Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

Pips. We are looking at the rest of asia doing this. 1 8kospi index down about of 1 . Some updatese, here on what happened yesterday. Military saying it is on high alert in that part of the world. Today,the top stories just a couple minutes ago, we did get confirmation out of the pboc, adding more funding to the system here. It is trying to guide the economy through a rough patch. A smaller chunk, 2. 95 . Jason. Us now is pleasure to have you. Good morning. Your top thoughts for today. What is top of mind for you . At chinas liquidity guess first the primary liquidity facility, but it does also add to the positive growth picture for china, especially on a relative basis. Covidast because the situation has been continuing in china. When you couple that with Strong Capital flows and improving current accounts balance, it doesnt mean the fundamentals are quite good at the moment. Note, and i guess on that many people say go long against the dollar. Your trade is the currency against the indonesian one. Why . The most bearish mediumterm view is indonesia. Seenink we have not foreigners come back to the indonesian market. Is acceptable to our risk off situations and when we have globalweek ruble growth dynamics, it tends to be the currencies that suffer. As far as looking for currency to reduce the carry and play strong versus weak fundamentals, it does seem to be a reasonable structure. Tom there seems to be a consensus amongst our guests that you are going to get further dollar weakness. Is it necessarily a space that benefits, and if so, would you be looking at some of the high yield currencies . That is a very good question. Weakened from may to july. It has been stable over the past three months. But there has been a significant divergence between how e. M. Currencies performed as a group it is historically kind of unprecedented, and we dont think that e. M. Strengthens to close that gap. The exception has been lower yielding countries in asia, but in general, emerging markets reason forelling investors. The yield compensation is extremely low versus past cycles. Risksthink the downside exceed the upside ones. If the dollar did we can further from here, currencies would probably lag significantly. I want to bring some of my personal bias to play here. Euro sterling, you have a view on this. We are in the middle of what could be lastminute negotiations over brexit. Gbphe relative weakness of something of a flaw for the currency . Terms, sterling is at very weak levels. Theres a lot of pessimism baked into the currency. Lookal brexit does increasingly likely. Even the possibility of the bank of england moving to negative Interest Rates this year or next year. We dont really see any point to buying sterling here. And a disorderly deal from the e. U. Could take euro sterling close to parity. David elections are coming up about three weeks from now. Four years ago we saw that massive reflation trade. In the event that we get a biting win and maybe a democratic sweep, do you think that sort of scenario would create something similar . What are you watching . We think a biting win would be more negative for the dollar, kind of all else equal. It would probably be more negative for the bond market as far as higher yields. The growth situation would be weaker. That should conspire to weaken the dollar. Sweep is kind of our base case as far as our forecasts are concerned. Jason, great insight. Thank you. That is jason from socgen. Lets get you the first word news. Thailand has declared a state of emergency in bangkok as protests against the government continue. Demonstrators gathered on a main avenue as the king returned home from germany. Protesters want new elections. They want constitutional reform and curbs on the traditional powers of the king. They insist they do not want to bring down the monarchy. U. S. Stocks fell on concerns a stimulus deal will not be passed in washington before the election. Treasury secretary Steven Mnuchin set agreement before november 3 would be difficult. He spoke after talks with Speaker Nancy Pelosi and said that democrats may be holding back in the hope of winning the senate next month. Supreme Court Nominee Amy Coney Barrett has faced further questions on capitol hill but the democrats all but powerless to prevent her confirmation, they chose to focus on statements by president trump. She was asked about his suggestion that the election might be delayed and his claim that he could pardon himself if necessary. Barrett continued to avoid saying how she might vote in potential cases. China says its military remains on alert after the u. S. Navy carried out exercises. The American Pacific fleet says the guided missile destroyer passed through the Taiwan Strait on wednesday in what it calls a routine transit in accordance with international law. The navy says it shows the u. S. Commitment to the region and it will continue to sail according to the law. Not everyone is driven to brave the elements. To meet Mother Nature each day. David in case you missed it, bangkok declaring a state of emergency after thousands of protesters take to the streets. Forill be joined later on what that means. Coming up next, we are talking , seekingack in court to block a second round of u. S. Restrictions. More on that coming up. This is bloomberg. Tom chinese social media app tiktok is trying to fend off further restrictions in the u. S. From the Trump Administration. Thehen engle is tracking development and joins us from hong kong. You have been across this story from the beginning. Tiktok won the first round of the legal battle in the u. S. , but there are still hurdles. There were two executive orders issued by donald trump on tiktok. The first one was semiresolved as far as getting a preliminary injunction. The judge basically said he that the Trump Administration perhaps had exceeded its executive authority under the Emergency Powers act and could not necessarily find evidence, while agreeing that the Trump Administration supplied ample levels of evidence that perhaps china was a National Security threat, but not enough evidence that tiktok in particular was a National Security threat. Round one perhaps. But theres that second executive order from donald trump and the looming deadline for the sale of tiktok u. S. Assets to a u. S. Company and other restrictions. Has filed aiktok court order to block these further restrictions from Going Forward, appealing to judge nichols, basically asking to issue this injunction against rules that would forbid other companies from providing the underlying web services that make the app available in the United States. Again, theres that other deadline of november 12. This is the statement from tiktok. There would be permanent devastating harm to tiktoks user base and Competitive Position even if the ban were to be lifted. It is doingase that considerable harm to their business. David we could possibly switch in light of the massive ipos in hong kong, this headline that the group might be blacklisted in the u. S. Is something you do not need in your life. What do we know . You dont want that in the prospectus for the ipo. A lot of u. S. Investors as well lined up and who are already invested. This is the big ipo coming down in hong kong,f half in shanghai. This kind of has a cloud over that ipo if the Trump Administration is going to try aunt,strict ali pay from which is the online payment platform, and also wechat pay as well. Reuters is reporting that the state department is now getting involved because the Trump Administration has been looking at the right avenue on which to ontrict and and we chat pay National Security grounds. Now throughtwice the District Court system on we chat and tiktok. Reutersear according to that the state department is considering adding aunt to its entity list, which would basically be a blacklist. The Chinese Government, the Foreign Ministry spokesperson already has likened this to economic bullying from the United States. We have to see how this one plays out before the election. Looming,deadline is not on tiktok there is no deadline on this one. Even im getting confused on some of these actions. But this one pretty much is up in the air right now. We have to confirm whether the state department goes after aunt by adding it to the entity list ahead of that big ipo. David yeah, dont worry about it, steve. It is not just you that is confused. Engle, our north asia correspondent there. Ine news coming out of china terms of passenger volume. Year,bout 12. 5 year on roughly 25. 6 , and as you would expect, that is given the pandemic. We talked about this recovery in china. We have yet to retrace. So much volume of people flying in the air. Coming up, we are talking to the imf. They are telling countries not to worry about taking on more debt. We ask the question, is that a good or bad idea . That is coming up next. This is bloomberg. Tom welcome back. Just a small correction on those passenger numbers before the break. We got the month wrong. China september air passenger volume contracted at 12. 5 year on year for september, compared to 26 for august, not october. We dont have a crystal ball for those data points. Contracted some 12. 5 year on year for september, compared to 26 in august. The golden wheat holiday over october. That will be an interesting number. Moving on to the debate happening in d. C. The imf is urging governments to borrow now and worry about debt later, echoing a host of Central Banks around the world. Kathleen hays is here with the details. The imf policy on debt and deficit is pretty different from what we would have heard a year or so ago. What is driving this conviction from the imf at this point . Kathleen it quite striking. For years the imf has urged countries large and small not to drive up there debt too much, and once it gets high, you take steps to start decreasing it. ,n the midst of a pandemic where every policymaker is saying we have to do what we must to survive right now later we will think about the consequences the imf, apparently their most detailed study on the pandemic saying that global Government Debt is going to make a jump this year. Thatead of the imf saying the big priority right now is not to worry about bringing the debt down but avoiding premature withdrawal of support. She said earlier today. The worries about debt levels going up are not for now. For now, the biggest worry is that we dont do enough to support the economy and here we have a durable exit from the health crisis. The governor of the European Central Bank Christine Lagarde saying the same thing. Her biggest concern is that ernments in europe remember that the imf estimates that government injections of totalingare already 12 trillion. Global public debt now on track forass 100 of global gdp the First Time Ever in 2022. Jp morgan has estimated that this fiscal rescue steps add nearly four Percentage Points to growth this year. We just got the forecast yesterday. Means that contraction of global gdp would be twice as big. This is why so many policymakers say we have to keep it up. David lets bring in the world bank. Push, the reason i bring that up, they have been pushing for debt extension if not debt forgiveness. Help us marry that with the reality where you have the g20, the biggest countries in the world, not pushing for the same thing here. What has been happening . Kathleen it is interesting. Extend thisagree to extension of debt repayment, but not until the end of next year as the world bank has been urging, but to the middle of next year. They tried to communicate lack of progress and private creditors. Saying, we are getting governments stepping up, but what about hedge funds . How about china . Also saying that we need rapid progress on debt relief. When you start thinking about that, you start thinking about default of any kind. He and carmen, the chief economist, have been speaking about this as well. This is a risk that is lingering. If this recession starts getting worse, spreading out. David kathleen, great stuff. Global economics and policy editor there. Lets get to your latest business flash headlines. Some change in australia here. The Company Announced a toplevel shakeup. The change is fairly remarkable here. Airways has won almost 4 million in loans as it struggles. Three others will take part, including the governmentbacked Development Bank of japan. Expect Japan Airlines passenger sales to fall this month. The carrier had considered a share sale. Tom . Tom lets check in on the mainland markets. Of a mixed, a bit picture in terms of the mainland. You did have that injection of 500 billion yuan by the pboc. Then you had the inflation data as well. Producer prices slipping. A suggestion that the recovery beains subject and may demand is weaker than expected. Down 0. 7 . Group, suggesting that maybe washington is looking for the entity list. Tencent lower as well. Can look at some of the currencies and commodities. That is what the dollar is doing. Year, 0. 71. Coming up, the state of emergency declared in thailand, in bangkok specifically as those protests continue. Stay with us. This is bloomberg. Thailand declared a state of emergency the capital bangkok after tens of thousands of antigovernment protesters surrounded the Prime Ministers Office demanding greater democracy and curbs on the monarchy. The order bans gatherings of five or more people and allows the arrest of anyone violating the law. It goes into effect immediately according to the royal gazette. With professor of Political Science. Expector, how do you this to play out . Is this a short term set of scenarios in thailand, or are these demonstrations likely to play out over the longterm . Shortterm we will see a lot of tension. This inseen some of thailand before. New constitutions. At the same time i am sensing it is a little different. The process looks familiar in the sense that people born after 1980 are leading the charge, leading to calls for reform. There are three main calls now having to do with resignation of , andncumbent president also to have a new constitution so we can reset to become more generally finance more generally democratic. The third demand is complicated. Yesterday, a lot more people showed up on a week a than many anticipated. Nut there wasnt was a encounter with a royal motorcade that became a catalyst for a royal for a crackdown. We will seer term, more manifestations of dissent. In the shortterm, more crackdown. Tom more of a crackdown in the longterm. As that suggest that there is any desire from government officials to start a conversation with these demonstrators . Is there any sense they are prepared to give ground to government on any of these issues . Guest on the one hand, the demands are very daunting. This is an uphill task for the protesters. On the other hand, the incumbent institutions of power in military, the monarchy, the judiciary, over the last two decades thailand has been brought to a standstill. A lot of political repression. Fallen behind regional peers. These young people now, they are reclaiming and demanding their future back because otherwise they will not have jobs. Them, they want finance to move ahead and to have a future. Side, incumbent institutions of power have not shown any sign of compromise. What we have seen from then actually is the contrary, which is a crackdown. You will see a lot more tensions building up. This will be very combustible. It will also depend on the young generation. They have a broadbased organic movement. But it is not very well organized. Very widespread and genuine but they have to find ways to channel them into a broader movement. Mentioned, youu obviously speak to your students a lot. That consensus among the young people in thailand. Because weuys got that state of emergency detained we got that state of emergency today. Protesters might protest again today to protest the state of emergency. You alluded to the fact that because authorities have certain regulations in place that what we are seeing on the street is a very small portion perhaps of what it would be were not for the regulations to be in place. Do you think sentiment on lung among the young people and the students is representative of the greater population in thailand . Guest yes. Timerotest dynamics this is new. And i think it is driven by new information technologies. Cyberspace inn some parallel universe, there have been thousands and even seven digit numbers of protesters and dissidents and people who are critics. But on the streets, on the ground, there are fewer. Maybe 10,000, maybe five digits. In order to quell into a David Professor . Professor . Can you still hear us . Ok. We are experiencing a little bit of technical difficulties with our professor in thailand. Thatll try and reestablish connection for you so we can continue the conversation. Certainly a big story in southeast asia. In the meantime, an update with your first word news. Lets start things off with the pboc. Injectinginutes ago, billions of dollars into the system to help support the economy through the pandemic. It comes as consumer and factory inflation both weakened last month. Up 1. 7 , slightly less than forecast. Factory inflation registering a 2. 1 decline, following a similar slide back in august. Becoming, its rapidly the latest covid19 focus with new cases rising in several countries. Innce is imposing curfews paris and other major cities. There is a partial lockdown in the netherlands. The u. K. Is entertaining a tier three status with rugged regional curbs. German chancellor Angela Merkel has said the country cannot afford a second wave. President trump reacted with anger after facebook and twitter announced action over a new New York Post article about joe biden. The report says emails from his introducedshows he his father to a Ukrainian Energy executive, claim it contradictsbidens earlier denial. Twitter users we have the professor back. We are still joined out of thailand. Apologies for those technical difficulties. Lets continue the conversation then. You oversee Political Science. We tend to see phases of discontent in protests. Usually at times when the economy is not doing well. Question his thailand is perhaps going through its most difficult economic time. Do you think these protests still be happening if the economic realities were different . Guest these protests preceded the pandemic. Economy was struggling for two decades. Economic been no upgrading or growth strategies. So the economy is not doing well. Protests, even independent of the economy, there are a lot of grievances for the young generation. Hand, theer conservative establishment has been unwilling to allow them to move forward. Now people think they have no future. They had been demanding their future back. Demanded thehey constitution,ew and reform of the monarchy. Whether this parallel universe can merge, theres a a lot of grievances in social media networks. Ground,es and on the fewer. We will see if the voices are willing to show up in reality on the ground. David that is a very good distinction to make. There is a big difference between saying something online and actually taking to the streets to push that narrative. Along the three major things the students are asking for, what do you think they are going to get . Them, allhink all of three are very daunting and very difficult. Demanding that the sitting Prime Minister resign. He kind of ran thailand into the ground over the last six years with no future ahead. But he is not likely to resign easily. Onre is a lot of pressure the protesters and the Prime Minister. Then to come up with a new constitution. Very laborious. A long, drawn out process. Not easy. Reforming the monarchy is the most difficult of all. The establishment will be very reluctant to make any concessions. They will be afraid any reform will lead to larger reform and change. Ande are very tough daunting demands to meet for the establishment, but also the studentled movement. This is their line now. They are staking their credibility on this line. In the shortterm i think more repression and crackdowns. Longerterm, we are looking at a very combustible situation. I know this is a sensitive issue given the laws in thailand. So what is the significance of this change in terms of the popularity of the monarchy in thailand . What is behind it and what are the longerterm implications . Guest well, if you look at the studentled protest movement, they have made the distinction this is a new monarch as opposed to the late monarch, it was very possible popular and was on the throne for seven decades. For the new monarch, the direction seems to be, from the protesters movement and also i think even a broader grievance, that there has to be a new adjustment in new times. Politics,means new new arrangements, perhaps reform and change. Thailand is not moving ahead. This is what the young protesters are demanding. So for thailand to move ahead, the political structure, the hierarchy, it has to be recalibrated. Otherwise they will remain stuck in the 20th century. Professor, we can use that as the jumpoff point for our next conversation. Thank you for coming on the show and making time for us today. Professor of Political Science in thailand. Very briefly lets take you through what is happening across the equity markets. Risk assets about one hour into the chinese session. This is where things stand. Coming off the lows a little bit. Aussie 10year still the focus as far as bond markets are concerned. Very, very, very close, if not already breaking below the low end. The big dance we are tracking thethe equity markets big names we are tracking. Coming up, the latest u. S. Bank profits are starting to resemble right before covid. Seems as though investors to not believe the crisis is completely over. This is bloomberg. This is bloomberg. Earnings. s talk Bank Goldman Sachs now joining other big u. S. Lenders cashing in on this pandemic induced market volatility we have seen the last couple of months. Wall streets biggest bond trading jump so far. Industry concerns still remain. Su, obviously strong trading gains, but talk to us about the concerns. See theren clearly are concerns because financial stocks are not favored right now. Look at the year to date performance of some of the biggest u. S. Banks. They lag the s p in a big way. J. P. Morgan chase down 28 yeartodate. Wells fargo down by more than half. This comes despite the fact that banks are saying they are stocking away most of what they need to cover near term loan losses. In the case of goldman, despite benefiting from a pandemicfuel trading boom, as we have said, goldman saw a 49 jump in bond trading, wall streets biggest jump so far. It helped fuel a 29 increase in trading revenue. Analysts say for now, it appears banks rna sweet spot. Are in a sweet spot. It has jumped for a Third Straight quarter due to volatility and demand for trading in this pandemic time. Thethe market is signaling 50 billion the Banking Group stockpiled probably is not coming back and that the banking industrys pain has merely been postponed. We are also hearing banks talk about uncertainty remaining, leaving questions on where they will get revenue growth. Best bond trading for Goldman Sachs out of all the wall street banks so far, but there big rival is Morgan Stanley. They are going to be reporting results later thursday in the u. S. Session. What can we expect from them . Su Morgan Stanley front and center in the u. S. Thursday. As you mentioned, the bank has already set a pretty high bar. Those who have reported thus far, if you look at the earnings scorecard, jp morgan and citigroup Beat Estimates for equity trading gains. Goldman was in bonds trading. Morgan stanley may actually lead with aquity slight edge if it meets consensus. Morgan stanley also being looked at to see if it echoes the bullish outlook of other Global Investment banks. Back to you. Su keenan with a wrap of the Bank Earnings looking ahead to Morgan Stanleys earnings later in the u. S. Session. Coming up, singapore paints a dire picture for the return of mass air travel, saying it could take at least two years to climb to prepandemic levels. Our interview with the transport minister is next. This is bloomberg. S is bloomberg. Tom welcome back. We are going to bring you a live shot of singapore. The sdi currently trading down by about five cents of a percent, about 14 points. Beautiful skyline. Singapore will not see the return of mass air travel for at least two years, according to the citys transport minister. He says only the wide availability of an effective covid19 vaccine will help countries reopen their borders and allow for free travel. The transport minister began by discussing the delicate alan finkel act between delicate balancing act between containing the virus and keeping the economy functioning. Ong if you asked me that question back in march, oh, either you close your borders and suffer the economic consequences, or you open up and then you get the virus and you still have economic consequences. Time, very stark at that partly because we did not know very much about the virus. We know it was very infectious, and we dont have facilities. Back in march we could test 2000 people per day. Those are mostly devoted to hospitals. There, but notll as stark. The big difference is, number one, we have kept the epidemic under control. If we had not, they would be nothing to talk about. For a long time we had zero cases. Cases of Foreign Workers down. That was a big milestone. That is one. Secondly is testing is not such a big constraint anymore. We are doing maybe 30,000 tests a day, going up to 40,000 by november, and probably up further after that. A good proportion can be dedicated to airport usage, and the indicate the airport can set up a dedicated test lab. And that can better strike a balance between travel as well as a demo control. Lets get to aviation. What are the prospects for Singapore Airlines . When we speak to experts, they say the real pain has yet to come. When does support from the government finally runs dry, what are the prospects for the carrier . 1. 5 we are serving about of previous passenger volume. So it is a dire situation. We do not really have a domestic market. What is critical is it is very much related to chinese airports. We have to gradually open up the borders and establish the key links. The key is nations around the world. Its not going to be commercially viable. But keep that open, keep the flights going. Have some passengers continue to travel. We cannot wait around for a vaccine to happen. But when the vaccine becomes widely available and maybe a year, 1. 5 years from now, at least the lanes are open, passengers have been flying, we are keeping in touch with our customers and partners. Haslinda what are the prospects would you have to reigh in plans for terminal five . There was so much hope on terminal five. Would you have to perhaps downsize those plans . Ong we have to. Theres presumptions and we went into terminal five i think would be blind not to relook at the situation. What we have done is we have suspended development for the next two years. Even now, i would say i dont have a prediction or a crystal ball to say what will happen to terminal five and what will happen to aviation. Its too early. But two years will give us time to assess the situation. And we have to decide what to do with terminal five. Haslinda realistically, when do you see the mass travel market finally going ahead . Ong when there is a vaccine, and the vaccine is widely available around the world, and people then gain confidence to travel again to other countries. Then well have aviation back on its feet, almost fully on its feet again. How long will that take . I cant make a guest. I would say minimally, a couple years. Tom singapores minister of transport speaking to our colleague, haslinda ominous. Haslinda amin. No travel. Years, sets reality in check. Economic reality here, in case you missed it we have Inflation Numbers out of china. 2 deflation mark. Consumer Price Inflation is good news. Quickly have a look across equity markets. The shanghai composite, asx 200 as well as the kospi index. In hong kong we are not doing too well. 1. 2 down. Philippines, 90 minutes into that session. , malaysia andpore jakarta. 3 . In a couple seconds we should get the first indication of how thailand should be opening up given the political gyrations we are seeing with a state of emergency being declared thursday. Close, 1263 on the fed index. We will wait for this to start ticking up or down when that market comes online. India also coming online in the next hour. Maybe a little bit of a scare. Who knows. We have guests coming through to talk us through fixed income. Also looking specifically at equity markets in india. We are just getting warmed up. Plenty more ahead. Stay with us. This is bloomberg. Is bloomberg. Haslinda welcome to Bloomberg Markets asia. David lets get your top story today. Thailand facing new upheaval after declaring a state of emergency in the capital. Although anying, selloff could be a buying opportunity. Haslinda tiktok heads back to court seeking a second legal win against the Trump Administration. It wants a judge to block new attempts to curb its use in america. David and we focus on india, where a late wave of optimism lifted stocks for a 10th street session gain. Completing his longest winning streak in 13 years. Asia, asianre in stocks under pressure after the lawsuit we saw in the u. S. Nochin said there will be stimulus before the election. Fargo among those who disappointed. Keeping an eye on the s. E. T. , down 1 . First reaction we are getting after they were put under a state of emergency. Slightly weaker, 71. 16. 10th of thousands of protesters tens of thousands of protesters demanding an end to the monarchy. Underperforming for most of the year. Unlikely to change. Asks those are tall according to one of our guests who joined us earlier to wonder if those demands are realistic. A brief look across other assets in the region. Dollar yen holding flat. We are still looking at another deadline. Leaders summit hope,ks like, and one can we may get number 11 in india today. Nifty features higher. 10 day winning streak. Haslinda quite a rally for india. In thailand, protesters are planning a new rally, defying the state of emergency in the capital bangkok. Police earlier dispersed demanded stepand down. Take us through the very latest. You mentioned the government has declared a state of emergency for bangkok to Disperse Protesters around the Prime Ministers Office. Police have arrested top leaders of the movement in an Early Morning raid. These events follow key antigovernment protests on wednesday when tens of thousands of protesters broke through police lines in a march two the government house. Some of the protesters openly defied members of the royal family by holding up three fingers, which was one of the symbols of the protest movement. Protesthe most intense since the Movement Began in july. This movement started off as a studentled protest movement, but has since grown into a much bigger movement. They are demanding governments resignation, rewriting of the constitution, and monarchy reform. David we do not numeral he see these kinds of things, although obviously over the last 10 years or so there have been bouts of protests in thailand. Talk us through this specific episode. How does this actually change things there . Randy the state of emergency rules now ban the gathering of five people or more and allows for the arrest of anyone violating the rules. So this would likely curb any future protest, any large protests. Alreadyprotesters have called for another gathering today at 4 00 in central bangkok. So the risk of violence Going Forward will be something to watch out for. What is likely to happen . Have we heard from the government . Have we heard from the premier general . The government last night said that legal actions would be taken against protesters who disrespected the monarchy, which is one of the official responses that directly references the monarchy. Forwe have to watch out further government actions against the protesters this afternoon as well. What the protesters want is change in the government and in the constitution. And without these changes, we will likely see the protest movement escalating and intensifying in coming days, whether that be online or industries. Or in the streets. David randy, great stuff. 00tch out what happens at 16 military time and bangkok. Lets get you started on what happened overnight. Concernsks down, over stimulus deals will not be passed in washington. Stephen mnuchin pointing to clinical reality and saying an agreement before the elections would be difficult. He spoke after talks with Speaker Nancy Pelosi and agreed that democrats may be holding back in hopes of winning the senate next month and driving through their own version of that bill. In china, the peoples bank of china has injected liens of dollars into the system to help support the economy. It comes as consumer and factory inflation both weakened last month. Ppi up 1. 7 , slightly less than forecast driven by lower food bills. Inflation registering a decline following a stimulus lag we saw in august. Europe is rapidly becoming the latest focus of covid19 with new cases rising in several countries. France imposing curfews. Also a partial lockdown in the netherlands. Italy and portugal reporting record numbers. The u. K. Is entering a quote, tier three status with targeted regional curbs. Chancellor merkel in germany says the country cannot afford a second wave. In china, the country is taking sweeping action to stamp out a possible virus resurgence, aiming to test almost 10 Million People in five days. The total number of new cases is only in the low double digits, but Authorities Say they are taking no chances, even in a small outbreak. China said it successfully tested millions of people earlier this year in beijing, and as we all know, in wuhan. In korea, the creator of k pop sensation bts soaring on its debut. Upside, boosting the fortunes of the billionaire founder and the Seven Members of the worlds most famous boy banned . Are they . Well, thats relative. They are worth more than three other leading kpop agencies combined. The offering was south koreas largest in a year. Those were your first word headlines. Willnda still ahead, we hear from imf managing director about why governments should not fear higher debt for the sake of balancing economies. Next, in a big week for bonds, we look at which ones are in demand with jimbo no. This is bloomberg. Is bloomberg. Haslinda the g20 agreed to a new Relief Initiative for the worlds poorest countries through at least the first half pandemic ishe millions of people into poverty. The world bank and imf are can are pushing for continued relief and support, especially for the lowest income nation. The imf, usually a champion of budget restraint, is urging governments to take advantage of record low Interest Rates to keep spending to stimulate growth. The managing director discussed all of that with bloomberg. The worries about debt levels going up are not for now. For now, the biggest worry is that we do not do enough to support the economy until we have a durable exit from the health crisis. With Interest Rates being record low, governments can borrow and inject, hopefully not only a recovery, but a more potent, higher productivitybased growth, so they can repay the debt they are acquiring now. This is, however, not the case for low Income Countries already in debt distress. This is why it is so important that we make sure they are provided with relief and they are supported with grants and concessional financing, a big theme for our annual meetings meeting. What is the biggest risk for your outlook right now . You have increased your projections somewhat. The situation today is less dire then it was a couple months ago, but dire nonetheless. We are projecting 4. 4 . Big problemnow, the we face is that we are not out of the woods of the pandemic yet. And until that happens, until we have a durable exit, we have to be concerned whether theres sufficient support for firms and for workers so we dont hit a wall of mac of massive bankruptcies and a massive increase in unemployment. This is shortterm i biggest worry. Abouterm, we are worried what these crisis is bringing. There are sectors of the economy that are severely impacted. Low skilled workers, women, young people. They are hit hardest. And how we make sure that inequality does not expand dramatically as a result of this crisis with the digital economy, and the rest of the economy doing poorly. That requires a sound policy, thinking, and making righ tnow to prevent this occurring. If we dont have a covid19 vaccine in 2021, will it be another lost year for the World Economy . If we dont have a vaccine, but we sustain support at the level that we have had it during recovery,e will be but this recovery is not going tobe as potent as we need it be. So what do we project for next year . Slightly over 5 growth. This is not going to bring us to prepandemic, 2019 levels. In fact, we are projecting that 28025, we will have lost trillion as a result of this change in trajectory because of the pandemic. Recoveryn, uncertain that is not enough to bring the vibrancy of our economy until we get vaccines or treatment so we can exit the crisis. David ims managing director speaking. Lets have a look at the bond markets for fixed income. Some Strong Demand obviously out of the Chinese Dollar bond option. One of the few places that is still giving you some decent nominal yield. In australia the big story is the nine basis point drop in aussie 10 year yields. Itsst if not already below six month rate. In italy most yields are either at or below zero. With all that in mind, lets bring in head of income joining us to talk about the asset class and outlook ahead. Pleasure to have you on the show. You are probably listening to the interview we did with the imf. The supply outlook comes immediately to mind looking at how big these budget holes are in the countries. With that in mind, do you think demand will still be there . Jim it looks, from what we seen, is that there has been healthy demand. Topical when we consider the peoples republic of china inued more than 6 billion dollar debt yesterday. Demand for that was very strong, very large amounts to be putting into the asian hard currency market. If you look at initial price guidance and where the issue priced, the spreads came in more half inup and a spreads. David right. I want to bring in inflation. China obviously this morning came out with Inflation Numbers. India was earlier this week. I want to get a sense of what you are feeling on the inflation outlook. We know how disrupted inflation can get. It catches you out of nowhere. Are you watching any particular country across asia at which could have the potential to surprise . Jim at the moment, if you think back a few months ago in terms indicated. Fed had that they were going to let yield to run in terms of inflation, and that certainly has not played out. Inflation remains well and check. We are seeing that also happening here in the local markets as well. So i mean, at this point in time, if you think of the overall headwinds and the Global Economy outside of china, inflation would actually be somewhat of a positive indicator. Theat this point in time, biggest challenge in the macro environment is trying to get growth back to sustainably high levels. Headwinds,peaking of i am looking at the yuan, slightly weaker, weaker since the pboc allowed for an easy way to bet against the currency. Do you see a weakening yuan becoming a headwind for chinese bonds . Jim no. Even though the currency appreciation has been a bit of a surprise, our expectation is that there is actually going to continue to be a bit of currency momentum. If not momentum, stability. We kind of take the rmb at a stable level. Then we look at the nominal yield differential. Of thevery supportive onshore Chinese Government bond market. So you also have a number of technical benefits happening in that market. Shoretly, china, the on china Government Bonds were included in the world Government Bond index. That is a third of three indices that the rmb, Government Bonds were looking to be included in. That is a strong technical driver. We think as long as theres such a large nominal yield differential keep in mind, that is being propped up as we keep having positive economic surprises coming out of the chinese economy. What is looking attractive in terms of sectors . Would property be one of them . Jim yeah. In terms of sector positioning, we are favoring those with strong secular trends versus cyclical, like property. Im saying chinese property versus other property markets. For example, indonesia tends to be a bit more cyclical. The china property market, even though there are some recent headlines on companies, we view that as idiosyncratic. Secular trends in properly property are urbanization. That has several years if not decades to run. Otherwise we like renewable energy, tech, and telecom. Sectors,nt a lot of and i am not saying these sectors will perform well in terms of total return, but at least they should remain somewhat stable. David jim, elections are coming up. Does it matter for you guys . And if so, what about it matters . Jim at this moment, i would characterize it as the market seems to be cautiously optimistic about a clear election open. There seems to be some stimulus jitters. It is obviously difficult to predict but our base case is the election will present a resolution in some mediumterm clarity. But i would not call it a High Conviction view, so our macro exposures are not high. It is important to remember that the u. S. Election will not resolve covid and will not immediately resolve trade tensions, the two most important issues in the asian markets. Haslinda thank you for your insights and i insights today. Still ahead, time for our morning calls. A look at some of the top recommendations across asian markets. This is bloomberg. Erg. It is time for your morning calls. Lets get over to sophie. We have to talk about aussie bonds. Suddenly the script is getting thrown out as far as forecasters are concerned. What do we know about aussie bonds . Sophie we are seeing bonds rally, given commentary from the governor. They are now forecasting a cut of 10 basis points for the cash late rate, threeyear rate. Questions over the efficacy of easing and the impact on favors, they are calling for the rba to maintain its hole in the cash rate through 2020 as they shift focus and signal there will not be rate hikes for at least the next three years. Citi expecting aussie bonds will continue outperforming treasuries. Haslinda sticking with bonds in asia, our strategists mapping out the risks of the u. S. Elections, about 20 days away . Sophie depends on what scenario plays out. If the results are contentious from the u. S. Election, dbs saying all bond markets in asia may come under pressure we see a rush to cash like we saw in march. Widening, thisad could bode well for economies seen benefiting from his presidency. Dbs saying it makes sense to continue holding chinese, singapore, thai, and korean bonds beyond november 3 as a hedge against election volatility. The key being an overwhelming biden victory, which would jolt asian rates. David lets build on that. Vix features up for a third day. As far as that is concerned, what is the playbook . Sophie the trend we have seen of late is the vanishing moves when it comes to vix futures. Futures,and december all of that is coming under pressure. Morgan stanley sees a gravitational pull lower, even lower given that volcano he is still high. We are seeing interred shorting across asset plans haslinda lets do a quick check of the latest headlines. To revive the mainland convertible bond markets as they struggle with covid19. They opened subscriptions for almost 2. 5 billion of bonds, the largest deal for a nonfinancial fund since 2011. The sale is also the biggest for the year and a record for the Airline Sector in china. Just eight bond deals. They won almost 4 billion in loans as they struggled collapsing demand for air travel. Part, including the Government Bank of japan. They expect domestic passenger sales to fall by 30 this month alone. The carrier considered a share sale and a costcutting drive. David speaking of cutting, were well off highs of the day going into the lunch break on the mainland markets. We opened a little higher compared to the closed yesterday. A topsyturvy in between. Shanghai composite. The bigger story is msci china. At the bottom of your screen, alibaba pulling down, tencent also down 2. 6 . 30 minutes left in the morning session in hong kong. Going into the lunch break in shanghai. India opens in the next 15 minutes or so. More coming up next. This is bloomberg. Is bloomberg. Im dough hirsch. You may already know that goodrx can help you save up to 80 on your prescriptions. Unfortunately, Many Americans cant get to a doctor right now. The good news is that for many Health Issues you can see a doctor online. Its easy. Just go to goodrx. Com and with a few clicks youll be treated by a licensed medical professional all from the comfort of your own home. Visits are confidential and affordable. Need a prescription . Your doctor can send it to your pharmacy or have it mailed to you. Get the healthcare you deserve at goodrx. Com. David good morning, india. Hopefully i want to say thats fall. What do i know . Markets are a little higher as we approach the opening session. Hopefully things brighten up through the trading session. We are on a 10 day win streak on the sensex index. It has not quite closed lower for this month. I will even throw in the last couple of days of september. Last time, i was still in school. That was back in 2007. Thats pretty telling. Lets get the first word headlines. Thailand has declared a state of emergency in bangkok as protests against the government continue. Demonstrators gathered as the king returned home from germany, although they did not stop his motorcade. Protesters want new elections and curbs on the traditional power of the king. They insist they do not want to bring down the monarchy. President trump reacted with anger after facebook and twitter announced action on a New York Post article about joe biden. The report says email from his son hunter show he introduced his father to a Ukrainian Energy executive, claiming it contradicts bidens denials. Fact checkers are evaluating its authenticity. Twitter users see a message saying this link may be unsafe. China has been on a spending spree in japan, buying a record amount of bonds. Buyers picked up over 21 billion of lower yielding debt, spurring talks beijing is diversifying reserves. China went on a smaller splurge four years ago. Demandnd exporter says after the coronavirus is far worse than the financial crisis a decade ago. India ships about 90 of raw diamonds and sales are down as much as a quarter. Last year sales were worth almost 19 billion and such a fall will push exports to the lowest from Industry Data going back to 2009. Updatelets get you an of this ongoing legal battle or series of battles tiktok is facing. Stephen engle, our chief north asian correspondent, has been tracking the story from the get go. They did win battle number one, but it is not over. Stephen its not. Thats the legal jurisprudence in the United States. There is Appellate Courts and thats what we have seen, the Trump Administration putting two executive orders on tiktok in august. Suspendedm has been through that preliminary injunction issued by a federal District Court judge, issuing a preliminary injunction on that wouldl trump ban that remove tiktok from the app stores in the United States. Tiktok bytedance, the parent company, won that battle initially on the grounds that carl nichols judged perhaps the Trump Administration did exceed its executive powers under the Emergency Powers act. We go to the next deadline, november 12 or thereabouts, for the second trump executive order which, among other things, would require the sale of tiktok u. S. To an american company. It also has other restrictions. Thats what tiktok has filed a court order asking for, to stop these restrictions. Tiktok the comment from that they are asking for the issuance of an injunction against what would be the restrictions that forbid other companies from providing the underlying web services that make the app available in the United States. We are going to be seeing a number of different steps from these chinese companies. Preliminarywon the injunction from a separate california District Court judge on similar grounds that the social media apps that they are social media apps and do not necessarily pose a significant National Security risk to the United States, as the Trump Administration contends. Haslinda what do we know about the u. S. Possibly blacklisting and group in the u. S. . Frontn this is another on the battle to limit chinese tech influence in the United States. Aunt is the financial arm of alibaba. Its crown jewel is alipay. Potentiallyth wechat pay from tencent, are in the crosshairs. The Trump Administration, according to people close to the situation, is trying to figure out the right course of action to limit these apps from gaining traction, or removing them from the United States altogether. , we talkedous report about how the trump initialration is 02 in District Court rulings. Would they take a different tack . Reporting that the state department, not just as were commerce, is potentially looking into adding ant financial to the socalled entity list, blacklisting ant. We are not sure how far along this process is or whether it will happen before the november election, but it is another front against china. Said has blasted this, this amounts to economic bullying on the part of the Trump Administration. Chief north asia correspondent, stephen engle. We are counting down to the open of the session in india, less than 10 minutes away. Can indian stocks continue the tenday rally . Investors are shrugging off concerns of escalating inflation at home. This is bloomberg. Haslinda live pictures out of mumbai as we count down to indias trading day. Imf. Trading up with the it faces the biggest contraction of emerging markets. An 11th straight investors gains, as piled into beatendown shares. Sircarring in shibani h what do you make of this rally in india . Thanks for having me on the show. Three key factors have been driving the markets. Front, while the absolute numbers have been increasing, what is heartening is the recovery rate and case fatality rates have been improving. The probability of a Strict Lockdown has gone down. If you look at the highfrequency economic indicators, data is showing a gradual recovery. Today we would be around 85 of precovid levels, so frequency data is showing normalization of levels. India hasl bank in indicated they will keep rates low and liquidity will stay abundant for as long as necessary. There are other factors driving the markets. Aday is a look at markets on pure evaluation perspective. The new skate is trading at above average. We believe the market has become more bottomup. There could be a period of consolidation. Data post the Festive Season of october and november would be key to track. If you look at the stock perspective for bottomup nature , there are a lot of opportunities in the indian market which can be ups can be explored. Haslinda talk to us about those. You suggested technical indicators say a correction is due. How much of a correction and what should you be picking up when that happens . I would not say it is going to be a large correction. Ofcould be a volatile period some degree of consolidation because the headline to earnings ratios have moved to above average multiples. ,rom a bottomup perspective there are three key things. One is the rural recovery. Merle demand has been holding up better than urban and rural cash flows have been improving. Is the market share shift. Company, companies that have low leverage and better cash flow have been gaining market share across sectors. That is something we are seeing widespread across large and even smaller sectors. Finally, the supply chain diversification of companies away from china to other parts of the world. India is a beneficiary and policy natives are trying to support Manufacturing Capabilities coming back to india. Thatnies that benefit from are also something we are looking at david david here. Tempted to ask you if you can give us specific names because those are very interesting things. Stopping short of giving us the names themselves, where do i look for those names . Give us sectors and the relative size of those stocks relative to the big caps in india. If you look at the midcap space, over the last three or four year bama period there have been huge divergences from the markets in india. Within the midcaps segment, we believe there are sectors that include specialty chemicals, agro chemicals, building materials, auto ends, pharmaceuticals, even i. T. What we are really looking at our companies which have strong balance sheets, low leverage, and are able to navigate the current period of uncertainty better. These companies would gain disproportionate market share as demand recovers. Where caps on concerned, you have to be patient. We do believe as the economy turns and growth improves, Midcap Companies would benefit in terms of earnings recovery. Sectors whereher we are positive include technology, the large private sector banks, and the insurance space. These are some of the sectors we are positive on. David how does that translate into earnings . Year with ahe general assumption, 5 Earnings Growth on the nifty. We are down 5 year to date. The expectation is we are only going to see negative Earnings Growth for the entire 2020. Do you think we will get that recovery between now and the end of this year . I think markets are already discounting the fact that if you look at Financial Year 21 is going to be a muted year, the market is looking forward into fy 22. Nifty earnings on a consensus basis, most estimates are in the range of 30 to 35 growth for nifty companies. We take the consensus estimates with a pinch of salt because there is usually optimism toward the beginning of the year. Nextelief is 25 earnings year as possible. As the economy starts to recover and Companies Start to recover, Earnings Growth trajectory should improve. The market is clearly looking ahead. Fy 21, the market is discounting because this will be a year of hardly any Earnings Growth and fy 22 is where the market is focused on. In terms of activity levels coming back to precovid levels, that will be the key to determine the course of the market Going Forward. Haslinda a pleasure david a pleasure to have you. Please come back again. Shibani kurian there of kojak mahindra asset management. Here we go with the open. Day number 11, very early in the session. To 2007 as far as the longest win streak is concerned. Beyond that i have not done my statistics yet, but that is more for happy hour and smalltalk. A couple of names to tell you about in terms of the big caps. Look at that. 4 for the upside. Going gangbusters. Still to come, a dire picture for the return of travel, saying it could take two years to return to prepandemic levels. Her interview is next. This is bloomberg. Haslinda live pictures of the lion city this thursday. 7 ,enchmark index down by adding to the losses yesterday, pretty much in line with the rest of the region. We saw something peculiar yesterday, a power outage in the lion city that derailed some rail services. The last time we had Something Like that was in 2017 with a series of averages derailing the rail system. The sei currently down. 8 . The returnont see of mass air travel for at least two years, according to the citys transport minister, ong ye kung. He says only the wide availability of an effective vaccine will help countries open their borders and allow for free travel. The minister began by discussing the balancing act between containing the virus and keeping the economy functioning. If you asked me that question , close your borders and suffer economic consequences were open up and have the virus and still have economic consequences. We dont know very much about the virus. We know it is very infectious. We dont have test facilities. Test 2000e could people 2000 tests per day. Today the tradeoff is still there. Numberger difference is one, we have kept the academic the epidemic under control. For a long time we had zero cases. Thats a big milestone. , tests are no longer such a big constraint. We are doing maybe 30,000 tests a day, up to 40,000 by november, probably further after that. A good proportion can be dedicated to airport usage. They have their own dedicated test lab. With tests, we can better strike a balance between travel and epidemic control. Next get to aviation. When are the prospects for Singapore Airlines . Experts say the real pain has yet to come. When the support from the government runs dry, what are the prospects for the carrier . 1. 5 is now serving about of previous passenger volume, so it is a dire situation and we dont really have a domestic market, so there is no domestic side to fall back on. Is seis fateal is related to the airports. Open up theradually borders and establish the key links that make this a hub, the key destinations around the world. That makes us commercially viable. Going as some passengers continue to travel. We cant wait around for a vaccine to happen. When the vaccine becomes widely available, which may be a year, year and a half from now, at least the passengers have been flying. We are keeping in touch with customers and partners and our airports can be revived again. Lets talk about the airport. What prospects do you have terrain in plans for terminal five . There was so much hope pinned on terminal five. Would you have to perhaps downsize . We have to. The assumptions when we went into terminal five has totally changed. Is suspendeddone development for the next two would say even now i to say have a prediction what will happen to terminal five and global aviation. Two years to assess the situation and we have to decide what to do with terminal five at the end of the period. Haslinda when do you see the mass travel market finally going ahead . When there is a vaccine and the vaccine is widely available around the world and people gain confidence to travel again and visit other countries, then we will have aviation back on its feet almost fully on its feet again. How long will that take . I cant make a guess. I will say minimally a couple of years. David that was singapores minister of transport, ong ye kung, speaking to our very own haslinda. A couple of hours back, we got the latest numbers out of china in terms of passenger volume. In the meantime, heres whats going on in china. While the rest of the world is grounded, china seeing some improvement. And. 5 drop for september for august a drop of almost 26 . That said, it is almost slowly getting back to normal on Mainland China and has in hong kong. We are getting news the Hong Kong Government is planning to hold a briefing at 2 30 p. M. Local time in about two and a half hours on the travel bubble. What they will say, i have absolutely no idea. Haslinda we remain optimistic. Bubblere looking at a with the likes of singapore, new zealand, korea, but in the end it is confident those countries are doing the testing we are doing as well. It has to be reciprocal. Lets do a quick check of the latest business flash headlines. Bridge and australia has launched a toplevel take up. The ceo stepping down following the carriers sale to bain capital. He will leave early next month with jane hurley seen as his replacement. The change is remarkable as he enjoyed bains support when the firm agreed to save Virgin Australia in june. United fell after a wider than expected loss in the Third Quarter as ticket sales plummeted. The airline says it is ready for a travel rebound with a cash pile of more than 90 billion. United lowered its daily expenditure to 20 million in the Third Quarter, half what it was in the june period. U. S. Carriers have cut jobs and raised debt to survive. Chinese rivals hit record to new york thanks to a vote of confidence on wall street. They expect Energy Demand to accelerate in china to 20 of the market by 2025, while city points to falling battery costs. Chinas card data for september shows sales of new Energy Vehicles surging 68 to almost 140,000 units. Minutes we couple of will be entering the lunch break in hong kong. We did go 10 Straight Days as of yesterday. It is still early. We might get number 11 in india. That takes us to the longest win streak. We are higher for the day back to when bonnie tyler released the hit total eclipse of the heart, 1983. As we approach the close of the morning session, 1. 4 , the potential blacklisting being blamed for the drop of alibaba. Tmc couple of hours, releasing its latest results. Moment india the is just about the only bright spot in asia. That is it from Bloomberg Markets asia. Daybreak middle east is next. 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. Announcer the following is a paid presentation brought to you by rare collectibles tv. In a letter dated december 27, 1904 to the secretary of the treasury, president Theodore Roosevelt wrote a twosentence letter in typical theater roosevelt direct bravado style