Abandoned any hope of a virus package before the election. He says a deal will come after the vote. Big tech prepares to defend interests as jack dorsey calls section 230 the most important law for free speech and safety. Get you started with a quick check up on how markets are right now. Sophie kamaruddin. Are set toa stocks resume losses this wednesday and you have nasdaq eminis under pressure early in the Asian Session after we sawtek shares rally. We are watching what is going on with the tech space following amd agreeing to buy a company. Results could provide support for that space. Its a busy calendar for earnings. Withec reporting today sony. In australia, the asx 200 coming online with some Downside Pressure set to extend losses for a fifth straight session while the aussie dollar is holding steady, slightly under pressure, while bond yields are easing ahead of inflation data due from australia. We see a pickup. Lets flip the chart for a broader outlook on where the dollaryen is headed. We are seeing the end looking to test nearterm levels here, i. E. 104. 34. Mere october. Igh we could see a push towards 104. Mckee level given what we are seeing ahead of the elections. Is in oversold territory. As we get closer to the u. S. Vote, lets switch out the chart for a look at two week yenvol, rising to the highs we saw back in april. It indicates that joe biden is leading in the polls, but overall, markets are looking complacent with the global forex volatility gauge set for the biggest month. Paul joining us now for more on the markets, we have the management scene or global strategy analyst, julia hermon. We heard they are talking about the u. S. Election. Something we talk about a lot. A big focus for the markets. You say its not the number one driving factor for markets in asia, particularly emerging asia. Can you explain what the key factors are . Absolutely. We are looking at shortterm volatility, but the election, as you say, is not the beall emerging markets assets. Ems generally do well in the world is optimistic about Global Growth and china plays a Critical Role in that growth of course, so we are looking at three key driving factors for ems in 2020, beyond the selection. The first is Global Growth and thats including ones beyond the u. S. None of these are fully dependent on any one u. S. Election outcome. Paul how much of a factor as well is the notion that the coronavirus seems to be coming under control in asia . Does that adjust the outlook for em equities . Erik i think the covid trajectory is definitely key in terms of determining the level of uncertainty and the growth prospects. Part of the reason that we have been positive about north asia up to this point is because that region has been in and out of the virus and they have been able to control it. The gdp print out of korea right now, for me, it was a fantastic surprise. I think that confirms how well a country can do when they control covid. Shery at the same time, we have the korean won at a 19 month high. Given how they have been, especially with a huge boost, how long can this last . Julia i think it can last a fair amount of time. Korea is a source of that resiliency and the recovery, and just as you say, the recovery in the Third Quarter was led by a manufacturing rebound which boosted exports. That was led by computers and bectronics, which we know to a stayathome theme. All this really matters for us because we have been wanting and waiting to see more strength from the korean economy and really show its resilience. The Industrial Production numbers at least have disappointed a bit and been shaky in the first half of the year so its fabulous to see this level of recovery. The recoverye seen being led by china and that has shown and its currency as well. On the bloomberg showing incredible strength we have seen in the chinese yuan. Thats not the chart that you want. You know what we are talking about. Its been an incredible journey for the chinese yuan. I wonder, given we have the pbocs yuan fixing mechanism being tweaked, basically telling banks they have stopped using the socalled countercyclical law factor in their estimates for the yuan fixing, what would that do to the yuan . Is this a symbolic or so standard move substantial move . Julie we would have to leave that to pboc. The chinese policy stance has been one of conveying strength. This is of course in the face of u. S. China tensions. One point of evidence for that strength is on whats happening as we speak. There is a fair amount of irony to see china going into a mediumterm strategic manning session while the u. S. Is facing potentially unprecedented electoral volatility. In this session, its important for us to remember, in addition to how china manages the currency is that individual shortterm u. S. Policy the pivots are not going to change chinas game plan. The tension between u. S. And china have really gone to the heart of chinas Strategic Policy goals. That includes relying less on its export led growth model and more on its mastic consumption. Be wrapping up on thursday. We hear a lot about the circulation strategy. Im wondering what that means to you. Does that mean a more inward looking china or a mature chinese economy . Julie ultimately, china got to where it is today by following a very simple export led growth model fueled by cheap labor and cheap credit, and that is not going to be able to continue in the future, so its going to need to rely on its now much more rich and sophisticated domestic consumer base. Theirnteresting that thirdquarter gdp figures show that the Domestic Services did play a more important role. Right now, we have the short Term Economic makeup matching those goals for the mediumterm, but ultimately, its still a very long road ahead and these sorts of shifts in the makeup of gdp come very slowly so its not going to be immediate. What is the best of sectors to get long right now . Julie we generally really like north asia as a reason to region to start. The issue is that the price action shows that. From a regional perspective, we see the em asia index vastly outperform the em latin america and emea indexes really since covid. Its hard to imagine now but asia has not always been the huge outperform or it is today. This has very much been a 2020 story and within the story, its about asia tech. For us, we really like the new economy, and for us, that includes ecommerce, communications, and simtech, so we are still excited about that space going into 2021. Shery julie hermann, it was great having your thoughts, strategy analyst. Lets get to Karina Mitchell with the first word headlines. Karina covid19 cases continue to soar here in the u. S. With rising numbers in 32 states and in washington. Jumped 68 inns new mexico. 50 in wyoming. And by 38 in connecticut. Elsewhere, reports from paris say france is planning a nationwide lockdown. There are claims that one in four airports in europe face collapse as the virus devastates their travel. China says it has completed testing of a whole city in a bid to control an outbreak of covid19. 5 Million People in xinjiang province are said to have undergone checks after a symptomatically says were reported at the weekend. Authorities found five confirmed cases and 178 a symptomatic ones with all other people testing negative. The e. U. s top brexit negotiator is in london as they try and hammer out a lastminute deal. Michel barnier is expected to remain in the u. K. Until wednesday before talks move back to brussels. The e. U. Council president says negotiations are at your most difficult stage with the clock ticking until the u. K. Family needs to sing finally leads to single markets. 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. How theill to come, u. S. Elections will impact south korea. We are joined later this hour by the president of the career Economic Institute of america, ambassador kathleen stevens. Plus the monthlong stimulus stalemate a few more weeks. The white house appearing to abandon hope for a preelection deal. We will have an update, next. This is bloomberg. Paul hopes for a virus release package before the u. S. Election have all but dried up as they blame each other for the failure to reach a compromise. Our Global Economics and policy editor, Kathleen Hays, is here with the latest. What happened or did not happen thats deepens the pessimism . Sides are no two closer to agreeing on a deal. I think what it was today is it seems that we are set, starting with donald trump, who said that basically, his message is, you have ae will stimulus bill. Wait until after the election. He said after the election, we will get the best seamless package you have ever seen. A white house spokeswoman also saying, now, the focus is on something that can be assembled within weeks. In other words, not in a week, not by november 3, but over the next few weeks. Once again, donald trump accuses nancy pelosi, speaker of the house. Also very much involved in these talks for trying to get funds and propping up poorly run democratic states and cities. We have heard that many times. We know they are far apart in terms of the size of the package. We know that the democrats have come down to 2. 2 trillion. They are close but not close enough. Nancy pelosi, in fact, in a letter to house democrats, saying one of the problems here anyway is at the white house is not committed to a plan to crush the virus, and thats another source of funding. Thats where the republican criticism comes in. We want to send stimulus checks, on a planet, etc. , but this is too much. Love one of Nancy Pelosis rejoinders, when President Trump talks about passing the biggest he must go you have ever seen, she says that rests on getting Mitch Mcconnells hand off the pause button. She also said this afternoon, she told reporters, democrats are continuing to work on stimulus legislation. Trump said he is willing to work with nancy pelosi after the election. He predicts that is when a deal will be reached. Certainly, its not that big. Here it is. Now, you can vote on this, democrats and republicans, and voters themselves. Its going to take some time in the question is how much. Shery in the meantime, americans continue to lose jobs and we are seeing households running out of money, so now what . We know the longer seamless is delayed, the longer people dont get federal on employment checks, the longer a very welcome 1200 stimulus check does not come out. It puts the economy more at risk to whatever happens with the virus. Not going away, things not fully opening up, and perhaps a serious resurgence in the virus. We got Consumer Confidence today in the u. S. For the month of october, and we see that it eased a little bit unexpectedly. 101. 3. Rom thats not really a big drop. Whats interesting is peoples expectations fell pretty sharply. Thats when the two major subcomponents they are more worried about the jobs outlook. Current conditions rose. A lot of people are buying houses. A lot of people have savings after getting extra checks this year. That was an interesting read. Gdp on thursday, u. S. Gdp is supposed to be up. 32 . We know it is a huge onetime rebound from a very weak Second Quarter. It will be interesting to see how that comes into the preelection debates, talk back and forth. Republicans and democrats. I think another big theme right now is the election itself is going to determine the size of the package, if we get the blue wave. Joe biden wins the white house, Senate Democrats are in the majority, then people say, yes, you can probably get a big stimulus package. Thes say donald trump wins, republicans hold onto the senate, i think that casts the size of the stimulus package in a different light. One more thing. December 11, every year, you have to do this every year. Refund the government so it does not shut down. That is the deadline. Something is going to have to be decided on spending. People think that is a possible time when the stimulus package can get past. It will probably not be until february. For americans without jobs, short of cash, that is not good news. Shery Kathleen Hays giving us the context of how important these u. S. Stimulus talks are. For the most recent reading, Consumer Confidence has only weakened slightly here in the u. S. The pandemic hit to supply and related logistics has led to some shortages in consumer products. There could be a boost to gdp coming as companies ramp up output and connect products with consumers. Shopping for a new freezer or bicycle . Join the waiting list. Buying things is easier than ever, but making and getting them to your doorstep is a complex choreography of Global Supply chains and reliable shipping. In the early days of covid, few retailers anticipated any demand search while decades of decades ofe stockpiling the virus gummed up trade links, resulting in a shortage of containers and congestion of ports. With demand climbing on the back of a booming u. S. Housing market, an already stretched network is seeing even more stress. Chinese madeng parts. Economists say get ready for the biggest restocking cycle on record, perhaps straining the system even more. As many factors rebuild inventory, gdp will get a boost over the next two to three quarters, but states that rely on logistics, manufacturing, and construction will outperform those with service driven economies. Paul the ceos of facebook, twitter, and alphabet are set to defend the Legal Protections granted to the tech industry, also known as section 230, before a Congressional Committee on wednesday. Jack dorsey said section 230 is the internets most important rule for free speech and safety. Kurt wagner joins us now on the line, so what exactly do dorsey and Mark Zuckerberg plan to argue . Exactly what you just said. Really 230 is a important law, not only for the foundation of the internet, but for what they dare, which is give people this platform to kind of safe in the most part whatever they want. Their main argument is going to be that while republicans complain that too much stuff ifrently gets taken down, they repeal section 230, dorsey and zuckerberg are saying they will have to remove more stuff because they will not be protected legally from the things their users say. Their argument is you already have an issue with how much stuff we take down but if you repeal this, we will have to do more of that. Shery and thats bad for startups, thats what dorsey plans to argue. How . Kurt if you think about what it would take if section 230 did not exist, it would require companies to review all the posts that their users to share, perhaps even before they post them, and that is a huge technical challenge. It could require thousands if not tens of thousands of actual human moderators to do that if you are a startup, you just not have the resources necessary to go through with that. His argument is going to be that if you want these new platforms to come up and grow and blossom, you should not saddle them with this kind of challenge right off the bat. Paul Mark Zuckerberg saying he a open to regulation or even revision of 230. Why . Kurt i think he has to go in there with some kind of an open mind as to the fact that this law is clearly not working for everybody, so i think it would be combative. It would probably be unhelpful if you shut up and said, hey, this is how the law works and we are happy with it. Dont change it. He has to kind of go there and try and find a way to tweak it that is not going to ruin facebooks business, so i think that this is probably a show of kind of openness, a peace offering, if you well, and the question will be how drastically is he willing or open to this mall being changed . Wagner, our Bloomberg Technology reporter, with the latest on those tech hearings. Heres a quick check of the latest business flash headlines. Advanced micro devices has agreed to by his rival for 35 billion dollars in stock in one of the biggest chip acquisitions ever. The deal will give amd more products and the Bigger Research budget as it looks to take on an industry leader, intel. Shareholders will get 1. 7 amd shares for everyone they hold. They closed up 10 on the news while amd ends up 75 this year. Microsoft First Quarter revenue climbed to betterthanexpected 12 driven by corporate demand for Cloud Services amid the pandemic as employees work from home and more business when online. Sales for the three months through september were just over 37 billion, exceeding average estimates. Net income came in at 14 billion dollars, which was also above the average forecast. Oldest north american headquarters to a korean Real Estate Investment trusts for the price that was proposed before the coronavirus pandemic. No details of the deal for the new jersey build have been released but the deal indicates persistent commercial properties with longterm leases. Samsung has been the sole tenant in the Ridgefield Park building since 2010. Insurance thirdquarter profit rose 8 as business recovered from the coronavirus, as the stock market rally boosted returns, net income climbed 5 billion from a year ago compared with a 30 slump in the first half. Ping an operating profit accelerated more than 4 in the nine months of the year. It willas chosen where list following its muchanticipated and delayed ipo and it has decided to go with the nasdaq ahead of that. No further details have been released but the nasdaq has a reputation for tech focused stocks and has handled highprofile share sales from lyft and zoom among others, however, it has often lost out to the New York Stock Exchange, including mega listings from uber and snowflake. Arenext, pharma stocks focused this week amid backtoback earnings. Investors are watching out for developments on the vaccine race as the rest goes all in on relying on drugs to defeat the coronavirus. 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. Karina this is daybreak asia. I am Karina Mitchell. President trump seems to have abandoned any hope of a virus package before the election next week, telling reporters that the white house at the white house that he sees the vote. Refuted the accusation that nancy pelosi is demanding funds to bailout states and local governments and saying the best package ever seen is on the horizon after the election. Levels ist at state increasingly worrying the reserve bank of india. Any reports that states are taking on more financial obligations to take on covid19 is adding pressure to local governments. It devastated revenues at national and the state level and the federal government has revised its borrowing plan to a record 177 billion u. S. Dollars. Indias eastern state goes to the polls wednesday. The first test for Narendra Modi and his hindunationalist party since the pandemic struck. India has one of the worlds strictest and biggest lockdowns. Covid cases are continuing to soar amid spiraling unemployment and the worst economic downturn in decades. The vote is spread across two weeks. Hong kong is starting to show signs of recovery from recession with exports rising the most in almost two years in september. The value of shipments jumping 9 from a year ago almost 49 billion u. S. Dollars, well ahead of estimates. Its largely due to deliveries with china, which surged 17 . Office data equipment led the rise. 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. Paul, back over to you. Much. Thanks very looks like a riskoff day for most asian equity markets today. For a closer look, lets get to Sophie Kamaruddin in hong kong. Aphie it is shaping up to be down day. Nikkei futures in singapore opening lower. S p eminis under pressure as well. Aussie shares on course for a fifth day of losses, led lower by banks. We are seeing pressure ahead of inflation data on the back but. Oil Prices Higher overnight. Thisholding above 106 morning, but is trading below the 200 Day Moving Average after breaking that for the First Time Since a, and westpac has seen the aussie kiwi at 105 in the near term. Lets switch out the board for a check on stock members in sydney. We have some moves on earnings. After pay gaining ground on its results. Rbc saying the company is on track to meet first half expectations and has good momentum going into the holidays using. Coles group climbing after its earnings beat for the First Quarter. Total sales rose 10 to 6. 8 billion u. S. Dollars as consumers boosted buying. Blackmore is rising nearly 10 this morning, the most after forecasting fullyear Profit Growth in fiscal 2020 one. Companies saying it will sell global therapeutics with a deal scheduled to wrap up by november 30. Out this company gaining ground. Atms. The nod to sell it is a product to treat serious burns. Shery. That races turn to to get a vaccine. Intoront runner is coming focus amid a slew of from a earnings. It comes as the u. S. Goes all in on relying on vaccines and treatments to control the spread of the coronavirus but some experts say that strategy threatens to delay the return to normal life. Michelle cortez is on the line and we heard the white house chief of staff, saying the u. S. Is not even trying to control the pandemic. Byy are trying to control it getting to those vaccines and treatments. How risky is this strategy . If we could get a vaccine that would prevent infection and we could get treatment, that could cure people who have an infection, that would resolve this problem. Willssue is is that it take months if not years to get to those outcomes, so relying on it when the only things we have currently available are things like Wearing Masks and social distancing. It means that basically, you are preventing action in the current moment that could help you in hopes that you have some future benefit that might give you a greater bang for your buck. It seems an odd tradeoff to me. Michelle, where are we at in terms of Vaccine Development . We heard from pfizer, late stage trial of an experimental vaccine, is not hitting those key milestones. How far away might a breakthrough be . Michelle its very interesting when you look at what we heard today from pfizers ceo. Basically what we are doing is reading tea leaves. You think about this, they have 42,000 people in this trial to see if there vaccine can prevent infections. They will look at the data when they have 32 cases. Out of the 42,000, they dont yet have 32 people who have been infected. So what does that mean . It is kind of baffling. On the one hand, it tells you that they are not seeing as many cases as they would expect. Is that good news . That means the vaccine is actually working. It could be. Also, you would have expected some cases to show up in the Placebo Group so may be people who participated in the trial are just more cautious and perhaps they are not going out as much. Maybe the transmission rates are lower. We are not exactly sure. Its not a terrible piece of news in terms of how effective and worthwhile the vaccine is going to be, but it does mean we will have to wait longer to get those results. Paul all right. Thank you. Health care reported Michelle Cortez there. Health care systems in europe are coming under more sustained pressure antivirus cases surge. Ceo toldtis bloomberg hes optimistic. He also says it has been important to strike a balance between regular patient care and covid responses. Going into the Fourth Quarter quarter, we have to see how Health Care Systems grapple with the pandemic. We have learned how to manage cases better, we learned how to keep getting patients in for the care they need, so overall, we are cautiously optimistic. We are 27 days into it. How much ability is there into whether that stability is continued . Vas when you look at the visits of patients into the health care system, what we saw was a slow recovery from the significant dip that happened in april. Close to 60 or 70 reductions in Outpatient Care visits. In early october, we did see a slight dip again but still close to precovid levels. We are watching those metrics very carefully, and what is important is they vary based on the individual therapeutic area. Some are very hard hit. Others are able to manage better. I think, overall, Health Care Systems have realized what we cannot afford is a second epidemic was respected covid. The second epidemic of noncommunicable diseases, taking a huge toll on large swaths of the population who suffers from these conditions so what we need to do is strike the right balance, tackle covid as the cases arise, and continue to maintain as close as possible, normal operations of Health Care Systems. As europeing deja vu yo goes back into lockdowns. I want you to put on a different hat now. You worked on the h1n1 vaccine. When we had a months vaccine in the latevaccine in 1960s, we got there in four years for it are we getting ahead of ourselves talking about a vaccine in early 2021 . Vas i think it is important to stay humble when we think about the development of medicines and vaccines. Its hard to find them. In this case, we are searching for a vaccine against a respiratory virus, which in the experience of vaccine developers, i myself have a history of Vaccine Development. It has proven challenging. What we can hope for is we start to generate data. By the end of next year, i am hopeful we will have solid data on hopefully multiple vaccines and then have reasonable safety and efficacy and adequate volumes of the medicine to be able to treat march populations around the world. When i am more confident about is what we will continue to see is incremental improvements in patient care, slowly and surely, better messing the sins better medicines, continuing to get the severity rates down on covid, and the world will then be able to manage this pandemic and manage getting back to a more normal way of living. Speaking to Annmarie Hordern and jonathan ferro. Up next, we discussed the outlook for relations between washington and seoul close elections with the former u. S. Ambassador to south korea, kathleen stevens. We will get her thoughts on each candidatess policy towards north korea. This is bloomberg. Shery with one week until election day in the u. S. , we are taking a look at diplomatic relations with the asian region. Today, south korea. Under the Trump Presidency, the relationship has centered around seoul increasing funding, renegotiating an fta, and the u. S. Approach to north korea. How will the next administration approach the relationship, whether it be trump or biden . Lets bring in Kathleen Stephens , president of the institute of americans, former u. S. Ambassador to south korea. It is great to have you with us. We have seen a lot of things under the Trump Presidency when it comes to south korea, u. S. Relations, including the meeting between President Trump and kim jongun, but at the same time, we have had tensions around true funding in south korea, not to mention the fda. , hasn all, looking back President Trump strengthened or weakened this relationship . All, kathleen all in the Trump Administration, in managing its relationship with seoul, has created a lot of uncertainty. On the one hand, i think there was a general welcome in seoul for president willingness to take risks with north korea, even if sometimes, the style and results were not what was hoped for. But i think he got a lot of credit for that. At the same time, as you mentioned, President Trump brought to south korea a longstanding suspicion of alliances and in particular, in south korea. Before he became president and throughout his presidency, there is a sense in seoul that because of what he is dead and what he said he wants to do, reduce troops, suspend exercises, suspicion of the relative benefits that come from our trade and economic relationship, i think people have been disconcerted about the u. S. Commitment to korea both on the securities side as well as on the economic side under a Trump Administration. Shery how much has china been able to take advantage of that . Vas not as much as you might kathleen not as much as you might think. In south korea, the moon towards china, the suspicion of china, especially among the south korean public as a whole, has really soured, really grown. This goes back a few years, when china hit south korea very hard with economic sanctions, when south korea deployed an antimissile defense that was provided by the United States in the face of north koreas growing missile program, china saw this as directed at it. Think thats actually one thing that has cap South Koreans very eager to keep the alliance and make sure that it is in good shape. If you look at public opinion, the South Koreans really value the alliance more than ever. They want to u. S. Presence there. You see the same kind of figures in the United States, this very mature and deep alliance. Here is where i think donald trump books have come out about his administration. Flip through some of these books, of course, there is a lot about north korea. Its amazing how much there is about south korea. Im sorry to say donald trump had a real chip on his shoulder about south korea. Translated and analyzed in south korea before they even hit the book stands in the United States, and it hurt South Koreans feelings, but more importantly, it has kind of made them think that maybe they cannot rely on the united dates. United states. They will lean over backward to strengthen the relationship and we have seen that in a Trump Administration, that even early on, trade was a big issue. The freetrade agreement with korea was the first one that President Trump said he wanted to renegotiate, and they did it. They did it. It did not totally inoculate seoul from being included in some of these tariffs and other measures the Trump Administration text, but nonetheless, korea values its alliance. They will work with whoever is in the white house. Paul to your point about President Trump having a chip on his shoulder about that alliance, this month was interesting. The u. S. Withheld a traditional commitment to maintain troop levels in south korea. Wondering what kind of message that sends to china and north korea. To china the message and north korea has come out pretty loud and clear, because again, President Trump, as president , before he was president , publicly and privately coming out, has said he does not really like the notion of having troops in south korea. He sees it as a transactional thing. He thinks South Koreans should do more. He said maybe they do need to do more. It has made South Koreans think may be they need to develop their own nuclear deterrent. There is that kind of uncertainty. They balance that against the threat, which has grown from north korea, not only in terms of its Nuclear Missile capabilities, but also in terms of its Cyber Capabilities and other asymmetrical abilities to really make life pretty miserable for south korea and for the region and the fact that china has kind of taken with gloves off, too. South korea is in that classic dish and it does not want to be in. Feeling it is being pulled essentiale u. S. , its and existential ally, and china, which with with which it has a history. Its neighbor on the asian landmass. They have a big diplomatic challenge ahead of them in managing this, but one thing they will try to do is to find a forward, drawing on the strong support for the alliance in both countries throughout the business community, the wider find a wayand also forward on north korea if that is possible. I know you say theres a lot of Political Support for maintaining and nurturing that alliance with the united dates, but how about the people of south korea . When it comes to having u. S. Troops on south korean soil, it is a bit more polarized, isnt it . Less polarized now than i think it has been in decades. I look at it with a certain history. Think primarily, i because of the perception that china has become a bigger threat korea, there is a desire to keep the u. S. Presence there. One,s been difficult, theres been this desire on the part of the Trump Administration to increase the expenses paid by south korea. South koreans are a bit offended by this, i think it would be fair to say. Its rather transactional. They are ready to step up and do more, but they are really doubling down on their own capabilities. Consensusetty broad to keep it there as long as the United States wants them under certain circumstances. President trump has more than implied he might be willing to aade for some kind of denuclearization act by north korea. On that kind of issue, the south korean public would be much more divided. Shery what can we expect on that front when it comes to a potential bite and presidency . Biden presidency . Kathleen when it comes to south korea, biden made clear he wants to return to much more of an emphasis on u. S. Seeing its allies as partners, and challenges they confront with china, the u. S. China relationship is going to continue, i think, to loom very large and be very problematic. Biden is really going to show he is the not trump. He is the american president who really appreciates and sees americas strength as coming from its allies like south korea so he will try and enlist south korea in a much more overtly cooperative way, to work on issues related to the region. With respect to north korea, i think we saw in the recent, the last debate that did two men have, there was an exchange on north korea, and biden makes it clear that he did not think it was the right thing to be, to meet with kim jongun, that that legitimated him. Without the kind of proper groundwork, having the right kind of agreement and concessions he would want to have forgiving him status like that, but you know, i think biden also understands that the world has changed, that north korea has changed, in the sense that we are dealing with a much bigger problem now, and i think the window is a little more open for a diplomatic approach, which i think he will try to do, working out with seoul, but with other partners in the region so i will i think it will be more of a multilateral approach, more of a traditional bottom to middle to approach. Know,g question is, you will pyongyang play along or not . Pyongyangorry that might get its own playbook and decide its time to show the new boy in the white house that they are tough and carry out a missile or nuclear test to lay the groundwork for things to follow, and we have seen that scenario before, and often times, we end up back in this cycle of no progress. Paul yes. Its a very familiar cycle. Kathleen stevens, president of the korea Economic Institution of america and former u. S. Ambassador to south korea, thank you so much for joining us. Ana unveils restructure plans after forecasting record losses from the pandemic travel slump. This is bloomberg. Shery here is a quick check of the latest business flash headlines. Befany and lvmh i said to talking about lowering the price of their contested deal with the jeweler seeking around 132 a share as a compromise. Tiffany also wants a guarantee that of the image will not back out of revised agreement after lvmh said it could complete the original one due to a request from the french government. The original deal was for 135 a share or about 16 billion. Has won more backing from daimler as it tries to shore up its finances. Mercedesbenz will boost its stake to 20 by giving them access to hybrid and electric power and other components. They will separately raise more than 1. 5 billion through new stock and bond offerings. Me Nippon Airways forecasted the biggest ever operating loss as the pandemic thats the global travel. In the carrier has unveiled major Restructuring Plans, which include a new low cost carrier. Hundreds of employees will be transferred. For more on this, our Senior Editor joins us from tokyo. A new low cost carrier. Is this really the time, in the middle of a pandemic . Tell us more about this Restructuring Plan. Few otherudes a measures, cost reductions from other activities. Japanese airline is also going to transfer hundreds of employees to other companies, and probably most significantly, they are going to retire or cut orders on a total of 33 aircraft. To thea has been late party here. They held out longer than other global carriers during the pandemic, but now, its crunch time for them, and they are going to go out and seek funding to bolster their balance sheet, and try to get through this, at least until what they hope is a time when passengers come out. The risks that the turnaround plan will not work . Beyond the second half of next year, if passenger traffic does not pick up, ana will probably half to do more restructuring or seek more funding. Shery Reed Stevenson in tokyo for the latest on ana. Coming up on daybreak asia, we speak to a professor and author of taiwans china dilemma about the escalating tensions over taiwan ahead of the u. S. Elections, plus we will be joined by an asiapacific Senior Analyst for his top calls. In seoul andens tokyo are next. This is bloomberg. Shery welcome to daybreak asia. From web from bloombergs World Headquarters in new york, im shery ahn. Paul im paul allie paul allen in sydney. Our top stories is our. Asian markets look set for more losses. President trump is now waiting until after the election. In yuans recent strength is focus. Lenders have more room to submit quotes for a weaker fixing. Group is said to be closing its ipo book today. Lets get straight to the Market Action with sophie in hong kong. With the yen holding at mid 104 levels, japanese stocks are opening lower. The nikkei 225 off by half percent. In and focus after the biggestforecasted its operating loss and announced a Restructuring Plan. The stocks unchanged at the start of trade. A look at the chip stock sectors should chip sector stocks in tokyo. This after we saw amd agreed to xilinx. X to buy for chip mixed bag stocks we are seeing a mixed bag for chip stocks. Samsung move to a downside on the kospi. Up to tens of 1 this morning. 1 this tenths of morning. Ahead of president moons speech today in which he is set to outline details on the budget price for next year. An on the back foot. We have seen the rally continue for the yuan given the strength of positive Economic Indicators including the pickup we saw in Consumer Confidence. Check in what is going on with australian markets. The asx 200 said to extend losses for a sixth straight day. That is the longest losing streak for the benchmark since march. Saw. Ernight pickup we we are still waiting on inflation data from australia at the bottom of the hour. We are keeping an eye on bitcoin , which is closing in on the highest level since january 18 january 2018. As the pboc tweaked of rules that would allow banks to submit quotes for weaker daily fixings. Daily fixings. A tactical short on the u. N. On the yen after november 3. Shery lets discuss the markets peered joining us is the asiapacific Senior Market analyst. Great to have you with us. As sophie just mentioned, election hedging. How much are we seeing this happen with Dollar Strength and how long will this continue for . I think we are going to see more of this as the election gets closer. I am expecting that to investors to take risks as you put it off andboard, reduced exposures into the election. When you look at the early voting patents in the u. S. , a lot of the sewing states have low earlysonably voting turnout. Election is live. I am expecting the dollar to strengthen and the election. Outperform as well. I am looking for gold to move higher as well into tuesday. Shery we have seen significant strength on the chinese yuan. That has come with more strength in the chinese economy. This as we have the Plenary Session going on right now. We are going to get some longterm goals for about 15 years. How much of your Investment Decisions will focus on what china and policymakers plan to do . Play aink it is going to very important part. We think them we think 2020 has demonstrated to the world the importance of china and the increasing importance a will have. China is the loan star the ne star in the world. Will be interesting to see what they come out with, particularly if one of those policies is a shift to Renewable Energy and a andction in fossil fuels fuel such as coal, etc. I thing that one will be the start of an important or will reenergize this move away from oil we are starting to see gather momentum around the world. Paul i am wondering how haven trades look to you at the moment as we head into the u. S. Election next week and potentially once that is over. The world of Financial Markets seems to have [indiscernible] a clean sweep of the democrats next week. A lot of things have to go exactly right for that to happen. I think the real race here is the senate race. Nine of those states are at least two close to call as of today. As we get into close votes, disputed elections where votes had to the supreme court, etc. , this could drag into november. I do not think the markets are pricing in those uncertainties yet. Im expecting safe havens to outperform. I am expecting the u. S. Dollar to strengthen into the end of the weekend the election. Typical safe havens such as gold showed outperform, possibly even showed outperform, possibly even bitcoin. Paul President Trump saying any meaningful stimulus is going to be on hold till after the election. I guess the package we get is determined on who wins. What are you expecting on that . Senate has clearly signaled and the market ignored this, that they had no intention whatsoever of passing a multi trillion dollar stimulus package. I would expect the stimulus package light from the Trump Administration. Good news for equities in the longer run into 2021 because it will mean the Federal Reserve will have to do the heavy lifting and we sell and we will see a let more monetary stimulus. Shery which would end up being very good news for emerging markets. How much leeway that gives emergingmarket policymakers as well. Deluca the dollar gets, the more room the weaker the dollar gets, the more room policymakers have simply because so many of them have [indiscernible] the lower the dollar gets, the stronger this talk of the currency gets, the more room they have to cut rates. I am expecting emerging markets, particularly in asia to outperform in 2021. That is simply on the back of their association with china. If we get some large stimulus from a democratic government in the United States, it will be another plus point particularly because of the emphasis on structure. Jeffrey haley. Lets take a look at some of the early movers in japan. The broader nikkei off by a third of 1 . Backing thenaa. Rend after the announcement the Restructuring Plan unveiled by ana. A new budget airline. Fast retailing performing well. More broadly, all major sectors on the nikkei are weaker at the moment with the exception of health care. Lets get to Karina Mitchell with the first word headlines. Karina covid19 cases continue to soar in the u. S. With rising numbers in 32 states and washington. 62 in ation jumped france is planning a nationwide lockdown on thursday. There are claims that one in four airports in europe face collapse as the virus devastates air travel. China says it has completed testing in an entire city. Are said toople have undergone checks after asymptomatic cases were reported over the weekend. Authorities say they found five 78nfirmed cases and 1 asymptomatic once. Asymptomatic ones. India has one of the worlds strictest. And biggest lockdowns kobe cases are continuing to soar amid spiraling unemployment and the worst economic downturn in decades. Hong kong is starting to show signs of recovery after the recession with exports rising the most in almost two years in september. The value of outbound shipments jumped 9 to almost 49 billion dollars. That is largely due to deliveries to china. Electrical machinery and office data equipment led the rise. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Still ahead, we turned the focus on taiwan and ask how the u. S. Election will affect rising tensions with beijing. From theave Analysis University of virginia. Thanks change how the reference rate is calculated. We have the details. This is bloomberg. Paul some chinese banks have stopped using the countercyclical factor. This is used to calculate the yuans daily reference rates. Lets bring in our china market reporter. Why has china done this . Thank you for inviting me this morning. The short answer is china needs to slow the appreciation in the yuan. The chinese currency had the best quarter in 12 years in the last quarter. It has jumped to the strongest level in two years. The pace is very quick. The yuan is having very good fundamentals. It is supported by really good economic recovery and a really wide interest weight Interest Rate premium in the u. S. That means china is seeing a lot of capital inflows to support the currency. That is why china is trying to ensure banks no longer set weak fixing. A pretty strong signal from the pboc. Shery is this just a signal or is it more substantive than that . To be honest, i would say it is a very strong signal. In terms of how effective it can be in practice, it is hard to say. I think a fair way to say it is it is going to be limited. Yesterday after the move was made, onshore yen only weekend. Banks are no longer setting really weak fixings because of the weakness in the dollar and the strength already. It is more of a signal than a practical move. How effective is this going to be when it comes to reining in appreciation and if it does not work, what other measures are there . As i said, i think in practice it really depends on how treasuries take the move. It is a strong signal. It depends on how they are going to react to the move. More likely, it is not going to be very significant weakness in the currency. The pboc has many other measures it can use. Weakn the pboc can set fixing for a few days. That is another strong signal it can use. It setome we some weak fixings before. Make thatan still note stronger. Another intense move they can take is use direct intervention. That would be the strongest measure it can take. It is less likely because the pboc is trying to make the yuan [indiscernible] the pboc can issue a verbal warning. Controls. Sen up it has done that a little bit already. It can take more forceful measures to allow capital to flow out of china. Shery our china markets reporter with the latest on the tweak on the yuan fixing. Coming up, enormous demand for ant. The historic ipo is set to be 64 times oversubscribed so far. We have the latest next. This is bloomberg. Set to be group is closing its books as early as today. The Hong Kong Economic journal reports the offer is 64 times oversubscribed so far. Its bring in our asia financing leader. It looks like a frenzy. Whether it is on the institutional or retail side of things. How is the share sale going . Seem the shares have been hundreds of times oversubscribed and that is why the company is planning to close its books early by 5 00 p. M. Today. In terms of the plan, the company is still speaking about 34. 5 billion for its ipo. Shanghai and hong kong planning to list. The Company Might be seeking to list on the same day, which is november 5 right now. Paul how is this deal helping chinas other Capital Markets . It is a huge win for chinas shanghai star board market, which is the new the pet project of xi jinping to boost the companys tech stock market. It is also having an effect in the shenzhen stock market as well. A competitor to the star board where the chinext is seeing a flurry of ipo demand right now. I resources are saying Chinese Security our sources are saying Chinese Security regulators are telling underwriters to put an application for offering because of the flurry of submissions that are coming in. Thanks for the update. Its get a quick check of the latest business flash lets get a quick check of the latest business flash headlines. Airbnb has chosen where it will list following its much anticipated and delayed ipo. It has decided to go with the nasdaq. No further details have been released. The nasdaq has a reputation for tech focused stocks. Has often lost out to the New York Stock Exchange including mega listings from hoover from uber and snowflake. Samsung has sold its north american headquarters to a real estate a korean Real Estate Investment trust. Released, have been but the deal indicates Persistent Properties with longterm leases. Micro devices has agreed to buy xilinx for 35 billion in stock. Amd morewill give products as it looks to take on intel. Shareholders will get 1. 7 amd shares they hold of xilinx. Mandarin oriental is in the process of reopening at Hotels Across the globe with some locations seeing business return to levels not seen in months. At the height of the pandemic, three quarters of the properties were shot were shut. After a really tough second reopeninge went from many of our hotels in the Third Quarter. Honest,o be particularly in europe and the americas, the resurgence of the pandemic is meaning that progress towards rebuilding is slow. I think in asia we are seeing some Good Progress but much less so in europe and north america. How many of your hotels are open right now . They are all open but two. At the height of the pandemic, we had three quarters of them closed. How are you pivoting the business . Are you preparing for a day when there will be significant travel again . It is going to be so long before that day comes. My focus for the group has been on leisure travel. I believe it is a luxury end of the market. Business leisure has been at the heart of luxury travel. I have been seeing business as al gradually declining proportion of our business for some time. All the pandemic has done is accelerated that trend. I would characterize us as focusing very much on leisure, some 60 or more of our business would be leisure. Business 20 5 maybe 25 maybe business. That business segment is going to be slow to come back. It is going to come back particularly only in areas of the premium element rather than the volume of Business Travel. Think in europe there has been the greatest help. There has been a lot of support for colleagues not able to come to work. We have also seen significant help coming from the hong kong and singapore governments and from the japanese government. There has obviously been some support from the u. S. Government in terms of increasing the payments colleagues have received for period at least. Those are the principal territories in which we have seen help from governments. In all cases, it can only go some way to make up the losses we experienced as hotel owners during a period where we are seeing occupancy in the Single Digits. Single digits. Can you give us an idea of what occupancy levels are in various regions . At the moment, they very significantly. What i can do is highly at the height of the pandemic got to a point where we only had 200 guests globally. Much, we are getting too utter levels. In china, we are seeing 80 and 90 occupancy on a regular basis. In a property like our hong kong 50 erty, we have over occupancy at the weekends and 20 to 30 during the week. Between those that are still in Single Digits because there is soft demand or those properties have a higher proportion of Business Travel to others that are able on a regular basis to get into the 20s and 30s. There are very few other than those i have named that are higher than that with the exception of resort properties where particularly in the mediterranean, our resort properties have done very well. Mandarin oriental ceo james riley speaking to vonnie quinn. We are seeing Downside Pressure from markets across asia with the nikkei losing 4 10 of 1 . We are seeing real estate and financial stocks leading the decline. Health care is the only sector gaining ground on the nikkei. We do have the thursday doj policy decision. Likely not much change. The focus continues to be on helping the corporate sector. The kospi losing ground. 4 10 of 1 . We have very positive thirdquarter gdp numbers out of south korea beating estimates. Right now, the stock is under pressure with tech and Consumer Discretionary stocks leading the declines. Flat for the asx 200. Fifth session of losses. Kiwi stocks the only one gaining ground at the moment. Coming up from a three week low. Take a look at currencies. The japanese yen holding steady. The korean yuan under pressure after reaching a 19 month high. The aussie dollar not doing much along with the offshore yuan. Up next, 112 days later, melbourne is finally reopening. We will have the latest. This is bloomberg. Breaking news out of australia, Third Quarter cpi numbers hitting the terminal right now. Falling in the quarter 1. 6 , a narrow beat. The expectation was an increase of 1. 5 , but it does reverse the negative inflationary read that we saw in the Second Quarter and give us us and on your number for cpi of. 7 of the trimmed mean, closely watched at 1. 2 on. 4 on the quarter, so a beetle around on the thirdquarter cpi, a narrow one though. We are seeing a small move in the aussie dollar come arising a tad, 126 now. Cbi numbers are still well outside the tiger branch for the reserve bank must really a of 2. 3 percent. We havent been there since 2014. The rba meets next week for its penultimate meeting of 2020, and a number of economists see the cash trade being cut even further, down 2. 1 . But those cpi numbers for the Third Quarter, coming in slightly better than expected. Is this is our reopening across melbourne is one of the worlds strictest covid19 lockdowns is lifted. The 112 day shutdown across australia dragged down the National Recovery as a whole. Our Melbourne Bureau chief has been living through it all and joins us now. It has been a long haul for people in victoria. How is the mood in melbourne . Victoria, which last year was rated the world secondmost livable city is emerging from 112 days of the most Strict Lockdown measures anywhere. As of 11 59 p. M. Last night, retail, pubs, cafes allowed to reopen. Mask wearing continues to be compulsory, but the mood is one of relief, paul. Of coffeehas a love and cafe culture, and we expect a flurry of activity after things open after such a long time closed. Shery i can imagine you must be really looking forward to going out, eating, shopping, but the coronavirus is surging around the world, especially europe. Are there lessons the rest of the world can take from melbourne . Rebecca thats a great question. The key take away, as the country begins the colder months, is how hard it is to get the virus spread under control. Melbourne had its second state melbourne has seen spikes that were costly to the Health Services and know that this needs to be taken really seriously. Paul melbourne gradually coming out of lockdown. What is next in the state of victoria, and australia more broadly . Paul, soon the summer months when people take vacation will be here. The next couple of months will be really critical in seeing how successful the measures taken by the states and the federal are. Nment and to see how the hygiene measures stand up to the oldfashioned barbecue and a splash at the beach. Looks different now. Collectively, we are cautious, but at least we have some understanding after this melbourne experience, of how we are going to proceed in this covid world. Shery our Melbourne Bureau chief rebecca jones. Staying with the virus, india has reported it lowest daily increase in infections since mid july. The founder of the countrys largest biofarma company is waveg a second coronavirus is avoidable. Even asd bloomberg why, coronavirus cases approach 8 million. Approaching 8 million, but active cases are below 800,000, which is a really good sign. And the for talent he and the fatality rate has come down drastically in the past few weeks. So that gives me hope that we are controlling the disease better, treating patients better, and are in a better place than a month ago. Wont see thewe kind of second wave europe and the u. S. Are seeing. People are starting to talk about herd immunity in india. With 180 Million People infected, do you buy into this herd immunity suggestion . You know, you can create herd immunity in small pockets, but you cannot hope to control it nationwide. Relying on herd immunity is not advisable. We do need to vaccinate our population, we need to treat better, and we still need to contain out rakes better. Oflinda and also, the issue vaccines, i think more and more countries are lining up to secure their own stock of vaccine once we find one. And that has led to the idea of vaccine nationalism. You have been saying that it shouldnt come down to that. But in the end, isnt it true that richard countries will end up having access to vaccines fast . Thehat we are relying on Johnson Johnson industrials and vaccines. India is also developing its own vaccine. Betweenxpect is that those, and the indian manufacturers, i think we will be able to make sure that the countries of the developing world have access to the vaccine, and it will not be the prerogative only the wealthy and rich countries. That is my take on Vaccine Availability and access to the lmic countries. Realistically, when do you see indians having access to the vaccine . And following that, how prepared is india to distribute the vaccine to everyone . Consensus is that in the First Quarter of next year, i think we will have a vaccine in the market. This has to be done in a very of time, andriod it is the most massive scale Adult Vaccination program ever. How you handle all that is the question. Then, we need to make sure rural india is the one that has to have equitable access. And that is a challenge. Urban sectors can still deal with most of the basic weapons. I have been advocating for the use of technology to make sure to theet vaccinations unique Identification Number that we have in india, because that is already a comprehensive database. This is a we know, very complex Vaccination Program which will involve multiple vaccines coming in at different times, and with different data points which will evolve over time. So we really dont know how long and arebility will be, there going to be longterm adverse events, etc. The work Speed Development of the vaccine is introducing another set of challenges. A technology have that can track and trace every person that has been vaccinated, you are going to end up having a lot of unanswered questions. That is biocons executive chairperson speaking to haslinda amin. We will have more on that later about female representation at the top of the worlds Biggest Companies but lets check asian markets with Sophie Kamaruddin in hong kong. Sophie, what do you see . Choppy week continues for asian stocks, which are resuming losses. U. S. Futures are lower. The dollars gaining ground, gold edging toward 1900. When you look at australian shares, we are seeing them come off session lows. Seoul, chipmakers at , this is after we learned of the amd deal. Tokyo rising to a fresh eye. Switching out the board to check sphere very much in focus with asian earnings do. Saying its Australian Unit will sell its cider and peer brands to heineken, that deal expected to be approved, asahi pressures under pressure for the fifth straight day in tokyo, and come also shares stocks fluctuating after the carrier announced plans to restructure to cut costs and forecasting its bigger biggestever annual loss. The japanese telco, flipping the mission to lower ana in japan, and we have a mobile charge lessing to than 4000 a. M. While they softbank price tag is 45 , while the00 softbank price is ¥4500. Shery thank you. Up next, rising tensions between washington and beijing over taiwan. This is bloomberg. Karina this is daybreak asia. Im Karina Mitchell with first word headlines. President trump tells reporters at the white house he sees a coronavirus eight i could steal coming after the election vote. Issays Speaker Nancy Pelosi working to bailout stake in local state and local governments and he says the best deal is going to be after the election. In the u. K. , efforts to hammer out a deal before the brexit split. The e. U. Council president Charles Michelle says the negotiations are at the most difficult stage right now, with the clock ticking until the u. K. Formerly formally leaves. At the reserve bank of india, and report says states are taking on more financial obligations to fight covid19, and the pressure is adding on local governments. The pandemic devastated revenues at national and state levels on the federal government revised borrowing plans to a record 177 billion u. S. Global news, 24 hours a day, on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Paul. Paul thanks, karina. Just days before the u. S. Election, the state apartment approvale signaled for antiship missiles to taiwan, move certain to anger beijing. For more on the arising tensions, we are joined by shirley lin, a professor at the university of virginia and visiting lecturer at the Brookings Institution and the author of taiwans china dilemma. These tensions have been assembling have been simmering for decades without boiling over, but are you seeing anything that suggests that is changing . Shirley the tensions have really risen this year, and the 2. 4 billion arms sale is worrying a lot of people, because since 1979, this is the first package to be sold that includes cruise missiles that could be carried by f15 fighter ass, and are characterized offensive weapons by some. The gapworry is that between beijing and taipei is packageso fast that any of this sort is primarily defensive, and is a deterrent to avoid any escalation. But the situation is changing quickly, and i would say for two reasons. One is, beijing is coming quickly to see the reality as it is, which is that the taiwanese and taiwan government maintained taiwan is separate. It is movingt say toward any sign of declaring formal independence. But from the beijing point of view, they have now drawn the and to another threshold, this time, protesting the arms sale, they said they wouldnt tolerate taiwan being separatist. This is not where they have been in the past, and describing taiwan as a separate place would cross the line to it so that is worrisome. The second thing that is worrisome even more is that fighters and bombers are crossing the median line in the thean strait, entering identification zone of taiwan every day nearly. So what beijing may be planning is perhaps peaceful but involuntary unification. Seeing the package of arms sales changing to include offensive capability, the language from beijing changing to include the world separatism, these crossing of the lines, as you have charged. We also have an image of a fullscale replica of the chinese headquarter buildings and for the purpose of military exercises. What does that tell you . I think the possibility of war is still quite remote because beijing is quite busy on many fronts. But a lot of people worry that during the chaos of the u. S. President ial election, beijing use the opportunity. But what opportunity is there . I think it is more likely beijing is using a show of force with drills involving amphibious landings to intimidate taiwan to think that they have no choice, or to add to it a blockade or economic sanctions to force some without actually escalating it. Trump hassident elevated taiwans status during his four years. What can we expect in the next four years, and what about a potential biden residency . Presidency . Waiting for next week, as you have seen, there are more taiwanese that support trump than biden in one recent poll. But that is because trump has prioritized my one and as you said, trying to upgrade taiwan and enhance taiwans international status, which a taiwanese want to see. However, biden is going to focus on one area that is different from trump, and that is to enhance the relationship with partners and allies. In that way, biden will be much more sympathetic to taiwans china dilemma. The name of my last book dilemma, the name of my last book. Taiwans, China Economic future will be connected to china, and taiwan will be a big part and china will be a big part of the taiwanese economy, as taiwan relies on the United States for security. And biden come up being sympathetic to this, may perhaps decouple from china that might taiwanesen and companies unintended victims of this process that so many are caught in between. Know in hong kong, china is becoming more assertive. What are the implications of what is happening in hong kong for taiwan . Shirley i am teaching a short course in taipei, and in our posters inhere are the hallways that say china cannot be the today taiwan tomorrow. So hong kong is not a very good story in terms of beijings soft power and propaganda in trying to get to the hearts and minds of the taiwanese people. But in hong kong, i lived there for 30 years and it is excruciating to see a government that is so unresponsive to peoples discontent. And if that situation continues, it is going to be harder for the taiwanese people to buy into the unification campaign. But in terms of hong kong, the verdict is out as to what the National Security law really means. The private sector seems to be unaffected, but i think everyone is prepared for some contingency plan. But in terms of academia and Civil Society [inaudible] shirley lin, thank you for your insights. Later, how the protests in thailand are affecting businesses already hit by the pandemic. Up next, chinas failing small banks are pointing to a big problem, and could trigger a wider financial crisis in the worlds secondlargest economy. That is the view of our Bloomberg Opinion team. We discuss. This is bloomberg. Shery china has been restructuring and recapitalizing Smaller Banks out of faster pace since the covid pandemic. However, our Bloomberg Opinion columnist says the pboc strategy of seizing risk isnt working. Shirley jones is on the phone from hong kong. Why is this approach failing . Now, the beijing slogan is won, one policy. Won, one policy, makes you feel beijing doesnt have much of a strategy. Like a soap bar, they take a very ad hoc strategy to operating banks. Sometimes they ask banks to recapitalize them and sometimes they ask local governments to recapitalize them. Right now, we are in a pandemic and local governments and even big dont have much money. And all these deals take time. It is very possible the socalled recapitalizing, restructuring and merger and acquisition deals will fall apart at the last minute. We think thisnse, one bank, one put one country fell flat on strategy. Paul the economy is growing again and Foreign Investment hasnt even been dented, but this is a moment for china. Uli we have been worried about that because investors have been buying government bonds record pace. They have a systemic risk. They account for about a quarter of the chinese Banking Systems assets. But the big problem is, it is going to turn out to be very, very expensive and beijing says it has a Clear Strategy of how to recapitalize. Bailing out banks can be very expensive. A bank in beijing has tens of so it isof dollars, going to cost some money. Paul our Bloomberg Opinion columnist, thanks very much for it lets check this this flash headlines. Operatorumber two posting a surprise lost after intense competition over the cost of coal. Oveross came in at just 100 million dollars. Revenue was up 22 . A 377 million u. S. Charge against secondquarter earnings to cover losses to customers and writedowns on softwares. Value of newtek is also being downgraded. Withoverage continues Bloomberg Markets china open. This is bloomberg. Haidi this is bloomberg. Init is manic like a. M. Beijing. Welcome to Bloomberg Markets china open. David we are counting down to the trade in hong kong. Lets get to your markets. We are looking at the chinese currency. Is giving up some influence over the exchange rates. Lenders now have more rooms to