Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

Or rather, which is worse than expected. We had expectations of 0. 1 . Rishaad exactly and thats currently where we have industrial production. Coming inese are pretty much bang in line with what we were expecting. The retail sales and only showing this contraction for july. Lets get over to bank of chief chinarities economist. Headlines pretty much what we were expecting, but tell me, what sort of picture is it painting for you . That atlly, i would say first glance, this set of numbers does not look extremely encouraging. For several, industrial output ip we would have thought it would be somewhere around this in belowt still coming 5 implies that the momentum of continued industrial recovery seems to be moderating. I think that is number one that i got out of the data. Number two, if you think at investment, thats roughly in line, but we need to look at the breakdown for example properties versus infrastructure to know what is going on. More importantly, retail sales i think to a large extent disappointed. While we were thinking maybe this would be a time we would see a close to zero number compared to a year ago, the number is still below by more than 1 , so that implies consumers are still taking their. Ime rishaad how does this match up with a High Frequency data you have looking at and other economies which have emerged from lockdowns . We saw a big rebound take place, but then some sort of stuttering or sputtering of the data coming through a bit later on. Is it similar to all that . Very good question. We areaid that what currently seeing in industrial is a bit interesting because and electricity production other highfrequency data perspectives such as coal seems to be that suggesting momentum is easing a bit, but industrial activities have largely been restored, but at a time when we are actually surprised on the upside, the very fact that ip is staying at current levels seems to be suggesting that domestic demand may need a little bit more help. That is number one. Number two is that consumers are clearly being a bit more cautious in china compared to when they are having no hesitation to go to work, they have more hesitation to spend. What exactly was causing their more hesitation over here, more percussion in spending . We are not exactly sure, but we example, thet, for potential risk of being infected if they go out, so a possible drag to the retail sales number is probably coming from dining out, but highfrequency data suggest that overall, restaurant orders are already back to the level we saw before covid19, so what exactly is driving the retail sales number . We think it could be the recent price cuts and sales that made phenomenal numbers look particularly weak. Other than that, one other thing we observed that is quite interesting, the Chinese Consumer seems to be taking a longer time to come back to normal spending compared to their counterparts in the u. S. And also in europe, even though the Chinese Consumer should benefit from a Safer Public Health environment, in theory, because the coronavirus situation is better in china, but retail sales rebounded much faster in the u. S. And europe. Haslinda with retail pretty far from recovery and you say it needs more help, are we likely to see that . China after all has been pretty conservative in terms of its stimulus compared to other countries. What do we expect from the pboc . What kind of policy . Will it provide that assistance as needed . Thats a great question, but im afraid we may not necessarily see this help coming our way any time soon. The reason is if you look at the pboc data, they are emphasizing that because households are improving on their sentiment and expectation of future job security as well as disposable income level if that is the policymakers may not be in a hurry to really introduce much more easing, and most importantly, during the policy meeting that was convened at the end of july, i think that was made very clear that decisionmakers have vowed to look at not just the current cycle, but also the upcoming next business cycle, implying that even if there are signs of weakness in the near future, that easing might be needed, they may not necessarily do so right away because they worry that it if they introduce much more easing right now, it could potentially hurt in the long run because it may introduce too much leverage into the system and therefore jack up the leverage ratio in the overall economy and therefore imply a higher level of risk to the financial system. Haslinda when you take a look toohe yuan, is it looking complacent, given the uncertain recovery . Say that the yuan is probably a reflection of many things. One is the very fact that china trade has been doing really well , especially if you look at the exports. Relative to expectation, in contrast to everybody saying the Second Quarter must be a very bad quarter with exports lasting, it did not. Experts actually held up reasonably well. Second, i think spreads in the one can reflect the fact that the pboc clearly seems to be more hawkish compared to the fed. To call upon the definition that it is a reflection of overall expectation of relative tightness in Monetary Policy. In other words, the very fact the renminbi is strengthening is probably a reflection of the fact that people are expect the pboc to hold Monetary Policy at a tighter level relative to the fed, which is probably true. Rishaad one thing in the data 5. 7 , jobless rates of pretty much bang in line. News conference or briefing we had out of beijing after these data dumps, they concentrated so much time on the unemployment figures that one has to question, surely, that its not capturing the whole position. Are there a lot more people unemployed in china than the data would suggest . Yeah, i think you are right. Im afraid the problem we are currently seeing is the Unemployment Rate is only a reflection of the average situation and probably misses out the critical situation some of the unemployed are facing. For example, from the policy statement that was made two weeks ago, we can rishaad i think we have just lost helen. Thanks to her. Anyway, haslinda . Haslinda lets get you the first word news for now. China and the u. S. Prepared to phase one trade deal. Add president g to trumps attacks on wechat and tiktok to the agenda. Republican leader Mitch Mcconnell says there will be no more extended votes for a month as the summer winds on, although members will be on 24hour notice in case a deal is reached on virus stimulus. The white house and democrats remained deadlocked on the makeup of a new program with each side refusing to budge. President trump suggests he will veto any bill that includes funding for the u. S. Postal service. From theaths coronavirus have passed 750,000 with almost a quarter of those in the United States. Worldwide infections, meanwhile, are approaching 21 million. Democratic president ial candidate joe biden calling for masks,nwide mandate on saying everyone should wear them for the next three months. He and Kamala Harris made their first joint appearance. Policy leaders are said to be rejecting u. S. Claims that israel and the uae are close to a diplomatic deal. The white house says it would be. N historic breakthrough the u. S. Said israel has agreed to halt moves to declare sovereignty over parts of the west bank, but al jazeera reports palestinians rejected such a deal. Ahead, bigill interviews coming your way on Bloomberg Markets. Of southeasteo asias second largest bank, at least in terms of assets. We will bend banksg to deutsche newly appointed head of asg. This is bloomberg. Watching youre Bloomberg Markets asia. Let get more on the Market Action so far this morning. Lets start with the latest data dump out of china this morning. Not too bad, but not to encouraging either. Yeah, thats right. They missed their forecast, but. He number is not too bad what is important is new orders, particularly new export orders show consumeri and industry activity. Also, we had very encouraging jobless claims data. Jobless claims were below the it couldon mark, and normalizing the data. What this shows is that they cyclical sectors will come back. It is tough to say if market leadership will change at this momentum, itom the has been less exclusive in terms of who is driving the market. We have seen some of the correction, but if the economy continues to recover and we get ahead of this covert fight, then theres some potential in the value sector and these bull markets can broaden out even further, i think. Does this herald also the return of inflation, and what does that mean for the yield curve . Right, that is a really interesting talking point this week. In the background is the increase around the return of inflation. Theres a lot of stimulus in the system, so it is understanding that marketbased inflation gauges would move higher, but there are several factors to consider before we are sure about the return of inflation. We need to see wti prices back sout pandemic levels, continue into continued increasing Inflation Expectation make be not likely. Inflation will come when high velocity is associated with a healthy economy, not the weak economy we have now. Lastly, the american savings. Ate an invisible check on how high treasury yields can go, and theres too much american debt in the government and public side. Rishaad great having you on the program. Up, the arrest of Hong Kong Media typhoon tycoon jimmy lai marking the most aggressive action on hong kong activists. We hear from him and how he plans to fight back. This is bloomberg. Rishaad Hong Kong Media tycoon and prodemocracy activists jimmy lai says his arrest this week took him by surprise and that he has been overwhelmed by the amount of popular support. He says he thinks the National Security law has already had an intimidating effect. Very negative to the Business Community here and overseas, but i think they want also to send a message to the hong kong people who have been rebellions been rebellious to show that the ional security law connecting it on some people to show to the hong kong people it, any time we will enact so make sure that you behave well. Actually, the National Security law has a very intimidating effect on hong kong people already. Stephen chinese officials have talked about this being sort of a damocles, a threat to make sure independenceminded activists stay in line. How would you change your activities in the month and a half or so since the implementation of the law, and what does that say to the possible retrospectivity that is not supposedly allowed under the National Security law, that they are not necessarily in the letter of the law supposed to build cases based on what you have done in the past. Iswell, they said the law not retroactive. To be honest, a lot of people here are intimidated. People haveocratic left or are leaving, and those fromtay are sidestepping the movement. I think they had a very effective result with the National Security law of calming they thinkase, but people who stay will not continue to resist, but we have to be more cautious and more innovative. I think the Resistance Movement i dont think the Resistance Movement will quiet down or die out. From the emotional reaction since my arrest, i can see that people are very angry and very persistent. Even myself, to answer your question, i will have to be more cautious. I have to do what i have been doing but with a more cautious attitude because this is going fight. Long we cannot just confront the regime with very strong actions or force. We have to be respectful and improvise. Stephen i understand completely you cannot talk about the specifics of the case. What i think you can comment on are comments we got on monday in a statement from the hong kong and Macau Affairs office, which is basically the body of china here that overseas Hong Kong Affairs under the state council. Their words have wait. Let me read you what they said monday. Im sure youve seen it. They said you participated in planning, organizing, and launching a series of illegal protest activities using your media to create and spread rumors, insight and support violence, and contribute to antichina chaos and hong kong independence forces. It fully shows that justice may be late but will never be absent. What does this tell you, when they hong kong and Macau Affairs office under the state council puts this statement out before you have even been officially charged, before theres a trial, before theres a verdict . Do you feel you can get a fair trial here . I dont know. Its like you said, before any evidence, they just presume that im guilty. This is not the way the law is. I should be presumed im innocent. We have never supported independence of hong kong. I myself, my organization, my agree withnever those people who support hong kong independence. I always treat this as a conspiracy set up by the cpp to trap us in to give them an excuse to crack down on us. From day one, that is my stance, and i have never changed that stance. I think hong kong independence is something definitely impossible, and it is something that is ridiculous. I never support this, and i always say this is not what we should do, what we should try to the rights that we are entitled in our basic law, andh is universal suffrage the protection of our rule of law, private property, freedom of assembly, freedom of religion. All this we are guaranteed in our basic law, which has been what we are fighting for, no more and no less. Haslinda hong kong democracy activist jimmy lai. Dont miss part two of our series hong kong on edge this theend about changing business and Political Landscape in the city. 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. With Bloomberg Markets. Here are the first word headlines. Statesanting the united to stop what it calls discriminatory measures as they discuss the phase one trade deal. Expected to hold virtual talks at the weekend with beijing wanting to add President Trumps toacks on we chat and tiktok the agenda. U. K. Tightening its coronavirus quarantine. Adding countries to its 14day isolation list. Adding lessnt is travel to malta, monica, and aruba, and the turks and caicos islands. Tensions set to rise in the gulf with the United States claiming that iran has stopped a ship in international waters. The revolutionary guard forces briefly seized a liberian oil tanker near the straits of hormuz. Washington has offered no motive for the claimed boarding. Tehran has made no comment. Lawmakers in lebanon met for the First Time Since the devastating explosion that destroyed parts of beirut. Amid reports safety warnings were ignored for years. At least 170 died and thousands were wounded. Lebanon is mired in its worst economic and political crisis in decades. Lets do a check on the markets right now. Asian stocks off the lows. Close to erasing losses for the year yesterday. U. S. Ve futures in the pointing to a higher open. We are also tracking treasuries. 10year yields below 71. Treasuries tumble. The auction did not go so well. Do not know if this was because of the record size or rising reflation concerns that possibly it coincided with apples own issuances as well. Gold futures lower. We know that it has been on a wild ride, only about 1900. Goldman says the Downside Risk for real rates positive for gold , gold has surged about 27 year to date. That is how it is looking at this point. Rishaad israel and the United Arab Emirates have reached an agreement to begin normalizing , a potentially historic breakthrough according to washington. Palestinian leaders are not healthy are not happy. What does this really signal and why is President Trump calling it historic . It is potentially historic. A lot of this will depend on how it plays out. The joint statement from the u. S. , the israel israel and the uae established that they will establish normal ties and signaling they will open more direct commercial relations and send ambassadors. They will begin a range of talks in coming weeks to discuss how they will do this. If it was to happen and they truly were to normalize relations, that would be historic, that would be a big deal. But it is unclear whether that can all happen. That is really what is going to be the test in coming weeks and months. President trump wants to call this historic because he would like to have a Foreign Policy win, especially right now running for reelection and is having to deal with a lot of problems domestically. He has famously also tried to establish more normal relations in the u. S. In the middle east, including obviously between israel and arab countries and had put his soninlaw Jared Kushner in charge of middle east peace efforts, which really have not gone very far in the past 18 months. What is israel agreeing to do as part of the deal . Yes, so at this point, israel is agreeing to temporarily suspend its moves which are controversial to annex portions of the west bank. This effort has been widely seen as having put any final Peace Agreement further from reach, having those annexations. No timetable has been set by american or israeli officials, how long the suspension was primeed to hold and minister Benjamin Netanyahu has emphasized that this was temporary. This was one of those wait and see things. We mentioned that hamas was not pleased with this and they have issued statements saying that they are very opposed to this and do not see this is helping the palestinian cause at all. Jodi schneider there. Our Senior International editor, of course. Joe biden and running mate Kamala Harris will accept their nominations at the Democratic National Convention Next week. They vowed to lead the u. S. Out of the coronavirus crisis, while attacking President Trump. One of the earliest and largest ancial bakers bankers what a biden and Harris Administration would look like. The Vice President said he wanted somebody who was ready day one and that is who he has. She has great leadership qualities. Sheron the biggest Attorney Generals Office in the country in california. She has great personal qualities , great judgment. I think she is really good at taking a lot of information, synthesizing it, and coming up with a perspective. She directs. Is think she [indiscernible] she is obviously very focused on working americans. She is very focused on helping those most in need. Almost half of america has a Family Member affected by this. She is very focused on what the 21st century should look like when it comes to things like clean energy. I think she will be very effective. What does an economy look like hunter biden and harris . That is one question under biden and harris . That is one question that seems to be at the forefront. Economy with those two in charge look like . I would expect an economy under a bidenHarris Administration would look like an economy with shared prosperity. You would have investment in 21st century infrastructure, broadband, upgrading of transportation infrastructure, schools. You would have investment in clean energy as part of that. Biden would think about how to create jobs. It is important to recognize that democrats do well for the economy. If you look at the past two democratic administrations, better stockmarkets, more jobs. As a stockmarket indicator, during the years of obama, his first arm, the market was up 15 . This current president , the market was up 44 area i think it is an outdated myth that democrats dont do well for the economy. Part ofyou yourself be any bidenHarris Administration . The answer is no. Im very happy doing what i do. Look, doing what you do now, you do talk to a lot of the biggest leaders in the business world. Politics, what are Business Leaders thinking about in terms of what they can do to help get the companies the healthck as crisis begins to ease . I would say first of all Business Leaders have been incredibly impressive leading companies during this period. They have shown great concern and welfare for the communities in which they operate. Have made important financial commitments, for example. In terms of how they run the companies, what is interesting to me is the best ceos are using the moment to say the world is obviously being disrupted. What does it take to be a winner in that disruption, what does the supply chain look like, what . Oes the real estate look like i think companies are learning how to operate in a new environment. A group ofwill have companies that for the most part are going to look frankly Even Stronger than they looked before the crisis. I wasnt going to ask you about mn day, so im not going to. You dont have any plans to ipo. We talked about that extensively. Would you consider selling if it showed backup . No. Very simple. I think this moment, it is prudent to be private, Pay Attention to our culture. I think it is a great opportunity for our colleagues to be mentored, probably the right way for us to run a business. We are very happy. That was centerviews cofounder blair effron. Bloomberg television and radio will simulcast in new york. Revenues, china mobile are on the way up in the first half as the pandemic increases demand for its services. We will be discussing results from the outlook with chinas telecom carriers. That is next. This is bloomberg. Lets look at the latest Earnings Results as they compete in building five g networks. Halfue rose in the first as the coronavirus pandemic prompted industries to accelerate steps toward digitalization. Meanwhile first half operating revenue rose almost 5 from year ago. China telecom will report next week. Joining a to discourse all of this is the head of Telecom Research at jefferies. Good to have you with us. It does seem like the latest numbers justify your optimism in the telecom space. I think the entire industry is experiencing some turnaround. ,here are a couple of factors including price competition, and the early stage of 5g penetration building up and also more importantly is the capex and operating cost coming under control. So these are all positive factors that will drive better Earnings Growth going forward. What are the risks to the optimism . Have trump threatening Chinese Telecom companies. Companies are really domestically focused. Mainly tosure is domestic consumption. 5g. Her it is 4g or basically, a large proportion of these Companies Revenue is coming from domestic consumption. It is true that Chinese Telecom have businessicom in the u. S. But it is a very minor portion of company revenue. Case the u. S. Cancels the licenses, the damage to these two companies bottomline and topline top line will be extremely limited. So, having said that, is there a sense that chinese players do have a fear response to the threat . Or isnt that necessary at all . I guess my view is that the Chinese Government probably is going to take a more measured approach. I think that so far what we have not been anyna has aggressive countermeasures. I think so far the actions taken by the u. S. Government reflect what the Trump Administration is thinking in terms of their perception against certain chinese companies. I think there is an election coming up in the u. S. , so it is a lot more complicated. Rishaad i just want to jump back a little bit and talk about the telecom carriers. I know you have been talking about how they are being affected between what is going on between beijing and washington. From an average revenue year perspective, how are they all doing . Which one is the best performer . How does 5g move the needle . Edison i think so far the 5g penetration in china right now is somewhere around 10 and i think that among the three operators, China Telecom has the highest 5g penetration, of about 11 . Said that there 5g customers are generating 6 more than before. We have conducted two proprietary consumer surveys related to 5g and both surveys indicated that the potential enhancement as a result of 5g would be anywhere from 8 to 10 , so we are optimism optimistic that 5g will help them. I also think it is important to note that 5g affecting the entire mobile data pricing environment and china has become healthier. There is less real competition at the low end and a lot of the promotional sectors have been illuminated. Why it is headed up, not only because of 5g, but it is a more stable pricing environment in 4g, as well. Got zte edison, weve being shut out of indias 5g market along with huawei, from the playbook of washington here. How does this affect the industry . How does it affect supply chains and the like . Edison i think obviously it is not good news for zte and huawei. I think that the International Expansion efforts of these two companies over the years have received a setback and may be more for huawei. I think thatain, this affects the supply chain of huawei and cte zte. Supply chain ztes is more china focused. I would say that it is not good news for them, but again, it is political. Know that politics could change from time to time, so that is why it is quite difficult to assess what the longerterm future is going to be. But based on what we see today, that is not good news. Rishaad edison, thank you so much. Edison lee from jefferies talking about the Telecom Sector in china. Now, a look at fortnite maker epic games declaring war on apple and google. More on the Battle Royale overseas. This is bloomberg. Google has joined apple in pulling fortnite from its app store after the games creator gave users a way to make direct purchases. After criticizing the pair of running a duopoly. We get more details. Matt, lets take a step back for a second read how did we get to this for these two tech giants are having a public debate over store commissions . Matt yes, thanks for having me. The Commission Structure in gaming goes back decades to pc gaming in the initial consoles, where if you are bringing a game to market, you need a marketing support, you need investment from a platform, so that 30 commission was an investment by the platform holder into the game maker. That carried over into the mobile market. A lot of mobile game makers would not exist if it was not for marketing support discoverability and the user base brought to them by apple and google every a the question has been how valuable is that support in all the analytics that comes from being able to access the data that they have . Not 30 , itng it is is 12 . They are also saying that some of the measures by apple to restrict them from going around the app store is also anticompetitive. There was a debate from both sides. It is just there are legal differences. It will be interesting to see how that shakes out. Stake forhat is at apple in terms of revenue and exposure to fortnite . And on top of that more broadly, mobile gaming as well. Tos it really mean apple has change the way it operates . Matthew yes, thats a great question. Our data that we have shows that fortnite is not a huge piece of the pie for apple. It generated about 50 million of revenue in the Second Quarter from fortnite. That is out of about 3. 8 billion they generated from the total app store and that is all included in their services business, which is about 15 billion last quarter. Billion, 50 million is a small chunk. Legally, our legal team both in europe and in the u. S. Have done a lot of work looking at antitrust cases being brought against apple and we dont think there is a risk to the 30 commission coming down, though they do think that some of the policies about not being able to publish directly to consumers might have to go away, so we will see how those cases shake out. That is a legal debate, though. If epic is successful in forcing changes, who benefits the most . Mobile games is going to benefit tremendously. Tencent listed in hong kong or blizzard listed in the u. S. , if the mobile commissions went to zero for activision, they would have added an extra 1 billion to the revenue last year without doing anything different. Because that all comes in at 100 margin now, that would have added about 45 to their earnings. , if a financial perspective these commissions went away, it is a massive boost for the entire sector, but the chances of that happening are still probably quite slim. Great stuff, matt. A quick check of the latest business flash headlines. Apple is taking advantage of cheap rowing costs, launching its first bond issuance since 2017, joining other Companies Aiming to raise more than 5 billion. Apple is selling bonds with a basisr security yielding points above treasury. Big tech has weathered the coronavirus storm with users often at home and reliant on devices. Softbank is injecting more than 1 billion in two we work to help it whether the coronavirus. We work says the money will boost its funds to just over 4 billion. Membership fell 12 in the Second Quarter to just over 600,000. Softbanks valuation has fallen from the peak of 47 million to just 3 billion. Company saidst ai to be considering a dual listing on the mainland and in hong kong. It aimed for evaluation of more than 8 billion ahead of any share sale. Listing plans have been hit by a u. S. Blacklisting threatening to access to american technology. Rishaad got a jampacked hour coming up. We will be talking to the head of southeast asias second largest bank. Us ingoing to be joining a moment. We will be talking about earnings and gold prices later on and we will do that with the executive chairman of australias biggest mining. Finally, responsible investing. What is Deutsche Banks head of esg has to say and is it getting traction in this part of the world . This is bloomberg. It is almost 11 00 a. M. In singapore and hong kong. Welcome to Bloomberg Markets asia. Rishaad here is a look at our top stories. Gold ending a week of wild swings just below its alltime high up about 30 this year. We will be discussing its prospects with evolution mining. Haslinda singapore banks brave for a surge in loans as the coronavirus hammers the economy. We are joined exclusively by the chairman of ocbc. Rishaad and indiachina relations dipping again as well. Increasingly facing pushback around the world. Haslinda lets do a check on the markets right now. ,sian markets off session lows but still in negative territory. Trading currently down by 0. 1 . After erasing losses for the gear yesterday. Are,g a look at where we slightly in the positive on the back of disappointing data dump earlier this morning. Retail sales missing estimates. The kospi down by 1. 4 . Gold futures lower. Firmly above 1900. Stimulus means more Downside Risk for real rates, which is positive for gold. Gold heading higher despite being down today 0. 6 . Rishaad all right, lets have a look at prospects for the Indian Trading day. Around about 43 minutes away from that. Same as what is going on in the wider region. Nifty pointing to its marginally lowest start. Did have consumer pricing coming in a bit more than economies expected in july. 6. 93 . There we go. At the moment, unchanged. A fourth consecutive week of gains against the dollar coming against the backdrop, approving additional budget to counter drought and flooding. It just came on to start its trading day. Fraction below the gain line. That against the backdrop of the Prime Minister saying that the country is facing its worst economic crisis in record and that it will endure until the end of next year. A quick look at treasuries. 10 year yield at the moment. 70 basis points. That is what we have. Against this backdrop of one of the worst weeks and months after an attempt to sell a record quantity of 30 year bonds, received a less than enthusiastic response from buyers it managed to limp over the line. Marketsve away from the to first word news. Palestinian leaders said to be rejecting claims that israel and the uae are close to a diplomatic deal. The white house says it would be an historic through with an exchange of embassies and more direct commercial relations. Israel has agreed to halt moves over sovereignty to portions of the west bank. The palestinians reject such a deal. Global deaths from the coronavirus have now passed 750,000 with all most a quarter of those in the United States. Approachingfections 21 million. Democratic president ial candidate joe biden calling for a nationwide mandate in mask, saying everyone should wear them for the next three months. Kamala let Harris Harris are making their first appearance. The government now advising against all but essential travel to the two countries, as well as less traveled malta, monaco, aruba, and the turks and caicos island. France had been in the initial list, but infections are on the rise. Republican leader Mitch Mcconnell says there will be no more senate votes as the summer winds in, although members will be on 24 hour notice in case the stimulus. The white house and democrats remain deadlocked. President trump that he will veto any deal that includes funding for the u. S. Postal service. Challenging times ahead for banks in singapore. It set aside higher provisions for loan losses. Sam, good to have you with us. There is so much uncertainty. Gdp contracting much more than expected, slumping more than 40 annualized. Given all the uncertainty, is to withstand a potentially prolonged crisis . Youappy to be show ofolutely in the first half this year, we have strengthened our Balance Sheet. Our operating performance was satisfactory. Do was tocided to create a significantly higher amount of allowances to prepare for the uncertainty. In a way, we look at what is expected. Beyond that, we added additional conditions to cushion for the uncertain future when the Relief Program surround the region come to an end and want to prepare for that. The Monetary Authority of singapore singling out ocbc and its unit forgiving people jobs despite the challenging times right now. Can you continue to do that especially with stimulus on the government coming to an end very soon . Ini think it is important each of the countries that we operate to do as much as possible to protect jobs. Having said that, we have to look for other areas to do Cost Management. This will include discretionary Cost Management and management related, so we also looking at that. Protecting jobs is very important and we are working with the government on it. Can offer continued Job Opportunities to the people and this will be a fairly important factor to make sure that the economy will be able to recover post covid. We have seen ocbc tick up when it comes to loan restructuring. Why is that . Thee look at the future of oil and gas industry and we notice that as a result of the lockdown in Major Economies that the demand for fuel oil has really decreased. As a result of that, we felt that the customers who are in this sector, particularly the offshore support sector will probably have a hard time in terms of getting contracts renewed at an acceptable rate or sometimes even getting the vessels employed. On a forwardlooking basis, our feeling is that it is likely to have their cash flow reduced. So we want to take a preemptive step. Want to prepare for future development in this industry. If the market turns out to be. Etter than what we expected from is some suggestion some analysts that ocbc was the slowest in cleaning up that that from the 2015, 2016 piles. Are you concerned that it perhaps will happen this time again considering your exposure . The issue is that when we look at the industry, we have some expectation of what the industry is going to perform. Demand. S a reduction in that the, it is likely vessels employed in the sector will be active. We take a preemptive view. Now, the remaining exposure in our portfolio is now invested 0. 3 . I think this issue is really behind us. Ive got to talk to you about hong kong here with what has been happening. Are you seeing any client flows, new accounts being open because people are trying to get their money out of the territory . We do not see that. Inquiries, but we do not see that flow. How do you deal with this crossfire that is taking place beijing washington the time the health of the people who have. From our perspective, we are involved in the underlying real economy videos. We continue to feel that hong kong is an offshore platform, so we will continue to be involved in the real economy underlying business of the economy. During the lockdown and socalled circuit record in poor, have you noticed that people are saving more . People are not spending. As a result of that, hes in the singapore economy have really come down. The savings rate in singapore has always been very high. Because of the reduced economics, they are dipping into saving. I do not really see saving for savings sake. It is because the spending has reduced. As a result of that, they have more cushion to face the future. Rishaad all right, i want to just move and talk to you about what is going on with the digital economy, virtual banks, other parts of the region here. How does it fit now with your Branch Network . Thoset make some of branches redundant . Do you plan any closures, etc. . I think the banking model will change. We have invested into digitalization. We are pleased that this crisis really forced the people to use the digital channel of which we have been preparing for their for quite some time and we see active utilization. In a way, we are able to derive more benefits. Going forward, some of these behaviors will continue so the demand will be reduced. So we can convert the branch model into more of a customer interaction advisory type of model and that is i think the right way to develop the financial industry going forward. Isyou know, open banking also coming into singapore. This will allow and facilitate more type of activity to take place at the branches, so we can make use to make it available for the future services. It is a move in that direction. We are able to capitalize on it because of the digitalization investments we have made in the past. Tell me about southeast asia. You are the second biggest operator in that part of the world. Where are you seeing strength, where are you seeing weakness . Concernnk the nearterm is when the Relief Program is exited. It isn we make sure that orderly and we will continue to have the discipline of the people to honor their original we are working with the regulators all around the region to make sure that it is orderly. We will continue to extend some accommodation to those under stress, but the majority of the , we expect them to revert to normal repayment schedule. Even though we have about 10 of our portfolio, 88 of our can io is usually secured by their houses, their homes. These first and second every repayments should be able to tide them over. We are still working with regulators to make sure it is orderly. The longerterm concern is that because of this covid, i think some of the Industries Need to not be restructured, but reinvented. We really need to work with customers on the reinvention to see what they need to bring them to the next phase of demand, the next phase of development. This is the medium challenge beyond the nearterm. Haslinda there is a lot of speculation about your successor. I mean this in the most respectful way. Are there plans to step down . Going forward, what do you see is the Biggest Challenges for the bank . I think we always need to look beyond the immediate crisis. Everybody is talking about covid19, but covid19 is going to end at some point in time. We need to eliminate the fear related to covid19, so we need to look beyond it. As we position the bank, we need to look into how the rebalancing of the economy going to happen . What are the industries likely to have more demand . In ocbcs case . We look at sustainability related projects. I think we have a higher demand than before. We need to look at how the companies reinvent themselves. It could be consolidation, privatization. I dont want to underestimate Wealth Management. As you know, we are very successful in Wealth Management and we will continue to build our strength and Wealth Management in scope and scale. That continues to be attraction for the bank. That will create diversity for the banking operation, so in addition to commercial lending, Wealth Management, and insurances of what we need to focus on. Haslinda the ocbc bank group ceo with his insights. Thank you so much for being with us. Really appreciate your time. We want to show you some live pictures of jakarta, where the president is delivering his state of the nation address before parliament. There you have it, the man himself saying that the coronavirus pandemic is an opportunity to transform indonesia as economic, legal, and Education Systems to put them on pause to become a developed country. Indonesia struggling to contain a surge in infections that follow the easing of the social distancing rules. Other headlines coming through with indonesia, the seeking also toseeing the crisis also expedite transformation in health and continue down , energyg and mining sectors, as well. The president is speaking in placea, seeking strategic for indonesia in the global battery, as well as easy business. These were some of the areas he highlighted when he came to power. It has been very challenging for him, where he thought he could build the momentum for growth. That is not happening because of the coronavirus. Now he says it is an opportunity to transform economics indonesias Economic Health and education system. Pop in gold. A nice talking earnings and golds wild ride. Rishaad next, hong kongs media tycoons, trumped up charges. We will hear his thoughts on hong kongs future under the new security law. This is bloomberg. Sky Hong Kong Media tycoon and prodemocracy laivist jim ely jimmy took him by surprise and he was overwhelmed by support. He thinks the National Security law is already having an intimidating effect. It is very bad for the Business Community here and overseas. I think they also want to send a message to the hong kong people who have been demonstrating and thestance, to show that they have to show the hong kong people that we will enact at any time. So make sure that you behave well. Has an intimidating effect on hong kong people already. Chinese officials have talked about this being a threat to make sure that independence minded activists stay in line. How have you changed your activities in the month and a half or so since the implementation of the law . What does it say to the possible retrospectivity that is not supposedly allowed under the National Security law . That they are not necessarily in the letter of the law supposed to build cases based on what you have done in the past. . They said the law is not retroactive. Honest, a lot of people here are intimidated. People, the democratic those who stay are sidestepping from the movement. I think they have a very , but it doesnt mean the people who stay, like myself , will not continue to resist, but we will have to be a lot more cautious and be more innovative. Whole Resistance Movement the Resistance Movement will just quiet down or die out. Arrest, i can see that in theire very angry will to keep our freedom. Even myself, to answer your question, i will have to be more cautious. I will have to do what ive been doing, but with a more cautious attitude, because this is going to be a long fight. Confront with very strong actions or force. We have to improvise. You understand completely cant talk about the specifics of the case. What i think you can comment on our comments from monday from the hong kong and Macau Affairs office, which is basically the body of china, that oversees Hong Kong Affairs under the state council. Their words have weight. Let me read you what they said on monday. They said that you participated in planning, organizing, and launching a series of illegal protest activities using media to create and spread rumors, insight and support violence, and contribute to antiindependence forces. It fully shows that justice may be late, but it will never be absent. What does this tell you . When the hong kong and Macau Affairs office puts this statement out before youve even been officially charged, before there is a trial, before there is a verdict, do you feel you can get a fair trial here . Said, anyke you evidence, there is a they are presuming that im guilty. I should be presumed innocent. One thing i can say from the havement they made is we diverse support for the independence of hong kong. Myself and my organization, my ive never agreed with i always treat ccp as a conspiracy by the to try to give them an excuse to come down on us. Hong kong independence is ,omething definitely impossible it is something that is ridiculous. I never support this. I always think that this is not what we should do. Is get should try to do the way we are entitled in our basic law, which is universal suffrage. Of our ruleection of law, private property, freedom of speech, freedom of assembly, freedom of religion. All of this we are guaranteed in our basic law, which is what we have been fighting for. No more and no less. Hong kong democracy activist and next digital jimmy founder jimmy lai. Nationals how the security law imposed by china is changing the business and Political Landscape in the city. Before we go to break, lets do a check of where the markets are right now. The hang seng under pressure. There is a sense it may be vulnerable until tencent can move higher. Currently, it is down. The nikkei, bucking the trend. Kospi,are tracking the currently down by 1. 3 , retreating from a 52week high. Here is how it is looking. On the back of disappointing numbers. This is bloomberg. It is a gloomy friday. We are in the middle of the trading day. The benchmark msci index down about sti index down 0. 1 . That is in focus today. St engineering. Since april 30. It reported firsthalf net income. Actually a drop of 4. 5 . Lets get the first word headlines for you. To stopnts the u. S. What it calls discriminatory measures as the two sides prepared to discuss progress on a phase i one trade deal. Trade rep Robert Lighthizer and the chinese trade representative are expected to hold virtual talks at the weekend. The two countries are at odds over trade, human rights, and hong kong. Are said toleaders be rejecting u. S. Claims that israel and the uae are close to a diplomatic deal. The white house said it would be an historic breakthrough. U. S. Said israel has agreed to halt moves to declare sovereignty over parts of the west bank. Theazeera reports palestinians rejected such a deal. Lawmakers in lebanon met for the First Time Since a devastating explosion that destroyed parts of beirut. Leading judges set to question officials over the storage of hazardous chemicals. People died and thousands were wounded. Lebanon is mired in its worst economic and political crisis in decades. The u. K. Is tightening the coronavirus quarantine. Adding to its isolation list. The government is advising against all but essential travel to two countries, as well as less traveled to malta, monaco, aruba, and the turks and caicos islands. France had been on the uks initial virus travel corridor list, but infections are on the rise. Pandemicthe global hitting plenty of industries so far. One of the areas hit in a good way, doing well, it is gold. It is up around 28 so far this year. It was up about 35 . Is of the beneficiaries australia evolution mining, up 38 from year ago. Ofalso sees Gold Production 730,000 ounces. Joining us exclusively from sydney is the executive chairman. Great to see you. Good times for you guys, isnt it . It is. It is a great time to be a gold miner. Historic high gold prices and the conditions look like they are favorable going forward. We are making lots of money. We are rewarding shareholders with almost a 70 increase in dividend the last year. Evolutionpany like paying a dividend of 3 in the current market. It is a great time to be a gold miner. So, during this whole pandemic, how have you been able to operate effectively . Have you been regarded as being any Central Service . Is that how you have been able to maintain operations . How you been able to . Yes, we operate both in canada and australia. We have been fortunate that they are tier one mining operations. All of our sites are residential or drive in, drive out, and we havent been interrupted by the covid pandemic. It has caused inconvenience in terms of travel, but in terms of business capacity and production , we have had no impact from the pandemic. How do you see prices actually evolving through the course of the rest of the year . The other part is what is your breakeven . Question,er the first prices are very favorable. It is an unfortunate situation where governments are needing to support their populations through these fiscal programs. I think very necessary. Here in australia, you have the job for program. It is very difficult to see how the government is going to withdraw these stimulus programs in any way in the near to midterm or even the foreseeable future. While they are appropriately generating and providing these programs, it is spreading a lot of debt and it is printing a lot of money. Right across the globe. We are in the one currency you cant print and that is gold and that is why investors are into it. It is a store of value, it has been for hundreds of ears and it is today. We once operated our business on the basis that we want to be a business that goes through the cycle. We happen to be in a very good part of the cycle. After everything, that is investment in the future, for the future, and investing a lot of capital. 750 australian per ounce. We get half of that back to shareholders. All in sustaining costs around the lowest in the world. Australian dollars an ounce over the last 12 months. Gold going gangbusters. Is there a sense for how prices have found a new floor . Everyone got a little panicked. The gold price went down. It is 450 higher than 12 months ago. All the conditions for a favorable gold price environment , unfortunately, a lot of them are unfortunate. The geopolitical tensions, the covid pandemic, the impact that is having. Unemployment rates are rising. These are all unfortunate circumstances. Unfortunately, gold is a beneficiary of those times. I think it has found a new floor. I think the Industry Needs to accept that it is not only to going to go up one way and it needs to build a business like we are, where it is appliqued in allocating capital prudently, shareholders on a longterm gold price, which is low. We make all of our Capital Investments on a lower gold price than it is today and we are returning excess money to shareholders. Give us a range for a new floor . I would say investors when i talk to them, it is not my job to predict the gold price because it is not because im not an expert. Haslinda come on jake, give us a range well, if youd asked me 12 now 2700 ant is ounce. The people at Goldman Sachs have ive heard 3000 u. S. Dollars an ounce. Times are likely to get better. Investors need to make a decision as to what and exposure they want. Haslinda i want to talk about your mine in ontario. You have set it has the potential to be the most transformative, value creating opportunity ever. Help us understand what the opportunity is there. How will that be a game changer for you . It is a game changer because we taken over an asset that was in need of change and transformation. We acquired it in april of this year. It was a mind that was when the depleting rapidly and needed a reset. It has been amazing how the work force has embraced the change. There is an environment and a culture which is ready for change. We made a number of changes already in the first five months of ownership and they have really been accepted and the work force is energized. Most importantly, we have secured one of the most respected pieces of land or gold endowments in terms of prospect to video globally. It has a 70year history of highgrade delivery. Theave demonstrated through retail relationship of the resources that there is an 11million resource that required. The last published information on the red light resource was 2. 9 million ounces. We now have 11 million ounces. Were going to get to 200,000 ounces of gold, but with this new resource industry, we are recalibrating that to something significantly higher. , with your Balance Sheet looking so healthy and with a name like evolution mining, are you going to evolve into something other than gold . Are you going to perhaps branch out and get a broader portfolio of commodities . Think that investors are investing in evolution because we are exposed to gold, because we have stuck to our strategy of always looking to improve the quality of our portfolio. We are evolving. We only have two of the assets which were formed. About improving the quality of our portfolio. We are sticking to gold. Rishaad thank some much for that. Coming up, chinese technologies have seen a bit more pushback. India shutting out while way and zte. This is bloomberg. Chinese tech firms face increasing pushback from governments around the world. The latest is india, which is huaweihile way and and zte out. Technologies of the two most Important Technology companies that are supposed to foride heat technological 4g and 5g. Anding the doors to huawei zte ahead of 5g, options are going to be detrimental. Are new Companies Including geo platforms, but this is going to be very important, as well as chinese telcos. Me, what . Ell does it change anything with regard to that . Interestingery thing for indian spectrum options. The process to auction five demon 5g may turn into next year. They are expected to announce. So we are not sure that the options will happen in this current year, so delaying the 5g , other companies [indiscernible] thank you. Ok, lets move to some of the latest business flash headlines. And games suing apple google after the tech giants removed the fortnite game from their app stores in a case that will set anticompetitive laws. They claim epic broke the rules when they started to offer users direct purchase plans on both platforms. Epic has accused the tech giants of running a duopoly. Softbank injecting more than 1 billion into wework to help it whether the coronavirus. The company says it will boost funds to just over 4 billion. I felt 12 in the Second Quarter. The valuation has fallen from a peak of 47 billion. Chinas largest ai company said to be considering a listing in ifmainland and in hong kong it closes on preipo financing. Softbank back sensetime. Listing plans have been hit by a u. S. Blacklisting that threatens access to american technology. Lets have a look at this company here, as well. Ige. Ins parent baidu fell extended trading after it revealed that is being investigated by the sec. They have been asked to provide financial and operating records going back to january 2018. It also wants documents about acquisitions and investments. The probe is the latest of tighter scrutiny of chinese tech companies. Global airlines with the travel markets being devastated by the coronavirus. Qantas trying to scrape together much needed cash by selling unused inflight biscuits and teabags. Of for 25 would be travelers can buy packs of typical freebies through the online store. Checking in of the indian markets, pretty much under pressure for the rest of asia, but india it seems not the case. Reversing yesterdays decline. Higher by 0. 4 . Some ofaking a look at those movers today. The virus slams demand. 43 point 7 billion rupees. Rising by 0. 4 . In some ofg and i the players. Telecoms adjusted growth revenue. Vodafone, services along with bank stocks will remain in focus. Currently up by 1 . Still to come, Deutsche Bank , it hasor a huge rise created a new meeting demand. We speak with the head of esg for apac next. Dont miss that conversation. Guest season next opportunity for companies sees an opportunity for companies in esg. His position is newly created. With us. Catalyst needed to make esg investment mainstream . First of all, thank you very much for inviting me to be here. I would not say it was needed because the esg movement has been going on for quite some time. Pandemicay that the has certainly accelerated some of the key trends we have been seeing in the esg market. In particular, the first fundamental change that has been happening has been the shift from what used to be a defensive, sort of negative aproach to esg investment to proactive approach. Esg used to be about what investors did not want to see happen with their money or did not want to be associated with in terms of how their investments were used. It is now very decisively shifted to what investors want to see happen. What impacts can we bring about with our investment, as opposed to what we did not want necessarily to be associated with. That is the first big trend. With the pandemic and people needing action and impact right away, it has really accelerated that. The second key issue has been with all the big investors. Asset managers and asset owners, they have all had to recalibrate risk. Esg have been looking at type of indicators for quite some time. This has been a very massive recalibration, as you can imagine. Both on the environment side, but also a variety of other risks that broadly speaking can be associated with stakeholders and that our social issues and environment issues. Two Different Things coming into play were a lot of capital has moved toward esg aligned funds and other investment. Expedited,lly being shall we say, over the last five or six months. Of course, you have seen that the esg indices have broadly beaten most of the other comparable broad market indices. That has a lot to do with oil and gas and other commodities that have not performed very well during the pandemic. As you can imagine, esg industries are short on those sides of the paper. So, it has been a mixed approach. Some structural changes, some changes specifically because of the pandemic, but we are seeing a lot of action because of that and certainly asiapacific is playing a Critical Role here. Haslinda right. Hasg economies here, korea overtaken china how well the big bond issuance set up right now . Asia is late to the party, as you all know. China certainly has been very in terms green finance of public and private issues. Loans, as well as bonds. Korea is catching up. Japan has been active. We are talking to a lot of other economies around the region who have either issued covid bonds or are in the process of issuing some. Driverw, using esg as a for how to reorganize the development programs, how to connect them with their funding sources. This is all on the paper right now, it is all on the table. Everyone is trying to figure out how to adjust around it. There is capital out there looking for these investments. Facead have you had to many cultural cobwebs in this part of the world . Tell us about them . I would not say they are cultural cobwebs. I think they are just adjustment that have renewed trends in the marketplace have to deal with for each region. I would say that if there are in curricula garritys asiapacific, they have been very positive for the global esg market. First and foremost, these are economies that have gone through significant Economic Growth over the last decade or two, even the advanced economies like singapore. The know firsthand what problems look like. Market has taken off in europe and increasingly increase has, the been more about the investment. What impact will they have . People are not as concerned , how youch framework classify a deal as esg, they are more concerned about what will it do in terms of impact . So, asiapacific we believe is playing a very Important Role in terms of shifting the focus to the final impact. Me, where is this appetite for esg investing coming from . Is it topdown or bottomup . Certainly income increased does create what we generally refer to as stakeholder pressure , which is incomes go up, people expect more from the companies they work for, and the companies they buy from. Reflected this is all in the board pressure and board expectations of companies. For asiapacific, this is also a very important commercial issue because are economies here are dependent very significantly on the Global Supply chain. So, you wake up every morning wondering whether today is the day when your buyer is going to stop buying from you because you havent established esg credentials and havent adopted sustainable practices. So, there is a demand already intrinsic here. Yes, go ahead. Just running out of time, im afraid, because we have been talking about this for ages. Thank you so much for coming another program. Just talking about esg investing. Weve got a quick programming note. Our coverage of the u. S. Democratic National Convention next week. Bloomberg television and Bloomberg Radio will simulcast the special starting monday at 10 00 p. M. In new york and that is of course 10 00 a. M. In hong kong and singapore. Haslinda that is it for Bloomberg Markets asia. Best of daybreak middle east is next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Announcer the following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. Announcer this program is a do you suffer from pain. Joint pain from arthritis . In your arms or legs . Toit affecting your ability work, to play, and to get a good nights sleep