We are seeing the home prices growing a little slower than may. This is coming on the backs of we trade data. We are also seeing some of the impacts from the tariffs. Information onde how much the chinese will look to implement. These numbers are looking better than expected overall. Great stuff there. We have ongoing commentary here on the backs of the numbers. On top of gdp numbers, thats those. In at 5. 8 . Ng these are quite decent numbers. Lets get a more reaction here. I was predicted 6. 2 iris predicted 6. 2 growth. Some of the numbers reach expectations. 5. 7. Pectation is i am a little surprised on the ip data. That what i amns thinking is that there is infrastructure. Should increase. This is my rational. Rationale. Metro line and you put the matter on the metro line. Then you finish the project. This process includes a lot of manufacturing. This number could mean these Manufacturing Activities have begun. Financing, fai and then ip. Is the retailg sales. 9. 8 not want it yearoveryear. I am quite optimistic. It is because of the wrong reason. Some of thee outbound tourist activities have diminished because of the job insecurity and expected low wage growth. Therefore, they stay at home to spend their money for Summer Holidays. This is only the start of the Summer Holiday. We could see Even Stronger retail styles in the coming month. This does not mean this is a good picture. It is not a good picture. If you read this together with , it showst account theyre not spending outside. The retail sales number was almost double digit. This is not. 8 . What youre saying is because it is summer, lets give a two months of good data. I would expect that for whether whatever outbound tourism, especially longhaul, it could diminish. We have the Summer Holiday in china. That is in the october 1 week. That means that they could pump up this. This would be in spain, in the u. S. , in europe. Kong, retailt hong is doing pretty well. Pickingave auto sales up for the first time. Are these the sectors we should focus on . This is due to lots of agency cuts. On other stuff, it is the domestic. Outbound becomes inbound. Then you see a lot of good news from the Ticket Office and sightseeing. They are all very good news. Dave we are getting a live press briefing. We have an english translation. Lets listen in. It was down by 3. 7 yearoveryear. This was higher than the first four months in 2019. The sector grew fast Service Sector grew faster. Service sectors performed well. These services have transported these products. And 7. 3 yearoveryear. 0. 8 percentage points, 0. 3 the index points and increased by 7. 3 . Point. Centage dave at you just heard, a machine gun of statistics. Just to highlight everything they were saying there, a lot of these things came in much higher than expectation. Retail sales were there big beat. Lows. Coming up we looking at gains across these commodities. Lets bring her back in. Mao we are seeing some results. We will double it up from my previous 2 trillion expectation on fiscal stimulus and in the structure projects. For chilean yen and the structure projects. Infrastructure projects. We will have another batch in the second half. Together with all of these commands, Interest Rates will have upward pressure. Do to easeoc has to. Iquidity and even more appropriate one is to cut targets to divert liquidity. This would be per small firms that are struggling with the technology were in the trade war. Small firms running and that you keep jobs. Otherwise, i cant imagine what will happen to the chinese economy. Yvonne we were just talking to citigroup. He was saying there was some question cushion to cut Interest Rates. That is because of the spread china trade bonds. What would be stopping them from cutting benchmark rates . I do think that the pboc will cut rates together with the target so they can magnify the impact of the target to triple our cuts. This is what i think. Is not because of the spread between the u. S. And china. China is not a capital account opening economy. It doesnt matter if the u. S. Cut raises rates, the pboc will cut if they want to. Dave you dont think we have bought them yet in china . Mao now. Dave why do you sound so depressed about that . Not yet . Mao not yet. Because the most damaging thing is technology was. Yes, it is part of the trade war but technology is more damaging than general trade. We are talking about various Chinese Companies being blocked to operate in some economies. 60 of chinese exports that are chinese economy related will be affected. That is a big thing to chinese exports. These companies will suffer. Jobs for some in the u. S. And also domestically. You dont know how big the impact is unless china can develop independently the technology. Especially on 5g. We will talk about 5g here. Lets do a market check really quick. We did a little after that gdp print. It was upbeat when it comes to the other lines we are looking at. Industrial production, retail sales. We see markets. Back a little bit on the losses. We are still seeing some heavy pressure when comes to the large caps. The hang seng down 192 points. Chemistry was, not a whole lot of reaction. The aussie dollar is holding at . 70. We are seeing a little bit of pressure weakening. There is a lot going on with korea and japan. Dave the mention is earlier. We go clubbing into the positive right there. 25 . This is the initial kneejerk reaction. We will talk about this more later in the show. Yvonne su keenan is joining us. U. S. Companies may be approved to restart sales to huawei within weeks. The department of commerce is evaluating all licenses that were blacklisted over National Security concerns. Jobs. Is ready to cut the glass original says this will affect employees and future technologies. The u. S. Trade commission is facing criticism for not going far enough in the settlement with facebook to resolve the cambridge Analytical Data scandal. They approved a record 5 billion deal. Meaning finds but it cant get an immediate outcry. Facebookment approved a revenue of almost 56 billion last year. To hong kong, protests continue throughout the weekend. Demonstrators are maintaining their demand for carrie lam to resign. And for an independent inquiry about Excessive Force by police. Beijing has refused the offer to step down, telling her she is to blame for the situation. To eastern indonesia. It is clearing up after a strong, shower earthquake caused widespread panic. No immediate reports of injury. Northremor struck the with its epicenter at a depth of only 10 common is. Authorities say there were several aftershocks but no concern of the tsunami. Think,ound one million this was one of indonesias least popular provinces. Day, news, 24 hours per powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan, this is bloomberg. Show,still ahead on the we will look at why this sale fell flat. Yvonne plus, dont miss our thissive interview with chairman and his outlook on a rate cut. This is bloomberg. Take a look at those gdp numbers out of china. Take a look at those gdp numbers out of china. Lets have our last conversation about tech. You say 5g is a bright spot for the chinese economy. How so . Other economies are blocking Chinese Technology firms to set up 5g in those economies. They have no way out. They have to focus on their home countries, home markets. This is the first thing. The second thing is some of the Chinese Tech Companies cannot buy technologies from the u. S. And maybe later from other economies. I dont know. It seems to me that they are working even harder to achieve the goal of independent innovation. This all happened within china. They put this all together and they say it could create a china version of the 5g world. Dave what is the net impact on the economy . Exportst really dont really contribute a lot to gdp growth. It is consumption. Secondly, if you look at net export, it is a little risky. The net export can grow quarter on quarter. It is quite dangerous. This is the first thing. The second thing is when 5g thependence is achieved, consumers will expand on the home brand. Not on foreign brand anymore. This is the one thing that is the bright spot of the future. You are looking at a lot of this Taiwanese Companies that are shifting their factories in Mainland China back home. How big is this trend . Mao it is very difficult for the taiwanese manufacturers to shift everything back to taiwan. The first difficulty is not financing. The government provides lowInterest Rate financing. Do you have so much Skilled Labor, so many Skilled Laborers ready for you or are you going to move this . No. Thatan you survive without Skilled Labor . Is applicable to other Southeast Asian economies. Many maybe this will move to other Southeast Asian economies. Dave do they moved to taiwan . How much of that capacity, to taiwan do they move to taiwan . How much of that capacity can move to taiwan . Mao only a tiny portion will really be moving. Joe that was our dave that was our Greater China economist there. See if china can ashley polak biface guarding from global shocks. That up, this is bloomberg. Yvonne jay powell has been making the case for easier monetary policies due to Global Growth. Douglas caught up with went and asked him about the fed, the real economy and the biggest threat out there. Of the markets are factoring in Monetary Policy, some helpful this for policy and a solid outcome from some of the uncertainties around trade talks and brexit. There is an expectation that things will work out. There is such a great reliance on Monetary Policy to drive growth. Be anry policy cant engine of growth. People have been saying that for some time. Does not seem to be a threat at the moment. Markets anticipate this accommodating stance will continue. You can see around the world that unemployment is good. Growth is good. Trade is a little unsettled because of geopolitical things. To meetnt of investment the challenges of Climate Change should create the environment for very positive economic backdrop. Haslinda Jerome Powell has suggested a rate cut is coming. What is your take on that . What would make sense . What is realistic . I dont think the market would be surprised with 25 basis points. I think 50 was surprise some people. We will see what happens. All central bankers take into monetary conditions, Market Conditions. This is a datadriven web. There is no shortage of data. Dave that was douglas speaking exclusively with haslinda amin. These are the stock movers we are tracking. Japan markets are closed. Hkex is coming up low. In line with the broader markets. That is a big drop on the back of an earnings miss coming out of the company. You can check out more gdp numbers on the bloomberg. Check out all of our analysis from the team. Bloomberg news as well as our editors. This is bloomberg. Kong is 10 29 a. M. In hong , 10 29 p. M. Here in new york, im su keenan with the first word headlines. Chinas economy continues slowing in the Second Quarter, with sluggish domestic output continuing to pull growth down to the weakest pace since the early 1990s. Gdp grew 6. 2 , matching estimates, but below the 6. 4 from last period. In june, factory output and retail sales missed forecasts. To the u. K. Now. A new survey says that recession in the u. K. Is at its highest in more than a decade. The independent think tank the Resolution Foundation says Government Bond yields are used to measure, and that the dramatic slump is greater now since before the financial crisis. The report also warns that the weakening sterling and the widening current account deficit for economic growth. Staying with the u. K. , the Banking Industry there is seeing more job losses. Socgen has started cutting positions with london, with sources saying 30 people have been wrought from the commodities unit alone. The ceo says they want to restructure the investment arm. April, the bank announced plans to cut 1600 positions around the world. To turkey now. The turkish president is promising significantly lower Interest Rates by the end of the year, this week after firing his governor of the central bank. He says the aim is to bring inflation down to Single Digits and cut volume costs. Last month he complained that while the u. S. Is moving towards a cut, turkeys policy rate of 24 was unacceptable. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Thanks. China secondquarter gdp grew 6. 2 year on year, in line with the economist estimates, but it was under the hood numbers that were the ones to beat. Factory output and retail sales were 6. 8 , 9. 8 with retail sales. On the flipside, we also talked about the credit data on friday showing signs of efforts to spur lending are taking effect. We are also getting lines from the nds. In terms of job creation, about 7. 4 million new jobs in the first half, net exports in terms of how that contributed to gdp growth, 20. 7 . You take that number, thats about a fifth exports were a fifth of what gdp numbers right. Lets bring in stephen chang, pimco asia executive vp portfolio manager. They put a report out very recently on chinas integration. We will get to that in a moment. Just your initial thoughts on these numbers. I think this set of numbers are pretty in line with what the expectation was showing. The retail sales will probably be, given what we are comparing with, and the friday data was more instructive to me. The loans data and credit data, it showed that loans were a little weaker than expectation. I would pull that in with some of the banks that happened june, and the and impact on to money markets in china, and whether that would have more of a Ripple Effect into how banks fund themselves in the credit that extended afterwards. I think back in february, you were expecting some type of i guess loan or credit release to decide the enterprises. Have you seen more of the recovery in that regard . There was some degree of helping with the private enterprise and the transmission mechanism, but we have noticed that the Property Market has responded very quickly, so much so that we are hearing window guidance coming out to in some ways look at the foreign currency debt funding and what the purpose needs to be along with other guidelines about hedging and risk management. Speaking about currencies, one of our stories today this is not your report, of course says that a fullblown currency war can no longer be ruled out. You look at the trade with the dollar, we are back to levels of 20 years ago. What should we prepare for . What we have seen over the last number of years since the financial crisis has been what we would term a cold currency war. Central bank using Monetary Policy, other ways like qe, which might effectively weaken the specific currency and now we are coming to a point where theres more verbal intervention , most notably from the tweets of president trump, and this is something we are considering and researching. What mechanism can Central Banks do to weaken the currency obviously trump has already put out tariffs which have impacted the currency market, and the next thing could potentially be actual transaction in the larger market. Last 20 years we have seen some cooperative type of currency intervention in order to the market being too volatile. But to actually have countries going at each other, to see what they might do to weaken the currency, and then the resulting potential problem, that would also be another popular i guess it is part of your new report, talking about the integration of the chinese economy. Bettert wondering, is it or negative for china to stay insulated . For Foreign Investors like yourself, they have largely looked at china as a hedge, more insulated from global external shocks. What can we glean from this report . We continue to see china theing up in terms of Capital Market reforms. Axis,ng foreign investor bond market infrastructure. Two us, that has not actually slowed. We will keep close tabs in terms ,f the capital account movement we want the currency to be relatively stable, and to be steady. The integration for us continues, more about the issues from the u. S. , putting tariffs and blockage in terms of the tech components, but china to us hasnt really changed direction. I always haven when the topic of integration comes in, especially for portfolio managers, is have we gotten the proportionate and qualityquality information on these companies that allows you to invest . Integration has been mostly it is much more of a macroeconomic assessment. To us that has opened up over provided12 years publicly before the end of the year. The other portion is on credit investment, the credit on Asian Companies and Chinese Companies that we are active on, and we have the disclosure by the Stock Exchange and bond market related financial disclosure. An emerging still market and things are improving, there is still some information that we can extract from. Always good to have you. Stephen chang, joining us here in hong kong. Plenty more ahead. This is bloomberg. More oning a little Chinese Markets now, the muchanticipated begins trading in shanghai on monday. Investors are worried it could drain funds. Our guest is with us in the studio. , but marketsce havent really come back yet. Exactly. We have that first day bounce after the trade war, and then mainland markets have not really done anything since then. That have to point Economic Data is getting worse. Ofa out today relates some this concern which is why the market is bouncing back a little. We still have the earnings season in the First Quarter we had hundreds of companies warning on profit. We have to see the data from Second Quarter to see if its improved at all. Now, itare seeing reported a 20 increase in the Second Quarter and shares dropped because that wasnt good enough you see where expectations are. And obviously the tech or a lot sooner than planned afters xi jinping first announced it. Thats 5. 4 billion that will dream liquidity from the existing market. Funds all expecting those that are being set aside to take part in these ipos in the first few days of trading, you want to be a part of it. You mentioned the profit warnings what are the initial back since of earnings telling us . Its not a pretty picture right now. We also had hand waivers saying profits could fall as much is 65 in the first half. Another Company Whose name im probably about to butcher, a chinese medicine maker who uses donkey skin to make medicine, profits will probably fall as much as 79 . Thats awful, especially since this company had 20 years of consecutive Earnings Growth and it is now saying that demand for the chinese medicine is dropping , wonder why. The first half its weaker, even though we had retail sales that came in better than expected. Maybe the consumer isnt as they are it shows, seeing a slowdown in Earnings Growth. Was that they are expensive. Stock, ite loved the was the first stock and Mainland China to hit 100 yuan per share, up almost 70 at one point. The tencent of 2017, essentially. Everyone was piling into this. It is setting the bar so high with 36 growth in the First Quarter that everyone expected to produce that kind of growth. When it comes to 20 , which is amazing for any normal company, thats not good enough for them. The Donkey Company needs a little more horsepower. Thank you so much. Get to your latest news flash headlines and have a look at the boeing 737 max 8. Stayircraft is expected to grounded at least into 2020. The wall street journal cite sources in the faa and pilots union, saying there is no affirmative timeline has been established. American airlines and united say they have removed them from the schedules through the beginning of november. The plane has been grounded worldwide following two fatal crashes, that killed 346 people. Lufthansa has a burgeoning price war that is squeezing earnings. Airlines are offering flights for as little as 10 euros, or 11. Its 20 profitred forecast last month, blaming intense, petition from lowcost travels. In rounding up your top airline stories today, struggling all italia could be weeks away from bankruptcy, attracting offers from Delta Airlines and italy stayed on railway companies. However some of them want the plan redrawn. Italys government has selected a deadline for binding offers and will not accept expressions of interest instead. Shelving and offered that took a weight on the sales of the Hong Kong Ipo market and its plan to address debt. Lets bring in our hong kong m a reporter. Why is the big question. According to the people we spoke to there wasnt demand for the ipo. A lot of the longterm investors found the valuation to rich, and they also had concerns over the growth prospects. What are the prospects for the company now . The whole ipo was to pay down debt, some m a opportunities or that leave ab invev in asia . They are still considering a lot of options. Maybe selling a Minority Stake would be one of the options but according to people we spoke to they may not immediately pursue anything. Valuations we were talking about this many people were talking about this listing in the weeks ahead and people were pointing to that it looked a little rich. I believe we are still down about 1 . Is there any indication right now that we might see this happen yet again or is it for now yeah. Its always possible we come back again with another attempt, maybe with a smaller size or lower price range. But i think at the moment they still need to address the growth concerns because a lot of them were actually thinking like in developing markets such as china a lot of younger consumers are switching to highpriced wine and even if they drink beer they will drink premium beer instead of massmarket. And a lot of developed markets like in australia or south korea, the market is very mature and very much saturated. They arent going as fast or as quickly as they used to be. We were talking to a guest a couple hours ago about what this means for the market in hong kong. Does this put a damper on any sort of optimism surrounding alibaba . I think would be people sector, a lot of are still hoping to get a finger on the alibaba pie, the u. S. Market for alibaba looked bigger, and a lot of chinese investors this homegrown company. Thank you. Our bloomberg m a reporter. We are also counting down to the opening of the session in india, less than an hour away. Lets bring in our reporter, standing by in mumbai. Out thequities close week with losses of firstquarter earnings, failing to excite the markets. Whats up for today . Will, as you move into this week, it is going to be more earnings that will take center stage in the larger earnings that will start getting reported. Aside from that, the set is such that you have a maximum amount of concentration which could be the nearterm hurdle. If they manage to go past 11,600, that could be a target one could aim toward. Aside from that, we have been strong and also the focus is going to remain we have the aa numbers that came out, and focus on what we do with regard to Interest Rates. In terms of the overall set up, todays session looks like could have a more positive bias, particularly on the back of just to mention, since you brought it up, we have wholesale prices coming out at 2. 25, exports are also due out. Thats the macro picture in hopefully you are right, we get more support. In terms of specific names that you are tracking, give us a feel. Interest has reported its quarter one number the prophets came in lower but what excited the area market is the fact that the company has increased their revenue guidance and have updated from 7. 5 to 8. 5. That will keep the market excited. Numbers, theof finance on, demand the back of its disappointing numbers. All right. Thank you so much, live out of mumbai. Coming up, the monday edition. It is battle of the charts, competing for our votes, coming up next. Lets give you a full round of markets data out of china today, thats all coming up next. This is bloomberg. Time now for our battle of the charts. They will pick their best charts against each other on this monday. Clients can access their charts in a couple minutes, right at the bottom of your screen. Populated after we get the pitch. Chartt you can see in our is the philippines standing on the edge of the bull market, one of the worlds worstperforming markets last year has seen a recovery in 20 19 with inflation and lower Interest Rates to improve earning prospects. Philippine stocks have climbed close to 20 since its career low in november. One key factor in the bull market, in the bull run, will be whether investors will come to place. It accounts for 66 , or two thirds of the market. You will see net foreign funds year to date at the bottom. Philippine stocks are heavily in the red, triggering the market decline. This year Foreign Investors are starting to buy them back. There has been some tips such as when the trade war took a turn for the worse, but for the most part the prospect of Stronger Economic growth and more Interest Rate cuts are luring Foreign Investors to put back their money. This will be the key ingredient in whether philippine stocks will be able to cross that line and sustain that bull run. All right. Go for it. We are coming off the back of an epic day in british the host of that wimbledon battle winning his six british core marie. But turning to the currency market where you are not seeing any of that optimism at all, you are seeing investors continue to add to the speculative short positions on the british pound. What you have seen lately is the weakness in sterling, and we are back down to those lows. What you are seeing now is whats reflected in the price and investor positioning, turning toward the extreme plays in the market where you would expect some kind of inflection. The markets move so far with pricing positioning and momentum, you may get some optimism coming back in which gives you an opportunity for a short squeeze and some upside for the pound. Potential for a optimism over the next few weeks. Ok. I think yvonne is judging. Are you biased . I was about to say, they are two things close to my heart. Adam just used it as a segue, which precludes that. For claires for today. When you look at whats happening in markets, it stands is actually on track for a bull market. Very much a domestic story, which we have been talking about given all the risks, perhaps there is a safe haven play when it comes to the philippine and the double whammy of fiscal and monetary stimulus coming through in the second half. Congratulations. Sorry, adam. G tv , thats the timeline we are talking about. Have a look at that. And in case you missed it, china has a look at how things are shaped up, or shaped down depending on which market you are looking at. Generally seeking, it was a decent set of numbers. Look they all seem to be going down. This is bloomberg. Its almost 11 00 in hong kong, its 30 a. M. In mumbai, im yvonne man. Im haslinda amin. Here are the top stories. Chinas economy continues to slow in the Second Quarter with sluggish domestic output amid the ongoing trade war. Samsung may have sidestepped japans chip export ban. Reports say in emergency source of components has been secured. And losing its phase. To decision by ab invev candidates asia share sales has major implications for the hong kong market. This is bluebird markets asia. Call it a relief. China out with numbers, and it shows some kind of resilience of the economy stop gdp for the Second Quarter coming in line with expectations, but the other numbers have come up pretty strong. Retail, investment numbers all strongerthanexpected, and of course we see china csi down. 3 , off lows for the day. Pretty good news for the rest of asia. We are also tracking the , among the, up 1. 3 biggest gators in asia and on the cusp of a bull market, up 20 since the low we saw in november. 7 , they willp continue with reforms and they have nothing to lose and expect investment in infrastructure to be boosted. Good news out of china. You mentioned the csi 300 we have been fluctuating with these losses, initially we pared back the decline leading up to the data frontier. Lets take a look at mainland markets weve been watching hong kong after reports that the shelved, we are seeing the Hong Kong Exchange down more than 1 after dragging the hang seng lower, erasing most of the losses when it comes to hong kong stocks. Shanghai composite was lower by about. 5 , initial declines of more than 1 at the get go. There is some concern about the slow down in the chinese economy, a pretty flat renminbi, regaining some of the losses when it comes to the currency. Take a look at indian futures leading up to the open, it was pretty brutal last time when it comes to india but we are set for the upside when it comes to nifty futures and the offshore rupee is seeing some strength, strengthening by about. 3 . Lets get to the first word news, selina wang joining us out of beijing with more. Thanks. U. S. Companies may be approved to restart sales for huawei within four weeks. Writer says the Commerce Department is evaluating all licenses after hallway was blacklisted after National Security concerns. Meanwhile, they are said to be ready to cut jobs with the u. S. Subsidiary. The wall street journal says it will affect employees at a company with about 850 staff. Is turkish president promising significantly lower Interest Rates by the end of the year a week after firing the governor of the central bank. Hes is the aim is to bring inflation down to Single Digits and cut borrowing costs. Last month he complained that while the u. S. Fed is moving toward a cut, 24 was unacceptable. The new survey says the threat of recession into the u. K. Is at its highest in more than a decade. An independent think tank uses Government Bond yields as a measure and says the chance of a dramatic slump is greater now than before the financial crisis. They also warn of weakening sterling, a current account deficit and poor economic growth. Protests hong kong continued throughout the weekend with violent clashes against police in a shopping mall. Demonstrators are maintaining their demand for the chief executive to resign and for an independent inquiry. The Financial Times says beijing has refused the offer to step down, saying shes to blame for the situation. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Thank you. To our top story chinas economy continuing to slow, with sluggish domestic output and trade tensions pulling growth to their weakest pace since the early 1990s. Gdp grew 6. 2 , matching estimates, but lower than seen in the previous quarter. Lets get more from our chief asia economics correspondent, the head of asia economics and ubs investment bank. Lets start with you. But stillow down above 6 how bad is it . Clearly it is slowing on a think thebasis i take away is the activity june, fixed Asset Investment and industrial output headed in the right direction, beating estimates, and if you look at the retail sales, a hint of a turnaround, that all points to an economy that clearly there is a long way to go but at the same time it hints at some kind of stabilization after a rocky period. Your initial thoughts about this . Sales numbersil were definitely strongerthanexpected and i think a contribute in part is car sales, especially on the retail end. And also whats surprising is industrial production, about 1 stronger than what we expected. Machinerye electronic is a contributing factor. Indeed, we continue to see Second Quarter growth slowing but we are seeing stabilization. The overall industrial side, the Infrastructure Investment, is taking off, pointing to a resilient fixture. Be Infrastructure Investment that will do most of the heavy living . How firm is this number . Half, despitet the government policy support, whats been surprising is the infrastructure remains very weak. In june the numbers are finally perking up a little bit more. Expectingard we are infrastructure to do more heavy lifting. Is that been positive Property Investment remains quite strong. Manufacturing is continuing to think also and i investment numbers will probably see a bit more weakness, but i think infrastructure is expected to go further. Reason why the pboc should continue to boost stimulus, given what you said, that they are trying resilience . Taken ank they have stable position. There hasnt been much fresh stimulus coming through since may, when the trade war escalated. They did increase liquidity offerings after the bow sean incident. I think right now the policy cautious, and they are trying to get policies to be more effective, especially on the fiscal side. Forward, with additional negative pressure, it is going to come from higher tariffs, and those negative impacts will come through in the third quarter. The central bank needs to be a bit more proactive. We are still expecting another 100 basis of rrr cuts for the rest of the year i think they will continue to inject liquidity so rates will continue to come down, and the feds dovishness provides more room for that. You mention stabilization and a risk of higher tariffs is this as good as it gets for chinas economy this year . For theyear, i think overall economy, probably yes. Our expectation of gdp growth this year is 6. 2, which means we expect the second have to be 6. 1. Economy,n the overall different components will diverge. We think exports may have additional weakness to come because of the higher tariffs in may. Manufacturing investment may weaken further. Infrastructure will pick up an auto sales will also get a more favorable basis and some of the negative factors are behind us in the second half. There is a divergence, but in general. Earlier there were some measures that looks like they were being mothballed, whether it was home appliances, auto ownership restrictions. Do you think those will be things that will be brought back to the table . Thoseicially, i think things are already in place. One thing the government is cautious is that automobile subsidies may distort the sales timelines instead of truly pushup auto sales. They are also looking at how to deliver afterhours subsidies or support to the economy. We dont really expect anything more material in the auto sector, maybe the restrictions relaxing could spread to a few more cities, but thats about it. Of the are you making china consumer demand datas numbers . They show some kind of weakness . Overall consumption growth, our expectation is this year we will see a moderation, but still growing in real terms above 7 compared to last year. Half, the weakest see is still car sales, we car sales stabilizing and may be rebounding in the second half of the year. What has been surprising so far is that despite expectations of the labor market, outside of car sales, Consumer Spending and Consumer Confidence has been quite resilient. Of a modestforecast slow down of 7 is still quite valid. We know that the fed are signaling a rate cut will these numbers lessen the chance that the pboc will hit their benchmark rate . Our expectation for this year was no benchmark rate hike. This number doesnt change our forecast. We are expecting to broadcast, we are expecting liquidity offering, but we think that pboc is trying to unify the benchmark rate with market rates, so in this sense they dont really need to cut benchmark rates anymore. The deposit rate for one year is 1. 5 , our latest inflation reading is 2. 7. We already have negative real rates, so i dont think they will move the benchmark rate. Well, we will have more with her just ahead, and later this hour, we speak to the head of emergingmarket debt to get her take on chinas growth and how pboc policy will affect bond yields. We will also get an update on the tree dispute between tokyo and seoul, as samsung manages to secure an emergency supply of key materials. This is bloomberg. You are watching Bloomberg Markets asia. Back the chief china economist and asia and head of asia economics. U. S. China on the trade war. A truce would impact chinas economy . Is it enough to revive chinas economy . At this moment, our baseline scenario is that there is a truce and eventually there will be a deal, so theres no further escalation. Keepi think will help things from worsening further. Our worstcase scenario, if the u. S. Imposes an additional tariff, that is going to be another 80 basis points, 100 basis point drag. At least we have that out of the way. But the negative impact of the 10 going to 25 is still coming through. Sayink it is too early to we will see the trade truth contributing positively because the negative side is still coming through. As a result the government needs to be more proactive than they have been in supporting the economy with local Government Bond issuance and liquidity offerings and more market opening measures from trying to keep the fdi at home. Even with those kinds of supports, the offset of the negative impact will not be full, so that is why we are seeing growth stabilizing at this point. What does it mean for the yuan . Can we not expect it to test now . Governor pboc mentioned seven is not a magical number necessarily or any particular number is not something our forecast is that they will be staying at this side of seven. No further tariff escalation. Authorities are not obsessed with a particular number, but on the other hand they want to manage the exchange dontin part because they want to strike any panic outflows and they want overall stability, and to refrain from using the Exchange Rate in the thats alsond another point from the u. S. Side as well. Is there any way the government can stop this whole trend we are seeing of Companies Moving their production out of china . Evidence suggests a lot of companies are thinking of the reason lot and ther labor costs, trade war is definitely an important factor. It,not sure they can stop but thats just the natural shift in supply chain globally. I think the Chinese Government is trying to make Chinese Markets even more attractive than before, with the market to be supportive to the think sometor, and i people are going to leave some companies to come to china as well, given the size of the chinese market. Could see a divergence within the stabilization. It is not as easy as it sounds, it is different sector by sector. Its one thing to move some machines but for some other types of manufacturing you have to keep your supply chain pretty close. Lowes companies, there is a concern about supply chain , you may not get some intermediate components because you are operating in china and people will start to move. Very largeso a market for electronics, the largest market for automobiles are supplying to domestic markets, increasing and congregating. Wondering, where are you seeing the most bright start right now, people diversifying away . India and bangladesh are indeed the winners of supply chain moving out of china, according to our surveys. Who aree are many cfos saying they will go back to northern asia. Because a lotly of these productions in china were companies from japan and korea and taiwan. Always great to have you. Ubs investment bank, joining us with the latest on china, shifting out of supply chains. Coming up, find out why this Hong Kong Ipo when slack, and what that says about ages appetite when it comes to ipos. This is bloomberg. Just taking a look at your one more hibor, we are continuing to see it drop, 27 around 1. 91, just the lowest weve seen since may, and we are still lower, back below libor. Giving aly that is little bit of softness, weakening for the second straight day. Lets do a quick check of the latest business flash headlines. Australian wealth manager amp says the sale of its largest Insurance Unit is unlikely to proceed because of challenges with the central bank. It was targeting a 2. 3 billion sale to u. K. Base resolution light, which has been unable to agree to requirements. Of sale had been a key part the restructuring platform. Huawei is said to be ready to cut jobs at its u. S. Subsidiary. The wall street journal says a will affect employees and company that employs about 850 people. The move follows president trumps decision in may to blacklist huawei over National Security concerns. The company says it will cut revenue by 30 billion. 8 is expected max to Stay Grounded at least into 2020. The wall street journal cite sources and pilots union, and says no firm timeline has been established. American allies say they have removed the schedules through the beginning of november. The plane has been grounded worldwide following two fatal crashes that killed hundreds. Decision to cancel what would have been this years hottest offering is raising questions about the appetite for share sales in hong kong. On friday the company cited prevailing Market Conditions as they canceled plans to raise almost 10 million. Sources tell bloombergs that several things push them to lower the offer price and pull orders at the last minute, forcing the brewer to suspend the ipo. Our reporter has been watching this how important was this deal . Its a big deal. It would be this years biggest ipo after uber. For the hong kong Stock Exchange, it is also one opportunity to attract a foreign company. The implication for other Foreign Companies to do a second listing or spinoff listing, that may temper discussions a little bit. But we are still seeing alibaba is expected to raise a huge ipo in hong kong in the third quarter, so there is still some hope for the hong kong Stock Exchange, but this has absolutely tampered it. How much of this was down to the companys positioning and the chinese beer market . This is the second biggest brewer in china after China Resources beer. They have a very dominant position in that market, and markets like australia and korea. They are rather wellpositioned in terms of market share. This ipo is really down to the pricing at the end of the day. They were having discussions about pricing a deal at the highend of 64 billion valuation, and that compares to a lot of the analyst estimates, and thats a lot higher than what analysts expected and what investors are willing to pay. At the end of the day, it is down to the price, and that is why we see investors expecting to collapse at the last minute. Thats right. Investors saying ab inbev needs a plan b. Thank you so much. Still to come, we take a look at the latest on the markets. This is bloomberg. Come back. The samsung boss came back from he returned tos, seoul with key materials that are crucial for semiconductor manufacturing, helping to prevent a deadlock in production. Lets go to our reporter what do we know . We know that samsungs vice chairman went to tokyo and reportedly met up with a lot of Company Officials that are very close to the Semiconductor Production material industry within japan, and he has secured an inventory of a monthlong , however this is a very shortterm solution for whatever impact they were to face as a result of japans export curb. However the vice chairman also returned to korea, set up a company meeting, saying that the company will have to brace for a longerterm impact, and that they will have to come up with a contingency plan on what to do should additional measures be applied on not only the company but also the country. A bit mindboggling. Government officials met last week but the two countries have different accounts of the meeting. Tell us about that. What came out of that . The meeting took place, south korean officials thejapanese officials told media separately what happened and what came out of the meeting and what the south korean media has been reporting is that these authorities that attended the meeting said they asked japan to curb these measures and take back the export measures whereas japan is saying that this request never took place. They are also seeing a rebuttal to japans rebuttal, and japanese officials have also complained that about south korean officials sharing and exposing this much about the meeting, and of course what they have agreed to share with the media. It takes apart credibility issues when it comes to government meetings and how much they will tell the media and how much they agree. Rate. What should we be looking out for when it comes to where these talks go . Whats the next step . Core, theou look at crux of the spat between south korea and japan, its the wartime past that south korea and japan are still grappling how to deal with. Retaliatory, as which is something japan is also denied. They have stepped back from the mediator role and we will have to see how talks further progress in terms of Building Back this credibility and this trust, returning to highlevel talks amongst government officials. All right, thank you. Lets get to the first word news. Selina wang is joining us out of hong kong with more. Thanks. The chinese economy continue slowing in the Second Quarter, with sluggish domestic output and continuing trade tensions pulling growth down to the weakest pace since the 1990s. Gdp grew 6. 2 , matching estimates, but below the 6. 4 seen in march. Factory output and retail sales outstripped forecast, in firsthalf investment also beat expectations. The Main Opposition Party in taiwan has snubbed billionaire foxconn owner terry gou, choosing a political firebrand as its best hope of winning the president ial election next year. Theprimary was won by Southern City of , setting him up as the main challenger to the president. Gou may run as an independent candidate. Eastern indonesia is clearing out after a strong shallow earthquake caused widespread panic, but no immediate report of injuries. The 7. 3 magnitude tremors struck the province, with its epicenter at a depth of only 10 kilometers. Authorities say there were several aftershocks but no concerns of a tsunami. This is one of indonesias least populous provinces. India has postponed the mission to the moon, halting plans to be the first of the southern regions. It would cancel just 56 minutes before liftoff for what the space agency called a technical snag. The scheduled landing of september 6 would have added them to a unique club, making a soft landing on the moon. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im selina wang. This is bloomberg. Thanks. Lets take a look at the markets. We are watching the Chinese Markets in particular, and now we are seeing a decent rally when it comes to the csi 300. 1 ,re up about close to hang seng also reversing losses, and we are still watching the ,hilippine stocks, 1. 5 higher the philippines will officially enter a bull market, also rallying on the back of the gdp number. What we saw when it comes to activity data were retail sales, essential production, fixed Asset Investment, all beating estimates in the aussie dollar strengthening. We have a bank of indonesia decision later on this week and we are breaking below 14,000 for the First Time Since february. Nifty futures are pointing positively here today after what was a pretty weak start last week during what we saw with the and bond yields heading lower. Lets take a look at what we are watching, chinas gdp is down to the weakest since the early 1990s our next guest covers sovereign debt, including china, and says local bonds and Development Bank bonds still offer good value. Joins us here in hong kong. Good to see you. Some investors were i guess caught off guard by the continue slow down in china does that change your assumptions at all for the later part of the year . Im surprised they were caught off guard because the expectations were weaker growth. What was surprising was the activity data and if anything we can take some comfort that the measures by the government are actually working. Bear in mind this was data from prior to the continued dialogue post g20 meetings in china and the u. S. We take a lot of hard from the retail dday in particular, the strength of the domestic consumer. When it comes to chinese Government Bonds, everyone has been talking about how it has been slow to pick up over the global bond rally we seen. Why do you think that is . Obviously theres a lot of onshore domestic risk, but can that gap actually narrow . We do think it can narrow and we like chinese local bonds at these levels, particularly at some end of the curve. At this point we do think there is value and we do think we could see some easing of policy on the lmo. Make of what we are seeing in china, with the bank seizure . Sovereign bond investor this is something im not covering too much, but it does really provide more of a context and how we think about china on a structural basis, but it is not moving us away. The negative field environment, does it change your strategy in any way . Does it impact your Investment Strategy . At the moment our Investment Strategy is to be overweight, thats really on the back of the green light fed has given for Central Banks to be cutting Interest Rates. We expect to be seeing other Central Banks following due course. In asia we have the bank of indonesia, we are expecting Interest Rate cuts later this year, india cutting Interest Rates as well. I think the data we are seeing today, even though the activity data was slightly more positive, we think Central Banks are likely to be easing Interest Rates. The fed has taken the lead on this can we assume the dollar could also weaken . , its a dangerous game thinking about the weaker dollar. Fortunately the dollar has surpassed expectations time and again. We would need to see a weaker dollar based on fundamentals in the u. S. , however we do remain cautious, and before we get constructive and general we feel we need to see a pickup in emerging market growth, and that is something we are not seeing at the time being. E. M. Dollar bonds in particular has been pretty cheap compared to some of these local currency bonds. Im just wondering, does that give enough insurance in case the dollar doesnt weaken as much as we think . That is what investors have been preferring, hard currency bonds, because you dont have the currency component, the currency volatility, protecting you from further strength in the u. S. Dollar. This year currency bonds have been outperforming by 3 . Has been ledally by investment grade, which is being led by a rally in core yields. We can see the highyield components start to rally and that is dependent on whether we see a pickup in growth. In e. M. Local bonds we like the duration and that is where we see the value. You mentioned india as one of the markets you are watching out for. Theres a lot of talk about these plans to issue foreign currency debt. The former r. B. I. Governor is saying it is full of risks and no benefit. Does he have a point . Ande does have a point, generally theres been concerns about currency mitch match mismatch. However being data dependent on local investors i think this provides a welcome diversification, and they are looking at 10 to 15 of funding plans which in these Market Conditions we think will go down very well with Foreign Investors. We are all awaiting the decision by the bank of indonesia. Do you expect them to move this time around . Yes, we are anticipating a 25 basis point rate cut at the beginning of the easing cycle. How deep do you think you can go . Can you see him unwinding the 125 basis points you raised last year . At some point, yes. These things do take time, but i suppose our positioning tells you our view and we are a great indonesian local Government Bonds in anticipation of the unwind. How about the bank of korea . Korea, we are slightly more sanguine. We are not anticipating immediate Interest Rate cuts, but the headwind for the market are easier policy overall, and given the recent weakness in growth data we would anticipate that we will see in Interest Rate cuts, but not in the immediate month or so. I was going to ask you about turkey in particular because the u. S. Is set to layout these Russian Missile defenses how are you viewing this market in particular . It seems like you see so much volatility, not just in the currency, but also other markets as well. Yes, and we just saw the rating downgrade this morning, taking delivery of the 400, which will be raising tensions with the west, particular with the u. S. , and that special relationship we hear about. Duration andike high Interest Rates and turkey offers that, we dont want to be overweight in turkey at this juncture. We believe in advanced policy particular wen saw the governor resign which is raising questions about the independence of the central bank. We need to see a strong reform program, and unfortunately we think that puts turkey on the continued vulnerable position. Thank you so much. Joining usk barton, here in hong kong. Coming up, inflation in India Remains below target despite accelerating the most in eight months. We look at what that could mean for the r. B. I. , next. This is bloomberg. Welcome back. Indias markets have just opened. Lets get right to mumbai, where we are standing by to go through what to expect from todays session. Indian markets have moved around the same market in the last five days why is it in stock today . Does seem like we are likely to break away from that particular market on the nifty, considering the fact that it has been a positive opening. The nifty has given up its gains made just a few minutes ago, and it is now trending higher by about. 2 . A lot of the weakness is coming in from the banking space, which is currently under pressure, largely on account of the private sectors. But it is the indian rupee that continues to strengthen against the u. S. Dollar, now standing at around 68 point five, something we will watch out for in the next few sessions. Right. And you are watching some of these indian tech names, detroit is in the positive whats going on . Projected by the company is positive because they have increased guidance in terms of revenues for the entire Financial Year to around 8. 5 to 10 . It is one of the largest companies, indicating doubledigit growth. Interest rates are also showing a possibility of 10 growth in this year, and investors we must also remember that it also increases Capital Allocation to shareholders, and that is also improving sentiment, which is why you are seeing a lot of strengthening, trending higher by around 5 , as is the case for the entire i. T. Sector. This has implications for diplo, as well. We need to watch out for them since they will be announcing earnings later on this week. All right, thank you, watching the tech sector in india. We are talking about the inflation data and consumer prices, the country accelerating the most since october, but still remaining below the central bank jargon, focusing on what the government will do to stimulate the economy. Our economics and policy reporter joins us from mumbai. Tell us about what really drove these prices higher, and what led to the uptick in headline inflation. What drove it higher was prices the prices of fruit, meats, there also an the 20 which explains basis point drive in the headline inflation. Is that prices tracked by bloomberg on a daily basis showed that food prices in july might be rather subdued, and the season is picking up pace. Theement of inflation joker of the pack is higher government taxes that the budget was announced last week, and that should counteract the jump in food prices we will see. Overall headline inflation is expected to remain within the 4 mediumterm target. Right. And we have some of these wholesale prices coming out this afternoon and im wondering if you put it all together, what are the underlying price pressures telling us . Well, thats the interesting part. More and more components strip away the volatile food, and show thee market is waning only things that are holding up our prices of medical equipment. Convergencell in between the core inflation and the headline inflation with the former dipping toward the headline inflation stop that is different for policymakers, because this shows that demand in the economy is slowing and probably opens up a new door for other rate cuts by at least 25 basis points. Once of questions, to cut or not to cuts. One of the best for august. The bets are still very much for a rate cut. Governor isindia pretty much worried about growth, and if you look at the core inflation numbers, except for housing inflation, household demand is still rather tepid. The other part is the shadow Banking Sector is still playing out, consumption is very much week. Given that the budget has not been much of a help us far as stimulus goes, the heavy lifting will have to be done by the r. B. I. , very much on a rate cut in august. All bets are on. Thank you so much for that. Still to come, our exclusive interview with the aberdeen chairman on his outlook for a rate cut. Thats coming up. This is bloomberg. Lets do a quick check of the latest business flash headlines. Jeffries has named a new chairman in asia, based in hong kong, overseeing Investment Banking and trading throughout the region. He comes with three decades of experience from being chairman and ceo. It is currently being restructured by the chinese parents. Expectedg 737 max 8 is to Stay Grounded at least into 2020. The wall street journal cites sources and the faa pilots union that there is no return time established. American airlines and united say they removed the max from their schedule at the beginning of november. The flight has been grounded worldwide following two failed crashes that killed 346 people. The rescue of all italia could be weeks away despite a looming deadline for offers. The plan has attracted investors including Delta Airlines, the industrial arm of the family, and in italy owned railway company. Some of them want the plan redrawn. The government has relaxed mondays deadline and will now assess expressions of interest instead. The fed and other major Central Banks are signaling a looser Monetary Policy and slowing Global Growth in trade tensions. Me aberdeen chairman told thats exactly what markets are expecting. I think that markets are factoring in a continuation of support of Monetary Policy and potentially some helpful fiscal fromy, and a solid outcome some of the uncertainties around trade talks and brexit. Theres an expectation that things will work out. If that were to change there would be a big reaction. There is such a great reliance on Monetary Policy to drive growth, certainly they cant begin engine of growth. People have been saying that for some time yet it continues to be a common day thing, inflation doesnt seem to be a major threat, and i think markets anticipate this accommodating stance will continue. You can look around the world and say unemployment is good, growth is good, trade is a little unsettled because of geopolitical things, but the amount of investment thats required around the world to meet the challenges of Climate Change and so on should create the environment for the cost of an economic backdrop. Fed chairman Jerome Powell has insisted a rate cut is coming. 15, 25 . Whats your take westmark what would make sense . Whats realistic . I dont think the market would be surprised with 25 basis points 50 basis would surprise some people. We will wait and see what happens. Michael sancho bankers you have to take into account the fact that he comes from monetary and investorsditions are a datadriven world and there is no shortage of data. Was the aberdeen chairman douglas flint. Before we go, lets get a check of the markets. Things are turning more positive. We are bouncing back from the session lows we saw in china, rallies up. 9 . Hang seng seems to be tracking some of that, reversing earlier losses, up by. 5 . Still a lot of concerns about whether this ab inbev ipo being shelved have an impact overall when it comes to hong kong. We are still watching manila, up another 1. 5 , poised to enter the bull market. We are watching the aussie dollar as well, continuing to see strength out of the gdp number out of china. The activity did a surprise the market a bit. The rupiah, we are still watching that strength. Thats right. Just taking a look, that is one market where we are following up ahead of the bank of indonesias , 38,000. 4 thats it from Bloomberg Markets asia. This is bloomberg. This is bloomberg. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates or employees. Announcer the following is a paid presentation brought to you by National Debt relief. Are your credit cards maxed out . Are you just making the minimum payments, or worse yet, falling behind in your bills . Are you stressed out all the time by your debt . Is debt keeping you awake at night . Theres reason to worry. Check out your credit card statement. If youre only making the minimum payment, it could take you over 20 years to pay off. Having debt is like having a tremendous weight on you and you cant lift it