The pound is trading up i about 0. 2 . Ultimately what the extra supply is going to do to the shape of the curve, but certainly, this is what many people have been anticipating would be delivered. Italy also announcing it is going to increase its fiscal stimulus to help the economy out , an economy that continues to remain largely in lockdown, along with the population. Lets get more on how Insurance Companies are dealing with what we are seeing at the moment. The u. K. s prudential is a Health Insurer and asset manager as well. Joining us now is mike wells, ceo of prudential plc. Good afternoon. How is the company being affected by what is happening . Todaywe Just Announced 2019 results, were you had a number of convergences occur. Earnings were up 20 . The majority of our markets in x hong kong come very strong and resilient. It is an indication of what youre seeing now, which is market by market, we still see doubledigit growth in Southeast Asian markets, and as we are sitting here now, the effect of the virus is minimal. And hong kong, you will see in politicale impact on and health in china, that looks different. Guy that is in a rearview to a certain extent. How do you think the story is going to be affected here in europe . How do you think it is going to work in the United States . Mike theres a couple dynamics. The speed is coming from the same thing you are seeing and speed of social media, some of the protests last year. Withthing accelerates now automation, automated trading, 24 hour news. The gasoline on this fire to a variety of dispense, but there of participants, but there are Different Things there. You get good information and Bad Information at pace globally. In europe, they are expanding fiscal policies. They were already struggling for growth, and i increases the challenges. The number of sectors hit by this, the travel and leisure, restaurants, that is really the piece of it you saw and hong kong that has taken the brunt of it. Big corporations adjust, and i think markets like china are on the back end of this, as f ar as policy is concerned. They have effectively and open market again, and that is the second phase. Theres multiple steps to it. Europe is going into the first round, and we will see how that plays out. I think in both, it will be local. A lot of areas wont be affected at all. There are certain areas with less infrastructure that will be affected more. You know,st month, as dan loeb said prudential should change its strategy to pivot to more longterm value creation. You have been tinkering a little bit. I am curious as to what your recent communications have been. Mike we have not had any direct communications, other than the i received. Meetings plus investor last year. I can promise you, all of them have a view on what our strategy should be, but we should do more unless of. They all represent their clients and shareholders. We discussed getting input from our shareholders. The fund is effectively a value fund, and their view is similar to value investors. We have 30 year funds that look at the business. You get different looks with each of them. Thinkost investors, they our shares are underpriced given the strength of our asian franchise and how will the thenesses how well business did last year in a difficult year. On other issues, it depends if you are a dividend investor or growth investor, emergingmarket , or hedge fund that is going to onus for a week. You have all of those in our shares, as any Market Participant does. Vonnie what do you make of the idea that you should separate more businesses out, the asian business from the u. S. Business in particular, given what you said about the strength of the asian business . Shares are obviously getting hit hard by the selloff, but you are down 26 this year. Thorough point owns pretty much 5 stake. See the Share Registry when it comes out. I dont question they have that interest in the share. We did announce at the halfyear last year that we would look at our u. S. Business with external capital. We announced today that the preferred route on that was for a partial minority ipo in the United States. We also agree that the shape should change, but keep in mind, Fourth Quarter of last year, we did the largest restructuring of this group with a merger in the u. K. We also bought a asset manager one of oure extended largest Bank Relationships in we entered the Digital Space with the launch of pulse in asia. So the shape of the group and its capabilities keep changing, and those Strategic Decisions are taking place in our boardroom for a very long time, and we are getting on them now. Guy what is the timing on that partial ipo . Will it be affected by the markets . Mike i think any ipo is affected by the markets. It is an extremely valuable business, and i think our shareholders see that. The question becomes at one point at what point can you bring it. Have to be a bit evasive on that. Guy fair enough. Thertheless, now is not time, given the volatility in the markets. Things need to settle down, right . Mike jackson is quite unique. It is capital generative and produces generous amounts of cash flow over prudential. Its produced 5. 5 billion in dividends alone in the last 11 years. We had a very different most. Ence then firms in that space in a potential experience then most firms in that space. It is a unique beast in that space. Guy give me your sense of what you think Financial Markets right now. How brutal they are, how volatile they are. You are a ceo that is about to business. You cant tell us the timing, but nevertheless, you are going to sell a business into these markets. What do you think of them . Mike i think they are a bit hyper. I think the vix is probably the best indication of a motion now in the market come the shortterm volatility. Do i believe personally that the vix will stay in the 40s and 50s . No. That would imply that those alternatives. Easing the quantitative has geared up the amount of equity institutions and pensions have had to take on. If you are running a pension fund in the u. S. Or u. K. , your bond yields are down, your equity exposure is up, and that is increased, the amount of equity exposure and the stretch of return youre getting, including five equity. Theres a number of things going on in the market that are new. What i think the core needs of the consumer are our accelerated because of that. Do people need more Retirement Income in the United States they can depend on . Yes. Do they need to fund more of it privately . Yes. When you look at the company we are selling a piece of, that is the lens. To somebody want a growing business does somebody want to growing business . Yes. Vonnie you are no longer a subject of the Capital Requirements, not regulated by the bank of england anymore either. What does that allow you to do that is potentially more risky and potential he has more reward. Mike our general view of risk and how we view that risk has not changed. Our primary regulator is hong kong. We are listed here as a primary listing. We have a secondary and singapore, adr in the United States. Our own economic risk capital key, and wethe have not changed our Risk Appetite any. By aligning our regulatory capital and largest growth markets, theres a logic in that that i think is consistent with our future growth, but we had a very Good Relationship with the bank of england and the fca, when they were our regulator. We were wellcapitalized under solvency two, and under the current regime. The current regime is a little closer to what defines distributable regimes in our country. It is a summary of all the Capital Requirements in every jurisdiction we have presence in , and an expectation of headroom above that. Vonnie all right. Prudential ceo mike wells joining us there in london. Thank you for that. Much appreciated. Lets get more now on todays market turbulence and the impact of the coronavirus. Bank of england makes the first emergency rate cut since the financial crisis. We are joined by Tobias Levkovich, citi global u. S. Equity strategist. What do your indicators show you . You have special proprietary indicators. [laughter] areas i dont know if they so special. I would say the coronavirus has been catalyst, but we were already vulnerable. There were nine different. Actors back tested in the that generates about 70 probability of markets going down. In addition to that, household equity exposures, what households in the u. S. Own as a percent of their financial highs. Are at 50 year there isnt necessarily this uninvestable Retail Investor out going to swoop in and buy the market. We were already seeing revisions fall before the crisis. Consensusarting their numbers for earnings growth. We are moving we were moving towards seven before coronavirus, and then still too high. Vonnie so your bear market checklist is thriving. It doesnt quite say buy the dip yet, though. Doesnt count for the types of problems we see in the market . Tobias someone told me a long time ago that economic cycles dont die of old age. They are murdered by the fed or some exhaustion us shock some exhaustion us some exogenous shock. We are getting this exit genus shock. Exogenous the pandemic shocks are something that is not going to show up on a bear Market Indicator or anybodys checklists they are thinking about because it is not something you can predict or really get great insight on. I told investor today that while this is particularly bad for elderly people, i can also make the case that it is going to be much worse as everybody gets very fearful. I dont know about you, but ive never lived in a world where we had trouble bands and split workforces and social distancing. This is a kind of new phenomenon the street is count the street is trying to get their arms around. Guy if there is a rally, say we do get some sort of fiscal or monetary response out of the fed or the treasury in washington. Would that be a rally you would advise people to sell into . Tobias weve already seen the fed cut rates on the emergency factor here intro meeting ting by 50 basis points. Im not sure that in r. Kellys it. That inoculates i dont think you can buy off somebodys health with lower financing costs. I am not sure that really inoculates. That does help credit spreads widening, and fiscal response is a question of how quick can congress do something. Number two, how people react. If all you are getting is a payroll tax cut, you are worried about being infected, worried about potentially getting laid off, im not sure that will be spent as aggressively in the market place as might be hoped. Guy you bring up credit. Is credit the next shoe to drop . Tobias we are certainly concerned about that. Youve seen Investment Grade and highyield credit spreads widening. Selective. Bit more its not been across the board. People have gotten very nervous in the energy space, but if you look at highyield credit for energy versus everything else, they were almost paying 2x the kind of yields you were seeing in that before this, and now it has gotten even worse. So energy is kind of the epicenter, and it is not clear that low oil prices are going to drive people together, no intended, to fill up their cars and go on vacations. Vonnie do you foresee bailouts of individual industries or companies at this point . Tobias i am not sure what they are considering. If i was to give advice, i would probably lean more towards Small Businesses that people arent targeting and probably dont have as much access to capital that a major aircraft investor does. Trying toi were there advise at the white house in terms of policy, thats probably where i would spend my time. Vonnie youve mentioned the fed emergency rate cut wont help the market, at least in the near term. What is necessary to shore up confidence . If Small Businesses are having trouble, that is going to get passed on. Tobias its a tough answer. People have said maybe a vaccine or at least visibility to a vaccine. I think a coordinated federal response is important to shore up some of the confidence. I got an email this morning, can fema do anything . I said, look, i was a victim of hurricane sandy. Yes, fema came in and were effective, but it didnt happen overnight. It took some time. Would beeems it encouraging, but it is really a matter of time for people to see that this isnt horrible in terms of the outcomes, and that people arent laying off a lot of people, and thats what you need to generate the failure of Consumer Confidence right now, jobs are still good. We got a good jobs number last month. But that is going to affect that consumer that is critical. Will corporate spend a lot on capex right this minute . Probably not because they will want to wait and see a minute. We also have elections later this year, and we were already of the mindset that corporates might tamp down expectations or some of their activity because they dont know whos going to win in november, so they are going to wait and see. Vonnie we are just Getting Started. We will have more with Tobias Levkovich, citi chief global strategist. Guy we are looking at the effect of coronavirus on business. We havent talked much about how it is affecting asian businesses. Do that now. Haslinda amin come over to you. Y expects an 80 collapse in passenger numbers, the likes of air asia delay in plane delivery. Having said that, several winners among them, ecommerce like alibaba, and i have with me david liu come up pinduoduo vp of strategy. This could be a longterm negative impact. David first of all, think you for having me on the show. In terms of impact to ecommerce, we have seen on the onset of coronavirus outbreak in china that ecommerce actually played a big part in supporting the life of the people. Pinduoduo is the second largest ecommerce platform in china in terms of user account, so around 600 Million People have come to rely on pinduoduo for daily necessities. At a trying time like this, our priorities are actually with our users, so we have proceeded to provide subsidies against medical suppliers. When we see surgeon demand andacing the supply disarray in the markets area the other thing i would point out is is actually in agricultural produce. Pinduoduo has been a strong Online Platform for purchase of agricultural products. As using about home and hood supplies, we leverage our network through the very different time to make sure farmers whose businesses have the impacted because of disruption of transportation are able to make goods available efficiently to the online logistics toeting make sure the goods are actually delivered promptly for the users in the comfort of their home. Haslinda but there has been disruption in the supply chain. Even alibaba has said if it persists beyond one quarter, there could be an impact in earnings. And consumer spending. Yes, absolutely. We also expect the First Quarter to our gme and our growth. That said, we have been observing very positive trends. N terms of Consumer Behavior we are roughly a month into the resumption of work. We have seen 90 coverage in the Delivery Network in china, and we have seen a pick up on merchants and users. To take the end of february as an example. We ran a three day campaign of program our rnb Subsidy Program. Consumer demand remains very strong, and the outlook for the year remains positive. Risk for is that a your smaller merchants . Those are more exposed, so we as a platform have actually set aside one billion start aeserve to Subsidy Program to help ease the transition back to normal. Vonnie pde announced haslinda pde announced results today. Are you at all disappointed . David we are actually very positive on our own results. We thought the Fourth Quarter was very strong. First of all, we had a new milestone in terms of gross merchandise volume, the one mark. In the 1000 secondly, we added 50 million active users in the First Quarter, about twice of our nearest competitors. So we continue to see more people come into our platform, becoming more engaged, and we think that bodes well for the longerterm. Monetization and revenue is not our focus today. Our priorities are on improving mover engagement and an action. Targetingalibaba is about one billion active users by 2024. Can you do that earlier, and a shorter period of time . David we had 50 million users in the last quarter, and thats twice what our competitors have added to the platform. We see no reason why that pace should discontinue. It is just a matter of time. Haslinda what is your three to fiveyear strategy . Pde has always been seen as a and likeatform, alibaba, are you looking at the first and second tier, or are you tweaking that to compete with alibaba . David let me clarify the miscoi dusty misconception. We look at user distribution on our platform. Begin tortantly, as we win more trust and build more engagement, i think activities first andm secondtier cities. 40 of our gross merchandise volume was generated by users buying things, so as a strategy, i would say that our platform has continued to understand and to understand what they may be looking for. A greater breadth of products, a greater diversity, and to share with other people. Haslinda black friday last year, you partnered with amazon, which was seen as a pretty successful partnership. Reason to think you will deepen that partnership . We partnered during black today to bring deals the chinese customers. We want to bring the experience to our user, giving them access product andality have very