Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240712

With the dividend although it will be far lower than last years. Hong kong media tycoon released on bail. His broken National Security laws beijing has branded him guilty. Breaking news out of south korea. We are getting Unemployment Rate numbers, and again, surprising to the upside. They fell to 4. 2 in the month of july, this after surprising to the upside the previous month, falling to 4. 3 in june. Of course, we have seen more job creation efforts. In fact, we just heard from south koreas Ruling Party Leader saying south korea will actively consider a fourth extra budget if needed. South korea has already pledged more than 225 billion in stimulus measures or roughly 14 of gdp to help put a floor on the jobs market, and right now, the july Unemployment Rate falling to 4. 2 . Lets turn to the markets and bring in Sophie Kamaruddin in hong kong. What are you watching . Korean alongside the jobless numbers, we are waiting on Australian Consumer confidence, due out later this morning, and this morning, we have also about the latest on dates from victoria state on their virus cases. 410 new virus cases and 24 hours in 24 hours, recording 21 deaths during that period. We are seeing upside moves potentially for aussie stocks this morning on a broadly mixed session potentially after we saw the msci aipac raise yeartodate losses on tuesday and s p eminis gaining ground as we get the latest developments on u. S. Politics. We are seeing downside for kiwi stocks falling as much as 2. 6 as the covid free run ends in new zealand but this may be a shortlived pullback. Ahead of the decision, we are seeing the kiwi dollar staying below 66. Implied fall has vol has jumped. Provide an attractive entry point given the lower rates. On the earnings front, Cathay Pacific and tencent due to report. Tencent has enjoyed 2020s global tech rally, which jump into the terminal, has helped the kospi rise to a twoyear high on tech fueled demand to beat almost all National Benchmarks with the exception of argentina. Samsung has been the biggest boost followed by lg, plus biotech names have been at the top of the world, guys. Asia tech still being seen as compelling and virus proof as an investment right now according to the ceo of pepper international. Lets get over to carol now. But is it politics proof . Theave seen tencent, one of most eyeopening rallies or 2020 awaiting earnings, worse, but that has essentially come to a halt with just that executive order from President Trump. Think, is true, but i you know, politics, during an election, is a bit of rhetoric. If you look beyond november, which will be upon us before we know it, the strength of the tech names will continue to run because we will continue to be in this virus situation for at least another year. Companies, ifain they cannot get into america during the next three months, theres lots to be done and the rest of the world. Hence the rallies. In particular, what opportunities do you see an issue within that tech space . Will you still find valuations look like they are still appealing . Carol they are still appealing. It is nice to go in on a basket approach. Shares etfhe beta which will give you the basket of all the big tech names. We are just at the beginning of this rally. The virus has shown us people can switch over to remote living and learning and i think we will be that way for at least another year, 1. 5 years. Today ore get the cure into years, people will continue to do a lot of activities remotely. That work in that trend will continue to do extreme the well. Shery softbank launching a new venture to buy stocks in publicly traded Companies Pay how much exposure would softbank give you . Carol i love softbank. I think it is a great play. Its interesting how they turned around the company with a couple of smart sales this quarter and it is interesting to note that softbank is going into the large u. S. Tech names at this valuation level. What does that tell you . Some of the biggest geniuses in tech cbr really at the beginning of a global shift and that there is a lot more runway for all the big tech names. I think that is why they are going into this new Asset Management business and focusing on the public tech names. I love softbank. I think it is a good play. Clearere are getting a picture of what november would look like in terms of the president ial election, now getting joe bidens Vice President ial pick with Kamala Harris. How do you trade that . Carol if you believe that biden is going to win, then i think that means if and when he wins it will not be until january or march. We will hopefully get a National Virus strategy which we have not had. We will get the virus under control more quickly and once medicine is ready, and that is a bit . Big question. The lockdown will last for a shorter period of time and we will have a turnaround more quickly and i think that means but in the meantime, we are probably going to have a lot of chaos in september, november between september, october, november. When and if there is a selloff, buy value or the big names because the selloff will be shortlived and then we will be back up again. [no audio] carol, in terms of the Market Reaction we actually saw when the news of bidens pick actually came out, we saw dollar trading putting much sideways, futures coming off the bottom. Is there a sense of cautious optimism . In part, as you say, perhaps more of a cohesive virus strategy, but also a straight talking, well communicated economic strategy. The fact that she is on the Senate Budget committee, does that add to her credentials in terms of being able to really beef up the expectations of managing the economy out of the downturn . Carol definitely. I think she is a professional. I think her prosecutor uriel prosecutorial mind is a good addition because she is fact and science focused and she is very practical. We need people that are speaking to the American People will with truth and getting things organized and moving forward quickly. Shes also frankly perceived as a moderate here and that will also make the markets happier than if she was perceived as a hard left candidate. She is really not a hard left. She is much more towards the middle and i think that is actually a positive towards the market. Ceo ofcarol pepper, pepper international. Still ahead, more perspective on why joe biden has picked california senator Kamala Harris as his running mate. Next. Est joins us class softbank is creating an Asset Management arm to invest in publicly traded stocks. We will discuss masayoshi sons strategy later. This is bloomberg. Karina you are watching daybreak asia. The coronavirus outbreak continues to spread around the world with u. S. Accounting for a quarter of all cases and florida reporting another day of record deaths. Hong kong may be bringing its outbreak under control, reporting the lowest number of new infections since the resurgence began a month ago. The city south32 new local saw 32 local cases. The virus is dragging on indias recovery with factory output down a fourth straight month in june as the economy struggles to reopen. The index of Industrial Production fell more than 16 , albeit less than the 21 decline seen in a bloomberg survey. India is heading for its first fullyear contraction in more than four decades. The imf seeing gdp shrinking by 4. 5 . New zealand Prime Minister has put auckland under a new lockdown after four cases of the virus were found in one city household. Days ofovery ends 102 no Community Transmission with only cases quarantined at the border. The new restrictions will last for 72 hours. Most schools will close along with dennis. Along with bars and restaurants. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Haidi. Ondi karina, getting more new zealand, after auckland is being put into a threeday law down following the first Community Transmissions of covid19 in 102 days, we are now hearing from the Prime Minister, saying that there have been increasing calls to delay the election. She acknowledged that is possible but that no decisions have been made yet. They were meant to dissolve the parliament on wednesday ahead of the general election, which has been set for september 19. No decisions yet have been made on whether to delay the election but the dissolution of parliament will now be delayed and no longer happen on wednesday. Auckland going back into stage three restrictions in that lockdown to try and contain those four cases which i should mention are within one family unit. Shery lets turn to what is happening in the u. S. , especially headed towards the president ial election. Joe biden has named california senator Kamala Harris as his running mate for november, betting her ties to the Africanamerican Community will help propel him to the white house. Harris becomes the first black woman and the first asianamerican on a major Party President ial ticket. Joining us now is Bloomberg Contributor jeanne zaino. Question is, how much does she help bidens prospects in november . Jeanne normally, a Vice President ial running mate does not change votes all that much. It usually gives voters an indication as to the type of decisionmaking prowess, the person that the top of the ticket has. This is the most important decision they make during the campaign usually, and certainly, joe biden took his time and i think it is so it speaks to the fact that he did pick somebody that by all accounts was a solid pick and answered the call of the moment. I think from that perspective, it does not necessarily change votes. That said, this is a different year from a variety of perspectives. Not only are we in the midst of this pandemic, but also, we have a candidate, who if he is elected, will be 78 when he is and are graded so theres a lot more eyeballs on his Vice President ial pick. He needs to show voters he is not a risky choice, that he will to somebody to run with him who can step in and do the job if you cannot do it so i think from that perspective, she is going to get a lot more, you know, focus from voters than a Vice President ial candidate running mate might have. You mentioned there is the historic nature of the pick, being the first africanamerican woman, the first woman of asian descent. Only the third female Vice President ial pick in american history. Shery especially given she was a very prominent advocate of Racial Justice legislation after the death of george floyd. I want to ask, how much to ask, how much do her policy priorities mirror that of joe biden, especially when it comes to the Foreign Policy area . We do have the ongoing u. S. China tensions. Jeanne absolutely. Just to what you said, she announced her candidacy on Martin Luther king day. Somebody who went to a historically black college. That is a very important aspect of who she is. Policy, of her foreign this was something i was surprised joe biden seemed to take as seriously as he did during this selection process, particularly in looking at susan wright susan rice. What biden has recognized is while Foreign Policy does not usually play a huge role in peoples minds, this year, because many voters see donald trump in terms of his Foreign Policy and the way that he has goingched it as somewhat on an impulse towards destabilization in some ways, it will be important. In the choice of Kamala Harris, he picked somebody who has a background in Foreign Policy, certainly by way of her roles on the committees in the senate which have been important. Not as strong perhaps as somebody like susan rice or somebody he could have chosen, but her views seem to line up with joe bidens, particularly since she is something of a pragmatist. Tooher to farleft farleft or too far in the middle. There is some criticism that she tends to flipflop a little bit as she did on a domestic issue Like Health Care during the campaign. Haidi i want to draw to your attention some of these comments jeffrey made recently about the vp pick. Pretty these quotes are remarkable, saying he thinks harris is a little bit too charismatic, also saying she is too dominant. We know the issues that hillary had on the president ial ticket. As a woman. Add in the issues, the context of race, and the culture wars we have been talking about in the u. S. , how much is this going to play into november . Jeanne i think it is absolutely going to play in. We saw some of that coming out of bidens own vetting team. Some comments were made which many women during the conference found objectionable in terms of describing harris in the way you just mentioned or a way that is too ambitious, and people have taken exception to that. The plight of female politicians in the United States the hope for many women but also africanamerican women is that because more people will be able to see an africanamerican woman in this position running for the second beach, that may change some minds in that regard. And she will be judged the same way her male counterparts will be judged. Haidi jeanne zaino with us. Do not miss our special coverage of the Democratic National Convention Taking Place next week. Plenty more to calm on daybreak asia. This is bloomberg. Haidi hong kong has been released on bail after his arrest monday for alleged breaches of chinas National Security law. Our chief north asia correspondent, stephen engle, joins us with the latest. What happens now . Stephen now, the prosecutor prosecutorial process begins. Declining to speak to media. Ins after about 36 hours detention where police raided his hong kong headquarters as well as his yacht. It has raised a lot of concerns about the reach of the National Security law and about whether it is actually retrospective and about the preservation of press freedoms and other activists also have been let out on bail. Agnes chow was out on bail early this morning and, she had to surrender her hong kong passport, told to return to police on september 1. This is going to be an ongoing story, but so far, the main people who were arrested in the latest round of Police Action under the National Security law are at least out on bail right now. Shery we are also hearing china has given its blessing to the one year extension of the current legislative term in hong kong. How significant is this . Stephen it represents a second time in as many months that chinas parliament, the National Peoples congress, the Standing Committee of that body, has waiting to interpret the basic law here in hong kong. Basically, the Standing Committee passed a resolution kongsay to allow hong current Legislative Council session to continue for no less than one year, and even the terms of those lawmakers who were disqualified would have their terms extended. This of course after carrie lam basically postponed Legislative Council elections by one year. Because of the coronavirus outbreak. Shery stephen engle, our chief north asia correspondent with the latest from hong kong. Relations between beijing and washington are worsening. Not only over hong kong but also taiwan. This weeks highprofile u. S. Carlato taipei, we asked freeman of Johns Hopkins school of advanced International Studies how taiwan plays into the u. S. China tensions. Taiwan is a country that has limited International Recognition because to have relations with the mainland with china, you cannot recognize that the medically taiwan. Taiwan has managed to have a successful economy in the world and it has preserved a very strong relationship with the United States, which has provided it with security to threat of against a military action by the mainland, china. What does that gain . If there is a legitimate mainland threat, what is the process you see . Does taiwan defend itself . Eitherwe defend them, militarily or through the discourse we have available in diplomacy . Carla to hope was that diplomacy would prevail, and the United States has helped secure taiwan by providing it with a defect to Alliance Relationships but also by providing it with military equipment to give it a credible defense capability against the military threat from beijing, but the hope was that beijing and taiwan would work out some kind of arrangement, hasso far, the relationship continued to be tense. Although the relationship not a relationship between taiwan although the relationship has grown over the years, the vitality of taiwanese democracy has been a bitter pill in beijing, which had hoped to be able to bring taiwan back into its hold. Diplomacyh of the that you speak about happens on wechat . Carla that is an interesting question. Im not sure very much. A lot of used for citizens to have a lot of discussions about different ideas. Ery popular app in china even in the United States, there are 2 million users, so wechat is a popular app all over asia. Im sure theres a lot of conversations going on all over asia, even between taiwanese and mainland chinese using that app. Y are we heading towards technological spheres of influence . Carla it really looks like the Trump Administration is pushing for some kind of technological decoupling from china. Tiktok, with a move on but even before that, huawei. Now, there are discussions about what might happen with wechat, and even zoom, which is based in california, but was founded by someone who is a chinese national. Cerns that sorry. Carry on. Finish the thought. Carla there are concerns that the u. S. Is pushing towards a tech policy that would decouple us from china, which would mean a tremendous change in the kind of open internet that we have our economic architecture on around the world. Freeman at Johns Hopkins school of advanced International Studies. The Johns Hopkins Bloomberg School of Public Health is supported by michael r. Bloomberg, the founder of bloomberg lp and bloomberg philanthropy. And do not miss a big interview from taiwan later. We will be speaking with a member of the Parliament Foreign affairs. Coming up next, softbank returning to profit. It is launching a surprise new venture, traditional Asset Management. We get the details ahead from the announcement. This is bloomberg. What happens when a wireless carrier puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. Karina you are watching daybreak asia. Trumpars after president abandoned the iran nuclear deal, his administration is threatening a crisis at the United Nations by reimposing sanctions on tehran. Such a move could push traditional u. S. Allies, germany and france, to side with russia and china at the security counsel. Embers will vote this week on a u. S. Demand to make an arms ban on iran permanent. It expires in october. There are growing fears of a virus impact in washington that will drag on for weeks. The main characters have not spoken for days, with the white house demanding democrats reduce demand that the government must double its current 1 trillion spending predicament. Markets have been generally content to let the issue run but a late session slumped tuesday and indicates there may be some pessimism. Tiktok is hiring more lobbyists in the face of a white house ban on its u. S. Operations. The chinese owned video sharing app must find an american buyer by the middle of next month or shut down to make claims it is a National Security threat. It is advertising what it calls Government Affairs positions as it seeks to boost its influence in washington. Hong kong media tycoon stimuli has been really jimmy has been released from detention. They were held under chinas sweeping security line the city, reinforcing fears beijing will increasingly suppress all dissent and antichina views. He is renowned for his condemnation of chinese authoritarianism. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Shery. Has bounced back into profitability following record losses. Now, it is ready to jump into a new venture but it is not the usual hightech moonshot softbank is known for. It will be forming a traditional Asset Management Business Trading public stocks. Avel has more. A lot of investors are asking themselves the same question. Been kicking this around for quite a while. It is not surprising considering how many of those people come from finance backgrounds. They have had some success with media derivatives. The wirecard deal was supposed to be one of the first ofestments in this new vein investments which unfortunately has backfired. It seems to have not deterred softbank at all. Has movedho was an on to become an executive Vice President at softbank, directly advising on investments. We are hearing it will probably be tens of billions of dollars of Technology Shares in Companies Like apple, amazon, and facebook, as well as derivatives. The main question is right now, giving the valuations of tech stocks near the record and concerns of the bubble, not to mention the fact that vision fund is not out of the woods yet. Right, so where are we at with softbank, with the vision fund . His vision fund 2 is vision fund 2 still hanging in with the possibility of life . 2. 6 billion in gains. Only 1 billion came from increased valuations of private companies. Fromillion dollars came private Companies Like uber. Uber is a good example. Softbank uber shares of the stock is trading around 33, which is pretty much breakeven for softbank. These gains and losses do not reflect the final outcome for the company. He has warned this will not be profits going forward. There may be rough times ahead for the vision fund. Haidi right. ,e said he is in defensive mode and defensive means cash, so how is he going to pay for all of this . Pavel a bit of good news for softbank shareholders. For the longest time, he refused to sell some of his most successful investments, including alibaba and softbank core, but that really has changed drastically this year. He has already sold off 40 billion worth of alibaba, tmobile stock. 42 billion dollars target. Yesterday, he said it might go beyond that and there could be one additional thing they are considering selling a stake or perhaps the entirety of the chip design unit that they own completely. They paid 32 billion. Its not clear if they could get much more for it. It is definitely showing a whole new approach to Asset Management , a bigger willingness to spend and sell, but also concerns around investing in things that are more risky. In tokyo. El alpeyev coming up next, we have a chat with one of australias largest Pension Funds. How their esg strategy is shifting amid the pandemic. We will be speaking with the cio shortly. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Tesla stocks surging after hours. They are pointing the elevated shares in a 51 tesla has been at record highs, making it the Worlds Largest automaker by market cap. Each shareholder on record will get four additional shares of common stock on august 21. Tesla will stay on a split adjusted faces 10 days later. Electric car sales rose in china last month, but beats remaining the low levels. Total auto deliveries climbed about 8 from a year earlier to more than one point 6 million vehicles. Sales of new energy cars rose 19 almost 100,000 with tesla leaving its domestic rivals. Boeings hopes of bringing the 737 max back to service may be hindered by regulators outside the u. S. E. U. And canadian officials are still concerned about software rebounds with fears that Global Certification may slip into next year. Last week, the faa launched the process that could see a u. S. Airworthiness order as soon as october. The jet has been grounded globally for almost 18 months. Has suspended two Senior Executives over areas as local affiliate after a pilot claimed safety lapses and was fired. The head of operations and head of safety have been sent home for three months. Whereted a Youtube Video he questioned eurasias policies on sick leave, landing procedures, and its handling of the coronavirus pandemic. Lets take a look at how we are shaping up when it comes to the start of trading on broader asian markets this midweek session. We are seeing u. S. Futures starting to pick up pace,. 25 higher. We had a moderately positive reaction off the bottom after we had news of Kamala Harris being picked as the Vice President ial pick by joe biden. Singapore nikkei futures up by. 3 ahead of that open. Not a lot of action when it comes to trading in dollaryen. Ahead to the rbnz policy decision a little bit later in the day. One of australias largest Pension Funds is not fazed by the runup this year. They are sticking to their bullish stance on Green Technology pioneers, including tesla, despite warnings from some on overextended valuations. Lets get more from john pearce, who joins us now from sydney. Great to have you. Every analyst that we speak to, every investor says we are building up into a tech bubble. You do want to be invested because these are the names that will continue to get runway when it comes to growth. The targets for your performances, how do you find opportunities when the prices are so high at the moment . Everything is extremely overvalued, and we look at the Broad Spectrum of the markets. Obviously, tech has had a great run. When you look at emerging markets, they had a terrible time. Obviously, within the tech sector, you have got out performers and some that are looking quite having said that, you have the stable starts. They are pretty mining at the moment. Earnings are part of fundamentals. Rates, we discount earnings by an interest rate. People seem to lose sight of that. They go back to growth in earnings, can it continue now . Extensionking at an of may be five years at least but maybe another decade of financial repression, where we will have zero rates for as long as the eyes can see so we are discounting earnings by zero rates. Im not seeing things as extremely overvalued at the moment, particularly the tech giants. So in terms of that traditional 6040 balance you get in a portfolio, that has been thrown out the window with the way the bond market is trading at the moment. How do you manage or diversify or change the way to get the riskadjusted returns in light of the extraordinary monetary policy, fiscal policy, and this pandemic environment we are in . John 6040 the american balance. In australia, we tend to be close to 7030, getting more earnings yield from our equity portfolio, profit portfolio is self. Within the defensive Asset Classes the bonds, look a little bit more towards taking a bit more credit risk. Indeed, over the last few weeks, we topped up our holdings in u. S. Yearolds so that is one of the ways that we are getting yields. The other thing of course is that we keep on having to educate our members that are expectations of future returns are also appalling. Five to 10 years ago when we were distracting these targets for the portfolios, we were looking at inflation plus five or even higher, margin of 5 or more over inflation. That is gradually coming down to 3. 5 . We are also lowering expectations. The factt to mention that as you can see in your investment portfolio on the screen right now is tesla. We have seen this runup in tech stocks. We continue to talk about valuations being pretty stretched. Where do you see them going this year . John lets just clarify, those companies are actually held in a very specialized Investment Option of hours, Global Environmental opportunities. It has been an absolutely stellar performer for us over the last few years. The pinup of that portfolio. It is a fairly exceptional portfolio that one. We dont hold much tesla in our mainstream portfolios. In terms of that portfolio, do things look a bit stretched . Average around 45, so its probably around 20 turns higher than the s p average. Do we see value . It is hard to see value in that portfolio. Does that mean that it is all about collapse . Fromt is the tailwinds some very powerful fanatics. Eatics. Mattix them in terms of our mainstream portfolios, we are a big fan of the faangs. Doy do look like they could a pullback right now. Whenever we have taken the profits on technology, we have been on the edge of our seats, waiting for a pullback. A patentkely to be holder am expecting a pullback rather than a selloff. Shery what about the downtrend of the u. S. Dollar we have seen recently . How does that affect your views . John the u. S. Dollar, overweight asia. That is probably the best way of looking at a weaker u. S. Dollar. We like asia. We like china. We will stay overweight there. We like india, obviously, although it is going to get through. Looks like it is tougher than most countries in terms of dealing with covid. Asia andrm, we do like a weaker u. S. Dollar to support that position. I want to get your views on this question, which is our mliv question of the day which asks how gender equality influences assets and whether investors should be looking at gender representation and other inclusive actors when they look across whole industries or certainly individual companies. I ask this on monday when we have the first woman of color on a day when we have the first woman of color on a president ial ticket as well. How does that factor into your president ial decisions and is criteria we should be looking at . John we dont single out gender asset quality. What we are looking for is diversification. Gender is a key component of the diversification story. We like to see diversification skills for gender and race, etc. It is not a gender specific thing although i know that that is getting a lot more prominent, particularly in australia. , great havingarce you with us. Cio with his views from sydney. Coming up next, Commonwealth Bank sees continued pressure on Revenue Growth from low Interest Rates and lower credit growth. More on the outlook for australias biggest lender, just ahead. This is bloomberg. Credential made its First Virtual sales this year, a move spurred by the pandemic. They plan to focus on asia. I think it has been interesting for us. You know, with our foot print in asia, we have been dealing with the coronavirus well into last year. We have seen a tremendous amount of activity. On our still focused strategic objectives and longterm objectives. You sauce work with regulators to allow virtual sales for the first time. 90 of our products in 11 markets can be sold virtually which is a concept which was barely discussed a year ago. In saw consumers Interested Health and life protection. 70 of chinese consumers went online during the crisis and left for insurance. By 10 asia and grew alone. In the midterm, we saw them continue to execute on our strategic options, willing to take that company into an ipo. Investments and other structure in the long term. Agency, new relationships. And the Digital Initiatives with 8 Million Euros or million users. It has been a hectic, busy time. You have a policy that is understood to be aligned with a revised strategy. Do you take from that that the worst is over or that there could still be, with fears around the second wave fullblown around the world, that there could be still more pain to come into the end of the year . Mike for us, the change in dividend policy is a focus more on growth. As you mentioned at the top of the conversation, the operating profits are up 14 , so with more channels to distribute, more various across Household Income spectrum to distribute, and all these new ways of doing business, we can deploy more capital than we have ever been able to organically as haveook at the capitol we invested. 11 billion in asia in the last 10 years. The money we invested last year in new business, every dollar in produced six dollars of earnings. We are trying to say to the market that this is strategic we want to deploy as much capital as we can in asia and to do that, we will have a dividend policy that expect growth. Jackson will have its own dividend policy. We have to let them board meet let them board meet for we could state let that board meet before we could state the policy. Haidi mike wells. We will be watching commonwealth bancshares. Australias biggest lender saying Interest Rates will continue to pressure revenue as its profits hit a sevenyear low. Lets get more from emily in sydney. All of the bad news out there, they still despite the ugly picture we see continuing when it comes to the loan loss provisions. Mean, one thing that is unusual about the australian banks in an International Context is just how big a proportion of their shareholders are retail mom and dad holders. What the bank is trying to do is of those,e needs roughly 50 of it, as they have grown used to these steady flow of dividends. I think overall, when you are looking at this, the result is probably unlikely to change anybodys minds. If you think cba is the Strongest Bank in australia, that australia is a strong economy, then you will probably have the same view. If you think the outlook for the Banking Sector is really bad and there is a whole host around the corner, you will probably think the same. There is something for everyone. Haidi we saw shery we saw bad debt revisions surging. What are we expecting in terms of credit risk . What do they say . Emily i think, you know, that is a difficult one to answer because we are in such a wait and see mode right now. You know, households have got another four months so we are not going to start seeing real distressed property sellers. The same is true for businesses. The banks are, wherever they can, they are trying to help people. Ones pockets of stress start to emerge, one of the things they did call that was credit cards. Commercial real estate is having some problems. We are waiting to see what extraordinaryhis level of government and bank the port pulled away. Bank support gets pulled away. Haidi it is one of the big four to report earnings. We get trading updates from the rest. What would you be looking oin the details of that . Emily missing on everyones coupleyou asked a minutes ago about bad debt. Getting frome be the other banks . Where are they seeing pockets of stress . Are they the same as cba . Are they different . Are any of them going to raise the money they set aside for bad debt . All of the major angst made an increase in anticipation of debts. There was a lot of commentary at the time about whether or not this was sufficient for the likely spike in bad loans. One of the things we will be looking for is whether any of those provisions get raised or stay the same. Emily cadman in sydney with the latest on the Banking Industry in australia. Coming up, more on the outlook for banks in a pack. We will speak in apaic. Outlook withcro the head of asia strategy. She joins at the top of the hour. For now, lets get a quick check of how asian markets are trading at the moment. We are seeing kiwi stocks falling for a second consecutive session. We are now at the lowest level in a month, falling the most since july 9. In fact, we are seeing Downside Pressure for the kiwi dollar as well, which is losing ground against the u. S. Dollar ahead of that are policy decision later today, likely to keep policy rates unchanged and maintain and easing bias although they could be expanding their qe program. Take a look at sydney futures. The aussie dollar holding at around 71 u. S. Cents. We do get the Second Quarter wage Growth Numbers later today. Watch out for that. We did see south korean Unemployment Rate dropping more than expected. Cost futures pointing higher, at the highest level since june 2018 for South Koreans box. Nikkei futures also higher by. 25 as the japanese yen holds at a twoweek low. More ahead. This is bloomberg. Good evening from bloombergs yorkl headquarters in new haidi . Im in sydney and asian markets have just opened for trade. Our top stories this hour joe biden picks his running mate for november. Kamala harris challenged him and brands herself as the progressive prosecutor. Shery another bumpy quarter with more than a billiondollar loss. To theid19 has hammer economy, including hospitality. Lets get straight to market in asia. Sophie kamaruddin is in hong kong. looks to be inheriting that risk off tone in wall street is declines set for a fourth session this morning. We are keep an eye on softbank, which is under pressure this morning, extending declines for a sixth day despite its return to profit. When it comes to the yen, trading near a twowe low, and we did see a spike rising across the pickup. Talk revivals for treasury, but we are seeing the u. S. 10year , moving below 63 basis points on the u. S. 10year yield and jgb opening lower this upcoming debt supply, also a drag during the summer holiday. Turning to south korea, we are awaiting household lending data following numbers showing the down again. We have the career you want just belowund 11 86, that level while the kospi is telling after the event. Indicesll national showing a rise to a 2018 hi. Tencent and Cathay Pacific also due to report. Setralias largest lender to pay despite a drop in profit. Commonwealth shares rising to percent at the start of cash trade. We are keeping an eye on gold after the tumble in gold prices overnight, but pulling back from 1900 and testing that 2011 hi. The kiwi dollar falling to a threeweek low while implied ball has jumped ahead of the rbnz decision. Haidi lets bring in our next guest, the head of asia strategy. Great to have you with us. As sophie was just telling us, we are seeing kiwi stocks leading the losses across asia after those renewed lockdowns. We saw a resurgence in the virus in a country that was doing phenomenally well when it came to eliminating the virus itself. Say it is sustainable without a vaccine . As you can see, there is really no country that is 100 safe. We have seen us really a we have even seen myanmar succumb to covid yet again. Aboute are more concerned than the second or third wave is how the economies are controlling local transmissions. China has already had at least three miniature outbreaks, but they have been able to establish a protocol in such a way that many lockdowns are localized lockdowns instituted at the same time limiting the impact on national activities. As long as those things are in place, recovery could still be quite possible. Are we expecting Central Banks to provide a floor when it comes to those declines . As far as Central Bank Policy is nocerned, there central bank that is really hawkish, except ironically for the pboc, which has turned which has quite turned its policy into a more tight policy, that, we would be remain a the rbnz to dovish bias. The first in,till first out recovery prospect looking brightest to you . So, the market is still quite far from prepandemic levels. We have seen that markets or investors have really appreciated the uneven recovery across the region, and you can months of theour equity indices, we have seen positive year to date gains from china, from south korea, and these are the economies that were first in an first out and are still very much in control of their local transmission. Meanwhile, the countries that used to be more resilient in times of previous crisis because they were more dependent on domestic demand they are more struggling these days because they are not in control of their own covid situation. Im talking india, indonesia, and the philippines. In the past, usually these countries because we do not have much exposure to external demand, they are able to recover much faster, and yet, these are also the countries these days that are not able to flatten their own covid curve. Where does the u. S. Dollar go from here, particularly as we expect further asset volatility . Our expectation is that the dollar will continue to weaken, despite the short term correction mode. Even though the euro is still in correction mode, we are still of the view that the euro would go up to 120. Our estimate of the shortterm fair value of the euro continues a go higher, and it is just readjustment of positioning and probably locking in the profit, but we are still very much bullish on the euro, thereby bearish on the dollar. Haidi we appreciate your time. Coming up next, joe biden banking on Kamala Harris to propel him to the white house. More on his vp pick ahead. This is bloomberg. Watching daybreak asia. The coronavirus outbreak continues to spread around the world with the u. S. Accounting for a quarter of all cases and florida reporting another day of record thats. Hong kong may be bringing its outbreak under control, reporting the lowest number of new infections since the resurgence began a month ago. The city found 32 new local cases, down from the high doubledigit numbers of the past week. Meanwhile, Hong Kong Media tycoon and activist jim eli has been released on bail after being accused of collusion with Armed Forces Media tycoon and activist jimmy lai. His newspaper is renowned for its denouncement of chinese authoritarianism. The Trump Administration is tightening screws on beijing by labeling all goods from hong kong as made in china. The move will begin on september 25, though the likely impact may be limited. The vast majority of hong kong arements to the u. S. Exports. Its experts to the United States last year, only about 1 were domestically made. Tiktok must find an american buyer by the middle of next month or shut down amid claims it is a National Security threat. It is advertising what it calls Government Affairs positions as it seeks to boost influence in washington. 24 hours a day on tick take global news on air and 24 hours a day on quicktake. Joe biden has officially tapped Kamala Harris as his running mate, betting that her ties to the Africanamerican Community will propel his bid for the white house. First becomes the africanamerican woman on a major party ticket. Investors feel like this was a sensible choice, measuring by the muted but positive Market Reaction. She is perceived in general not tooy moderate, extreme and fits with a lot of what joe biden stands for. I think the markets are reacting to it, it is steady as it goes, as it were. Pair dueat does the for the prospect of democrats taking over the white house in november . Number one, it does not hurt them. Thats the number one rule in picking a Vice President. Shes battle tested. She has run for president herself including on the debate stage with joe biden. She also has a background with prosecutions, with law order, which is something that President Trump wants to make a big deal out of. Its going to be harder to criticize her because she has actually put bad guys in jail. What do democrats need in Foreign Policy . Told we see again a pivot asia . I dont know if it is a pit it to asia, but certainly back to alliances, to multilateral approaches. Both biden and harris specifically have criticized President Trump for pulling out alliances. Kamala harris has been quite critical of china specifically with respect to its human rights record. That suggest that maybe we will not see the amount of volatility and levels of executive orders with regard to Chinese Companies, but certainly that toughness coming down on china, the bifurcation is going to continue to be a bipartisan. Ssue i will say, if there was one thing there is bipartisan support for in washington, right or wrong, it is that we think that some pressure has to be brought to bear on china, but President Trump really prided himself on doing it by himself, just bilaterally, u. S. Versus china. Itidenharris regime, if came to power, would have a very different approach. It would try to enlist allies in europe, in us trail you, to try to put pressure on china. Haidi there seems to be an investigation inquiry into the Trump Administrations handling , and the other on the economy. That she has at seat on the budget committee, and what are the occasions out of the downturn . First of all, they would be in favor of stimulus much more quickly than trumps her fire. On the other hand, i think the one thing you can expect is taxes will go up. I think everyone should get ready for that. That is not necessarily bad news for the markets because it depends on where the money goes and if a biden on ministration, if it came to pass, invested in things like infrastructure and research and development and some basic research, it actually could good for the markets over the medium to long term. Shery you are gearing up for the Democratic National Convention Next week. What should we be watching out for . We should look for not one but two obamas. Michelle and barack obama both appearing. They will have all the Democratic Candidates who ran for president against each other they will have them all on the stage at one time. We will see hillary as well. A lot of unanimity, a lot of saying we should bring the country back together. Absolutely they will emphasize treatment of the covid19 crisis, and they are really going to push on the fact that they dont think President Trump did well because polling suggests americans are not entirely enthusiastic about the way the president of the United States has handled this. Shery thank you so much. David westin with the latest on all things politics in the u. S. Dont miss his special coverage of the Democratic National Convention Next week. Coming up, we preview Cathay Pacific first half results, which are due in a few hours. The airline has warned of a billiondollar loss as the pandemic cripples air travel. This is bloomberg. Airbnbs much anticipated ipo is ever closer with reports the home sharer will file paperwork later this month for a potential listing before the end of the year. Morgan stanley is said to have been tapped to lead the offering. Airbnb has been hit hard by the pandemic. It was recently valued at 18 billion, down from an earlier 31 billion. A chinese Online Video Company is the latest to be considering a secondary listing in hong kong. T is reportedly in talks who was recently reported tencent is eyeing a stake in the nasdaq listed company. Tencent rose after the Company Announced it is splitting shares in an exchange aimed at making it less expensive sieve less expensive for individuals. Tesla will trade on a splitadjusted basis. Shery the travel industry continues to suffer from the pandemic, and Online Travel industry booking holdings does not see a recovery any time soon. Ceo glenn vogel does not expect travel demand to return until a vaccine is available. People are seeing things better than lows in april. Certainly things have improved a bit. Said, youre right, until we get a vaccine or some sort of treatment, travel is going to have some issues. Things are better than they were, but we are all still far away. What we really need is that sense of safety. People want to feel its ok to travel, and the thing that is going to help us get there is a vaccine and hopefully we will see something in the nottoodistant future. Is the worst behind you . Where do we go from here . Is it better or kind of plateauing . Im curious to the kind of trajectory you think we are on. A lot of people have been talking about recent flareups in different parts of the world. Some of the issues happening in hong kong, and there are parts of the world where things were great or very good and now are not so good. A buncheurope you see of flareups here and there. I think we are going to be on a bit of a roller coaster for quite a while until we get that vaccine. We need that vaccine because when you read these things,hese terrible news items people getting ill and unfortunately some people not making it through their illness, it scares people. All of that leads to cash burn, etc. You did not have to raise any cash so far. You are cutting some of the workforce. Im wondering how many letters left to you have to make it through until there is a vaccine . Over 4tually did raise billion, so we felt pretty good about that, but we are feeling because of what our Balance Sheet looks like and we have made a very clear to the street we have no problem getting through this crisis. That said, what will the other side of the hill look like . What is going to change in terms of the industry . You mentioned Business Travel, and Business Travel does provide a lot of revenue to some of the big chains, and the front of the airplane is where those people are paying those big fares. What is going to happen . Are people going to go on as many business trips as they did in the past . From our point of view, we are much more leisure oriented, so theres a bit of a Silver Lining for us because when there is a lack of demand, people on the work with aneed to distributor like us to help fill on a plan ort empty room in a hotel. Its unfortunate, you dont want it that way, but that is what is going to happen. Cathay pacific reports earnings later today. Hong kongs flagship carrier that it expect more than one billion u. S. Dollars for the first half as the pandemic paralyzes the aviation industry. What are we expecting from cathay today . Its hard to try to see the light at the end of the tunnel for this carrier. Yeah, cathay is in a bit of a squeeze at the moment. , evenmp back to your go then it was saying times are tough because of the trade woes between china and the u. S. They were thinking the second half of the year would be defensive, and then the hong kong protests came, and that hit the carrier even worse. Cathays lowcost unit, hong kong express, has not been flying since march. It just started up again. It has been in a tough position, and like some other carriers, transcend these border restrictions up all over the world, so it is a tight spot. There might be some light from cargo operations, but not nearly to offset this loss. Outlook does not look good for cathay. What is management trying to do to improve things . They expect significant change in the landscape. They have done a fundraising that is governmentbacked that is actually coming to fruition today or this week. Cathay senate might return to the markets at some point if conditions are right. International air transport association and Industry Group has said air traffic is not going to return to precrisis or precovid levels until 2024, and that is a long time away. Obviously, theres tension between the u. S. And china, and hong kong is being dragged into that, as we all know, and who knows how that might affect cathay down the line . We will get more insight with of cathays results. Alvin lau later he says the worst is over for the carrier. Coming up, we speak to the ceo holdings in an exclusive interview. This is bloomberg. We are just getting an alert when it comes to Australian Consumer confidence. That gaze just crossing the bloomberg. The august Consumer Confidence falling 9. 9 9. 5 month on month. We have seen retail sale spending numbers surprisingly robust even as parts of the country are currently still in at lockdown. One people spending more their houses as travel, internationally at least, has been significantly curbed. We are starting to see that august Consumer Confidence , reflecting the pretty dire unemployment situation the country is facing as well. Lets look at how the markets are faring. We are seeing the aussie dollar trading at 7140 at the moment. That rally has taken a little bit of a break. Lets take a look at what else we are seeing in the markets. Are edgingan stocks a february high with modest gains at this point. The nikkei adding slightly above its 50day moving average. Day in then antipodes. The kiwi dollar to threeweek low ahead of the rbnz decision. Checking in on stock movers after an fiveday decline, south bancshares swinging in the wake of its profit rebound. Switching out the board to check in on softbank this morning on the back of earnings we got on tuesday. Shares under pressure by nearly 1 and rocky 10 falling raku an falling after registering First Quarter loss. Aftera under pressure posting a First Quarter loss in line with expectations. Lets check in on bloomberg in sydney. Rising as much as 2. 7 after the posse lender announced dividends sevenyear low. Magellan financial rising after the fund manager pushed fullyear profit with funds under management growing by 26 . Because, quickly, i just want to turn to the credit market. Yield floated pickup in asias primary dollar bond market tuesday, but the mood may shift amid warnings the rally may falter on worries may plateau. , fading tos fading the lowest order ratio since the credit route dried up. Hsbc warned the asian credit rally is running just a bit too hot, so expecting spreads to widen as Risk Appetite is seen moderating in the third quarter. Shery lets not get to first word headlines. President ial contender joe biden has picked Kamala Harris as his running mate in november, hoping for africanamerican ties and self branding as a progressive will propel him to the white house. She ran against him in the democratic primaries and is the first black woman and Asian American to land on a major party ticket. Harris has won three california elections, having started her career as a District Attorney in san francisco. There are growing fiercely the virus relief package impact in washington will drag on for weeks with no talks on the table. The main characters have not spoken for days with the white house demanding democrats reduce and the government must double its 1 trillion spending commitment. Markets have been generally a late slump new zealand under a new lockdown after four cases of coronavirus were found in a single household. New restriction start wednesday and would last for at least 72 hours. Most schools will close along with bars and restaurants. Coronavirus is dragging on indias recovery with factory output down a fourth straight month in june as the economy struggles to reopen. The index of Industrial Production well more than 16 . Heading for its first fullyear contraction in more than four decades with the imf gdp shrinking 5. 5 . More to comeplenty on daybreak asia. This is bloomberg. Worldsaidi the thirdlargest whiskey maker has income lessrating than expected. Joining us now from tokyo for an exclusive interview is the sunt ory president and ceo. Wonderful to have you with us. We really appreciate your time. What has been the impact of the pandemic on your business . I think we are doing fine in the third quarter. This summer is picking up business. Done ampanies have fullyear forecast that has been withdrawn because of covid19. Having said that, we are very much confident that we are to emerge strong from this crisis. It covers products from a variety of price ranges. We are down for the first half, but we can catch up. We cannot catch up to the level. F last year, im afraid optimistic, but we can catch up. Our team around the world has resources by leveraging with the Ecommerce Companies and Home Delivery companies. Rapidly, we shifted other resources to home consumption. That, i believe we still will have attractiveness because they are working together with us. Younger generations cannot stay at home forever, so we have to deal with that issue because they have energy. Haidi obviously the pandemic has changed the way that restaurants can operate. What sort of numbers are you looking at in terms of the possible growth in, for example, if youre looking more at ecommerce and home consumption . Right. 30 is basically on premise in our business, so that goes to the 10 . The gap should be filled by home consumption, but we dont see the positive number i dont think we can offset ,y increasing home consumption though we are increasing more or less the standard segment because the market itself is it is moreation, so expensive for regular, ordinary tax,mers because of the which is higher than other things. Shery what about your whiskey spirits segment . How has coronavirus affected that and how is the virus impacting production . Stories about u. S. And japan are different. U. S. Global consumption likes premium spirits and wellknown brands, whereas in japan, people things that do not have the highmargin. In japan, we are selling more or in the economy products, so there is a huge difference between the countries. Wellnk we are doing pretty. What about the fact that we continue to see escalating tensions between china and the United States . Does that have an impact on your business at all . I dont see anything at this moment. Sell makers mark a. Ittle bit we are trying to increase japanese products as well to mix our portfolio in china. How concerned are you about these trade tensions in the u. S. , china, the hong kong situation as well . Are you worried that increased protectionism, increase trade tensions will weigh further on your business . Exports from of the United States to china like maybeam and makers mark force us to reconsider our like scotch whiskey, like japanese whiskey, like courving a assier, which is cognac. We have to diversify our portfolio so we can mitigate upgrading tensions between the two countries. Do you think the Tokyo Olympics will go ahead . Are you preparing for a scenario where it gets delayed again or canceled . That is a tough question. I believe the team of the olympics and paralympics in tokyo, they are doing very well, so what i can say is it is andly up to the medicine vaccine available at the right timing. Protocols oftional pcr testing and oxygen testing and so forth, but i still. Elieve that will happen why was your japan segment profit down so much, more than 50 year on year, and what will you do to fix it . What are we talking about, the 50 50 . The japan profit. That is because of the soft drink and vending machines. We are number two in the soft drink market in this country, behind coke. Lost salesnd suntory because of the vending Machine Business in japan. Our people do not stay in the office, so we lost customer numbers first. That hurt our bottom line quite a lot. Drink softple do not drinks so much if they do not act very actively. You dont want to drink water or soft drinks when you are ofltered in, so consumption soft drinks is not strong. The soft drink needs and economy of scale. Losing one or two days of sales, that hurts the bottomline of the soft drink business. Do you expect this to improve in the second half . Where do you see the better markets right now around the world, where you see the most Growth Prospects going into the rest of the year . Lucrative intill the United States and south east asia, including korea and taiwan. It was a real pleasure having you with us. Thank you so much. Do join us again soon. Coming up, we get the outlook for tencent and other chinese tech stocks in the face of trumps threats against wechat and tiktok. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Softbank is launching a new Asset Management business to buy stocks in publicly traded companies targeting investments of more than 10 billion. It reported net income of almost 12 billion after a 14 billion dollar loss for the previous quarter. The new Asset Management firm aims to follow the tradition of vision fund. Commonwealth bank aims to pay close to the maximum permitted dividend even after bad debt provisions push profits to a sevenyear low. Australias largest lender will pay . 98 per share down from 2. 31 a year ago. Its local rivals halted dividends earlier this year while u. S. And european regulators are capping or suspending payouts and buybacks. Chinaic car sales rose in last month. Total auto deliveries climbed from about 8 from a year earlier to more than 1. 6 million vehicles. Sales of new energy cars rose 19 to almost 100,000 with tesla leading its domestic rivals. Wechats Parent Company coming out with earnings later as the Chinese Company faces increased scrutiny from the u. S. It feels like every time we see a pullback in the tencent share price, analysts tend to say use this as an opportunity to build out positions because we have had really a head spinning rally so far in 2020. Is the growth story domestically focused despite all the pressure from the u. S. . Now, we seeright tencent as fairly valued, even after the pullback. I think theres a lot more for us to enter. I think a lot of the pullback is basically coming from the u. S. Potential bank on we chat, so we look at the base case scenario. [indiscernible] i dont think that is the best. Hing for the white house to do an executive order was issued last year and actually, there was no action that was really taken, so i think the share is fairly valued right now. Haidi how seriously does tencents business get hit in the worst case scenario, both domestically and, of course abroad . Are you able to quantify what kind of damage we will see . To be honest, i think at this stage it is very difficult to quantify. Assuming that is in the worst where they been tencent with doing business for many u. S. Companies that have operations in china, i think the impact will be huge. All the chinese businesses that are u. S. Own, they will not be on u. S. Basedise platforms. Cloud, we look at it. Y the u. S. Calculus guess it could potentially hurt Chinese Companies that go to the u. S. , and you might not be able to service those clients as well. We just look at the overseas coming from tencent. There are other mainland businesses that could be hurt if the ban is broad. I want to reiterate again it is not our base case scenario. What about the 22 billion of gaming investment tencent has in the u. S. . How hurt could they get . I think it would hurt them as well, but first of all, if you actually reveal onir previous transactions guesslling interest, so i they can viewthat those major acquisitions for orders like u. S. Gaming companies. If we pick a collaboration between tencent and activision, the company has have disruption in the game and also have investment basically, they investment in many Game Companies are broad and in the u. S. As well, so i think they will all be affected. [crosstalk] haidi thank you so much for your time. We will have more analysis on tencent in the next hour. Be looking we will ahead at Cathay Pacifics earnings. Plus, also getting the outlook when it comes to banks in a pack, an exclusive conversation with the bank of singapore ceo when it comes to banks in apac. Is clock a. M. In beijing and shanghai. Im tom mackenzie. Im david ingles. We are counting down to the open of trade. Lets get to your stories today. Joe biden picks his running mate for november. Brands herself as a progressive prosecutor. Reports laterfic after yet another bumpy quarter