nikkei just about the same level at the moment as we do see all but topixof the topics indices advancing. Sony electronics giving the biggest boost with regards to all that. All of this against a backdrop of asian stocks shrugging off and seeingl concerns green out there with hong kong leading the pack, two point 1 up. Indian markets, at the moment it is a situation where we have positivity going into the session, according to the nifty contract in singapore, up by 0. 4 , a gain of highfrequency data from a managing service. Fuel sales, growth plateaued in july and that is perhaps boating badly for the economy looking ahead. The rupee pretty much unchanged. Yields edging marginally to the upside. Here is a stock worth keeping an eye on. The companys top glove and it is the Worlds Largest rubber glove maker. 450 , making it the second most valuable stock index. Major stock that is due to a boom in demand for gloves amid the pandemic. It is aided by a selling been in malaysia until the years and. Joining us exclusively, good to have you with us. Given the sense of what we see end of in terms of demand, many countries are seeing a second and third wave of the virus. Thank you, haslinda. Amand has been very strong. There has been an upsurge of demand from every part of the world. This is something rather unusual. In the past, we have demand coming from specific countries but right now we are having requests for gloves in almost every corner of the world. We are working very hard to get the gloves out so they can reach to the users very quickly in hospitals, laboratories, and many other places where they are required. Can you quantify that increase in demand . You are talking about how demand is coming from everywhere. So far, the u. S. Has been a major market. You have seen 25 of your sales coming from the u. S. Will that change or are other countries stakeholders . This will continue, because from historical data, the u. S. Has always been a very important glove for big manufacturers like top glove, and demand in fact is the biggest in the world from a single country. If you look at before the pandemic, the demand for gloves used to be about 8 12 . Right now we are seeing the demand increasing to 10 , 15 , even 20 particularly in bigger countries where the concern for health and protection is much more important. The demand has even increased by 100 , like in the u. S. , if you look at the past few months, it increased by about 250 . In europe, some countries have increased by 300 . In countries like japan, demand has also increased by about 300 . Talk now thate is we could see a vaccine by 2021. How might that impact demand for gloves . What kind of decline are you anticipating, or not . We are happy to hear that a vaccine is in view. We hope there will be success in the vaccine, to alleviate the sufferings of many people in the world. Looking at the vaccine, we believe it will take quite some time, and it is something that requires to be manufactured very quickly and supplies to many countries in the world. Some moving forward, we believe that the demand for gloves will still be strong because if you look at in terms of , theeracting the pandemic most important items are face sanitizers,s, hand etc. So whats a person has come we believet, awareness is created and they will continue to use gloves even through the pandemic. Many smaller countries, where in the past, they have allocated a smaller amount to hygiene, smaller amount to public health, we believe this covid19 increased awareness for many people in the world to the level where they believe it is important to practice good hygiene and important to take good care to protect himself. Protect themselves. Rishaad how much protection do gloves actually give you . There are many obvious answers, but one major one is that people touch their faces and if you are wearing a glove or not, you still touch your face and that is one way you can have transmission. Is as, but at least it front line of protection. Gloves help us protect lives, and protect against harm. If you look at the usage of gloves, it has been around for more than 100 years. Gloves have been manufactured differently in the past compared to now. Right now, if you look at countries like america, europe, the numbers of glove usage has increased tremendously. Americans use 150 pieces of gloves per capita, population basis, compared to in the past, some countries on a per capita basis only use five pieces of glove. I think loves are relevant in many areas. The one we are most familiar would be the examination glove, where they are used for contact with a patient, for nurses to handle chemicals, further laboratory four the Laboratory Technicians to handle testing equipment. It is like a second layer of skin, where the gloves on your hands, at least you are not in contact with dangerous substance. By dangerous substance, i mean bacteria, it could be viruses, it could be other harmful chemicals. It is very natural in countries like america, where glove use is very common. They use it in the office, they use it in the hospital, they use it at home, and even some of them have a box of gloves in their car. So any one point in time, if they require it, it could be put to good use. Is,aad the other question theres this huge upsurge in demand for gloves. Over wagesoncerns and working conditions in your company. Are you paying your workers properly now . Are you ensuring perhaps they share in this boom . Yes. Very good question. In fact, the issue you mention about the treatment of Foreign Workers, we have a better since 2018, when news , the out that top glove manufacturer had issues with , handling oftime passports, etc. In fact, we were glad that we were given the opportunity to improve at that time, and because of that, a lot of these issues are not specifically made known. We had the opportunity to know more about these requirements. Since then, from january 2019 until now, we have improved by leaps and bounds. We have done so many things. Wen have come up with give two lockers to our employees so we can tell them you have the choice to either keep your passport in your personal locker in the place where you stay, or you have the choice to keep it in the office, where the passports are under cctvs and a proper place to keep it. So many other such practices have come in. At thee news broke out time, i believe this was because we are the biggest glove manufacturer in the world. A lot of news when it broke out, they like to choose the biggest industry in the industry. Mind you, this has always been an industry problem and a problem in many developing countries. Learn thell trying to best way to move forward, what is the best way to handle Foreign Workers, and if you look at top glove, we have a total of 12,000 Foreign Workers. , ifou talk about 1 of them they have any issues that we are 1000, 100, 200, 120 Foreign Workers, i think we are glad that in top glove we also practice a very good culture. Our culture has always been talking about integrity. Our culture has always been talking about good health. We have embarked on this good Health Journey more than 10 by good health, what i meant is we pay a lot of attention to ensure that our in a hygienic place. We ensure they are given proper meals. We ensure they are well protected. We ensure they have a good place we also etc. , and establish a medical center. I believe it could be the first in the industry to have such a program, to invest in a medical center. S, have nine nutritionist we have a doctor and dentist. Solved youre you dispute with the United States, where some of your products were banned . The cdp. Talking to they are responsive and professional. We started our conversation on july 17 and last week we spoke to them, as well. This week, we are continuing our engagement with them and we are pleased to have the opportunity for the cdc to hear the other side of top glove. We have also taken measures to tell the cdc that we want to do good. We have the best of intentions to improve, and we want to do it properly this time and the covid19 has afforded us the opportunity to do it well. One of the things we have done was, we made our first remedy payment yesterday. The 10th of august. We paid out a total of Malaysian Ringgit 4. 5 million, roughly u. S. 1 million, as the first phase of our payment to the Foreign Workers for remediation of their past debts. I should say this is something that is not practiced by everyone in the industry, but again, since this is an important issue, that we havent resolved yet, we want to do good. We want to do good and we want to do well in this area. I think this other issue is passports, overtime, have all been resolved. Other than the remediation issue, it is basically looking at the welfare of the workers, which at the moment, we are coming out with programs to improve in this area. Haslinda very quickly, the glove industry has minted quite a few billionaires. Is there any indication the government will impose some windfall tax on the glove industry . Governmentve the will be able to differentiate in the tax and the commodities sector. It is different, because in the commodities sector, they are basically exporting the products on a raw basis, whereas in the glove industry, they are looking at value added to product, which i think is important for malaysia to continue to emphasize this area to produce more value as a product, to bring more foreign equity to our country. Kim meow, top glove manufacturer. Indias biggest airline, indigo, is turning to the averages market to raise half 1 billion and put a block on its cash drain. Who will be buying them . This is bloomberg. Rishaad the markets in mumbai opened up. Lets look at equities. We had predictions of a move to the upside like the rest of the region and that is what we are getting. The index, the sensex up 0. 8 , the nifty is up, most sectors are up. For access bank, hdf see also raising money through a qip, the same thing for ici bank which had a similar offering. I think you have something on indias biggest airline, haslinda. Haslinda indigo is planning to raise more than 530 million i selling new shares after the pandemic halted air travel and cash flow. Lets get details from our reporter. Echo sperate for cash for cash . Indeed. Indigo last month said it is burning through 300 million rupees of cash every day despite drastically reducing flights, cutting jobs and slashing salaries. That led indigo to decide to to 400stimated returns billion rupees and raise a 500 million after the pandemic halted things. What other options, what is on the table also for indigo . Good question. Indigo is raising 20 billion rupees by selling unencumbered assets in an addition to a previous plan to raise money through renegotiating contract terms with suppliers. Indigo had over 700 billion rupees and 109. 2 billion rupees as of june. It was looking really grim. Rishaad thank you very much. Reporter intelecom mumbai. Softbank expected to report one of its best quarters in a while. We will have a look at what to expect. This is bloomberg. Haslinda softbank suffered record losses in may and a slump in the value of its vision fund you to covid19, but that may revise when we get earnings in a few minutes. Tracking the company is our Asia Technology reporter. What should investors expect . Always, its performance, the 100 billion mammoth fund that invested in Companies Like we work and uber. It has only been three months since softbank posted an 18 billion loss after slashing hasations, but a lot changed. For once, and massive tech rally past pushed up the valuations of the company that are publicly listed. Huber was up in the last quarter, slack was up 16 , another of other a number of other companies benefited. The most interesting aspect, there are signs that tech ipos are back in vogue. Relay and lemonade are two companies backed by softbank that had stellar returns recently. Other companies are waiting in line. , companies in china and india, lots of good news one could point to to make the argument things are turning around. 400aad softbank is selling yen of assets. Will we hear more later . We are hopeful. This has pretty much been the topic investors have been most interested in, overshadowing performance of the fund since april. We know most of the details, softbank is selling 20 billion stock, and isile someng alibaba stock, but is unaccounted for. The buyback aspect has been well underway. Softbank [indiscernible] left over. Out, iose numbers are sales are paying down a bit. Softbank is at the center of some of the Biggest Technology stories, including tiktok in the u. S. And possible sales of its design unit. Yes. They are the most heavily followed topics. The company that owns tiktok is facing trouble in the United States, potentially considering spinning off the tiktok operations in a way that makes it independent from china. Softbank has a fairly minor billion stake, but it is one of their best investments. It raises the question of how investors will deal with this potential spinoff. Softbank paid about 32 billion four years ago for this chip designer, which is in almost every single mobile phone out there. This company is at the center of its ai future, but seems to be in the mood to sell. Nvidia is interested in purchasing it, but [indiscernible] ask. Re to thank you so much. That is our Technology Reporter joining us from tokyo. Looking at markets, it is green across the screen at the moment. We have hong kong stocks leading the charge as we head into the lunch break, up 2. 4 . Casino stocks with visa restrictions on the mainland being lifted, that is helping casino stocks drive the market up. South korea doing well, we have a dollar that is marginally to the downside, as well. Anchor this is bloomberg daybreak middle east. Our top stories. Marco rubio and ted cruz. Manus as global coronavirus cases though up, it will take well until 2021