Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

3 . 5. 6 , but improvement from the previous ask. Haslinda it does look like china continues to Gain Momentum in terms of recovery. Lets look at where we are in terms of market reaction. Just. 1 . Underperformed after its biggest rally in more than 5. 5 years. Up. 2 . Pretty muted. Belowe been dragging this 6. 8, a strengthening that we saw onshore and offshore. Jp morgan is seeing gains. The 10 year yields. Take a look. Study right now. 313 after that fresh quiddity injection. Yvonne lets break down these numbers with the head of macro resource. Chinasensus about economic recovery and renminbi since april. What is your take on these numbers . I think the number basically confirms that the Economic Activities are normalizing, especially on the consumption front. We see from highfrequency data that retail sales, etc. That were hit during covid19 are slowly coming back. Upside for september data. Also, from the production side, recovery from earlier in the year. There are three things Going Forward that will help the recovery. Picture withical retail sales recovering. The industrial output is removed resuming. Cycle has global tech been quite helpful for export and hightech industries. Far this year, semiconductors globally have turned positive after a steep drop last year. This is a positive for china and for asian tech producers. The third factor, look at the breakdown. It is the acceleration of the upgrade that is driving the recovery. In the tech sector, the service sector, the investment has been expanding. Relatedtruction industrials and some of the consumption sectors, the investment has not picked up as strongly. Divergence is rising. We think, Going Forward, this will continue to be a theme, after covid19 because of thetalization, demand and demand on the tech side and consumption trend. Lets talk about that consumption trend. Retail sales have contracted. This is the first that we have seen all year where we are in positive territory. Is it still premature to say that this is a broadbased consumption recovery . Earlyis probably a little to say it is broadbased. For instance, the catering, it will take longer to come back, to come back. People are slowly coming back to normal, in a sense. In the past, they probably traveled using airplanes. Now they want to take vacations in nearby suburbs or nearby towns. But itvel is resuming, is a little different than the past. To gok it will take time back to normal, as we used to. I am not sure if the old normal will repeat it self anytime soon. At the aggregate level, the activities are picking up. Also, the ecommerce platform really helps. Towns,past in faraway cities probably did not have as much access to some of the good sold on the market. Ecommerceovid19, accounts for 26 of overall retail sales. That is up six percentage points. It is also wider, so it will take time, that the momentum is there. Look likeit does investors are liking the data at the csi, extending its again. In terms of growth momentum, isnt it true that this is the easy part of the recovery . From here, it will be more difficult. It will not remain until next year. I think that is a fair. You have the first leg that is mostly normalization. You have a strong bond. That is already happening. I think, Going Forward, the sequential driver and sequential case is to slow down a bit. This time since around, the government has not ruled out a big stimulus package, so the policy support is there, but it is much more measured. Are mentioned, there organic drivers in the economy. They will add incrementally to the growth, but it will not be as fast as the last couple of quarters. Is the economy good enough to address unemployment issues . I think it will take a bit of time to repair on the job front. Hit thee around, covid most on Service Sectors. The Service Sectors are laborintensive. Arerestaurants, etc. Laborintensive. The growth it self is one factor, but the structure of growth is more important. You need the expansion of the service sector. To drive on job growth. The translation is towards that ofection, but because covid19 aftermath, it will take time. Supportear term, fiscal is necessary. Income support, and we are talking about job training to move people into necessary areas to create jobs. Isnne so fiscal support still needed. In terms of light policy makers can deal, are we reaching some sort of normalization and policy . At which point do we need to seize tightening . Probably not is yet on the cards now. I do think that policy is ofeady in the process normalization, especially on the Monetary Policy front. We have seen that since may. Shortterm Interest Rates have gone up. Also, longterm Interest Rates have gone up. We are already in the process of normalizing Monetary Policy. I think fiscal policy will take longer. Are nontioned, there transitional issues. There could be job market pressure, so the government needs to provide income subsidies and jobtraining to support this transition. Iso, the growth picture still on the headline front, even though it is picking up. It is probably not considered strong enough, yet. In the next few months, fiscal policy on the infrastructure front will still be in place. They will continue to rollout the projects to support the reflation of the economy. I think the longerterm picture is that the government is going to use fiscal policy, mostly to support the transition, rather. Han to stimulate the economy Monetary Policy will gradually move back to normal, especially next year. To moveooking for ways slowly higher, next year. We are is that why seeing this upward pressure on Government Bond yields with the chinese tenure around 315 right now. Is this a sign of chinese exceptionalism or addressing liquidity concerns that traders might had . I think there are several things. Is theoint something normal range before covid. It is not extraordinarily high. It just says that the economy is andng back to normal productivity is increasing, or at least keeping solid. Factor the fundamental to the interest rate. Number two, in terms of Monetary Policy and fiscal policy, it is also supportive to the race. On a tape policy is neutral, or going back to neutral, but fiscal policy will be expansionary. We have seen a lot of Government Bond issuance in the last few months. From a supplyside, that is putting pressure on the Interest Rates. Economy,ombination of economic recovery and the policy choices that the government has made that is supporting the longterm race. What do you make of the yuan strength . At what stage will that impact chinese exports . Markets are already suggesting that the yuan strength will not persist. I think there will be volatility. You can see the government is increasingly tolerating you volatility. Longterm, there are several things. Longterm meaning the next few months or next year. One is fundamental. Actually surplus is quite healthy, despite all the concerns about a trade war. Of course, the Commodity Prices are low. Isnas overseas traveling declining it has declined this year. These are helping. Second, importantly, is the dollar trend. We are going to see several years of dollar decline because of the massive easing on the fed front. To drag the dollar down in the next few years. Will be morethere volatility, but longterm trend, it is coming down. Importantly, the domestic rates are much higher than the global rates. As i just mentioned, the longterm rates are 3 something. Locally, the u. S. Rate is much less than 1 . The gap has widened a lot this year. Have seen that global asset allocation. And coming into china. It isupports actually not that expensive yet because of the u. S. Dollar decrease. I think there is more appreciation to go. Thank you for breaking down all this data for us. 6. 6. We will look out for that. Newsst want to break some here. We were following some of these headlines with carrie lam. She is going to Start Talking about social distancing measures later on today. Seeing moreps relaxation of some of these measures. They are to be starting on friday but government beaches remain closed. For those of you wanting to go to disneyland, ocean park and disneyland will reopen at the end of the week, as expected. Im guessing a lot of people in hong kong are making some weekend plans. Haslinda thats right. At least there is somewhere to go. Happiest place on earth. He has pleaded innocent and the. Allegedly helping carlos ghosn he could face as long as a decade in prison, if convicted. Know that proceedings are scheduled to last through july with a verdict anticipated in the fall. Lets get to first word news with Karina Mitchell. Faces tiktok oracle deal a security review and then will need the blessing of President Trump. Any deal still requires a sign off from china. Sources say that oracle will make an investment instead of buying the business outright. Meanwhile, global coronavirus cases have taught 29 million. Organizationlth has reported more global cases in a single day than ever before. India remains the second worst affected country. 90,000 cases recorded each day for the last five days. Short of 80,000 deaths. His first ing suga is spending his first full day as Prime Minister. Toorts say he is planning keep the finance minister in the cabinet. This is bloomberg. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Back over to you. Yvonne still ahead, we look at the challenges facing japans prepares toas suga be installed as the next Prime Minister. Haslinda next, oracles deal with tiktok has been hammered hurdlesfaces several with approval needed from president and beijing. Details are ahead. This is bloomberg. Haslinda oracle may have sealed the deal with tiktok, but now comes the hard part, winning approval from President Trump and china as well. What is the next step that they need to go through . We need to see a little bit of the details here. We need to see what this Technological Partnership they are going to be having in practice. I am thinking the details of this tiktok set up, given the nature of these jobs, there is going to be a u. S. Review that happens here, that is standard with all of the acquisitions. It really does come down to President Trump. The 1. I wanted to make clear is that this is going to be an incredibly complicated review. You will see some headlines over the next few weeks or so that may startle you, what people are saying, we are not going to do this or we are definitely going to do this. A lot of posturing. Through that process and it will have to be signed off on the sides. Think this do you deal will be affecting the president ial election, once it is finalized . That it shows how important china is. They want to position themselves. S being tough on china at the same time, if you are donald trump, you are pitching on the economy. You are saying before coronavirus got here, the u. S. Economy was doing well, and by trying to make the case that they are on the upswing. That is a critical case for donald trump to make. It might be the most critical case for him to make in the course of this campaign. Yvonne we have plenty more ahead. This is bloomberg. Yvonne here are the latest business flash headlines. Sony is said to have cut its waystation five production by 4 million units, taking it down to around 11 million. It follows design issues on the chips for the new console. Been studying the feasibility of a megamerger with its rival. It is said to be an ongoing thought exercise on strategy. They have been no formal discussions. Presuming job cuts amid the pandemic. Thanks says that cuts will affect less than 1 of its workforce. Haslinda asian markets are leading forhey are what will come from the fed meeting. Take a look at markets in japan, as they head towards their lunch break. A sea of red. Markets are right there by softbank, trading lower after the surge yesterday. As suga isng expected to keep the markets stable during the crisis. Still to come, reports from minister the finance will be staying on. We will be right back. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. It is 10 29 a. M. In hong kong. 10 29 a Bloomberg Global headquarters in new york. Ae tiktok oracle deal faces two track National Security review there will also need the blessing of President Trump. Tiktok has now submitted its proposal to treasury but any deal will require the signoff of china. Oracle will make an investment in a restructured tiktok instead of buying its business outright. Shareholders is a Quick Capital would take stakes in the new business. Global coronavirus cases have millionhe 29 mark. And the World Health Organization has reported more global cases in a day than ever before. India remains the second worst affected country and a surge has seen 90,000 cases reported each day for the past nine days past five days. The country has 4. 8 infections 4. 8 million infections. One day after astrazeneca announced its vaccine trials resumed in the u. K. With oxford university, reuters is reporting they remain halted in the u. S. It says regulators are still examining the side effects suffered by british patient. The fdathe company nor would immediately respond to requests for comment. The u. S. Is recommending americans reconsider travel to hong kong. The state department raised its advisory the city based on the implantation of the National Security law. U. S. Citizens in hong kong are strongly encouraged to avoid any demonstrations. The moves comes as u. S. China ties remain strained. In beijings kite grip over hong kong. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Lets take a look at markets right now. We have basically flat on the asia benchmark but we have seen off the lows of the session. The china data we got for the last couple minutes certainly helping bring some juice into the markets, for things to break higher. They have been marginal. We are higher by just about a fifth of 1 . It was a beat on all fronts. Or production growing the fastest pace in two years. Retail sales also growing for the first time in 2020 in china. So it seems like the domestic demand seems to be improving finally for 2020. U. S. Futures as well are positive. The indian session will be interesting as well. We saw inflation yesterday. We are waiting some trade data out of india. And indonesia today. The dollar slippage seems to be holding today. Rightllaryen below 106 now. And the renminbis still the big story. 680 threshold the we have been holding on for some time. 2020 highs for your offshore and onshore remedy and the chinese 10year at 314. As you take a look at on yield, you continue to see the yield premium over u. S. Treasuries. 47 basis points. The yield premium the chinese 10year has with the u. S. 10year. A sign that perhaps things are looking better in the economic recovery in china. Liquidity concerns as well but clearly also saying, it is showing signs that this is the first in first out mentality we are seeing out of china. Can starts the pboc to normalize policy. On the other side you have the u. S. Which with the fed continuing to go lower for longer. We mentioned renminbi the strength. The bond inflow strengths are helping the strength. That premium as well maintaining the gains for renminbi, but if you look under the hood, you look at volatility versus onemonth you are seeing it out run itself to perhaps there is some jitters going on as it gets closer to the u. S. Election renminbi where the is going to go after november 3. And dollar weakness is really masking what we are seeing when it comes to the nerve some traders might have on the renminbi tec right now. Is set to become japans next Prime Minister on wednesday. Attention turns to policy and potential capex. We are hearing the finance minister. Joining us from tokyo is our correspondent. The associate professor of Political Science at sophia university. Good to have you with us. We know that he represents himself as a reformer but no change expected in terms of policy, whether it is foreigner economic policy. I think during the election yoshihide tied himself to the Prime Minister abe. Probably any changes would be subtle changes rather than policy shifts. See an end to we the revolving door when it comes to the Prime Minister of japan . Because the last time we had a long serving Prime Minister step down, we saw six Prime Minister. That remains to be seen. It is likely he will seek a mandate from the people by calling an election possibly the next couple months. If he does not do that, he still faces an internal election with his own party next year. Lot on aere is a shoulders. If he does not perform well in the next year. It is possible the factions that came together to support him and give him this overwhelming victory could withdraw their support. That will be predicated on getting a grip on the pandemic in helping to revitalize the economy in japans regions. Also building good relationships with who is the occupant of the white house after january next year. Haslinda how long is the honeymoon period going to be . Yvonne do you see that yoshihide is going to find . A way to distinguish himself or will he have more of a transition government . Trying to keep transition himself position himself as a different character e, his background is more humble than more previous Prime Ministers. Ural oute comes from a r of japan. And his parents were farmers. He also has a legacy of being a key member of the abe cabinet for seven years. We know about yoshihide. He is a tough figure implicated in many places in japan to do with encroachment on media freedoms, putting pressure on media organizations to get rid of critical journalists. Despite the best efforts of the government to try to picture him as the man of the people, he is very much a powerbroker within the political establishment. I think the honeymoon will be short unless you find some way to give himself a different angle on the reason on these reform efforts. They were lackluster on the Prime Minister abe. Yvonne what about when it comes to Foreign Policy . Because yoshihide does not have much of an identity on the global stage. Abe, was very good at getting the ilife together for trade deals and security partnerships whatnot. Can the japan fill the vacuum the u. S. Has left and create more of this multilateral type of leadership role . And do think it could be a good counterbalance to china . I think what mr. Suga is try to do the same that a mr. Be did which is to walk the tightrope between the u. S. And china. And he said he bids to continue ual policy. F d betweene are tensions the u. S. And china over a number of issues. Trying to be the middle guy between these two players is going to be very difficult. In japan has a few headaches coming up itself with United States in the next few months. Cannot solve an order from a system it will buy in the u. S. In june. That created tensions between washington and tokyo. The u. S. Base in japan is due to expire. Toted states says it expects japan to shoulder much more of the economic burden to those basis. Japan says it thinks it would not be appropriate for the japanese taxpayer to be finding these bases almost in their pinrety that relationship is going to become much more difficult, especially President Trump is reelected. Haslinda you know, tina, we saw how abe was cozy with trump. Abe he called on trump when he became president. Benefit more from a trump or Biden Administration or does it matter . I think over the issue i highlighted due to with to do es, a bidensi administration would be a more reasonable and known quantity when it comes to negotiations. That would be easier for the japanese administration. I think we can probably expect President Biden is elected that he would be willing to or hoping to try to reset the relationship with beijing, also. If that tends relationship becomes less tense that would be a good thing for tokyo. I think on balance, probably a Biden Administration would be less erratic as well. It would be easier for tokyo. Yvonne probably. Haslinda japan has been hedging its bets. I guess, building on its relationship with australia, with india. Do you see suga following that route as well . He said in his press conference over the weekend he intended to continue to push the free and open into pacific belicy which i think was an a initiative to bring together more countries in the asiapacific, especially those democracies in a more cohesive security relationship. But i think one of the problems with japan is that mr. Suga has set in the defense rome he plans to continue with Prime Minister revising the constitution which would include giving official status to japans selfdefense forces. And that is going to be something that is not greeted well in certain countries in asia that will occupy there were occupied during the second world war, especially south korea. Those two policies in tandem may undermine one another. I do expect constitutional revisions to be a priority for mr. Suga huawei in the next few years mr. Suga in the next two years. It does not place to plan well when it comes to trying to build relationships with countries that may be concerned about those revisions. Thank you so much for your insight today. Still to come, e. U. Leader step todemands on china asking xi prove in investment deal is worth their while. We have the details of the summit next. This is bloomberg. Hasinda the European Union stepped up its demands on china to open its markets further to Foreign Investors to keep a goal of sealing an investment deal alive. A lot remains to be done. More difficult chapters of the agreement in two areas. The one is Market Access, and the other one is sustainable development. We need china to move on these two issues. China has to convince us that it is worth having an investment agreement. Mima, bloomberg has learned that u. K. Foreign secretary dominik ross told his diplomats to avoid getting trapped in a cold war with the u. S. And china. For more on that meeting between chinas see shipping and three chinas seizing peng and three e. U. Leaders, karen lee is in hong kong. How did the e. U. Step up pressure on china . To be held in person. They were having a via videoconference. Merkel and what they are discussing is something we have been talking about since 2013. A bilateral pact that would reduce restriction rates on european companies. Last april they send a target date of the end of this year for reaching an investment deal. This is a key moment for that pa. Stepping up for china to open its market for Foreign Investors. They want to keep the agreement alive even as we saw agreements over whom you human rights issues that could fuel uncertainty. Europe is saying beijing needs a followup on efforts to pursue fair and economic policy. They need to have more concessions for that deal to be reached in the next [no audio] yvonne walk us through what chinas response was through all of us. Was president xi able to toe the line . Sides needed to accelerate the negotiations for the deal. But he also shrugged off what he humanurope lecturing over rights issue. He doubled down on the stance china has always had criticism of china in hong kong, two areas heavily criticized over human rights. Meddling in chinas internal affairs and he said there was no universal path for human rights development. Said i believe europe could find Good Solutions to its own problems. China does not accept a lecture on human rights. Told reporters that she seem to be allowing diplomats into the far western parts. Of china where the Muslim Population is. Merkel says that needs to be workout. Really the e. U. Trying to put pressure on xi and xi pushing back. Yvonne we have seen ties have been strained this year. Tell us more about the major contributor factors. Karen there are a number of them. Chinas mishandling of the coronavirus. National security laws in hong kong. The e. U. Has interest, as does the u. S. And european efforts to protect domestic manufacturers from foreign companies. All of this come as china aims to stabilize around the world amid rising tensions with the u. S. Particularly as the u. S. Gets more aggressive on the front looking to keep huawei out of 5g networks and looking to prevent tiktokfrom apps like from accessing u. S. Data. It is really trying to bolster other relationships in the west as its relationship with the u. S. Gets more fraught. Karen leigh our china government editor. Coming up we talk more about the lock sunday, and merger monday. 59 billion worth of deals were announced to start the week. The highest tally for 2020. More on that coming up. This is bloomberg. Yvonne a productive weekend for with 59 billion of m a announce. It was not just nvidia, the deal with softbank or bytedance, tiktok and oracle. Lets get more from her asia reporter. Im sure your team has been very busy. The size and volume of the m a we have seen. What is so special about this weekend . Yes, definitely. Think what is really special is, as you said, the usual suspect is technology companies. And biotech deals but what we are seeing is across the board, across a lot of different sectors. Retail space. Security services. Mobile services. Very different. , youy like also across know, across the world from asia to the u. S. To europe. It has been really busy for us. What is really driving this . I will say definitely the equity markets. There has been a rally. Interest rates also remain very low. In terms of financing all these deals. We think about what is usually needs to be done is facetoface meetings and travel. Now looks like dealmakers can do that without travel and without facetoface meetings. We are seeing that on india. They raise 20 billion for digital services. Facetoface is not essential anymore. That is really interested, the equity market being the driver. I guess one of the questions is whether the current pace of deals can be sustained. Haslinda what is down the road . Of course, we do not have that cristobal. If the deals will continue at the current pace, tember will definitely be the most for 2020 for m a, it is definitely good news for a lot of bankers, advisors. Year to date volume has not been great. We have seen it uptake and hopefully it will continue. Of course, i think equity markets will be something we can watch and see whether he continues to keep going. Are asia deals editor in hong kong. A busy, busy we for her team today. Another word about citigroup. About the future of dealmaking post covid. Here is what he had to say. Into march and april, a lot of capital raising, you know, a lot of pulling down revolvers. It was around liquidity. A lot of concerns about what happened last time. As that subsided and the equity market stabilized and started to recover, a number of ceos i have a strategy. If opportunities become actionable, i will start working on them. That has built over the last couple months. The other thing is if you look for stuff that is reported in the Public Markets and that is the lowest since 2013. There is a bit of a valuation opportunity. That people take advantage of that, whether that is sustainable given where the markets is is highly questionable. And we have seen, as you say, sort of a return to certain tods of deals being done one of the interesting features is that weve seen a lot of government venture or Government Role in the actions being announced. Some you cannot talk about but weve seen just this morning the deal with the u. K. Government server role and tiktok and oracle where the u. S. Government already had a very prominent role. Why are we seeing this increased like,f, you know, if you this tension between state and corporate when it comes to m a . Look, it is a great question. I am not sure i have a great answer for you. But it is clear we have seen, relative to regulation i think most of us would conclude as practitioners that the Regulatory Environment has gotten tougher whether it be around antitrust, whether it be in this country so it is not that surprising. Given a lot of concerns about sustainability and 5g and what do we do about it, we are in an environment that is not going away. We will see more government intervention. You have a plan for. What can a company due to plan . Just change the way they look at the risk of a deal closing . Does it change the conditions they might ask for in terms of getting something over the line . It is a little all of the above, right . You got to be smart about, in the planning process. You also have to look at feasibility. Can you really get something through . You know, in an environment like this. And that i think the other thing, again, around sustainable we are seeing a lot of effort put in by our client base, whether it be on the fossil fuel side, all the way through technology. You know, people are planning for an embracing it i think it is high time we did it. Schaefer, citi had of m a speaking with that hammond. Lets do a check on the markets. Looking for a catalyst perhaps that will come whether the meeting makes a decision. Of course, it is expected to stand pat. Take a look at where the hang seng is come up. 4 . Rising for a third day. Aia saying it will launch a new round of iris measures. Fibers measures. Says not as scary as people it would be. Everything has gone very smoothly in china. 76 on thechina 32 back of the data dump. They have underperformed global peers since it having more than the biggest rally in more than 5. 5 years. Down. 6 . And the kospi gaining half a percent right now along with the esti up half a percent. Tencent picking the lion city is this asia hub. 20 to come in the next hour. Stay with us. This is bloomberg. Plenty to come in the next hour. This is bloomberg. Haslinda it is in hong kong. A must 11 a. M. In hong kong. Welcome to Bloomberg Markets asia. Yvonne here are the top stories are chinas economic recovery by thep in august led first growth in retail sales since covid19 hit. Industrial output also accelerated. Haslinda oracles bid for tiktoks u. S. Operations awaits a National Security review as President Trumps blessing but we still do not know what beijing thinks about the proposed deal. Prepareslus as saudi to take japans as suga japans top job, he plans to keep the same finance minister. Haslinda lets do it check on the markets. In asiapretty muted after stopping two weeks of declines on monday investors on edge. Reassessing volatility. We have the Msci Asia Pac index at 173. It is expected to maintain its dovish stance. In china up. 3 . Trading after the data dump in the last two hours. It has outperform its global peer since midjuly. Their recovery gaining momentum nonetheless. The kospi up by. 5 and the hang seng hundred by. 5 as well at this point in time hang seng up by. 5 as well. Yvonne take a at you as futures as well. They are pretty much slightly higher, about a fifth of 1 . That china data certainly did help a little bit in terms of the sentiment. Leg higher a big when it comes in equities. When it comes to movement in currencies, not a lot. We saw the dollar slippage overnight. That seems to be staying put. 678. 55yen below 106 and for offshore renminbi. The one to watch on this tuesday morning. We continue to go strength strength on the back of the chinese data that was a bead on all front when you look at retail sales in industrial output. And the chinese 10year yield, yields ticking lower, 312. 09 for your chinese 10year. We got that liquidity injection from china earlier this morning. Haslinda providing some kind of this stability. Lets get more contacts with the asia editor. Areoes look like investors looking for some kind of catalyst. I am not sure they are somewhat on edge. They are just waiting for the fed. That is the big event of the week. We are a couple weeks away from that especially from the asian point of view. So it is understandable after a brutal couple of weeks for what had seemed like a bulletproof risk rally, and with the fed coming up that no ones willing to take on last nights action in the u. S. As being an all clear signal. So, we look for a bit more nervous earlier in the day in the initial start, we had some declines for u. S. Futures and we also had japanese stocks falling because the yen had risen. Me nerves and those nerves have been calmed by the pboc. And by harnessing promising china data. That helped to send the yuan up and the u. S. Dollar down. And mostly we are looking very mildly risk on. But i do not think anyone wants to get too carried away until we find out what the fed has to deliver. Are you talking about chinas data dump suggesting for the momentum in its recovery . But that is not to provide that is not enough to provide that support. Why not . Part of that is because and this is what is driving the , its sort of reaffirms that the pboc and the china authorities in general are going to stick with targeted easing. , a they have got a strong much stronger economy than most. They do have some easing measures in place, but they are not about to ramp those up. For example, i mentioned large mediumterm lending facilities. Injections. Three times as big as was made to roll over what was coming do. So that was a welcome bit of liquidity. However the rate for that, 2. 95 pt unchanged. Same as july and august. It is a soft approach for the pboc. It is not up for big easing moves the way some of the developed Central Banks have been. Coming back to the fed. So, that is why it is encouraging, but again, nobody is jumping in the feet. And we saw this flood of deal activity in the last 48 hours. Mostly in the tech sector. Goldman sachs, Deutsche Bank saying perhaps the end of this tech route could be over right now. The rout in u. S. Stocks as well. Tell us when it comes to the next move for the nasdaq. The 10 move higher or could it be 10 lower . Well, it comes back to animal spirits and that is where the fed plays a role. Also there is some positive news on the virus. There has been some thought that what drove strength in the chinese stocks on the news on a vaccine there. So there are some promising developments on that front. That could help. Also, if some of those alternative dated indicators that people are watching, the were showing arm those are showing a moderate recovery. If those start pickup, and again, there were some thought overnight that if the democrats and the republicans can at least onee without too much rancor how to put in place stopgap funding to avoid a government shutdown, that that might help to reassure stock markets that there is not going to be too much disruption on the government side of things. At least for the next little while. Ticall of those, we want to k some of those boxes and then we can get a move higher. It is interesting, three times leverage, nasdaq etf has been receiving funds even amid the drawdown. So, there are still hunters out there who are willing to put money in on the hopes of a fresh rebound rally. So, momentum has been king this year. If we get some momentum going on top of yesterdays move, then that could send us 10 higher. That momentum phase away fades away or if we get something from the fed or from the political side of things that alarms investors, then we could perhaps slightly more readily get a fresh selloff, taking us 10 down. Haslinda how about momentum for emerging markets . What a dovish fed be enough to send ems higher . Up 45 since march lows. Well, i think em asset Say Something of a tougher task to gain significantly from here. Especially if i certainly if developed markets do not turn it around. I fail to see how emerging markets will, because the risk evaporate, and the potential for turmoil surrounding the u. S. Elections is probably more likely to hurt emerging markets, hurt emerging markets more than it will developed markets. Emerging markets also face headwinds from, greater headwinds from the virus, and from concerns that they are at their limit when it comes to stimulus to combat the pandemic. So, they look more vulnerable than developed markets stocks at the moment. Haslinda for a reality check for em Garfield Reynolds there. You can follow more on this story in all of the days trading on our markets blog on bloomberg at nygo. Commentary and analysis from bloombergs expert editors. To find out what is affecting your investments right now. Now lets go to first word news with Karina Mitchell in new york. Chinas economic recovery sped up in august led by the first growth in retail sales since covid19 hit early this year. There was also an acceleration of industrial output. Retail sales gained half a percent from a year ago. While industrial output moved 5. 5 over the same time. Retail sales have fallen almost 9 in the first eight months of the year. In other news, the u. K. Foreign secretary has asked its diplomats were carefully to manage relationships between the u. S. And china in not to get trapped into a cold war. Bloomberg has learned that dominic raab made the comments during a meeting of this top officials in which she set out his vision for global britain. Boris Johnsons Brexit divorce bill survived its first hurdle in parliament. 340 to 263 to advance the legislation giving johnsons government the power to override parts of the bill with it e. U. Arguing it is essential to guarantee the economic and political integrity of the u. K. Has not taken that particular revolver off the table. It is such an extraordinary threat. And it seems so incredible that the e. U. Could do this, that we are not taking in this bill to neutralize that threat but obviously reserve the right to do so. Is spending his first full day as japans Prime Minister after winning an overwhelming majority among the liberal democratic party. His role will be rubberstamped on wednesday. Attention turns to his cabinet picks and policy. He is planning to keep aso is finance minister and a new cabinet. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Still ahead, how the pandemic has accelerated the growth of Digital Payments. We speak to paypal Senior Vice President of international markets. Cameron mclean. Haslinda the developing asia gdp shrinking for almost the first time in 60 years. A chief economist joins us to discuss the latest economic arguments. This is bloomberg. After beating off microsoft for tiktoks u. S. Corporation, oracle will face intense scrutiny before it is able to be finalize. It still needs approval from the National Security grounds and from both President Trump and authorities in china. The details from our Senior Editor what are the next steps for the deal now . Well, you have a couple of things. Review as standard you have for Foreign Investments in the United States of this magnitude. You also have a National Security review here by the u. S. As you mentioned, china has to sign off as well. So, there are a lot of steps in the process, and already, we have seen a little bit of kind of some posturing headlines intended to sort of set the terms for where this is paid now, what we are told is happening here is that tiktok will set up tiktok u. S. , 20,000 jobs in the u. S. Somehow. That oracle will be a part of this. Some of the investors will continue to be a part of this. And that there will be somehow this is going to shoot the gap to what donald trump wanted without running afoul of beijings demand that the Underlying Technology not be transferred. Derek, how will a deal impact the u. S. President ial election in november . Should it be finalized. Well, i think that what it will do is it will go to show the importance of china in the u. S. Election general he speaking. Generally speaking. Ktok could somehow be blocked before the election, that would certainly be something and a lot of the user base, young and lean democratic. Lets take the track that this goes through, though. That it reallys does highlight that china is important thing here, but also, it highlights how much donald trump is going to be relying upon the economy as he goes forward in his campaign. Remember, this is a president who began his Reelection Campaign saying, look you might not like me stylistically, mark knight like some of the things i say, but i do what i do to get results might not like the things i say, but i do what i do to get results especially on the economy. That message has been tweet to say, that the client the economy has been doing really well before the virus. Now it is coming back and im the best guy to lead it back. So that is a really, really essential message for donald to get out this november. For donald trump to get out this november. And not having something that is a big sort of economic cataclysmic event in terms of blowing up something that is really popular would go toward that, the ability to sort of negotiate through some complicated deal using that astlistic on best bomb would go towards that. Ways that thisof plays into that larger narrative of how trump wants voters to see him this fall. And there, over and china we are hearing from the bytedance china chief about their daily users. Passing 600 million in china. It just goes to show the growth that bytedance does have domestically in china without even talking about how many users they have an tiktok in the u. S. If this deal becomes a restructuring or spinoff, is is the best case nowra for beijing . This could be the win for china. Well, it could be a win for china if Something Like this is able to be, is able to be done you are right. This scale of this is really something. You are talking about this creation of a whole new platform of scale, right . And it has been a minute since we had a brandnew platform of scale be really durable. You know, in that social media space. I mean, it has been a couple years anyway. And so, this is really a growth area. If china is able to get this say, ifu know, as i there is a way to shoot the gap here, so the u. S. Is happy and so that china is happy, it would additionally be a sign that as areas u. S. China relations in a number of different ways, there is still an ability to get things done to kind of satisfied both sides when both sides are really trying to find a way to do that. Our Senior Editor in singapore with the latest. Coming up we talk about the suga, almost certain to be japans Prime Minister. This is bloomberg. Is expected to be installed as japans new Prime Minister wednesday. Having won the vote for the party leader. He turns to his picks to run the country. Lets bring in our editor joining us from tokyo with the latest. What happens next . A new president. Suga will form a new cabinet. One that works for the people, he said that he wants to appoint who align with his thinking regardless of faction affiliation. Here is what we know. Local media is reporting suga plans to retain the finance minister. The foreign minister, and the secretary general. And the affairs chair. All likely to stay in their posts as a sign of maintaining stability. In the reshuffle we are seeing reports that suga will appoint as chief cabinet secretary to succeed him. Oe is also expected to name sot as chairman of the partys general counsel. Suga expected to omics. Ue with aben continueas pledged to pushing ahead saying we need to make sure everyone in the country can feel reassured and deliver stable life. He told lawmakers he would s policies and bring reform were needed. That means he is likely to keep the monetary and fiscal policies as they are while trying to make his own mark on structural reform, one of the first economic decisions for him as the new Prime Minister would be the timing of the stimulating of a return to growth instead of focusing on life support and aid for businesses and households hit by covid19. With talks of a snap election, we heard from the finance minister early this morning say that an early election must be considered if the olympics is held in 2021. How are those two related . Thats right. The general elections they have to be called by october 2021. Some senior lawmakers have hinted at a snap election before the lgp election. He said it may come soon after the new Prime Minister is named. The defense minister also expecting in october sometime next month. At the News Conference last night suga suggested it would be difficult and less experts view the virus as being brought under control he stressed is important to build rebuild the japanese economy while continuing containing the virus. The early election must be consider if the lubitz were held in 20 21 p. M. Last time in 2028 the election early much the early election must be considered if the olympics were held in 2021. Lets do a quick check of the latest business flash headlines. Have cut itsto playstation 5 production by 4 million units, taking it down to 11 millions. Cites production issues. Softbank will raise 10 million 10 billion in selling its domestic wireless our market japans biggest secondary share sale in a decade. The firm will sell shares at 204 yen apiece. It helps to refill his war chest. And he considers taking the company private. Ubs Group Chairman axel weber has been studying the stability of the megamerger with rival credit suisse. It is said to be part of an exercise thatt future strategies and there has been no formal discussions. Talk about consolidation with the european banking spaces increase. Citigroup a resume starting this week, ending an earlier pledge to pull its and that the pandemic. The bank says cuts will affect less than 1 of its global workforce. And with recent hiring, overall headcounts will likely not show any drops. Yvonne Chinese Markets getting close to the lunch break. Today. N a positive we raced some of the earlier losses. Some of the earlier losses. Msci up. 5 . Ashares also up. Shen jenin chinext up. The currency is breaking below the 680. Offshore for renminbi and onshore for this year. The key question is we are hitting resistance levels. Can we stay below that 680 handle . 313 for your china 10year yield. Snapping the rise with the upper pressure in yield after that mls liquidity injection from the pboc and enough to make up for some of the bonds that are maturing as well. That is keeping a lid on the yield for now. This is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with Xfinity Mobile. Live features of the lion city. We are in the middle of the trading day. The sci getting the left, up by. 6 . We heard how tencent is taking the lion city as its asia hub. Also, people familiar saying that alibaba is in talks to invest 3 billion in the ridehailing giant in Southeast Asia. And separately, as the world singaporeaccine senior minister sounding a sobering up. Saying that a large proportion of the worlds population will not have access to that vaccine is develops over the next 12 months. His to be sure will be a huge challenge. We have to see how that pans out. The tiktok oracle deal faces a two track National Security review. That will also need a pleasant a President Trump. Tiktok is now cemented its proposal to treasury. In any deal still requires the final from china. Oracle will make an investment in a restructured tiktok instead of buying the business outright pin and at least two shareholders in bytedance and Sequoia Capital would take stakes in the new business. In the European Union has concluded its Virtual Summit uphxi jingping by stepping demands for china to open its markets. Wants beijing to pursue fair economic poli cies and provide concessions. A lot rains remains to be done. Areas. Larly in two the one is Market Access and the other one is sustainable development. We needchina china to move on these two issues. China has to convince us that it is worth having an investment agreement. And more on the pandemic. Global coronavirus cases have topped 29 million with 925,000 deaths. The World Health Organization reported more global cases in a single day than ever. India remains the second worst affected country and a surge has seen 90,000 cases recorded each day for the past five days. The country now has more than 4. 8 million known infections and just short of 80,000 deaths. And the u. S. Is recommending americans to reconsider travel to hong kong. The state department raised its advisory for the city based on the implementation of the National Security law. U. S. Citizens in hong kong are strongly advised to avoid any demonstrations. U. S. Chinames as ties remain strained over the coronavirus, the treatment of weaker minorities, and beijings increasingly tie grip over hong kong. Global news 24 hours a day on air and on quicktake by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haslinda, back to you. Haslinda lets take a look at the markets. It does seem like investors are waiting on the fed, which is expected to remain dovish at its meeting this week. The Msci Asia Pac index up. 1 . The nikkei 225 down. 6 . The kospi higher by. 6 . Rising for a fourth day, samsung among the gainers. In the hang seng is higher by. 6 . As it looks to launch a new round of stimulus measures. We had from carrie lam. We heard from carrie lam. Lets take a look at where we are. In australia, bhp gaining. Goldman sachs raising his call. On bhp. Currently trading up by it changed somewhat. Currently down. Oil higher. Il, traders awaiting the fed decision for more clues on the policy meeting and gold also trading up, 1966 right now. Take a look at where we are in terms of currencies. The dollar we have investors positioning ahead of the feds policy. The fed expected to maintain its dovish stance. We have to yuan reaching 678. An past and offshore yu 2020 highs. 66. H the yen at 105. Some people saying that the yen is using the fed and the boj to pivot stronger. Yep. E stronger. Lets take a look at developing asia. Coronavirus battered economy will shrink for the First Time Since the early 1960s. According to the Asian Development bank. The regions gdp will decline by percent this year but it does believe a recovery will resume next year without put still seeing below prepandemic projections. Lets discuss this with the adb chief economist. Thank you so much for joining us. This is quite a significant downgrade to your june forecast. for the region. Tell us what is driving the growth forecast lower . The pandemic was more serious than we we believed in april. That is why we downgraded all of forecasts. Rowth now, as you mentioned, contraction by 0. 7 this year. This will be the very worst contraction the very first contraction in six decades. Having said this, our Business Health risks will be basically contained. Within this year 2020. Then we can set the forecast, strong rebound to 6. 8 next year. However, 6. 8 looks like a very high number. But this is because of a low baseline this year. So, if we take the trajectory of gdp, precovid19 and after covid19, we do not see a vshaped recovery but rather it will be l shaped or nike shaped recovery. Nike shaped,ped, all the different shapes. Tell us more about this recovery. Does that mean it we have reached peak rebound . In the fiscal measures we have seen are fading now . Or can we see some momentum revive itself . Admittedly, there are different stages across economies and countries within the region. Some countries still suffering, like Southeast Asia and india. Still from increasing numbers of cases. The largest economy in the region used to be suffering from a big outbreak, especially has been less than 100 new cases daily. This allowed the chinese economy to reopen. In q16. 8 contraction china grew by 3. 2 in the second quarter. So i think, again, there are some different across economies and countries but some countries successfully contained, to some degree, allowing the economy to be reopened, and now we see some recovery, especially in countries, in east asia. So i think that is behind this. The reason why we envision a strong recovery next year. Why the strong recovery next year, because when you take a look at opecs projection in terms of oil demand in asia, it cut the projection for 2021 anticipating the negative impact from the pandemic to be sustained pretty much through at least the first half of next year . So, youre talking about the oil prices. Actually, inflation will be rather moderate this year and next year. This can be a trivia to demand a decline attributed to demand decline as oil price stabilization. So, under this moderate inflation, and also precovid19 inflation, Asian Countries actually undertook a prudent position in managing their public finances. A large fiscal space to respond during covid19. So we actually have been making covid19,adbs database to track a different policies. This data shows that our member countries have a very large stimulus package which 15 of gdp. In total. So, halfandhalf into fiscal policy to support the income and revenue of a household and business. In the other have to voted into credit policies. Devoted into credit policy. These largescale fiscal stimulus really help to maintain economies and some economies have been rebounded. Situation, and a with that come i think it is reasonable for us to set a baseline next year as recovery. But not this year. Adbs chief economist. Still to come on the show, how paypal is benefiting from the growth of ecommerce and Digital Payments during the pandemic. With more and people reluctant to handle cash. We will discuss the future of digital monetization with Cameron Mclean next. This is bloomberg covid19 is accelerating the Digital Payments. Growing elected to handle cash creating first time uses of Digital Payments. Our next guest is responsible for paypals commercial growth in 170 international markets. Lets bring in Cameron Mclean, the senior bp of international markets. Take us through some of the changes due to this pandemic. What are the trends developing . Covid19s head huge impacts across the side is around the world. What were seeing is a massive earnings ourq2 announcement that we share figures across our results. And we see massive growth in the move to Digital Payments. And the focus on omni channel experiences, people moving away from using cash as societies become more disconnected with lockdowns and other things going a trustedly having Payment Network by paypal brings people together and connects people so they can fulfill their transaction needs across the world. But with the rise and Digital Payments we are seeing a concurrent rise in cyber fraud. Done, ishat is being there enough investment to ensure this growth sustainable . Look, i think, you know, paypal has become an essential service. People around the world. Oflook at export orientation Small Business from Southeast Asia into western europe. And into the u. S. Giveeally trying to people ways to connect with buyers around the world. Of course, cyber fraud, hacking attempts is rising. Exponentially as well. Ourreally we have to be on game every minute of the day to mention the transaction stay secure. The people are actually getting a great Quality Service and we are avoiding the issues with cyberattacks. Haslinda you talked about the greater adoption. Especially in asia. Where are the Growth Markets in particular . Are we looking at india, for example . So, a world world, i mean, paypals older markets are growing incredibly well and we volumeord q2 transaction of 222 billions through the network. What we also see is incredible growth and crossover trade. 37 billion in q2 alone. We consider Growth Markets to be areas where the paypal trusted platform payments platform can go further. We have announced new services recently like Small Business, working capital solutions. In places like brazil and mexico. What we are trying to do is bring a trusted platform to new markets. And, of course, major markets all of the ina, all over Southeast Asia markets are really important for our future growth and we are focused with solutions. , you know,ng that with the Global Platform that papal has we are very focused paypal has we are very focused in China Union Pay and china. New partnerships forming around the region. We want people to plug into the trusted payments platform which is paypal. I want to talk more about china because a year ago you became the first foreign payment platform in the country through your acquire stake in go pay. This is a pretty mature market. Tencentali pay, and we chat. How do you break into this arena . Today paypal has a really substantial business in china already. We power a lot of export growth out of china into our 340 million plus consumers around the world. What we saw to the covid19, china locked down early, as we know and we saw huge recovery and a focus on those exporters connecting with buyers around the world. So, today we have a very substantial business in china. We obviously want to go further and provide Better Services and enhance that business. In thefeel confident service we are providing in china for these exporters to connect with the world. Yvonne do you feel like you have an even Playing Field in china . Or do you think he needs to be there needs to be more on the repertory side to improve the competition . Platform has a global for payments is local in nature. The reason we have gone further in our focus in china is to be able to play more deeply in the local market. But we need to come you know, every market is different. So, regulations are different, whether it be leveraging baking license across the European Union, new services that we offer in latin america, different regulations. Paypal being a Global Platform, the actual hard work is at a local level. Im confident we have a big focus on the China Business that we can provide a Great Service Going Forward. And help china connect with the world through paypal. Cameron, we have the wire cut scandal. Do you see that impact in the future of payments in asia . And whether paypal has benefited in any way with that scandal rd . Acting wire ca it is very unfortunate for the payments industry. It is not a good thing to have a trust break down in a Payment Network. We stand by, really the original sin tech. Tech. The original fin we have tried to liberate markets around the world with a Global Platform. R impactthe bigge around the ship to digital and services ineqr code hong kong or the u. S. , people want to interact in omni channel experience. Digital is at the heart of that. Ecard situation is unfortunate but we provide a very good trusted platform. Cameron mclean from paypal. Thank you for your time and insights today. Lets do a check on the indian markets. As they join the trading day. We have a pretty muted session in asia. Ahead of the fed meeting. We have india in positive territory. The nifty and the nifty 100 all trading in positive territory. Of course, india will release its trade data for august we await that data that could impact how investors view the indian market right now. We have, also, tracking the rupee which has been under some pressure. Coming up, it has been almost two years since greg kelly arrived in japan for what would have been a quick twoday visit. Today the alleged ghosn accomplice is in court facing a trial that could last another 10 months. We have the latest. This is bloomberg. Former nissan director greg kelly pleaded not guilty to charges to help carlos ghosn hide millions of compensation. Kelly is the sole individual defended in a case that has drawn global attention, involving ghosns jamal escape from japan. Katrina, this day has been a Long Time Coming for kelly. Tell us more about the allegations made against him and is on for this morning. Thats right. The u. S. Citizen who turned 64 today has been charged by japanese prosecutors for allegedly helping to understate Carlos Ghosns compensation. , 85out 9 billion yen million over eight years. This is something kelly has strongly denied. His firsthe had morning in court in tokyo. When asked at the outset whether he had anything to say, he says, i do. I deny the allegations. I was not involved in any criminal conspiracy. So, the Court Proceedings are underway. , thememo to employees nissan chief executive officer said that there was an internal investigation that had shown there were serious misconduct kelly could face a decade in prison if convicted. Katrina, walk us through what the trial will involve. This has been seen as a precursor to ghosns trial. Does this impact ghosns side of this in any way . Had a very jamal escape and he is now in lebanon. He is not present at the proceedings in tokyo. This is a trial that has been delayed ultimate times and was kicking off almost two years after kelly arrived in tokyo for what he thought would be do to day business trip. This is a trial that is expected to run for about 10 months with a verdict in the fall. Kelly, even though he was present in court and listening with an earpiece for translation, will not actually take the stand himself until may. But he will have a front row seat as a parade of witnesses, mostly his former nissan areeagues and possibly called to testify. His family and attorneys have questioned his ability to get a sir trial without ghosn testimony. And there have been vocal critics of the proceedings in japan. Kelly himself earlier before today said that he was detained shortly after he turned 62. He is going to be turning 65 before the court makes any decision on his case. So, really he was making the point it is time more than anything he is being robbed of. Katrina nicholas there with the latest on this nissan trial. A quick check on the latest business flash headlines. Alibaba is said to be in talks to invest 3 billion in Southeast Asias ridehailing app grab. They will not be the only investor and would buy some of grabs stock held by uber. The deal would be one of alibabas biggest bets on Southeast Asia since its investment in 2016. And we give it access to data on tens of millions of users in eight markets. Tencent has big singapore as its asian how. Joining alibaba and bytedance in the race to build up the presence closer to home. Sources say geopolitical tensions accelerated tencent plans to shift to some of its operations out of china. Tencent currently has dozens of job openings in the lion city. For businesses including crossborder commerce, cloud computing, and esports. Soni is said to have cut his estimated playstation 5 production for this fiscal year by 4 million units. Taking that down to around 11 million. It follows production issues with its customdesigned systemchips. Be u. S. Sec is said to examining nicola after a short sellers allegation that the electric truck maker deceived investors. In a september 10 report, the head of research called nicola and intricate fraud that overstated the capabilities of its tracks. Ikola has accused the short seller of making misleading statements. Steve cohen has reached a deal to buy the new york mets. Terms of the transaction that needs approval from other club owners were not disclosed. N was in talks to acquire the Team Last Year but negotiations broke down and the owners went looking for other buyers. The deal values the mets at 2. 4 billion. Like it is looking investors await the set meet the fed meeting coming up this week. China gains this week after the data dump suggesting that perhaps it is recovering and it is gaining momentum. Mscifore, pretty much the asia pac index up. 1 . The nikkei is being dragged down by softbank, which rose 9 . And the kospi currently up. 6 . Rising for a fourth day. Take a look at where we are in terms of currencies. In focus, breaking 6. 8 for the First Time Since may. Measured at 678 currently and 67. Yen looking at 105. Some say the yen using the fed and the boj to hold the yen down. Yvonne we still have a boj meeting that we are looking ahead to not just the fed. Bank indonesia as well. It is getting to be a pretty busy week. That is it for us. Daybreak middle east is next. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. This is bloomberg daybreak middle east. Top stories this morning. Chinas economic recovery Gains Momentum with growth in retail sales and acceleration in industrial output. Fiscal stimulus in the u. S. Is almost over and advising investors to tomorrow policy meeting. Parli