Transcripts For BLOOMBERG Bloomberg Markets Asia 20240711

We are going mostly down. Trump has used his executive powers to ban investments in companies that are associated to the Chinese Military. Lets look at some other asset classes. Dollar index unchanged. The euro, which has been under the caution with the dollar. Crude, just dropping below 40 bucks a barrel. We have the surprise stockpile gain in the u. S. Gold price moving up as well. Goldman sachs saying they are bullish on not just gold but also copper. Lets move to what is happening first word news was. We get over to new york and joined karina mitchell. Karina the chances of a new stimulus package in the u. S. Are receiving with the white house saying sources tell us gop leaders will not lead any of the talks. Mitch mcconnell has been more distant from a democrat proposals, reducing the chances of a new deal. The Federal Reserve is again warning fiscal stimulus is required to support the u. S. Economy as potential vaccines may not end the economic fallout from the coronavirus. Chairman jay powell spoke at a Virtual Panel hosted at the ecb and said the coming months could be challenging. The Worlds Largest retrade agreement is expected to be signed this weekend as asiapacific nations conclude negotiations at the aussie on summit at the asean summit. India has so far declined to be involved. 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. Coming up, president an orders signed banning investment in chinese firms which are determined to be owned or controlled by the Chinese Military to ramp up pressure on beijing. Ours get more on this with Senior International editor, jodi schneider. Why is the president doing this . What are the implications . Think it is an other in a string of actions President Trump and the Trump Administration have taken against china, trying to put pressure on china through things like these kinds of bands on investment. They are targeting in this case any company that is owned or controlled by members of the Chinese Military. 20t could include at least companies we know of that are on a list. What this would allow is investors could divest any these companies, giving them time because this would not take effect until january 11 and after that, they could divest as well depending on the 60 day rulemaking period. This is yet another in the administrations attempts to pressure china. In terms ofgrowing the criticisms from the u. S. , from President Trump himself about china in terms of the origins of the coronavirus, the crackdown in hong kong and the treatment of the weaker uighur minorities. Disqualified by the Chinese Government and then an mass resignation of the rest of the opposition lawmakers. Responset have been in to that directly but these are the kinds of things the u. S. Is reacting to. Why does it appear at the moment the Trump Administration is pulling back from its threat to ban tiktok in the u. S. . We have had some legal news today. What are the next steps in this litigious fight . Jodi the fight goes on although the ban will not take effect. It is not going into effect. The Commerce Department said it will not occur. They put out a statement saying that will not happen. The next couple dates on the calendar to look for in december. The 14th and the 28th. Sale or tiktoke will be trying to go through the sale in terms of Getting Court action to allow the sale to go through. This is to oracle and microsoft. They want to see this happen so that this can be as President Trump had ordered in american hands. He said that had to happen if tiktok was going to operate. Obviously the Commerce Department is letting it go ahead at this point, but the legal action will continue. The people who one for sale who have filed the Court Papers Say they have not heard from the administration on the sale and they will fight to have that happen so that tiktok can operate on interrupted in the u. S. Jodi schneider, ari Senior International editor. Still ahead, we are having a look at Market Strategy as hopes of a vaccine drive sentiment. Sayy davis from quadratic the markets are straight from winnie the pooh. Andty markets as tigger bond markets playing eyore. Banks asking deutsche affect strategist on whether the pboc has a tight leash on the yuan. This is bloomberg. Haslinda the Federal Reserve is again warning that fiscal stimulus is required to support the u. S. Economy as the vaccine may not be enough to stop the economic fallout from the coronavirus. Our next guest says more stimulus will come. The trouble will be getting the money to where it will have the greatest effect. Joining us is the quadratic capital founder and cio, nancy davis. Good to have you with us. We talk about the stimulus coming but that is in question. I do think the stimulus will be coming. Everyone is waiting for it. I think the question is, when will it have been will it be enough to counterbalance the take up we have seen the tick up globally of covid cases . Haslinda how does the market make sense of all of this . We talk about rising covid cases. Take a look at yields. Still below 1 . 1 . Eating from the cusp of i think entire 10 year u. S. Treasury yields would signal more of a risk on market for equities and credit. I think the bond market still has not recovered to its prepend david prepandemic levels. If you look back to 2013, Interest Rates were still near the zero bound in terms of policy, but it was a more healthy environment with the u. S. Yield curve was about 250 basis points, which it is more normal which is more normal. Right now, the bond market is signaling one thing and the equity and credit markets are looking ahead to that fiscal stimulus. Predicting a steepening, looking at 1. 3 by the end of 2021. Do you see that happening . We do. We launched a whole product along that theme called the eyeball etf, which had the curve steepen are coupled with u. S. Treasuries, inflation protected treasuries. Whogree with goldman sachs, is actually my former employer. Rishaad nancy tell me, you have got this analogy that the equity market is tigger bouncing around and the bond market is eyore who is always a bit gloomy. Walk us through the analogy in a more detail. The equities and credit markets are like tigger. They are excited. The vaccine is coming. Fiscal stimulus is recovery is coming. Everything has recovered to the pandemic levels. ,hereas the u. S. Bond market take the 10 year treasury, quite gloomy. It is not normal idle. Prepandemic, we were close to 2 on the 10 year, which given the inflation target around 2 to the cpi was normal. The bond market is behaving like eyore equities and credit are bouncing off the walls. Rishaad lets take this a bit further. Hunny that winnie the pooh like so much and where is Christopher Robin . Who is getting it right i am suggesting to you . That thee that analogy equity and credit markets have their hands in the hunny pot. Be welltion is going to their hands get stuck . In the necke hunny of time or will we see a spike in covid cases and eyore to use the analogy of the bond market is actually the right one . Rishaad the question then is, will the hunny bee significantly more expensive than this time last year . Do you sit in that camp as well that perhaps inflation is one of the known unknowns . I agree with goldman sachs. The u. S. Yield curve is a very market based measure of forwardlooking Inflation Expectations. They are in the toilet because the u. S. Yield curve is about 60 basis points. If you think about what that means for a typical investor, if you loan money or you lock up your money in a bank cd, you get paid daily half a percent to lock up your money for 10 years. Rational a investor do that . It is because they are expecting a deflationary outcome from this environment. Rates normalize, where do you see yields . Will they remain low . Bei do think we are going to in a low yield environment for a very long time. That is why with the eyeball etf, we own about 87 of the fund is u. S. Treasuries. We do believe that Interest Rates will stay low for quite a long time. The question is, will the fiscal stimulus, the fed moving their it not a targets make firm level . In the fed not even thinking about raising rates, we think it is a terminus opportunity to add Inflation Expectations to a portfolio. There are very few things in todays environment that are stating that are trading below their fiveyear, 10 year, 20 year levels . Expectations and Interest Rate volatility are two things that are still discounted. Haslinda some are warning about more pain coming for the 60 40 allocations in the portfolio. What . 60 40, then how should investors be looking at it . 60 40 has been a quite good trade because we have had bonds and equities going up together and that has been really positive. I think the challenge for investors is if we had a stagflationary environment, that would be bad for both sides of the equation. Equities would selloff. Selloff. S would likely investors should be looking for ways to add asset class, diversify their portfolios, add inflation protection, add Interest Rate volatility. Many investors use the equity vol market. It is an important time to be thinking outside mainstream, being a little bit of a contrarian and looking at in financial assets, what is cheap . Interest rate volatility and Inflation Expectations are two things that are attractively priced. Rishaad that is all we have time for. Thank you for joining us. Have a fantastic weekend. Throughs coming considering we had the Chinese Markets shot yesterday. Typhoon known locally as ulysses hitting the country. The bond markets have resumed after the oneday halt because of that storm. News coming through from manila. Coming up, we have the rbnz governor saying aucklands are a signd19 cases of the uncertainties that lie ahead. This is bloomberg. Haslinda the head of new zealand Central Banks is the are a cases of covid19 reminder of the economy. The governor spoke to Kathleen Hays about what the pandemic means for new zealands economy. I think it means the same here as everywhere else and the answer is we cannot only think about a scenariobased we think about assumptions, create particular scenario and then do your best with policy. The challenge for us is that those scenarios can change so dramatically. Policy int monetary new zealand is based on an assumption that the International Borders will be open by 2022. That is a very bold assumption. Even with that assumption, we still having to maintain Monetary Policy. It shows the work that is head of Central Banks to keep inflation positive and to keep employment anywhere near a maximum sustainable level. For countries like new zealand, we have always got problems. Interest rates are so low. S8 rates are high. That means house prices. We are back at the challenge to law. Consumer inflation low. We have got her mandate our mandate. The Monetary Policy this Monetary Policy meeting this week, the outlook was boosted. You introduced the funding for Lending Program. Investors seem now to have stepped away from this absolute certainty. As soon it can almost, rbnz is going to move to negative rates. Does this auckland outbreak somehow remind you as policymakers, remind investors that may be it is still an issue that is alive and well, an issue that is on the table for rbnz . I do not think the reserve banks ever forgot it. We have gone to pains to explain to people we are crowding scenarios and not projections of certainty. Markets to be thinking forward. They know what we have to achieve. They know the instruments we use. I really do hope they are watching the same information. Growe economy continues to and do what it is doing, todays news around the coven just puts the covid just puts it back into perspective. Be prepared. Do not run around on predictions. How much are you depending on the new funding for Lending Program to give the economy the additional stimulus it will need to keep the recovery going and maybe again there will not be a need for negative rates if it does its job. One would hope it is a beautiful world and the sun comes up and covid goes away. We could we normalize Interest Rates. We have a lot of folks a lot of confidence around the funding for Lending Program because it is such an invasive way into the Banking Sector to provide very low cost of funding, which we will be on watch to make sure that is passed on to borrowers and investors. Really making sure confidence and cash flow exists. Is weallenge of course cannot force people to lend. We cannot force people to borrow. We can only create the environment for that to be happening. In terms of steps you might take next, you have mentioned purchasing foreign bonds. Have not taken that step yet. Is that still on the table . What will it do for you. What is the reason to adopt that step if you do . It is still on the table. It is not a preferred option because we do not think it would be as effective as the many other options. It is a way we are building up reserves. We could have more of those in foreign currency terms. That allows us to create the liquidity in the market that we need. It would also impact on the level [indiscernible] selling local. We do not believe it would have a Significant Impact really longterm. It would have an impact on the liquidity, not necessarily the Exchange Rate. We want to keep it there because we want to rule out options. We are comfortable where we are with the funding for lending and the quantitative easing program. Haslinda rbnz governor adrian orr speaking exclusively to Kathleen Hays. Now, the latest business flash headlines. Nissan jumped the most since midjune. Cutting a loss estimates for the current quarter. Million. Mates were 46 market estimates were for 30 times as much. Nissan has been cutting costs, restructuring its operations since the ousting of carlos ghosn. Ferrari has announced a version of it debut hybrid. It will match the power of its starting atrpart the equivalent of 560,000. Orders in october were up 30 . To movers ining japan as we head to the lunch break in tokyo. This is a look at some of them. Nissan on the way up. 7. 6 . The restructuring is perhaps working. Are you frustrated with your weight and health . Its time for aerotrainer, a more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time, all while maintaining safe, correct form and allows for over 20 exercises. Do the aerotrainer super crunch. The prestretch works your abs even harder, engaging the entire core. Then its the back extension, super rock, and lower back traction stretch to take the pressure off your spine and stretch muscles. Planks are the ultimate total body exercise. Build your upper body with pushups. Work your lower body with the aerosquat. The aerotrainer is tested to support over 500 pounds. It inflates and deflates in less than 30 seconds using the electric pump. Head to aerotrainer. Com now. Now its your turn to lose weight, look great, and be healthy. Get off the floor and get on the aerotrainer. Go to aerotrainer. Com, thats aerotrainer. Com. Is 10 29 a. M. In hong kong and shanghai. Largest freetrade agreement is expected to be signed this weekend at the asean summit in hyundai in hanoi. Rcep is anchored by china but india declined to be involved. Brexit talks continued in london with both sides admitting serious differences still remain. U. K. Treasury wants to saying it is regrettable the block has not shifted its position. The u. K. Has unilaterally opened access to parts of its Financial Market and wants to see reciprocal action from brussels. Philippine Financial Markets have reopened after being closed by the passage of the typhoon. The storm was the 21st major system to hit the islands this year. At least seven people were killed. Currency and bond markets will be shut for a second day although equities will trade. The typhoon is forecast to exit the philippines today, weakening as it tracks to vietnam. A new report warns australia to expect longer and more destructive bushfires seasons, heavier droughts and more bleaching at the Great Barrier reef as Climate Change intensifies. The bureau of meteorology warning comes after fires caused 10 billion worth of damage and killed 33 people. The report says the trend increases the likelihood of extreme events. 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. Haslinda lets take a look at markets asia. Tracking losses in the u. S. All major encz marks in asia are in negative territory. The msci index down. Investors back to worrying about the resurgence of virus cases, tougher restrictions. Vaccine prospects are not enough to cancel out economic challenges created by the pandemic. The dollar pretty flat. Along with the yen. The Trump Administration backed away from fiscal stimulus negotiation. Havens finding some support. Here are some of the movers we are tracking on the back of trump imposing restrictions on investments and companies linked to the Chinese Military. It is seen as the latest white house bid to pressure china. China telecom down 7 . Percent. Own half a net income forecast. Will stay flat in the Fourth Quarter. Rishaad lets have a look at bond markets in china. The 10 year yield the highest of the year. It is expected to keep rising. This is on the expectation the pboc may start paring back at stimulus programs. The central bank expected to carry out operations monday. Investors will be watching that closely. Lets get more as we are joined by the Greater China macro strategist. Thank you for joining us. Give us the rationale here. How much of this could be based on a feeling that inflation may make a return in the months to come . Thank you for having me. Correction. A sharp it is attributable to the positive development on the vaccine overall. The risk rally post election outcome. To some extent, concern for the longterm inflation risk down the road similar to other markets. I think at the current level, valuation seems increasingly attractive. Absolute yield is the highest. We have renormalized the bank to precovid levels at three point 3. 2 . Relative yield against the u. S. Treasury 10year at 240 basis points is also closed to the widest level over the past decade. I think Exchange Rate is also quite positive. We are bullish on the renminbi. The valuation of renminbi on government bonds at this level is attractive to longterm investors. 3. 3 compared to other countries is quite attractive. Widening on some parts of the curve. Rmb of this is down to the and the yuans appreciation. We could be seeing the yuan at 640 at some stage. Went does that likely happened and what will be the impact when does that likely happen and what will be the impact . I feel that we will see that some point next year. Our view is based on a couple considerations. We believe overall Global Growth recovery seen in the second half of next year will strengthen after broader adoption of vaccines globally. That will reinforce our broader bearish view on the dollar because the market will come back to look at Interest Rate differential and the altar easing monetary condition by the fed and the ecb. A lot of investment inflows will go into emerging countries such as china. On the other hand, because of the pandemic and some of the manufacturing facilities globally could not run in terms of full capacity, so expert growth for china had been strong in beating expectations. That perhaps will continue to some part of next year. That is also supportive to performance. On the other hand, china is increasingly opening up its Financial Market. Inclusion, major bond index inclusion in october of next year. We have jp morgans em inclusion s. Already included all of the renminbi government bonds by early november. All of those structural flows will also support for the strengthening of the renminbi Exchange Rate. Feel most likely to have to happen around the middle to Third Quarter of next year. Haslinda we are talking about tighter liquidity and all eyes are on the operations by the pboc on monday. What you expecting . There is a sense that anything less than 2 million yuan will disappoint. That is a very good question. In terms of Monetary Policy, i think the pboc will maintain mildly accommodative auditory policy. October, credit and supply growth already decelerated from the first half. As you pointed out, inflation pressure also continued to ease. I do not think it makes sense to tighten monetary condition also given global Central Banks maintained easing stance. If for the tightening of the domestic Interest Rates levels would perhaps add a lot of pressure. On the other hand, it does not make sense to ease too much given valuation in china has gdp bysing to 270 of june of this year. It was 240 during the previous three years. Limit room forns additional easing. I would expect the central bank to keep its current Monetary Policy stance mildly positive. Expect anot aggressive tightening of liquidity. Liquidity, recent the pboc has started to inject liquidity into the opening market. Week operations of a virtue hundred billion renminbi going into the year, i think we aould be prepared for perhaps slightly more liquidity injection in preparation to support credit growth into the first half of next year. That, thehaving said pboc has made clear that making an exit from the easing measures is a matter of time and is necessary. N you see that happening when do you see that happening . I think the easing of the exiting of chinas Monetary Policy will be more or less in line with global Central Banks exiting. China has been leading in a sense of growth recovery domestically as well as structural tightening into the Property Market and also some of the liquidity measures going into credit market being very targeted. China has already finetuned into Monetary Policy stance. As i discussed earlier, i think growth risk globally as well as uncertainties with u. S. China relationships and uncertainties with the evolving pandemic and so on, perhaps the change in policy stance is more likely to happen into the second half of 2021. Both emerginghen, economies will be able to come from thee recession pandemic and perhaps on a much stronger trajectory in terms of growth recovery. I think they half of next year the central bank could consider exiting monetary accommodation. Rishaad ok. We have got the possibility we could have further monetary easing. We are going to have signals on the pboc. Something like 900 billion dollars worth of funding shortages, raising concerns about tighter liquidity. The pboc is slated to offset most of 91 billion of policy loans coming due this month. What is your take on that . Yes, right now, the current for threence is purposes. Number one, to keep interbank liquidity station liquidity condition stable. Close to the policy right anchor, which is the seven day reversal rate at 2. 2 . Intendc will in will to inject more shortterm liquidity. Secondly, to support credit growth to be stable, not really a sharp cliff off previous levels but more even paste of deceleration of credit growth. We estimated on a monthly basis we still need at least 250 billion renminbi of mediumterm liquidity injection to support credit growth. Lastly, it is about financial stability. As you can see, a couple credit events into the market has by a lot ofhuffling financial institutions. Liquidityar chairman demand, it might come to the market to bar more. That could push money market rates to more of a credit squeeze and this is why it is necessary for the central bank to step in with mark targeted liquidity with more targeted liquidity support as well as to the interbank market. Rishaad great talking to you. Have a great weekend. Have Japanese Companies. They have been beating profit expectations by the widest margin in almost three years. It has been drawing global attention to their stocks. Details coming along next. This is bloomberg. Climate change is happening. It needs to be repeated over and over. 126 governments have committed to net zero. We must harness the firepower of the financial sector. The Financial Community has a Critical Role to play in driving this transition. For ouroing to lay out stakeholders how we intend to align with the paris accord. The investment industry now has the opportunity to further accelerate this phenomenon and demonstrate that we can be a catalyst for change. The economic challenges of the Climate Transition are phenomenal. Then i ask myself, how much does it cost . A lot. But nothing that we cannot afford because the cause is our survival. World leaders highlighting concerns about Climate Change. Do not miss our new show. It is bloomberg green. A launches this friday on Bloomberg Quicktake and this weekend on bloomberg television. Haslinda japanese firms exceeded earnings and expectations by 34 compared to 6 in the nfci asiapacific index. The biggest margin in almost three years is adding to the appeal of local stocks, which are already anticipating a return of foreign investors. Lets get more from our news editor. What is behind this Job Performance . It was a very Strong Performance in a lot of different sectors, particularly in sectors such as autos and machinery. Areof the factors we talking about them exceeding expectations, not compared to the previous year. Part of that is the conservative guidance companies were giving up until now and the difficulty of gauging precisely what impact the pandemic was going to have. Japan until recently has been doing quite well comparatively the pandemic. The recovery has been very strong in certain sectors, aided by government campaigns and so on. We are going to see that in the gdp data, which comes out on monday. , i can every morning find a list of Japanese Companies that are moving the most and have a look at why and it tends to be exactly this. A beating of estimates. Not just beating them, smashing them quite often. Which of companies for you that have been the standout performance . Which of the companies for you have been and upper formers . Autor me, it was the sector. You saw nissan, it was a very small loss compared to the massive loss analysts were expecting. For even nissan, which is a Company Going through a lot of difficulties at the moment. For them to outperform that much is quite impressive. We also sell both and honda. Sawabsolutely we also both toyota and honda. Makersachinery performing very well. A lot of these companies are doing one thing Japanese Companies do very well, which is implement cost cuts when times are tough and some have very Good Management teams that are able to implement those cuts when things need to be tighten up. To be tightened up. Haslinda lets assume that would give the equity markets a boost. That seems to be the expectation. Markets are down today a little bit on the pandemic news. It does depend on where the pandemic situation goes from here. Not just in japan but where cases are increasing but also in the u. S. And europe. Japan equities have performed very well over the last since the start of this month and particularly since the election. The nikkei has finally been 2500. It is above it today. Expected those gains to continue until next year. Up 27 200. Target, so, it depends on the pandemic what we ared also looking to see is how much for an investment is going to come back into japan. They have been the sellers japanese equities. Haslinda bloomberg Senior Editor in tokyo. Up next, we will look at disney earnings. Do not miss that. This is bloomberg. Disney jumped and expanded trading as it reported a smaller than expected fourthquarter loss. It smashed subscriber estimates and showed signs of a themepark recovery. Su keenan is following all of the action. Many have focused on the disney plus numbers. So have the ceo and executives. Disney plus is the key to the company. Shares shot up as much as 7 . Disney blow away the subscriber estimates for disney plus. They had 73. 7 million paid subscribers. Far more than expected. Disneys recent entry into the video wars. You have amazon prime is a strong rival in the mix. Disney has been reeling from the pandemic and the strong growth in disney plus has solvent the growth the growth has softened the growth according to the ceo. Despite the many challenges and hardships, im proud to say we have been steadfast in managing our businesses under enormously difficult circumstances. We have not just persevered during these tough times. We have also taken a number of deliberate steps and smart risks that have positioned our company for greater longterm growth. Thedisney plus was clearly star of the earnings show. To consumerct platform launched a year ago. Subscribers to the hot Stars Service in india helped fuel the growth. It is up to a quarter of the platform. Of . 20 a share was less than expected. Revenue slumped to 47 billion. Abc Broadcasting Network was a bright spot in the earnings story. The Parks Division having a tough time of it because of lockdowns. We had this controversy over the movie mulan as well, didnt we . Su we did. Disneys ceo said he was pleased overall with the decision to do something different. They can see the controversy surrounding the film itself and the depiction of certain characters likely hurt sales. Disney did not give any specifics about the streaming data or revenue other than it was positive enough to continue exploring the video on demand strategy for premier. As for the Parks Division, it continues to be a drag on the company. They posted a 1. 1 billion loss for theme parks, slightly smaller than expected. Disney is extremely disappointed that california parks remain closed. Disneyland will not be opening this year. The result of the standoff with the state. Netey plans to forgo its semiannual dividend as it comes to terms with the impact of the pandemic. York. Da su keenan in new heres is a reminder that bloombergs annual new economy form happens next week. We will bring you live interviews and Panel Discussions throughout the event on bloomberg television. Terminal subscribers can see at all on live ago. You can watch it on new economy form. Com or go to bloomberg. Com. Stay with us. This is bloomberg. Haslinda welcome to Bloomberg Markets asia. Rishaad i am rishaad salamat. Asian markets following wall street down. Casesg numbers of virus raising fears of further u. S. Lockdowns. Investors worry about the timing of a relief package in washington. Haslinda President Trump takes aim at china again, banning u. S. Investments in companies deemed to be controlled by the Peoples Liberation army. Stimulusindia expands to 15 of the economy as the downturn threatens to become a recession. Rising inflation may rule out any chance of reserve bank cuts. Haslinda we are seeing red across the board, asia tracking losses in the u. S. Resurgence,virus stimulus uncertainty, and we have the three Central Banks, ecb, boe, and the fed, warning about a challenging economic environment. The asiapacific index, down by 0. 5 . We have the dollar inching upwards at 6. 62 on your board. Rishaad quick word on bangkok. Lets have a look at what is going on, following the Regional Trends to the downside. The tie, weakening against its american counterpart. Likewise as we see the dollar coming back a fraction. Lets have a look at what is happening first word news wise. The Federal Reserve is warning that fiscal stimulus is required to support the u. S. Economy as potential vaccines may not end the economic fallout from the coronavirus. Chairman jay powell spoke at a Virtual Panel hosted by the ecb and said the coming months could be challenging. The bank of england governor and ecb president echoed this caution. President xi, halted is said to have an ipo. The dow jones says the president has been irritated by wealthy private chinese entrepreneurs challenging the rule of the communist party. A speech by jack ma late last month was seen as an attempt to burnish his own image and tarnish that of the state. Tencent has moved to reassure investors by announcing a 29 growth in revenue in the Third Quarter, saying it will work with regulators on chinas new demands for big tech. Tencent will cooperate with beijings increasing control of fintech. Such regulation is not new, and its also not unique to china. As Technology Companies become bigger and more important to the would say more regulations to reflect the new reality are needed. Haslinda philippine Financial Markets have reopened after being closed by the passage of the typhoon. The storm was the 21st major system to hit the islands this year. At least seven people have been killed. The storm is forecast to leave the philippines today, weakening as it crosses across the south china sea. Dayal news 24 hours a powered by more than 2700 journalists and analysts in over 120 countries. I am karina mitchell. This is bloomberg. President trump signing an order banning u. S. Investment in chinese firms determined to be owned or controlled by the military. It is the latest bid by the white house to ramp up pressure on beijing. Lets get more on this as we get to jodi schneider. And alson idea why, the implications. Is the timing interesting . Rish. It is, obviously, we just had a president ial election. Joe biden the president elect even though President Trump has not conceded to him, but this order comes ramping up more pressure, attempting to ramp up more pressure on china, and it would take effect on january 11, nine days before the inauguration of the next president. Is it allows investors and firms to divest any of their holdings in 20 Chinese Companies that the administration has said have links to the Chinese Military, and that they could do that over the coming year. Basically, they are putting in process another in a series of attempts to ramp up pressure on china, and this would be coming just as a new administration would be taking over. Its quite interesting. He seems to be tying the new administrations hands. We will see how that plays out. We are waiting to hear reaction from beijing. They have in the past said they could reality could retaliate with u. S. Firms. Why does it appear that trump is pulling back from its threat to ban tiktok in the what is next in this legal fight . Ban on thenda, that u. S. Operations of tiktok, basically being able to view videos, wasose supposed to have started yesterday in the u. S. , and it effect. Gone into the Commerce Department came out with a statement saying they were not going to go ahead and push for that ban at this point. Meanwhile, bytedance, the chinese owner of tiktok, that sale of the u. S. Operations from bytedance to oracle and walmart has been winding its way through the courts. Onre hasnt been much action it, and those Companies Want to be able to do this. There are two upcoming court. Ases, december 4 and 28 may be seeing some things in court, but right now, the Commerce Department is saying they are not going ahead with the band at this point. That doesnt mean they wont try again in the future. This has been a months long battle since President Trump said in august he wanted to see a sale of u. S. Operations of tiktok, or he would ban it. Its been back and forth since then, but no ban right now. Haslinda Senior International editor jodi schneider. Well to come on the show, look at indias economy. Rishaad next, we talk equity strategy and emerging markets with jp morgans james sullivan. This is bloomberg. Haslinda asian stocks are falling. A resurgence in virus cases, adding to concerns that tougher restrictions may hamper the economic recovery without stimulus. Lets bring in our guest who says he is positioning for a large rotation out of growth and into value stocks. James sullivan, head of Asian Equity Research at j. P. Morgan, he joins us. Why do you think this is sustainable . Always, letsas look at what the market is telling us. The yield curve is steepening, which means the street is starting to believe that Global Growth will start to pick up. If we look at investor positioning, what we see, even after mondays historic value rally, it is still extreme investor positioning. There are two ways of looking at that. The overall positioning in growth versus value, and two, the evaluation gaps between those categories of stocks sit at extreme levels, which sets the stage for an interesting rotational conversation. It all comes down to the prospects for growth, which comes down to the conversation regarding a vaccine. Haslinda what is your take on tech . Tech has broken down on a relative basis for three weeks now. Tech on pause or tech on reversal . James i think we will see a rotation within the tech trade. We are taking money out of tech and putting it into cyclicals and financials across emerging markets. What is the market telling us versus what are our expectations moving forward . The market has shown us tech outperformance in every country we look at. China, youve seen consistent 20 plus outperformance of tech relative to the rest of the sectors we are looking at. If we start to get comfortable that Global Growth is starting to accelerate as we move through 2021, you should start to see a rotation out of tech into cyclicals and financials, which are exposed to a great outlook going forward. Haslinda would it be out of the u. S. And europe and into asia . If you take a look at the recovery story, asia got it contained and could be on a quicker growth path. And thereat question, are two elements to the answer. We are overweight rest of world relative to the u. S. That is partially off of a belief you will see a stronger acceleration of Economic Growth and the rest of the world relative to the u. S. , particularly if you look at the High Frequency data in terms of Economic Activity starting to flow slow in the u. S. In asian seeing that economies. Within emerging markets, we are looking for relative outperformance of em compared to china. China, a massive outperform or over the course of 2020. We think that will reverse out as we see this move into cyclicals out of the chinese market. Rishaad james, just changing subjects and looking at the world, which has been geopolitically bifurcated this year, we have markets that seem to be getting more bifurcated, as well. Reset President Biden come along . Can he reset anything . James its a good question. The way i would encourage people to think about this issue, number one, a Democratic Administration is widely expected to take a multilateral approach than the Current Administration has taken. That doesnt necessarily change the destination, and thats an incredibly important point. It does change the process by which one gets to that definition. A multilateral approach will be by definition less volatile, and you could see the risk premium, down. We expect a world in which china and the u. S. Are both competing as well as cooperating in some areas. It creates a far more complex conversation. We do expect to continue to see both competition and cooperation , a more multilateral approach moving forward, which potentially reduces risk in the overall system. Approacha multilateral may have more efficacy, may it not, james . James it potentially does. We do have to recognize there are very real issues at play on both sides of the equation. There are National Security concerns on behalf of the Chinese Government, as well as on behalf of the u. S. Government. These are longterm issues which will take time to work through. We dont want to downplay the importance of some of the issues being discussed, but we do think we will see a less volatile discussion surrounding those issues. Awould stress we do see significant scope for cooperation between the United States and china on particular issues. Climate change would be an obvious issue. Financial services in china would be another key example that is in the interests of both parties. Rishaad do you think they are happy in beijing that donald trump lost reelection . James i wouldnt care to postulate on the views of the Chinese Government. I will leave it to them to comment on that. Rishaad fine, james. Lets put that in another way. If we look at what is going on between these two countries right now, what needs to be done in order to lower the temperature . How does Something Like that work . You need to have cooperation on both in order to do it. James i think that is exactly the right point. You have to have cooperation. You also have to have understanding. I think a clear delineation of what are considered core National Security interests on behalf of the u. S. Government as well as the Chinese Government, illustrating that across both parties is critical, because then everyone knows the conversation we are having. We are seeing significant disagreements and uncertainty in several sectors, and i highlight the tech space. Hosting the at t conference. Working through what are the underlying bedrock National Security concerns we are actually discussing, and then you can create a conversation to move forward. Looknda james, when you at the bond market, you take a look at how yield has been rising, its below 1 , but it has been rising. Our traders concerned about the pace of yield increase . James not yet. As you indicate, youve seen the yield curve steepening. Its only been about 20 basis points since june. We are not at levels that would start to elevate the risks to equity markets. What i would say on that issue is the key things that we are watching, number one, fiscal comings, and number two, back to the vaccine issue. Issue,fiscal stimulus you saw almost 4 of global gdp and fiscal stimulus as we moved through 2020 that is scheduled drag as weo a 3 look forward into 2021. Thats a critical issue because you are taking a significant amount of pressure off the gas pedal on behalf of Government Spending as we look into next year, so you are going to have to see the real economy step up in a big way. Its difficult to see unless you get clear visibility unless you get not only the existence of a vaccine, but the ability of companies to distribute that vaccine. James, always good to have you with us. James sullivan from jp morgan. Up next, time for our morning calls. A look at the top Analyst Recommendations across the asian markets. This is bloomberg. Haslinda welcome back. Ofs bring you live pictures the chinese premier speaking over video link at the odyssey on his new summit at the summit. Siness Southeast Asia has become a battleground for u. S. China tensions. Implications for Southeast Asian nations at this point in time, which count china and u. S. Among their biggest trading partners. One of the key things happening is the focus on of the rcep trade deal, which is expected to be signed. Rishaad the question has been, will india sign up . It looks like they wont. Lookingional summit is at this trade conflict with the United States. Talkingd supply chains, about the region again of their supply chains out of china and into some of these other asean countries that are represented by their leaders at this conference, which is virtually taking place in hanoi. We do have other moves by donald trump and executive orders to threaten Chinese Companies. As much as Southeast Asian nations are looking to china for trade, they are concerned about the south china sea. We know the philippines for instance and vietnam have taken issue with how china is expanding in the south china sea. A lot of contentious issues there. Nations have refrained from taking any sides. More and more, they are saying it within the battle of u. S. And china, at some point, Southeast Asian nations will be forced to take a side. Perhaps with joe biden as the next president , president elect, tensions could be eased somewhat. Rishaad they could be certainly. We will carry on watching that kiqiang. Y li atare going to have a look these business flash headlines with the reuters saying jp morganhas tapped for an ipo. It was transformed by the coronavirus in the u. S. Indent the chinese developer ever grand has won approval from the Hong Kong Stock Exchange to list. Has been told by regulators to report on the 15th of every month. The Property Management arm is 72 owned by evergrande group, but other Details Remain unknown. Haslinda time for morning calls. Lets get over to Sophie Kamaruddin whos been tracking some top calls. An unlucky friday for global stocks. Risingestors look beyond virus cases . Sophie earlier, we had the rbf governor cautioning about uncertainty around covid, but jp morgan strategists are feeling bullish about global stocks given the vaccine breakthrough, which they say will allow investors to look past restrictions. They are boosting exposure to global equities, going 10 overweight. Alsorgan strategists, retreating further from bonds, both sovereign and corporate. Got ad i think weve call on aussie bonds. What is it, soph . Sophie we have seen aussie bond yields back up. Trade,tting in on that saying go along with the aussie 10year with supply dynamics looking supportive as the rbf continues its qe program. The u. S. , seen as outperforming australia in 2021 on a macro level. Tencent shares climbing on key results. More bullish sentiment from analysts . Sophie we are seeing tencent shares getting close to 600 hong kong dollars, analysts noting the strong gains. Several brokers have boosted their revenue and price targets, including thomas chong and the team at jefferies. Rishaad sophie, thank you. Markets as we head to the china lunchtime break. A quick look at the price action there. This is what is going on regionally, asian markets feeling it. Weve got an unlucky friday the 13th, as sophie was saying. A quick look at china as we head into the break. We do have donald trump signing an order prohibiting u. S. Investment in chinese firms determined to be controlled by the Peoples Liberation army, the latest salvo from the white house pressuring beijing. Those are the Chinese Markets as we go to lunch. Rishaad four 27 27 degrees in mumbai. That is not smog, that is smoke. As far as the nifty goes with the singapore contract, we should get a prediscovery of the auction period in 30 minutes or thereabouts. Look at what is later to be a negative trading day. A host of companies are reporting earnings. We will be reacting to companies that came out with results as well. Have aove to new york, look at first word headlines. Here is karina mitchell. We start in the u. S. Where chances of a stimulus package receding. The white house saying, there will be of negotiations with republicans in congress. They will no longer lead talks. Mitch mcconnell has been more distanced from the democrats proposal, and mnuchin reducing the chances of a new deal. Mass has ridiculed the resignation of prodemocracy lawmakers in hong kong, describing it as a challenge to beijings authority. And quit the Council Members were dismissed for being insufficiently patriotic. The u. K. Says they are breaching contracts for hong kongs autonomy following the 1992 handover. A large trade agreement to be signed at the asean summit in hanoi. Fs, and ao reduce tarif set out new ecommerce regulations. China, andred by india has declined to be involved. Longerians to expect bushfire regions, heavier droughts and more bleaching of the coral reefs is Climate Change intensifies. The bureau of meteorology 10ing after fires caused billion of damage and killed 33 people. The state of the climate report says it increases the likelihood of extreme events. 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. I am karina mitchell, wishing you a happy and healthy duvali this weekend. Haslinda thank you so much for that. Earlier, it is unlucky friday the 13th. We have asia in the red. Bucking the trend, up 0. 1 . We have jitters in the market. Investors are worrying about resurgence of virus cases, tougher restrictions, that could hamper Global Economic recovery. After the investment in 31 firms. We had overnight the s p falling as much as 1. 4 . All sectors were down, including tech. The dollar, flat right now. Getting a bit up over the last few days, along with the yen, rising. Yen getting a bit as the fed continues to be dovish. Gold currently up slightly, 18. 74. Rish . Rishaad lets have a look at tencent shares, up 3 . A reassuring investors of the antitrust crackdown from chinese regulators. Lau sayingnt martin tencent supports the governments goals. The country beating analyst expectations with its earnings. We get over to our tech reporter. How did tencent react to these antitrust rules . They were a bit confused how chinese regulators are planning behaviors in on the tech sector. As you mentioned, last nights earning call, gives their best assessment of the impact. They said they were going to comply with the governments policies, though they are trying to contact the watchdog for new policies. Thing, martin lau said they are reading of the new regulations is focused more on the transaction phase platforms. That could mean ecommerce platforms like alibaba and others. Core business, Digital Entertainment and games, they do not come as a transactionbased platform. They are more individual and entertainment platforms. As a targetceived of the Chinese Governments antitrust crackdown. We need time to see how that will play out. Can you take us through highlights of the results . Games were an important driver of the Third Quarter. Tencent was doing well for the quarter. The topline and bottomline beat estimates. Like you said, the bread and butter, online games, were powering the growth. 45 forame revenue grew the september quarter. That is the fastest pace since 2017. That is important because gaming has been tencents strongest edge. Has china is cracking down on transactions. Surprisesaw the cancellation of an ipo. Resilient and being conservative in terms of its expansion for young, Digital Entertainment. In the short to mediumterm, its focus on the gaming world helps the company do well in the face of any potential government crackdown. Rishaad that was our asian tech reporter. Lets look at the markets in hong kong. Festival, a picture of pressure. What is over there is over here. A bit of weakness for the overall market. This part of the market is not. We were up 3 at one point. Technology index getting currying more favor. Good numbers from tencent, 3. 2 up. Its trials ande tribulations of late, the single day record sales figure, perhaps feeding into the sales price. Jd. Com could be hurt by the antitrust regulations in china. But it was a good day for jd. Com. Health got permission to float on the Hong Kong Park it market. Ev maker a chinese posted a better than expected growth margin as a public company. Also forecasting Fourth Quarter revenue more than a year ago. We spoke to ryan. Ryan the company did not operate on where the stock price is. Shareholder has received good value and the stock has performed well, but we have not been operating the company because the stock markets are priced. Generally in the last few months, we have seen a significant pickup in terms of momentum in the chinese ev market. And otherse xpeng are getting the benefit of that. It is one of the reasons catalyzing movement in the stock sector. There is a lot of competition. Tesla is one of them. A homegrown ev competitor is nio. How did you reach profits before nio . You offer your vehicles at a lower price point than nio. Brian this quarter we achieved the growth process for the first time as a company. We attributed to a number of factors. First of all, we have a better product mix. Our sedan is a highmargin product that has done well. We have delivered over 6000 vehicles in the Third Quarter, compared to 200 in the second quarter. Given the volume increase of our vehicles. Our production and labor costs have been reduced because of efficiency gains, because of volume and economy of scale. And continuing the cost down on materials contributes to gross profits. Is lowering the car that competes with your car the price of the car that competes with yours. How will that be with that chinese produced tesla . Brian tesla is a worthy competitor for the chinese ev players, including xpeng. 3 has done well in china, especially after they lowered their prices. We turbocharged Market Development for ev because more and more gas engine drivers are switching to smart ev because of the education provided by tesla and other players. In terms of competition, we welcome better products to be available in china. P7, has anr product, advantage over competition because its smart features are locally developed. It will overall catalyze the conversion from the gas engine market to the ev market more quickly. That is what most carmakers say about tesla, the diplomatic line. At the end of the day, you have to sell the cars, make the cars. Can you sustain profits if you are dealing with a cheaper model 3, and have to deliver two new models over the next two years . Welinda we are brian are already living in an environment where tesla lowered its prices. Tesla announced the price cut, there was a short period of pressure felt on the sales front. Backsorbed it and we look on october as a record month for sales. November seems to be a month that has beat october. Constrainedbeen because of tesla competition. Overall Market Growth is very exciting. Vice chairmang brian gu. Homegrown rival is stealing the limelight, pushing the companys valuation past general motors. This is despite nios sale volume being minuscule compared to rivals. The company has never turned a profit as of element and marketing costs rise and the pressure is getting tougher. But, investors are confident nio will thrive. We are counting down to the opening of the session in india. A downer of a story, the nifty contract in singapore, down over 100 points, 0. 8 . Premarket, the nifty seemed to decline Something Like 0. 4 . We will be joined by nirmal bang equities economist teresa john on what is happening with inflation in india. This is bloomberg. This is bloomberg. Lets have a look at cpi, retail inflation in india, rising the most in six years in october. Boosting the chances the central bank will keep Interest Rates on hold for longer, as the economy slipped into recession. According to the reserve bank, gdp declined until the end of september. From nirmal bang equities joins us. What was your take on this . Teresa i think cpi inflation, as you said, has come in as a six year high, higher than the high expectation and consensus expectation. This is largely being driven by supply. Vegetable prices are up 22 , year on year. I think that is a key driver of inflation. Pasta and items like eggs are driving up inflation. Given inflation is driven by food prices, you could see a sharp reversal in the coming months. We do expect inflation to come down over the next couple of months. For december, a rate cut is unfortunately ruled out. Rishaad how much of it is base effect, how much of it is down to a good monsoon, according to people we have been talking to . Monsoon has been good, but we have not seen the full impact of that on inflation as yet. Prices are coming up. Rice and other grains. We are seeing the impact of that. The next few months, we have a high basis which will support a decline in inflation. Haslinda we also have the government increasing stimulus measures to 13 of gdp. How significant is this . How effective will it be encountering the recession . The fiscal measures announced yesterday, a lot of that was supporting the recovery. Even see that helping, though we talked about fiscal stimulus around 15 gdp, the fiscal impact of that in this Financial Year may be around 2. 3 of gdp, according to our estimates. The expenditure from yesterdays measure will be 1. 6 of gdp. Sector andtate construction contractors, some of those will aid recovery. But it is not really fiscal stimulus, it is Government Spending, to a large extent. Haslinda there is expectation india will return to growth in the octoberdecember quarter. What kind of recovery is realistic . We are seeing an uptick in indicators in september. Thatve a macro tracker tracks economic indicators. We have 60 of, indicators. For look at the data october, we have about seven indicators in positive territory. Things are looking up, but i would put in a word of caution. Last year september and october were pretty bad. Indicatorst 30 of in the months of september and october. I would be watching for indicators coming through in november to see if we could return to positive territory. We could return to positive territory in the Third Quarter. My sentiment, we could see a sharp improvement in the contraction, the contraction 2 ,d come down 1 to production in the Third Quarter. Returnt sure if we will to positive territory in the Third Quarter. Haslinda teresa john from nirmal bang equities, thank you. Coming up, disappearing because of the pandemic. It might make travel tougher in the coming years. This is bloomberg. This is bloomberg. Climate change is happening. This needs to be repeated over and over. 126 governments have committed to net zero. We must use the firepower of the financial sector. The Financial Community has a Critical Role in driving this transition. We will lay out for our tokeholders how we intend align with the paris accord. The investment industry now has the opportunity to further accelerate this phenomenon and demonstrate that we can be a catalyst for change. Climatehallenges of the transition are phenomenal. Then i ask myself, how much does it cost . A lot. But nothing that we cannot because the cause is our survival. Highlighting concerns about Climate Change. Thisberg green launching friday, 8 30 new york time. And on Bloomberg Quicktake and bloomberg television. Is not only jobs being lost in the aviation sector, airline roots themselves are disappearing, too. Joining us, katrina nicholas. In less than a year, covid19 has knocked out 1 3 of routes. What is the significance of this . Were 48te january there thousand operational roots that crisscrossed the world. More than half in the u. S. , western europe and northeast asia. 00,november there were 33,4 down 40 . That has meant an awful loss of connectivity. What is harder to measure is the blow to the airlines contribution to opportunity. Before the coronavirus the industry supported 65. 5 million jobs, more than half indirectly through tourism. The industry had a Global Economic impact of 2. 7 trillion. To have even a little of that eroded, it affects livelihoods and stability. Mean in what could it the future, in travel . Are these likely to come back . They mustve been profitable at some stage, or we would not have kept those roots routes. Katrina the borders are effectively shut from europe to new zealand. The bulk of the worlds dropped routes are crossborder. We are thinking of pointtopoint connections. Canberra in australia has no direct flights to singapore since september. That means flying to sydney, then another link. Overseasto come, business trips and holidays will mean more airport stopovers, longer journey times and perhaps an additional mode of transport. Even when the vaccine is found, the economic reality of the recovery may mean some nonstop flights are simply gone for good. Rishaad thank you, katrina nicholas. We are headed to the hong kong lunch break. We need to check in with the hang seng. About 0. 5 . It seems most of the damage done by those shares of Chinese Companies trading in hong kong. Coming through to the tech side as we see rotation from growth, value into growth. Technology stocks of it. Exemplified by that particular board, which is showing gains of 6. 4 . Newsm getting some good on thermission to lift hong kong exchange. Haslinda a reminder that happensgs annual forum next week. We bring you live interviews and Panel Discussions on bloomberg television. Subscribers can see it on live go. You can also watch it on new economyforum. Com. That is it for Bloomberg Markets asia. Emily i am emily chang and this is bloomberg technology. Coming up as his days in office dwindle, President Trump is making waves, signing an order banning americans from investing in companies the white house says support the Chinese Military. Though he refuses to concede, could a trump tv empire be in his future . Plus disney earnings smashing , expectations