Investors concerned about rising Coronavirus Infections and what that means for the recovery. Global deaths are approaching one million with record cases in france and the u. K. The Trump Administration given an ultimatum over tiktok to delay a ban or respond in court. Ban isnt trumps due to take effect on sunday. ,aidi it was a meandering confused session in the u. S. Investors seemed to be trying to work out where the lead was. Investors weighing the scanned prospects of another stimulus package against a resurgence, the second wave we are seeing across europe and the u. K. Modest gains but the s p has wiped out all of its gains for 2020. Futures trading up by. 3 at this point. When it comes to the asian trading day ahead, the nikkei 225 regaining a little bit of positivity. Modest gains of. 1 , trading in the futures session in chicago. In sydney, we are watching as to whether this surge we have seen in growth shares will continue. The msci australia index jumping to a record high compared to the index. Sydney futures of mike we will see a pretty much unchanged start to trading this friday and new zealand, upside of just about. 5 at this point, shery. Shery markets watching coronavirus headlines. The world will record one Million Deaths from covid19 in the next few days. Some experts think the real tally might be double that. It comes as france and the u. K. Report their highest case numbers since the start of the pandemic and the vaccine race dredges forward. Michelle cortez is on the line. Give us the death numbers and the surging cases in europe. Michelle record numbers of infections in france and the u. K. , higher even than early in the outbreak in march and april, when there was chaos and concern everywhere. We are seeing the u. K. Start to shut down things again. Ireland as well. In spain, which was hardhit early on, they are seeing some of their hospitals are getting to the point where they might be overwhelmed. Not only are we seeing serious concerns with deaths and hospitalizations, the rising number of cases means the followon deaths and hospitalizations are also only going to get worse. That is in the u. K. , in europe. We definitely do not have this virus under control. Haidi in the meantime, the vaccine race continues. Patients and its late stage trial in the u. K. Do we have more visibility as to when and what these vaccines will look like when available . Michelle the good news on vaccines is we are getting a Broad Spectrum of different approaches when it comes to what kind of therapeutics we are going to get. We now have eight different approaches that are in late stage trials. We have one that is going to be an oral vaccine. We have several that work off of the way conventional flu vaccines work. We have a couple that are completely novel, getting the immune system to create of our particles itself, a completely new way of doing it. The idea that one of these is going to hit is very high. It could come as soon as october. Expectingd they are these results to come pretty soon. We have heard from for dharna moderna andd astrazeneca. Michelle cortez with the latest on the vaccine race. Lets get you to Karina Mitchell who has the first word headlines. Decided toe russell include Chinese Government bonds in its world index. That date is still subject to final confirmation in march. Recent reforms from beijing reported practical improvements required. Asia will remain on its japan is maintaining its severe assessment of the economy, saying conditions remain tough. The Cabinet Office monthly report kept the same language to describe the outlook for a Third Straight month. They see improvement in four of 14 categories. Exports,roduction production, and the labor market. Nancy pelosi and Steven Mnuchin saying they are ready to sit down. The treasury secretary said a targeted release package is needed. The speaker confirmed she is willing to resume discussions. Its not clear if either side is prepared to compromise. Lawmakers are skeptical an agreement can be reached before the election. [chanting] meanwhile, president was met by hecklers as he paid respects for Ruth Bader Ginsburg on capitol hill. Moments after he arrived, booing erupted with people chanting vote him out. President trump said he will announce his pick for the court on global news, 24 hours a day, saturday. On air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Shery. Shery still ahead, we are speaking to Wells Fargo Securities representative about the best places to go for yield. How china looks like emerging as a winner. The latest on that, next. This is bloomberg. Haidi we are seeing gains picking up pace, gaining just about. 25 . After the ftse russells decisions include Chinese Government bonds into the world index. We are seeing the yuan trading after a recession dominated by some u. S. Dollar strength but of course, this is injecting a little bit more momentum in the chinese currency. This has a stronger setting which suggested authorities are not concerned as much with the strength we have seen in the yuan. Lets stay with china and bytedance is working on approvals from authorities in washington and beijing for the sale of its u. S. Assets as demanded by President Trump. In the latest twist of the story, a judge has given the administration until friday afternoon to delay its ban on tiktok or to respond to bytedances request for a court order to temporarily block it. Lets bring in Stephen Engle in hong kong. I ask you how you thought this was going to end yesterday and we were sort of anything could happen. We have another deadline looming. What is the latest . Stephen monday of, donald trump gave his blessing to this deal and then on tuesday, he flipflopped and said he wants to see oracle have total control of tiktok global, which would not satisfy the chinese demand, so there is a lot of different backandforth on this deal. What we know is that the Trump Administration and the Commerce Department gave a oneweek extension on sunday to the original date for the ban and that new deadline will be coming up on this coming sunday. Bytedance has filed a petition for temporary or preliminary extend thato deadline from sunday. They have too much to try and get done. Either the deal with oracle walmart as well as with the Chinese Government approval as well as with Commerce Department and the review that needs to sign off on this deal. The timeframe now is, as you mentioned, the u. S. District judge has given the Trump Administration until today, later today, two 30 p. M. Eastern standard time, friday 2 30 p. M. Eastern standard time, friday. If you are not going to do that, you must file the Necessary Court papers, stating the reasons why they oppose bytedance requests for preliminary injunction without a delay of the band, the judge will hold a hearing on the injunction request by bytedance on sunday morning, so half a day before that takes effect. It would take effect at 11 59 p. M. On sunday and that would essentially remove bytedance tiktoks app from the app stores and effectively kind american users off from that app as well as future updates that are crucial for its survival in the United States. Shery does any of this legal noise give any indication as to the likely outcome of all of this . Forhen you are asking me my forecast again. Ok, well, i see two foreseeable outcomes given the current situation. I could be completely wrong but this is how it stacks up right now. The deal goes through. Ok. That is one option. If the deal goes through, china and bytedance essentially are victorious, if you want to call it that, because it is not an outright sale. 80 s bytedance taking control. They control the algorithms. Oracle gets involved, puts 12. 5 billion in. If youort of a winwin, will, but it is something that the chinese could possibly stomach. The other option is a ban, outright ban. Annedpp gets band and b and tiktok does not come to be. The Chinese Government, i dont like to use the word win, but they come out ok because they are against an outright sale or the control of the algorithm and the source code in a Foreign Companies hands. They are against the u. S. Government forcing this marriage. Scenarios look like it favors bytedance the Chinese Government. Shery Stephen Engles with the latest on tiktok. Coming up next, milestones for junk. Where the rise in recent side and highyield bonds is sending investors. The head of credit strategy joins us next in the never ending hunt for yields. This is bloomberg. Haidi a quick check of the latest business flash headlines. The developers warning of a looming cash crunch, saying it unless chinese authorities approve its long delay Stock Exchange listing. Evergrande has until january to win approval for a listing or cuteness will be able to exit, leaving the company with a 19 billion debt accounting 92 sent of its available cash and cash equivalent. An electric truck makers candidates first rating. Shares have shed nearly 80 since june. The company is under even more pressure after teslas factory announced this week. Increasing through nissan the founder resigned as executive chairman on monday with the losses of more than 50 this week alone. Withsoft is pushing ahead plans to attract more mobile gamers and aiming to launch a Cloud Streaming Service in japan by next june. The xbox chief says the company is committed to a fastgrowing market for game subscribers and it started testing the technology needed for the launch. Xbox to a play anywhere style. Shery it has been a time of highs and lows for junk bonds. You are seeing that earlier this week, u. S. Corporate junk bonds almostannual record of 330 billion since september but of course, highyield bonds are on their longest losing streak in six months and all of this has to do with the equity volatility we have seen as of late. Here for an outlook on all credit assets is winnie cisar, head of credit strategy at Wells Fargo Securities. Great to have you with us. Highyield being supported by the federal reserve, but given the equity volatility now migrating to credit, where does it go from here . Winnie i think what we have seen lately is something we kind of expected heading into september. There are a lot of risks building especially with the u. S. Election on the horizon, questions around fiscal stimulus, but we do know that there is going to be a continued economic recovery. We are not expecting a second doubledip in terms of a recession, so what we think is happening more recently is just kind of a limited urgency in terms of putting cash to work. I would say the credit markets have actually responded pretty favorably, all things considered, given we have seen very heavy new issuance across highyield and investmentgrade, and this equity market volatility. Shery how unusual is volatility in september . Is it just seasonal . Do we still have cash lying out there for more gains . Winnie it is actually not very unusual. The equity market historically has not performed that well in september. It is one of the months where we do see weaker returns, particularly when you are heading into an election and there is a lot of uncertainty around the outcome of the election. It is definitely not unprecedented. There is a lot of cash hanging out on the sidelines. By our calculations, we still have cumulative net inflows into money market funds. In recent weeks, we have seen a little bit of a slowdown in terms of the pace at which investors are rotating out of cash and into something else, but i think that that is more a function of just some shortterm caution on transitory volatility rather than a fundamental longerterm outlook that is turning more negative. Haidi of course, in this hunt for yield that continues globally, we are seeing investors getting called into chinese bonds where the 10 is offering 3 . We saw the ftse include Chinese Government bonds today in its index review. What does that tell you about this search for yield, the need for diversification . Winnie i think it tells you a lot about how investors are being crowded into different parts of the Financial Markets based on centralbank intervention. We have a little bit of a playbook in terms of the ecb and ig ande for specific some highyield zero bonds, and now, what we are seeing is Central Banks across the globe are basically taking a lot of the fixed income supply off the table for investors, so they are having to think a bit more creatively about where they can access liquidity and sometimes whether they are willing to say a bit of liquidity in order to pick up some yield. We are also starting to see the ripples when it comes to some of the comments from fed officials. Sooner than expected fed tightening even if the two inflation 2 inflation target is this something to Credit Investors . Particularly across the asian and ems base . Space . Winnie absolutely. No yields clearly pose a risk for Credit Investors if you do ultimately have this inflationary environment. That is faster than expected or you see Central Banks becoming moreaccommodative in a shortterm horizon. That preservation of capital and the ability for rising yields to a road total returns can be pretty significant. That is where you really have to balance the fundamental side of things and valuations on a spread basis to see where could there be incremental compression if we start to see the economy in both the u. S. And across the globe start to pick up some steam . That is one of the reasons we are fairly constructive on u. S. Highyield because it does offer that incremental pickup still and even in a potentially faster than expected deflationary environment, you would expect a lower rated part of that market to recover relatively quickly. Your time asiate always. Head of credit strategy at Wells Fargo Securities. Johnson johnson has started phase 3 tests with its covid19 shot that says it provides immunity and 15 days. The chief scientific officer spoke with bloomberg about beginning the trial nearly two months after frontrunners. Study. 00 people in the it will be run mainly in the america, also in south south africa, to recruit diverse old, asboth young and well as diversity for africanamericans, latino, and people who are at risk. Thing we havele shown to our research and clinical testing earlier that the singledose will be sufficient to protect people so we are going to study the singledose in the next few months. You mentioned the elderly as well as africanamericans. Hispanics who have been disproportionately affected by the coronavirus. As you put together your group of volunteers, do you take that into account . Do you index for people who are most vulnerable . Yes, and we have been working andhs with epidemiologists data scientists to find out where in the u. S. Can we find regions of high transmission, but also population groups which on over indexed africanamericans, latino, and elderly, so to make sure that the risk groups are very well represented in efficacy studies. Bitour approach is a different from others as i understand it. Working with harvard, you have a version of a cold virus that is adjusted somehow. What advantages does that give to you . Is it difficult to store this vaccine . We have been working on this for 10 years. We have done several vaccines. The ebola vaccine is being deployed in africa. We are doing an evaluation for over 200,000 people. That has been approved. Factor which carries a piece of the genetic material of covid and then the body produces the protein which then generates immunity. At 228 celsius for three months. It can be kept up for a long time at 20. It is a way to transport it to the distribution side and then go into the field. Simple tongledose, transport, and hopefully available on a very large scale. What is also important is this has come to be effective starting 15 days after the first injection and that is very important for the pandemic because that will protect you almost immediately. Others, six weeks before it starts to be effective. If you have an outbreak, you want to protect people past. Singledose, fast protection. President trump has talked about how fast he wants to have this vaccine. Do you have any sense and the timeline about how long it will take you know whether it is effective as well as dave or not, or is that unpredictable . It is unpredictable, but we will recruit. We are very well set up. We will be able to recruit people, but we have our own families. We want to absolutely work learn absolutely learn whether it is efficacious and safe. We want to talk with the regulators to be able to be using it in emergency use. We predict that could be around early next year. We are around midseptember. For five months would be the timing for getting to that point where emergency use could be possible. Johnson johnsons representative speaking with david westin. U. S. Futures gaining ground by. 5 at the moment. This after u. S. Stocks fluctuated throughout the regular session. We have some optimism over stimulus packages. Japanese futures unchanged at the moment as the japanese yen holds steady. We have seen it weaker throughout the week against the u. S. Dollar. Sydney futures gaining ground,. 1 . Asx 200 has been stuck in a narrow range since june. And the yuan gaining strength for a second consecutive session, this on the ftse russell inclusion of the bond markets. We will have more on that. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. In courtl respond friday. The judge gave the administration until 2 30 two agree to a delay. The apps owner launched a separate suit and is late in filing a new injunction. Over to the pandemic, france and the u. K. Both record daily numbers of covid19 cases as europe battles a resurgence. France reported more than 16,000 infections and the u. K. , 6. 5 thousand infections. Restrictions are now being tightened. Globally, cases have passed 32 million with a death toll close to surpassing the one million mark. The u. K. Government issued an equally gloomy forecast, warning more jobs will go despite the chancellor announced a program to subsidize wages for parttime workers to extend loans for firms. He told the commons that unemployment is bound to rise as the u. K. Economy adjusts. , as the primelear minister and our scientific advisors have said, for at least the next six months, the virus and restrictions are going to be a fact of our lives. Our economy is now likely to undergo a more permanent adjustment. Lawmakers in bangkok failed to reach any agreement on a way to amend the constitution, sparking more mass protests. Parliament overwhelmingly backed the creation of a panel to study changes, but a vote means the process for rewriting the charger will need further delay. The traders are calling for more democracy in thailand and limits on the powers of the monarchy. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery. Investors will have a new channel to invest in Chinese Government bonds. Ftse russell will include the countrys sovereign debt into its indices, having declined to do so a year ago. Tom mackenzie joins us from beijing, and tom, this is the last of the three main indexed compilers to add chinese debt so how significant is this . Significant. You have the Bloomberg Barclays index, j. P. Morgan, and now, you have the ftse russell world Government Bond index agreeing to allow exposure and inclusion of Chinese Government bonds in its index from october of 2021. In terms of inflows and what that means, Morgan Stanley protect you could see an increase or inflows to 90 billion u. S. Dollars from next year on the back of this. Already, since 2017, you have seen an increase in 40 in terms of foreign inflows into chinas bond markets. You have a total of 380 billion u. S. Dollars in holdings of Foreign Investors in the chinese bond market here. A lot of that is down to the yield story so you have 10 year government yields about 3 and that compares to 60 basis points for the u. S. Tenyear, so that yield premium is at a record. The yuan has been relatively stable and that makes the environment more attractive as well, but no, it is worth pointing out foreigners only account for 3 of Government Bond holdings on the mainland in china. There is still a long way to go. It is a step in the right direction from chinas perspective. Haidi so what changes has china made to boost the appeal of domestic bonds . Tom we have certainly in the last few years made a number of changes, primarily, for example, making it easier to get your money out once you invest here. There are capital controls in place in china. That will be a concern for investors. It is much easier to get your money out once you invest in the chinese market. They have also increased access for institutional investors. That is something chinese regulators have been very keen on. They dont want them longerterm investors having exposure. They have given licenses to ratings agencies like fitch and s p to come in and do independent credit assessments. Again, that goes some way to addressing concerns of Foreign Investors. They also extended the hours in terms of trading to allow european investors to get access in terms of the hours. There are a number of steps they have taken and again, we should expect, according to the market analysts we have been speaking to, that there will be further measures down the line that china will be taking just to increase that appetite for Foreign Investors in the market here. Just to make it slightly simpler to get your money in and out. Tom mackenzie in beijing. Coming up next, we will be discussing equality in japan under the new suga regime. Is joining us next. This is bloomberg. Shery heres a quick check of the latest business flash headlines. It is the end of the road for Harley Davidson in india. It is halting sales and pulling out as part of wider cut backs. The decision is a further blow to Prime Minister Narendra Modis hopes of attracting foreign manufacturers. Harleys decision comes after toyota said it will not expand in india. General motors pulled out in 2017. Indonesias biggest lowcost carrier is being sued in london for late payments for plane leases. Lion air is facing claims from nine parties who have almost 22 Million Dollars in outstanding costs. The leases involve eight boeing 737 jets operated by lion and its thai affiliates. Garuda faced a similar lawsuit from aercap holdings. Offer 250ines will on the spot covid tests for travelers heading to hawaii so they can avoid two weeks quarantine on arrival. The carrier hopes the testing revivecan be expanded to international travel. United is seizing on hawaiis decision to allow travelers to avoid a 14 day quarantine if they can show a negative test result within 72 hours. The new rules begin midoctober. Haidi time now for our weekly bloomberg equality segment. We are taking a look at the new political era in japan. Much has been said about how shinzo abes successor will continue abenomics, what does yoshi who is ceva suga mean for womanomics . Said it is time for a woman to lead japan, but that will require changing a lot of minds in the maledominated society. Joining us to discuss all of that is Goldman Sachs japan vice mitsui. Athy i particularly like the comment that said in japanese mythology, women are seen as strong, but it is time in real life, in society, in the corporate world, for them to take concrete leadership roles. Rather than emotional leadership. Do you think we will see more womanomics . In kathy i am hopeful, although we have yet to see any concrete policy proposals be put forth by the new super cabinet although the cabinet literally just formed a few days ago, so its a bit premature to judge. I am hopeful that the cabinet will address the fact that they did have an original goal of 30 acrossership positions all facets of Japanese Society being billed by women, and we fail to reach that goal. Anquietly postponed that for undetermined period, which is the next decade. We would like to see, first and foremost, and analysis for why that an analysis for why that goal was not reached, what obstacles stand in the way of the goal, and what the suga cabinet has in mind in terms of forueprint or roadmap reaching the target. We know it is a very ambitious goal and target, both in the public and private sectors, but i think identifying what those obstacles are in one by one, clearing it from a policy perspective, it would be quite important. Keen onthink he is as promoting gender diversity in the same way that his predecessor was. Its interesting that female Labor Force Participation in japan is higher compared to the u. S. What is the fundamental issue in the upperalent echelons and is there a sense that government policy, these campaigns can only do so much because they cannot force corporations and businesses to make those decisions . Kathy thats exactly the right point that you made. At the end of the day, the government im not trying to suggest the government has done everything it possibly can. There is still room for improvement and mandating greater gender related disclosures. In 2016, the government to enforce Japanese Companies to disclose genderrelated statistics and encourage them to set gender diversity targets, which is a good first step, but we also need to go further. For instance, a advocated mandatory gender pay disclosure requirements, which we all know is a very controversial topic in any society, but that would go a step further. In addition to increasing daycare capacity, rewriting the tax code to encourage married women to work fulltime. One of the reasons we have a dearth of leaders is the fact that women are now the Participation Rate is 72 . 72 of japanese women who could work are actually working outside the home, which is higher than both the u. S. And european numbers. The problem is coming in japan, half of those women working outside the home are not working in fulltime capacity but in parttime roles. Those are of course very difficult to develop into a ifeline of future leaders, you are working a parttime capacity. Number one, the government needs to improve its policies. Helpnfrastructure, to women get promoted to leadership positions. At the end of the day, the onus lies on the employers side, and the book i just published a couple of months ago really strikes at this point. It has gone beyond what the government can do, and what can we do within our own organizations, in terms of managing female employees, in terms of retention and promotion. We all know females universally suffer from this selfconfidence cap, and how do we try to encourage them and give them a nudge in the right direction so that they do take those assignments . Shery we have seen the political will with womanomics and so forth, but what about the social will out there . Do you see that in businesses . Do they want gender equality in the highest levels of business . Kathy to be perfectly honest, i think it still makes people in japan, not all, but some, frankly, uncomfortable, because that is just not the way they grew up. That was not the kind of societal norms that they are accustomed to. But at the end of the day, to me, economic reality is going to push this agenda forward because, face it, and 35 years, japans Labor Force Population is going to shrink by a massive the country can only grow through its labor force, capital and productivity. It is falling or shrinking. Massiveot to execute a revolution in order to sustain overall trend growth. The numbers are real. The demographic crisis is real, so without tapping into half its talent pool, japan is going to get left far behind. That reality is sinking into a lot of Japanese Companies. Most managers get it. Now, the point is, ok, what do i do about it . Do i just talk about it . Do i have to do more . What is interesting is esg Interest Income on which i think is not just a buzzword, but is here to stay. Those who dont really care about diversity, this is forcing them to care about diversity. Number two is values. Millennial males in japan dont 24 7. O work for seven they want a better balance of work and life. The values of the Younger Generation are going to help propel us in the right direction. Post pandemicll japan look like for women . Providesthink that it challenges and opportunities as for men, not just women. On the challenges side, we know accesschnology and the to Technological Capabilities is going to allow everybody, men and women, to become more productive. What if women are not armed with the appropriate skills, with Digital Literacy, to take advantage of those tools, then unfortunately, they will be left behind. The whole society will be left behind. How quickly can we get the entire population, not just women, but men included, up to speed in terms of overall Digital Literacy . Cabinet is planning agency. Lish an if it includes educational and training aspects, that could be very interesting. I think the opportunities, of course, are vast. The whole world is about disruption these days. Conventional income and players across many sectors, so this is a fantastic opportunity, particularly for women, who may not follow conventional career paths, to take advantage of these new and innovative opportunities and technology and combine that to give themselves an opportunity to make their mark in the outside world as well as keep a sense of flexibility. Matsui from Goldman Sachs, thank you so much for your time today. Another big guests coming up later today. Stay tuned for our exclusive interview with the south korean trade minister. Haidi we do have more details on the highly anticipated talent here listing pelletier listing. Shares expected to be in trading at around 10 each, expected to be valued at nearly 22 billion. We are looking at potentially the date, september 30, for that sort of trading. It is the highly Secretive Company that has a strategy of helping large corporations and governments make sense of huge data sets. A pretty controversial and combative tone being taken by that Company Heading into the ipo. Coming up next, Masayoshi Son is trimming shares as values more than doubled since march lows. We will get the details on that, next. This is bloomberg. Masayoshi son has reduced the number of softbank shares pledged as collateral by 1 billion, cutting back after heavy borrowing raised questions about this debility of his empire. Peter elstrom joins us from tokyo. Explain to us why he had to do this. Peter hi there. Yes, so earlier this year, there was a lot of tension focused on Masayoshi Sons pledge of these shares as collateral to banks that was happening as the share price at softbank was going down for the precipitously, and so, now, what we have seen, six months later, is that he has taken some of the shares off the table. He reduced the number of shares he pledged as collateral by 18 million. Still has 209 million shares pledged as collateral to banks, and that is about 37 of his overall holdings, so essentially, he took back 1 billion in stock from the banks, and typically, ceos will be pledging these shares for a variety of reasons. They may not want to sell the shares and trigger tax consequences and lose control over shares. They have access to the money in shares. Its not clear if softbank is talking about exactly what is going on, but it takes other shares off the table. Last what happened the time we heard about his borrowing . In march, softbank was in a very different place. They come through some of the missteps with their startups. Highestas probably the profile of those where they lost money. They were headed towards record losses for the group. And the share price was dropping sharply because of concerns that coronavirus pandemic was going to hit the startups they had been investing in and they may the forced to pledge more capital. At that time, son had increased his marginal loans with these banks, pledging more shares as collateral. The numbers had gone up pretty sharply and there was a lot of tension given to why he was pledging these chairs. He has not talked about this very publicly. He did get a question about it at a recent earnings. He borrowed about 500 billion in yen or 5 billion. Peter elstrom in tokyo. Saidues president and coo the airlines industrys demand outlook is only somewhat stabilizing. He talked about the need for more covid testing in the u. S. The demand outlook is stabilizing somewhat if not trending slightly positive. As you know, in early june, we saw a bit above bump in demands as new york cases came down and as the south had not yet peaked. In the summer time frame, the south hit sort of an all new high on case counts. Quarantine around the United States and demand came under increasing pressure appeared as we see our networks, we are seeing some demand coming back. Think caribbean islands. We are seeing some demand off of a very low base coming back in northeast florida, notwithstanding the fact that that is still a quarantine prohibits folks coming in from states with high counts to come in without quarantining for 14 days. Guy there is a lot of uncertainty around new york. Every few days, you see a new headline. How is that uncertainty affecting things . Joanna it is incredibly challenging for customers because they do not know what to expect. It is subject to a 14 day quarantine and then comes off. Do you have to quarantine for the 14 days . We are actively encouraging the exemption. Connecticut put into place a testing exemption that allows you to produce a negative test within 72 hours of departure or on arrival and for the period of time in which you get that test. Youyou dont have to quarantine. New york has yet to put one in. From our perspective, we are concerned about the impact that will have on economic recovery longerterm. There is the view that there is widespread compliance with the 14 day quarantines. Its hard to tell whether people are complying with them or not. We do see in the case of connecticut before they put their testing exemptions, we saw customers poking around connecticut, going into looking booking around connecticut. If people have to travel, they will find a way. We are actively encouraging governors around the United States to come up with a more cohesive approach to air travel so that customers know what to expect when they come to a destination. Testing is absolutely the way out. Adequate rapidn Testing Solution so in the absence of that, we believe that having an option to produce negative tests in 72 hours, that should be the grounds to not have to quarantine for an extended period of time and have that consistent from state to state. Guy do you think it is easier in the United States, versus europe, to get states on the same page because there is the overlay of the federal government . Do you think 72 hours is simply too long . There is talk now getting a down to kind of within an hour. Do you think 72 hours is unrealistic and maybe that is part of the problem . Joanna i will start with your first question. There have been a lot of challenges around coordination across the states. The federal government has not necessarily taken as active a role as it needs to to ensure coordination. Things the government should be stepping into such as testing. Whether it is temperature testing, covid testing, theres things that are uniquely situated for the government, for the federal government to help navigate and help the states navigate, and that has not happened in a cohesive way. Shery coming up on daybreak in thechinas inclusion global bond index. We will assess the implications with Matthews Asia portfolio manager. The market open is next. This is bloomberg. 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 up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. Shery welcome to daybreak asia. From bloombergs World Headquarters in new york, im shery ahn. Manus im haidi stroudwatts in sydney. Ages major markets have just open for trade. Tentative gains after a roller coaster battle on wall street. Possible new stimulus talks against an uptick in global coronavirus cases. China has beaten down bonds earned unused earned a boost. Morgan stanley says it could attract 90 billion in foreign money. The u. S. Has given an ultimatum ban ork tok, delay the respond in court. Issident trumps ban t due to take effect monday. Shery major markets coming online. Gaining ground by. 6 . And Consumer Discretionary stocks leading the gains after two sessions of losses for both indices. The japanese yen seeing a little bit of strength. This after weakening throughout the week. We have seen the boj july Meeting Minutes with corporate financing expected to remain under stress. We have seen the boj keep its Forward Guidance unchanged. Take a look at the kospi, gaining. 8 . This coming off of its worst day in about a month. In yesterdays session was leading the declines in emerging asian currencies. Risk aversion gripping the markets right now. A little bit of strength against the u. S. Dollar. All to do really with what happening with the u. S. Stimulus package. Not to mention the surging global virus infections. We are watching those closely. Haidi there seems to be a little bit of a lack of direction in markets as investors look at what the next rebound could be. This at the start of trading. Staggered open coming through for australia. 1 . Asx 200 up a quarter of Growth Stocks in australia doing well. The msci australia growth index jumping to a relative high compared to the broader index earlier this week. We will see if that trend continues. Aussie dollar at 7058. On the up after a session mostly dominated by dollar strength. The aussie set for its worst week since the borders closed on march 20. The aussie dollar rising about. 10 in the early part of the session in the 100 day moving average. The aussie 10 year yield steady at the moment. Kiwi stocks trading higher by about. 4 . Shery lets discuss the Trading Outlook with Mark Cranfield. Great to have you on. Clearlly have lacked direction in the Global Markets for the past few weeks. Continuing, at least through october, given the uncertainty of where the geopolitical landscape is . I think we can expect more of this. We will have to get used to it. Yesterday was a good example of what we will have to put up with. You see how u. S. Stocks traded yesterday. U. S. Data about jobs, which wasnt too good. Stocks reacted badly to that. Optimism there would be a stimulus package between the democrats and republicans, although that hope seems to be fading. And the back and forth over the u. S. President ial election. Whether or not we will get a virus solution before the election or after. All of those things are battering people during the day. The ebb and flow between people wanting to buy and sell. This will go on for a while. It will be hard for people to make a clear conviction on where they want to go until they get a better reading of how quickly the u. S. Comes out of contraction, whether or not there will be a solution for travel arrangements, because people are so heavily restricted because of the pandemic, and whether or not the u. S. Will provide the stimulus package, which is big enough to satisfy what so many people in the markets want to see. In terms of the markets, the search for yield continues. The Government Bonds, the inclusion in the ftse russell world bond index. How much of a shot in the arm does it give the index . Not just bonds, but right across the china asset space. We have already seen the yuan strengthen a little bit. Although the yuan has been having a good ride for the last few months. There will be some decent inflows into china over the coming years. One of the things is the chinese yuan bond market is so big, potentially one of the largest markets in the world. Many Foreign Investors are relatively underweight. Not only chinese bonds, but the currency, as well. It will happen over a long period of time. More people will get used to the idea that chinese bonds are a Good Alternative to other major markets, and those flows will gradually come into china, so they will support the currency, the bond market, but also flatten the chinese yield curve, the forward curve in china is steep. Thats a direction of the divergence since the pandemic hit. Pboc has been much more moderate with its responsive Monetary Policy compared to the fed. It has pumped up the qe levels high. Divergence through the curve in china, which has gone much steeper. Chinese yields are so much higher than their u. S. Counterpart. Theres room to flatten out. Many parts of the chinese space, which will be affected by this move into the bond index. It will happen over a period of time, not a few days. Us. I Mark Cranfield with more on the ftse bond index asiaes later with matthews portfolio manager, teresa kong. Lets get you the first word headlines with Karina Mitchell. Stimulus talks may be on again in washington. Nancy pelosi and Steven Mnuchin and now ready to sit down. The treasury territory said a targeted relief the treasury secretary says a targeted relief package is necessary. The speaker willing to talk. It is not clear if either side is wanting to agree. But an agreement skepticism an agreement will be available by the election. Some signs of a pickup from the coronavirus. The Cabinet Office monthly report kept the same language to describe the outlook for a Third Straight month while saying it of 14mprovement in four categories, exports, production, bankruptcies, and the labor market. The u. K. Government issued a gloomy forecast, warning more jobs would go, despite Jobs Companies weathering the virus fallout. The chancellor announced a program to subsidize wages for parttime workers to extend loans for firms affected by lockdown rules, and cut sales taxes for longer. He told the commons unemployment is bound to rise as the u. K. Economy adjust. Adjusts. It is now clear as the Prime Minister and advisors have said for at least the next six months, the virus and restrictions are going to be a fact of our lives. Our economy is now likely to undergo a more permanent adjustment. Karina China Remains committed to defeating independence for after theall costs airspace was encroached on. The Ministry Says it dares to separate itself from the mainland, and action will be taken. Taiwan is condemning chinas rising military activity, calling it a derivative direct provocation and attack. Global news 24 hours a day on air and at bloombergquint take, powered by more than 2700 journalists and 120 countries. Im Karina Mitchell, this is bloomberg. Shery President Trump suffered another loss in the tik tok showdown with china. Details next. Ofsident xi pushing a model circulation to reduce the reliance on exports. How alibaba is helping Domestic Companies pivot inwards. This is bloomberg. Lets check in on australian banking stocks. Watching for a couple of different stories coming through. The government set to lose some lending laws. The government looks to really accelerate the recovery from covid19. The first recession australia has seen since almost 30 years ago. Part of the overhaul, the government will scrap the lending obligations for most forms of credit, but has made banks overly cautious and access to mortgages and other loans. Cutting red tape and removing that overlap should speed up loan approval. We are seeing that across the big banks. Cba, the largest lender, up by 2 . Now close to 6 . Also watching westpac. It agreed to pay on australian record of 1. 3 billion aussie dollars to settle the countrys biggest breach of antimoney laundering laws that was more than the 900 million the bank had been setting aside. Some analysts say the penalty is higher than expected because it included additional breaches. In terms of it removing a significant source of uncertainty, you are hearing the likes of payless raising the westpac stock to outperform, as well as jeffries showing a similar view. You see that jump in westpac by over 7 in the first part of the session. s owner is still working on approval for the sale of its u. S. Assets. Judge hasest twist, a given the administration until friday afternoon in wash can to delay its ban on tiktok washington to delay its ban on tik tok or block it. Lets bring in Stephen Engle in hong kong. Another deadline is looming. Termswists and turns, in of the legal implications. Once the latest . We should know we could know the fate of tiktok global, the u. S. Entity within the u. S. , 52 hours from now. By midnight on sunday. Three key deadlines coming up, including the when you mentioned. Friday afternoon, 2 30 p. M. Eastern standard time in the u. S. The u. S. District judge has given the Trump Administration until that time later today to agree to either delay its sunday abn deadline, ban deadline, or file the Necessary Court papers opposing the request for a preliminary injunction. Wednesday, the request was filed in federal court for a preliminary injunction on the grounds of it violates free speech. Unlawful ump of the ban is also unlawful. Taking additional steps as we chatted to get that preliminary wechat did earlier this week. Without the delay of the ban, if the administration decides to file the court brief instead of offering the delay, the judge will hold a hearing on the injunction request on sunday morning. Is 11 59 p. M. Line sunday eastern standard time. Thats the deadline for either the deal to be worked out, or tiktok will go silent on u. S. App stores on android and apple. Shery do these moves give any indication of a likely outcome to this saga . Fourere are really outcomes. Three are more likely than the other one. And theth is bytedance Chinese Government approves what donald trump said he wants. Tuesday, he told fox news he wants oracle to have 100 control of tiktok global. Thats not something the Chinese Government is willing to give into in its own review of this transaction. The other three options are a deal with oracle and walmart going through, where 80 of control stays in the hands of bytedance and its u. S. Partners, including Sequoia Capital and general atlantic, and controls most access to its algorithms and source code. Something the u. S. Administration doesnt necessarily want, even though donald trump gave that deal his blessing in concept. So there are complex. The other option is the ban takes hold, tiktok closes up shop in the u. S. , beijing is happy in that scenario, because they have said they do not want this company to go completely into the hands of an american company. Haidi no doubt there will be more twists and turns before we see the end of this deal. Stephen engle with us. Coming up next on daybreak asia. Global a look at why s p ratings upgraded the outlook for china, with sean roache joining us next. This is bloomberg. Haidi a new forecast for asia set and impose global ratings have upgraded their outlook for china. 2. 1 from anrowing earlier projection of. 2 . s chief Economist Says the recovery is real, but not yet selfsustaining. I want to bring up a chart that shows the dire outlook across the rest of asia, and how the theme of chinese exceptionalism is playing out, whether you talk about the domestic recovery story, the strength in the currency, and we had another boost to sentiment with the inclusion of Chinese Government bonds in the ftse russell world bond index. To what degree can this be sustained, particularly as you would see that we have had the country reopen and virus levels low, do they get the boost when the rest of the world gets a boost from the vaccine in the First Quarter of next year . I they certainly would, but think the recovery is not all it seems. If you look a little bit under the hood, its not quite as strong as it might appear. There are three drivers of this recovery, infrastructure investments, which is clearly related to stimulus, exports, which has outperformed. It is concentrated in the electronic stoit seems chinese k its a safe home for their money in an uncertain time. What does worry us is the consumer. The consumer taking a long time to get over what was a very large income shock in the first half of this year. If you look at retail sales, they were only just positive year on year in august for the first time this year. In other asian economies, retail sales of inks came back quicker. China is exceptional, for sure, first to recover. At the same time, its not all it seems. Haidi what does that mean for fiscal and Financial Stability and moderation . So far, we have seen a moderate approach from the pboc. Is this a case of china returning to the old stimulus pay book when it comes to the suggested investment driven reliance for the recovery . Not at all, actually. What we are starting to see is some of that stimulus getting pulled back. We think it is getting pulled back too quickly. If you look at the index of financial conditions, which includes things like real Interest Rates, both at the short end, the low primary example, and the low end of the yield curve, we see real Interest Rates rise substantially from the may lows. At the same time, the credit impulse is weakening. You put that together, i think it is telling us authorities want to be cautious. Thats understandable. At the same time, if the recovery is not yet selfsustaining, if consumers are not spending at the rates they were before covid, we think its too early to tighten the growth from that approach. Shery not only are they not spending, there seems to be a gap between who is spending. The rich seem to be buying luxury goods, cars, and electronics, but the poor are really saving. Food and other essentials are not being bought as much. How will a lopsided recovery affect the longterm growth trajectory of china . When will the risks surface . I think this is not so much an issue for the longterm. I think they can, if they provide enough stimulus to allow the rest of the economy to catch up, get back to where they can be by the middle of next year. But i think you are right in the sense it points out some very important structural issues, where the stimulus doesnt get to where it should be going. I think thats an issue. We know low income households, migrant families, these are the areas of the economy that have suffered so much during covid19. The Service Sector has been hammered. It has taken time to recover. Thats where all of the jobs are, where the migrant jobs are. As they lost jobs and went back home, they did not get the Cash Transfer payments you see hitting households and other economies, whether it be australia, korea, or even in malaysia. Chinese customers are suffering a little bit. It will take time to recover. We think next year, we should see quite the consumption recovery come through. I think it will be more gradual than some people think. Shery let me turn to another economy that caught my eye and bring up haidis chart a little earlier. I couldnt stop staring at the huge red bar that went down. That,n see look at thats india. Whats going on . How challenging will the return to a new normal be . It will be very challenging. A couple of things going on in india, nearly the virus remains uncontained. If you look at the mobility data, which identifies how much people are moving around in the six weekst stalled to in june and july. That took in a normas chunk out of the economy this year. We revised it from minus five to 9 of the fiscal year. Enormously strong rebound. They already came into the crisis in a weak state. The other thing that has hammered india is the policy response being so weak. We estimate the fiscal impulse, the amount the budget is adding to aggregate demand, is only about one percentage point of gdp. To compare that to any other economy in the world, it is exceptionally low. That has not provided any sort of safety net for growth. Thats the result we are seeing. What concerns us is this is going to create longterm damage. Colony willia as a be back 30 below where it would have been after all of this is behind us. Theres going to be a big permanent hit. Then we worry about longrun growth after that. With Balance Sheets so weak, it will be difficult for firms to invest and for banks to lend. Haidi we are starting to really ponder the limitations of even the most extraordinary of monetary policies. It seems new zealand is heading towards negative rates, the First Quarter of next year. How much potentate potency is left for Central Banks . Central banks are getting quite inventive some of the mutuals they are coming up with our working. I do get the point Interest Rates are getting closer to the zero low band. There is a marginal effectiveness from traditional qe, just buying longterm Government Bonds. Particular those that are not important for financial conditions, especially emerging markets. Its more about lending rates to the banks. What we are seeing Central Banks doing is creating new facilities which provide financing for banks if they lend it onto the real economy. Particularly on too or mediumsized enterprises. I think that explained a large part of the big surge in credit impulse we saw on the first half of this year. That provided a safety net for the economy. It allowed them to keep going during a difficult period, providing payroll, so Central Banks have tools. I think these new facilities are proving quite effective. Shery shaun roache, great to have your thoughts. S P Global Ratings chief asiapacific economist. Lets get a check of the latest business flash headlines. Biotech will complete Coronavirus Vaccine trials in brazil and seek approval by the end of the year. The trial for children has been approved in china. Results are also expected in the coming months. The drugmaker is pledging to supply china and other countries at the same time. It will prioritize and nations conducting Clinical Trials and those hardhit by covid19. China, brazil, indonesia, the countries where we had Clinical Research will get the vaccines simultaneously. This is the goal of our work. Says the ftsekong rustles inclusion of chinese indexn the global bond seals china rise in Global Capital market. Details ahead. This is bloomberg. Here is how markets are trading. The nikkei gaining ground. Utilities and Consumer Discretionary stocks leading the gains. The japanese yen holds steady. It will weaken through the week. About though mid100 highlevel against the u. S. Dollar. The kospi is flat. We have seen it come back from its worst day in about a month. The asx 200 also gaining more than 1 . We have seen the index in the narrow range since june or so. The aussie dollar has been under pressure. We have seen the speculation of the rba cutting rates. The aussie at the moment at the 7052 level. Qe stocks gaining ground. The yuan giving up earlier gains. In the context of things, one of the best quarters ever. Aslly getting another boost Foreign Investors are now to have a new channel to invest in Government Bonds. Ftse russell is to include the sovereign debt into the index indices from october next year. Lets get perspective on what this means for investors with Matthews Asia portfolio manager, teresa kong. Completes chinas integration into the global bond markets, the last of the three main index compilers to add china debt. How significant is this . It is really significant. Its the second of a onetwo punch that establishes chinas place in the global one markets. Most bonds global bond markets. Most bonds are tethered to either the barclays or the rig be, so these are the heavyweights. With the inclusion, not only is china part of t china is part of both. It acknowledges its role as a highly investable market. Shery what does that mean for capital inflows into china . Aswe are assuming around 6 the chinese bond weight. We think approximately 2 trillion of assets track the rigby. Overall, capital inflows could billion. 120 thats not counting the crossover investors who will also be investing. Overall, we think the flows will be very significant. Probably north of 120 billion over time. Haidi em investors in the space, do they need to get more picky and cautious when it comes to risk . Particularly as we get more conversations about the possibility of earlier than expected Central Bank Tightening . Its a really good question. One of the things the china bond market offers is diversification. The volatility of the chinese bond market has historically been very low. One of the lowest with any global bond currencies. If you couple it with the fact that the chinese bond market tends to zig while others zag. Its really because the Monetary Policy cycle is much decoupled from the rest of the world. When you combine the two, we think china bonds can be a good way to reduce risk in the global bond portfolio. This idea of chinese exceptionalism in this space really depends on the fact we do see a very domestically independent set of monetary and fiscal policy operating . Thats right. I think the most recent episode of covid19 has been a good case study. If you look at the rest of the world, most Central Banks have been loosening to stimulate the economy. That has not been the case in china. Chinese indices have risen more than what a lot of investors would expect. That shows a shine of strength, not weakness. The increase in Interest Rates means the Chinese Government can afford not to stimulate, because the economy has actually recovered ok on its own. Shery which is one of the reasons we see a rally in the chinese yuan. What would the index inclusion due to the chinese remedy . Do they have direct Material Impact on its movement . We dont think so. If you look at what drives the currency over the long run, it has a lot more to do with whether or not a country has sufficient savings to meet its own investments. Whether or not its relative gdp is growing faster than the rest of the world. If you look at those factors, china is doing quite well. The chinese saving rates are still larger than investment needs, so that means it enjoys a current account surplus. That means they dont have to rely on some foreigners to finance its own ways. If you look at that perspective, we dont think this inclusion will have Material Impact. It could possibly a mild tailwind be a mild tailwind over the next couple of years. Haidi lets talk about investment opportunities, if you impendingive on risk, disaster possibilities. The Bloomberg Barclays asian highrisk yield is an interesting place. The problem is china makes up about half of it. We had the headlines of the worlds most indebted prope rty developer warning about a cash crunch doom if the government doesnt step in and allow it to grow. How much opportunity do you see in this space . Is it their concern the junk bond space is setting up for disaster . Now you are asking me about the u. S. T dollar denomination of many Chinese Companies. The chinese bond market is about half of the u. S. Dollar highyield market. Do i think ever grand is a Systematic Risk . I do not. It has sufficient liquidity in the shortterm to meet its pending maturities. Is question for evergrande whether or not its willing to moderate its ambitions in things like electric cars that they have gone into, which requires a substantial amount of capital investment. About 2 billion or 3 billion last year. And whether or not they are willing to taper their Growth Prospects in the real estate sector. If you look at real estate companies, if they are willing to do that, that means they can spend less on their acquisition. It becomes a very positive cash flow entity. I think its really up to evergrande to figure out what it wants to be when it grows up. In that perspective, we dont think it will pose a Systematic Risk to the u. S. Dollar or the highyield market of Chinese Companies u. S. Dollar highyield market of Chinese Companies. , wei teresa kong appreciate your time. Coming up next, more on the latest with evergrande, and the cash crunch it is facing. What are the implications and likely outcomes . Next. This is bloomberg. Karina this is daybreak asia. Im Karina Mitchell with the first word headlines. The Trump Administration has been ordered to delay its ban on tiktok or respond friday to the apps request for retention. Says theistration owner launched a separate lawsuit more than a month ago newis late in filing a injunction. Lawmakers in bangkok failed to reach any agreement on how to amend the constitution, potentially sparking more mass protests. Parliament back to the creation of a panel to study changes, but it means a process for rewriting the charter will be further delayed. Demonstrators are calling for more democracy in thailand and limits on the powers of the monarchy. To the pandemic. France and the u. K. Marked record numbers of covid19 cases as europe battles a resurgence. France reported more than 15,000 infections. The u. K. , 6. 5 thousand. The most in both countries since mass testing began. Globally, cases have surpassed 32 million. Is london job market shrinking as people increasingly look for work outside of the capital amid the coronavirus slump. Search forsays employment elsewhere in the u. K. Rose by 27 in august compared to a year ago. The number of jobs advertised in london remains at about half the level recorded in february hold. The pandemic took global news, 24 hours a day, on quicktake,bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell, this is bloomberg. Shery trip. Com reported a Second Quarter adjustment loss, narrower than estimates thanks to a strong pickup in chinese demand for travel. The ceo spoke with bloombergss guy johnson at the aviation seminar. So we verycovered, much look forward to healthy growth in the aviation industry. In terms of the nature of travel we are seeing, is it leisure, visiting friends and family . If it is those two things, Windows Business travel come back . Leisure comes back first. For example, we are seeing one to two hours near shanghai. The most frequently visited areas, because people need to do something to relax during the weekends. Seethe long weekend, we Long Distance traveling, which would take three or four hours by flight. So those are the ideal destinations for the three week holiday. Found, we need to wait a little longer to go. Of meeting people taking through zoom, however, the demand is very strong. Pickup, in strong terms of Global Travel within china between major cities to conduct business meetings and facetoface meetings. Curious the nature that this comes back. Im fascinated you hear Business Travel is coming back. A lot of people in europe and the u. S. Are not talking about that. Thats such a critical yield driver that they are desperate for it. In terms of the way the protest is working, discounting the Leisure Travel first, and getting into the highyielding Business Travel down the road. Is that the way you would expect demand to come back . Thats correct. Selfdriving type of nearby travel come back first. Then the Business Travel. Less ande becoming less interested right now. The longterm effect of all of this, what do you think it will be . Do you think there will be consolidation, changes in the travel industry, or having a longerlasting impact . What we have seen is the crisis really made Small Businesses not have sufficient reserves financially. Its very difficult for them to sustain. Wellompanies that are prepared with strong Balance Sheets, they will be able to do very well to weather the storm well. Going forward, i believe the pentup demand is very strong. Particularly in china, where you see people we used to send 150 Million People out to different countries. Because they cannot go abroad, now these people are converting to the high end users for prices that propel the material trends. They are doing a lot of shopping within china right now. I think the Consumer Power is there. The pentup demand for travel abroad is there. When the vaccine is developed, i think pentup demand will be able to bring people abroad and sent to different countries. That was jane sun. We need to talk about China Evergrande investors rushing to the door after the cash crunch. It may have a wider implications if the situation worsens. Lets bring in david ingles. Im not sure if you heard teresa kong earlier. She said it doesnt signal impending disaster, but evergrande needs to decide what it wants to be when it grows up. Let me get your views. How serious is this situation . Thehe situation now, and reason markets reacted quite badly on thursday, when the stock was down 6 , the lowest level since may, is we were able to see a letter dated august 24, it was from the company sent to the government. It was outlining a worstcase scenario mapping out of the situation. I guess thats the first point. There was an incentive from the company to paint a fairly bleak picture to get what it wants, which is really support for a restructuring. What will happen is theres a deadline, january 31. Thats when Strategic Investors are allowed to exit. If it does get the restructuring, and part of it might lead to it being able to lift over the cash crunch. If it doesnt happen, it might face 19 billion. Thats the payment it makes to the investors. Thats about 90 of its cash. That will dry up the balance sheet. The reason we are looking at this, it is a very big developer. When you look at the bond market reaction, and here you go with a drop yesterday, it is something to consider. It might be a similar situation which some, not all developers, might find themselves in. S p yesterday revised the outlook for the companys rating. We will see what happens. Shery the signs pointing to a systemic disaster . What are the possible wider implications . Part of the letter did talk about that. If it does get to the situation where it needs to pay a certain amount of money, a large amount of money, and im going to look at the paper here, it may lead to cross default in its borrowing from banks. This is where it goes from an asue specific to evergrande, deadline, investors to pay, pay it by this time, to something that might have wider implications in the industry. You are looking at dollar issuance, bond issuance in china already quite low. Debts, chinese debt issues, the first thing that comes to mind is property developers. Thats where you get a lot of the funds raising, leverage, net gearing on those Balance Sheets. It is specific to the industry. Is it a big issue . It hasnt been an issue. Will it trigger something . It could, which is why we are not just tracking evergrande today, things like wider spreads. If you are sitting on debt, bonds of chinese developers, this news is what you do not need in your life. Shery David English with some insight on what happening with evergrande. Been hitactories have by a double whammy of the pandemic and geopolitical tensions. A lot of them pivoting to the domestic market. We find out why alibabas big data is playing an important role. This is bloomberg. Says the company is committed to the Fastest Growing market for subscribers and has already started testing the technology needed for the launch. Xbox is shifting from a console centric Business Model to a play anywhere style. Indonesias biggest lowcost carrier is being sued in london for late payments. Eight other parties have almost 22 Million Dollars in outstanding costs. The leases include eight boeings. Earlier this year, another airline faced a similar suit. 250d airlines will offer on the spot covid tests for travelers headed to hawaii so they can avoid the two week quarantine on arrival. The regime can be expanded into international travel. United is seizing on hawaiis decision to allow travelers to avoid a quarantine if they show a negative test result within 72 hours. The new rules begin midoctober. Chinas factories have been hurt by the pandemic, but they are turning to alibaba. Many are shifting to the demise tick market, looking for the next local hits. Joining us is our consumer reporter. Theeems only natural given trade tensions that these businesses are trying to refocus on the chinese market. How is alibaba helping . Since march when the pandemic actually hit their overseas orders, we have seen hundreds of thousands of chinese many factories are turning towards Commerce Companies like alibaba. This is important because right now the China Economy with 1. 4 Million Consumers is the only economy back to precovid production level. This could affect global trade as well. Jinpingusion the whole government is ambitiously seeking to boost the mastic consumption to boost domestic consumption. They are per day they are data. Ding they are now doing these electric toothbrushes selling to rural areas. Interested. S were is selling this and reduces the reliance on exports. How many factories are involved in this . Are there any downsides to this kind of direct selling . Actually, when alibaba marched this app back in on the others, the consumers inning up to become active users. [indiscernible] the downside of this is the domestic market is very price sensitive and consumers are looking for lowpriced items when the factories do not have their own. The competition is very fierce. According to a ministry of commerce expert, he said only 10 to 20 are taking actions to shift to in orders. If in the longterm, chinas export data shows strength, then very likely chinese export factories will do both sides, inward and outward, to reduce their risks. Anchor before we hand it over to the china open, lets take a quick look at how markets that are open are trading. After a pretty messy handover from wall street overnight, investors struggling for direction, but we are seeing one direction all the way up when it comes to here in asia. Up 0. 5 . I 225 the kospi also bouncing back after a lower trading session. The futures market up by 0. 6 . In australia, the big banks theing, up by 1. 5 across asx 200 after the loosening of lending restrictions. Kiwi stocks are also up by 0. 5 . Gohl ahead, we have edmund joining us, and george sun. Inclusion ofe Chinese Government debt. This is bloomberg. Tom it is 9 00 a. M. I am tom mackenzie. David i am david ingles. We are counting down to the last trading session of the week. Lets get to your top stories. Stimulus stocks may be on again. We will see, after washington sees
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