Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

The futures contract from the big gains as well. Optimism at the start of this session. A data out of the u. S. We have p. M. I. Numbers. And easing from the impact from the virus. E await that data. Good to from bill have you with us. In the end at the end of the day, it remains strong and solid. This market seems to suggest you cant fight the fed or federal banks and no bad news will sentiment. Y damp the im not sure that i would be that positive about the sentiment. The correction that we saw in march was sort of a classic correction, if you like, with all the things happening in the normal order. But the rally has been defensive in nature. A lot of defensive assets like gold have done very well. And certainly defensive sectors within equity markets, for well. E shes have done we have this massive, massive, monetary and fiscal action by the fed and other Central Banks and governments but im not sure if that turned yet sent metropolitan positive. People are still very, very carbous. Whats the path forward . Yeah. Its still falling. For equities, what people are focusing on are earnings and it is very difficult to get a handle of whats going to happen to earnings in 2020. There are a couple of different ways you can get a handle on is and try to reverse out of g. D. P. Forecasts and perhaps a bit easier to do. That tells us that earnings will be down 20 to 30 and at the trough of the markets, it looked like the market was implying 50 and vessel slowly recovery. I think thats what people are focused on at the moment. Markets are morals where they need to to be which means there isnt value there and expected return of high Single Digits and in an environment where you got zero rates. Its just an uncomfortable place to be. Bill [indiscernible] isk to reward ratio in his life. What do you take on such a comment . He is a very impressive man with an impressive record. Can turn. Of investors they might be very short one day and very long the next day and we are trying to look a bit longer than that. I think he was partially to e. M. s as well and the riskreward is a little bit more challenging. They got vessel locked down like everybody else. They have effects going against them and local currency against them. E. M. s are with petro states and the volatility doesnt help and they are ex pieced to the slump the europe and they anufacture faster and they got ballooning twin deficits. I think now in the end you need to be very selective. Asia yeah looks like the pick of taiwan, korea, china and hong kong and you need to be very, very selective on a country basis which is the big change in the last few years where from was this kind of outlook. I have been asking of our guests indiscernible] rrl liquidity support measures that are in place around the world and bank of england and especially with the fed that is helping companies all the way down the spectrum and may not just target Large Companies but has a trickledown effect. So i think so far its ok, but youre right. Because it can lead to watch that. Very quickly, bill. What out of all of your clients, what is their biggest concerns and what questions do they keep asking you . Why do equity markets are disconnected from the economy and the virus and thats the ngs i gave but it is difficult to get a handle on that because people are so worried and so much uncertainty. But thats the biggest question on peoples minds. Bill, more and more companies are saying they are willing to let employees work their employees work from home. How do you expect this unexpected shift in behavior . I think there will be a shift in behavior. But it is very difficult to trade on that. There are trends, there are themes out there that are really good themes and real and going to happen but not always tradeable, maybe at the margin. Maybe in terms of certain equipment manufacturers and certain types of recall estate and you may be able to do it at the margin but do a portfolio is oing to be very difficult. Bill, thank you so much for your insights. Global coronavirus cases now top 5 million with reported deaths of 3258,000. The whoa has recorded the number of daily infections with 100,000 new cases. President trump said the gradual reopening may be a face to face event. Japanese exports sold the most in 2009. And have now declined to 17 months and the longest streak. Lockdowns in the u. S. And europe slammed demand for companies such as toyota slashing production. The bank ofening lapped governor said the time is right to determine how low rates i will will go. And the bank is actively discussing rates. These comments come among ar growing discussions and inflation falling to its lowest in four years. Indiscernible] cyclone has hit costs. And it hit the coast with 200 kilo meters and making its way as a tropical depression. The storm has closed indias plants. Global news 24 hours a day owered by more than 28,700 journalists. His is bloom burg. Bsh bloomberg. [indiscernible] im one that is a little concerned we are doing more testing in texas, but i would love to see a National Initiative Manhattan Project to really emphasize quick testing in front of stores, restaurants and other facilities so other people have more confidence so people are not walking into a situation where they could be at risk. Until we have that, my concern is there will be limits as to how fast we will recover and will recover but without certain types of activities fully recovering, it will limit our g. D. P. Growth and Unemployment Rate will be morel vated. I captain let you go without asking you about the oil patch. And the oil is concerned. Do you have any forecast for where the industry goes . How many countries might go bankrupt . Thated said it was under 0 they were expecting 40 , is that realistic . It might be. We are seeing here in texas and seeing in texas, lots of drillers shutting in, its not economic to drill and just shutting down and what we believe total u. S. Production will go, from, say the Fourth Quarter of last year, it will nd this year at 10. 8 million bar else. And so, yes, you will see bankruptcy, restructurings not only in drillers but those who service them. Having said that, its our own view as people begin to drive, work y resumes, we will off the excess inventory as early in the second half of 2021 or early 2022 depending on the rate of growth, and we think its not surprising to us you are seeing a firming in the price of oil but in the meantime, you will see lots of in and restructuringings and bankruptcy. Those quickly who shutter wells turn them back on . The folks in the industry explained to me, once you shut a well, it takes some time to unshutter them. But my guess is the magic price starts to be in the neighborhood of high 30s or in the 40s. You are going to see people resume and our own forecast with u. S. Production by two Million Barrels a day, the actually production is muchless than that and have further reduction. Some of those shutins will come back. The shutins in the United States may now be at their peak. We think some of that will come back and so yp wont u. S. Production decline because of the decline curve. If you start drilling again and even without new drilling, you will have areduction in output because you need new wells. A lot of those will come back at the end of the year. Details on that just ahead. This is bloomberg. I Asian Countries looking at measures across the region and pan will lift and india lost Airlines Despite a surge in inif he can shons. We have the very latest. And some signs of progress. Reporter these emergency measures are set to expire and it is set to expire. And could be lifted in western japan. So those three popingsly could join the 39 where emergency measures. But tokyo will continue a state of emergency. They continue to see multiple cases and they didnt meet the standards but the Prime Minister abe. And looking at the fill pines, the villages and regions and malls and some businesses as of last week have been allowed to open in manila but the government is concerned about resurgence in cases and expecting 42,000 mige grant workers to arrive and that may overwhelm the facilities and 27,000 workers are staying in Isolation Centers in the capital. The president not ruling out just yet bringing back if there is a second wave of infection shon. The india has become epicenter for the virus in asian they are going to be allowing Domestic Airlines to fly. How big a deal is this and how big a risk, i suppose . Airlines were caught off guards and the tweevet and sources telling us they were expecting that things were going to go on for a longer extent. They suspended ticket sales until june 1. This makes it harder for airlines to prepare for these operations and get staff back on. But this is two months after the lockdown that grounded 650 planes in the country and the Prime Minister trying to restart the economy. So we have seen some concerns from state governments about allowing people from these red zone areas to enter their borders. Cities like delhi and mumbai are considered as red zones and rules and regulations are needing to put in place. But we see they are trying tore remain in business and boeing top customers. Arriers ordered 1,000 planes of indigo and spice jet one the top customers of boeings top massive jets. New outbreaks showing that the virus is changing, do we know how . Patients between wuhan. And patients in other provinces arried the virus for a longer period of time and takes longer to test longer. And typical one to two weeks and make it harder for authorities to track these cases before they spread and seen family infections and they arent sure if it is mutating or observing patients than in an earlier stage in wuhan. They were only to treat cases that were the most serious. First are looking for these answers. They now believe that the latest cluster may be arrived from russia which is the latest outbreak in outbreak. Lets look at where markets are right now. Sia and the index. Rising pressure from the u. S. And delist china companies. To come. This is bloomberg. First word headlines. Brazil posted another daily record in new coronavirus cases, infections rose by 20,000 wednesday, confirming the country of 210 million is the worlds new covid19 hotspot. President bolsonaro has told the Health Ministry to loosen protocols of the antimalarial drug hydroxychloroquine. It has an unproven track record. Police in the u. S. Have arrested two men for aiding the escape of former nissan boss carlos ghosn. He will face possible extradition. He escaped japan late last year to escape a financial crime. The men will appear in court by a video link. Carlos ghosn denies any wrongdoing. Finances,rutiny about alibaba slumped after legislation banning chinese firms from listing or raising money from u. S. Investors. The communist party is accused of cheating stock exchanges. The u. S. Says they cannot let Foreign Companies take root. It is considered real. If you are taking other peoples money in china, there is an expectation there is some level of fraud. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am karina mitchell. This is bloomberg. Haslinda lets look at where we are in terms of the market. Mulling the risk coming from the u. S. China trade tensions. Msci index coming down 0. 3 . Day. Down for the second the bloomberg commodities index is lower after a broadbased rally not just in oil and gold, but other metals as well. Gold is hovering at sevenyear lows. The dollar index pointing up unsurprising when it is risk off today. The vix under 40, but Going Forward volatility may inch up. To that mpc meeting, rising pressure from the u. S. Chinass gauging if economic rebound will stall as there is a rise in coronavirus cases. Exports ining off may, falling 20 on the year. Some of the movers we are production lines to indonesia, it will boost production by 30 . It is forecasting lower milk prices, but says the financial earnings outlook will come in the top half of the range based on performance in the past nine months. Travelerswill allow come june 2. That is where we are in terms of the markets. To ming lee,s get founder ceo, caidao capital. Good to have you on the program. Is this the right time to get on the road to prosperity . Ming thank you for having me on the show. What we are seeing at the moment for ourght to quality investors as a general rule. Of certainntage drops in the market and the volatility to buy what we consider high quality stocks at favorable prices. We do see a lot of opportunity in the market despite the pandemic. Rishaad is there a particular asset or asset class or sector you look at at the moment where down valuations and good quality . Ming we have been looking more and more at acquiring quality reasons. Te for two real estate values have not so far plummeted in good locations. We only see a 5 or maybe 10 adjustment during the worst part of the pandemic to date. We are looking at assets because ongoing cash flow. If you have the right tendency profile in the building and a good location. We see our investors seeking out these assets with a flight to andity, flight to location, a lot of investigation into the quality of the tenants so that there is less risk on being caught out, and if you want to hold an asset and generate cash flow while you do that. The other areas haslinda we are seeing companies and banks, for instance just a follow on real estate, we have heard from bank ceos saying they may to cheaperfices areas. Could that be a risk to real estate . Ming we do see that, but we are currently looking at properties where the tenants are likely to benefit from people having to social distance, and the less in public. We did a recent transaction where we closed in the middle of the end of march, beginning of april in the middle of the roundic, the peak of this knock on wood, hopefully there will not be another 1 but the tenants were benefiting from the fact people were not going to restaurants and so forth. One was a tech company, and the other was a Credit Card Company who is saying a big tick up in online bookings. You have to be reflexive in what you are looking at. We are looking at properties that are occupied as well. Years, wein recent have seen chinese money flooding the Real Estate Market overseas with rising tensions between the u. S. And china. Do you see those investors putting their money in chinese real estate and boosting the chinese real estate . Ming i think that is a tricky question. Seen a lot of inbound money going into china at the moment with our investor base. I think there is a lot of concern over being able to get money out of china still, which you can do, but it has been more difficult the past few years to get money out of china so easily. And i think there is concern in the market, in the International Market outside of china that there is still a lot of corruption domestically in china , and real estate is an area where you have to choose your partners well. Because we do not do anything in china unless we have local partners on the ground that we have known for a long time, and who have good track records. It is important to have good local relationships whether investing real estate, or we also invest in private equity funds, and do direct investments. We always do it with local partners. We have to be very reflexive. Tohave nothing money going chinese investors, but there are opportunities to do so. Looking into etfs, Exchange Traded funds, how are you using those in all this . Ming what we do with our portfolios, we tend to have a hub and spoke approach. Our clients and with our proprietary money, we are not actively trading. We do not want to act like a hedge fund or think we are as good as a hedge fund. Those guys are good at what they do. We tend to be more conservative in our asset allocations. We tend to do a Core Portfolio etf, relatively conservatively among back, and basically trying to get data exposure and liquidity. Then what we do, around that we will take opportunistic on for example, we recently took exxon mobil when the price dropped, and we are happy with that because it is paying a high dividend. Although the oil industry is taking a hit, that will not be a longterm trend Going Forward. We did the same with tech stocks, including alibaba and tencent when there was a drop in the market. We took some positions adding onto our spoke, as you may call it, to take advantage of the volatility in the market at the moment. That is not a huge part of our portfolio. We try to keep etfs passive, but it is a liquidity play in the event we the other good opportunities. Haslinda is there reason to think you should pile on tech . For example, one of the companies who is a big tenant in the recent real estate transaction we did, it is benefiting greatly from broader broadband use. There are specific sectors within the tech we are looking at more carefully to see how they might benefit. Logistics is another area, and those groups in logistics who hub and spoke, and the infrastructure. We are looking at another real estate deal with a wellknown retail logistics thirdparty Provider Company as the main tenants. Tech there are companies that will benefit because of the fact people are staying home more and unable to go out. It depends on whether we buy stocks to take advantage, or express that particular view, or look at real estate to combine that view with our underlying view of being a strong asset and good locations. I know in some major cities like in the u. S. Where we are looking at, we are seeing a lot of movement in the Real Estate Market, where as you mentioned, some companies do not need to pay expensive rent for employees, but there is a lot of subletting going on within that. I was surprised to hear that. If you are in a good location in real estate, longerterm will wind up being a reasonable play for you. Haslinda ming lee, founder ceo, caidao capital, thank you so much for staying with us. Tiktok is now worth more than 100 billion, numbers based on recent transactions. We will have details, that is next. This is bloomberg. Rishaad Australian Governor has been talking to bloomberg. He is talking about liquidity matters, and liquidity buffers could be tapped to aid the economy. Some reduction for capital ratios is entirely adequate. That is what he is saying at the moment. Governor. E rba the owner of short video platform tiktok, it is set to reach 100 billion in valuation. Expectations that it will keep pulling in advertisers to go headtohead with rivals. Our tech reporter has the story. Propping up that valuation . It has been higher than that before. , you see it is valued as much as 140 million u. S. Dollars, and when we look back at 2018 when they raised their last financing round, it has years. Up 33 in two i think it tells something about. He owner the social media arena, it has been taking advertising and market shares from giants like tencent and alibaba. Can they truly be a Global Player . Question on aen a lot of peoples minds. The first obstacle is the political one. In the u. S. Facing how it handles data. The company, there are concerns over restructuring. Apart from regulatory concerns, is how i canestion find the next viral product globally. How it can find the next product globally. Globally, it needs the next big hit. Our asian tech reporter. Coronavirus protest has battered hong kong, especially the retail sector. We will hear how one businesses coping. This is bloomberg. Haslinda aprils retail Sales Numbers from china as consumers remain cautious, it was less than half of the previous month with online sales appearing strong. Was optimistic about a pickup in sales andrew keith was optimistic about a pickup in sales. In terms of the digital penetration, we are seeing more customers becoming more comfortable with shopping online. Toould say it is difficult look at it black and white, because increasingly what is happening is customers are becoming comfortable with different digital channels. Very muchng digital as a way of communicating and staying in contact with customers. Whether that be on zoom or a lifestream feed, people are being able to use different channels to connect, and those shopels are becoming pable. It is about the holistic continue tohow we stay in touch and relevant to our customers. You be changing the ratio of your brickandmortar stores in hong kong and china against her Online Presence question mark we continue to see this trend, but despite the fact retailers are struggling, their online sales are surging. What we have seen is that we have a strategy where brick stores are there to create the theater and immersive this of oft we do immersiveness what we do with a luxury product. Nearly there is a physicality and Human Connection is important to our customers. We are seeing that in china, customers are coming back. They respond to the level of personal service we provide, and safety in the vip suites, and intimacy that brings. Clearly online, that gives us access to new customers. We are seeing purchases and customers we would not have necessarily seen come into the stores accessing our digital platform. We have a personalized approach to our assortment with the china store, so each store has its own buying strategy and supply chain. The benefit of online means all that product is available. We will continue to look at how we penetrate particularly within china. Does that mean you are not making any adjustments, whether it is costcutting . We are seeing more retailers adjust their Business Operations given the pandemic, and in hong kong the protest as well. Clearly we are very mindful on how we are focusing to drive differentiation. And where we can get the value at. Obviously, Discretionary Spending is something we are focused on. It is important at times like this that we go above and beyond to create something special. It is an opportunity for people to fall back in love with fashion. Seeing in china particularly, as people feel safer and are coming out of their houses, the joy of being , what will i wear seeing my , there is a months little bit of revenge spending happening against covid. There is a human need to feel uplifted having been through this experience. We are seeing that with the behaviors of our customers. A look at the latest business flash headlines. Luzhanska on a 10 billion stake bailout from germany, they are in talks with the country on stabilization funds. Get normal voting rights. Same with delta airlines, boosting flights next month. They will have more personal space. 60 on acarrier sees route, that will trigger them to add more planes. They are expected to bring 250 flights next month, and possibly 300 in july. All u. S. Aviation remains to look uncertain. Maybe the final blow for the superjumbo. The carrier will accept three aircraft next month, but says it does not want the remaining five. The two sides are locked in talks. Airbus has a fleet of 115 currently. Goldman sachs reopening eight offices in new york, paris, madrid. Butf is invited to return, only if they want to. The paris office will reopen next week, and Safety Measures put in place including masks and social distancing. Jp morgan seeing a different workplace when they return post corona. Personal licenses are sealed inboxes for common use, and strict cleaning protocols will. E put in place many people will be working on different floors with strict measures in place to prevent any contagion. Haslinda lets look where we are in terms of the markets. Asia is looking pretty mixed. Msci index in negative territory. The hang seng currently flat. China,watching mgm cutting its rating to neutral. Shanghai in positive territory, up 0. 2 . Brushing off tensions with the u. S. Offi up 0. 4 , also brushing those export numbers. Taiwan in the positive. Lets look at where we are in terms of Southeast Asian markets. Pretty muchng at flat. A threephaset plan on infection rates. We are keeping a watch on Philippine Airlines. Andaad absolutely, asiapacific airlines. We have an interview with their new boss coming up in the next hour. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Haslinda its almost 11 00 a. M. In singapore and hong kong. Im Haslinda Amin with rishaad salamat. Welcome to Bloomberg Markets asia. Here are the topics. A deal could see Chinese Companies delisted in the u. S. President trump maintains beijing misled the coronavirus. The pandemic shows safe signs of a recovery. The outlook as nations begin to move out of lockdown. The fed says chinese video app tiktok has boosted its parent valuation to more than 100 billion. As 140ld be as high billion. Rishaad getting straight to the markets, it is a tale of two mornings. One the first half of which was showing positivity across the board, turning tail after donald trump escalated his rhetoric against china suggesting leader xi jinping is behind a disinformation and propaganda attack on the u. S. And europe. Donald trump says it all comes from the top and added china was desperate to have joe biden win the president ial race. That set negative tones halfway through the morning and looking at now where we are, that is the position these equity markets are in. The asx in negative terrain. The hang seng also. The futures contracts have also turned down. Singapore pretty much flat. The time market getting a bit of a boost. 8 10 of 1 higher. Thats after the bank of thailand cut Interest Rates 25 basis points and malaysia is up by 1 . Manila story dominating is the Philippine Airlines restructuring taking place. Equity markets in singapore, bangkok and co. While the lump kuala lumpur. Haslinda lets look at commodities. Oil continues to rise. Wti and brent up at the highest in two months. Of 5. 6 saw a drawdown million euros. Kaplan weighing in saying u. S. Oil shut ins may be at their peak. We also have chinas economy back to prepandemic levels. The question is, how sustainable is that recovery . Gold futures coming down 6 10 of 1 . Gold on the rise recently. The nextget to 2000 in 12 months and could trade much higher over the next several years if there is an inflationary cycle or if we see unforeseen circumstances. The dollar index climbing up right now. This is how it is shaping up in india. Of 1 . Open, down 3 10 stocks have rallied 17 from lows in march. Valuations at about 19 times earnings, well below the peak of 30 times in december. The rupee at 7579. Indian futures, 10 year yield 5. 78. A Credit Rating downgrade to junk, keep a watch on that. Now lets get first word news with karina mitchell. Reporter global coronavirus cases top 5 million with 328,000. Deaths over. The World Health Organization has recorded the highest number of daily infection since the pandemic emerged with more than 100,000 new cases. President trump says americas gradual reopening means he may make the upcoming g7 a facetoface event at camp david rather than a virtual discussion. Is to lift then state of emergency in osaka and other prefectures, although restrictions will remain enforced in tokyo. Nhk says the government is to announce the move after a Cabinet Meeting thursday. The coronavirus has devastated many parts of the economy with visitor numbers plummeting. Than all rivals total less 3000, a slope of 99. 9 from a year earlier. Japanese exports fell the most in april since the Global Financial crisis in 2009. Shipments fell 22 from a year earlier and have now declined for 17 months. Thats the longest streak since the 1980s. Lockdowns in the u. S. And europe have slammed demand for key products Like Companies such as toyota and other carmakers slashing production in the face of plunging demand and global sales. In the u. S. , minutes from the april meeting show coronavirus poses a Severe Threat to the u. S. Economy including the stability of the financial system. Official said the economic fall out from the pandemic is creating an extraordinary amount of uncertainty and considerable risk to immediate term activity. The fence is buying could come under increasing stress. With businesses reopening, i think we can see a good, slow, steady recovery in the third and Fourth Quarters. Fiscal policy will help. The fed programs will help. Ultimately, money will not get consumers to engage in behavior that im comfortable with and i think we could spend a fraction of what we are spending on stimulus on testing. Reporter 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. The white house has issued a broad critique of chinas economic and military policies in a report for congress. It comes in dutch amid an increasingly fraught relationship between the two countries. Coanchor Tom Mackenzie is in beijing. What does this report actually say it . What is the accusation. It outlines familiar criticisms of beijing around things like intellectual property theft, economic protectionism, but also lays into china for human rights abuses including the forced detention of more than one million ethnic uighurs, and takes aim at chinas military activity, provocative moves in areas like the South China Sea and the taiwan strait. It claims the decades long u. S. Policy toward china, basically based on the assumption that if you engage with china, you will help the country become more open. Essentially that that policy was wrong. It did say also that competition between the u. S. And china does not have to result in confrontation or conflict. It is the latest broadside from the trump administration. The president himself in the last few hours coming out with a tweet accusing train of what he describes as a Disinformation Campaign around the virus, saying it comes right at the top. The senate has also passed a bill aimed at delisting Chinese Companies. How will this legislation work in practice . Reporter if this is passed into law, and of course it has to go through the house and be signed off by president trump, it would require Top Companies to certify they are not under control of a foreign government, and if they cant prove that and if an audit cannot make a determination, the company could be banned from u. S. Exchanges. That is the meat of this legislation. Potentially it could impact major Chinese Companies like alibaba and baidu and others. Senators say they were not trying to provoke a conflict with china over the issues. They said they were trying to level the Playing Field and give the u. S. More transparency. Mike pompeo congratulated the president of taiwan. China byng to wind up doing that . He certainly succeeded. Is one ofobviously he a number of highprofile u. S. Officials making a move to reach out to taiwan and their officials. Taiwan has received a lot of praise over its handling of the coronavirus, but this was the clear message from pompeo the president of taiwan for her second term and it really breaks the longheld diplomatic protocol that you dont have senior u. S. Officials reaching out directly to taiwans leader. It is of course a provocative move and seen as that in china. You have the Chinese Military officials saying its a dangerous move and saying china wouldnt flinch for protecting its territorial sovereignty and it does build on this outreach between the u. S. And taiwan. In terms of how china may approach and respond to some of the challenges, the bill in the senate or other moves to punish it over trade practices, you china potentially by targeting u. S. Companies. That is something to look out for if indeed they do that. Another area potentially china could resort to is restricting u. S. Casino access to macau. We are waiting to see if there , but we willation see with the National Peoples congress that kicks off friday in beijing and see if theres anything about u. S. China relations which remained fraught indeed. Our markets coanchor Tom Mackenzie in beijing. Tom will be leading that coverage starting tomorrow. More to come as we look ahead to the resumption of crossborder air travel with one of the top carriers in asia. And bailouts, bankruptcies, and the way ahead in the association of asiapacific airlines. This hour. Ats later coming up, we hear the case for markets hitting a bottom. Lgt global strategist on why he sees a bull run. Mikio kumada is next. This is bloomberg. Mixed. asian stocks, investors weighing science the economy is starting to reopen. Our next guest believes we will return to a bull market quickly. Mikio kumada is head of lg capital. The thinking behind that and that as a strategy right now. At what is going on a particularly in the monetary and fiscal space, i think it is becoming very evident and very clear that we have the biggest stimulus since world war ii in the u. S. And i extension, and all other. Ountries compared to the magnitude of the , a relatively mild selfimposed noneconomic in 2008, thelike consumption is coopting because they were ordered to do so, while before come all these bad loans and others other financial fraud crash the system. I think it makes a big difference leading to the result that the stimulus impact is underestimated while the concerns about the deadliness of the virus are overestimated. Weve got the pandemic, and to complicate and make things worse for investors to navigate this minefield, weve got u. S. China relations continuing to dip lower and lower. Thats true. Of course, thats another minefield, as you say. Thats also why, despite my bullish outlook, at this firm we are positioned in a more risk conscious way. Broadly neutral in equities and trying to hedge things here and there and be broadly diversified. That said, my take on that is that i think its not news that china and the u. S. Are in a strategic competition and i also think that is something that will stay and i believe that at the widely understood levers of power in china and the u. S. And many other places. While this may cause volatility every now and then with a risk of things getting out of hand at the margin, i do think it is possible to have a cold war andation like in the 1950s 1960s and still prosper. The reason is historical precedent for the west is to prosper when it is united. That is when all the prosperity happened in the west historically, while china is much bigger and more technologically advanced than the soviet union was in the 1950s or 1960s. We cant have a two world two system world. It will be a bit noisy here and ande, but it is manageable not a dealbreaker for a bull market. Assuming sentiment remains positive, which assets would outperform and give the best returns . I think its going to be equities. Haslinda how much upside . A number because i dont know what the earnings will be. As you know, some major investment banks expect earnings to grow by 60 this year. If that numbers number is fairly accurate, we will reap lame highs we saw last year or earlier this year very quickly. We are seeing how the markets in china are looking toward the mpc meeting starting tomorrow to provide some kind of impetus for chinese stocks to go up. What assumptions are you make in . For the mpc . Or for the stock market . The mpc haslinda the impact of the mpc on the stock market. Ok. The stock market in china will be in line, although perhaps not outperformed for the time being in terms of the direction, which i think is higher as well. That being said, in terms of the mpc, i know the focus is on the question whether china will announce a growth target or not and my take is that it actually doesnt matter that much over the medium to longterm because we dont know what they will actually do. What we know is that so far, in terms of stimuli, china has been on one of the Major Economies, the economy that has done the lease. If you look at the imf fiscal monetary, you would see fiscal stimulus in china is, they would qualify to join the euro, it is below 3 , whereas most other Major Economies or industrialized economies are 10 or 5 even in the case of european economies. Its very clear they will do more stimulus to boost growth. Particularly as they are also exposed to political challenges overseas. I think they are waiting to maybe see how exactly they will respond, but they will do more stimulus. Whatever number comes out in the next few days, i think will only have a shortterm impact. There will be more stimulus in china and it will produce more growth. Rishaad we often talk about japan with you. I want to get a take on the abe kuroda administration and whether its working and your take on where the country finds itself. I think japan is going through economically at least, provided i am not completely off the rails with my global assessment, will be among the economies that do well. The reason is it has done among the largest stimuli worldwide while having really the smallest public in terms of the Health Emergency among any major economy. You look at per capita deaths and the Health System capacities. Think thats a very good example of an overreaction to a relatively mild Public Health problem. On that note, lets leave things, mikio kumada from Lgt Capital Partners asia. The situation across the region of the pandemic. Economies try to make moves to reopen. That has some out there scratching their heads. This is bloomberg. Haslinda Asian Countries are set to further ease long down measures across the region. Japan is expected to lift its state of emergency on osaka, although not in tokyo, while india allows airlines to resume domestic flights despite a surge in inflections. Global markets anchor yvonne man has the latest. Lets start with japan. Some signs of progress, some relief. Aonne this country has seen steady fall in confirmed cases and they do have the lowest infections among the g7 countries, so osaka could be lifted along with kyoto. Join the rest of the 39 prefectures were emergency measures were lifted one week ago. Tokyo and surrounding areas and hokkaido will continue a state of emergency. They were slightly above the governments threshold of 0. 5 new cases per 100,000 people in a week according to some reports. They are on course to be under the threshold before the end of the month. Prime minister shinzo abe said to make that formal decision later today. In the philippines, weve also seen the government weighing downsizing their lockdown to villages and regions now. Weve already been seen parts of manila well where malls and some businesses were allowed to open last week, although the government is concerned about a possible resurgence. 42,000 Migrant Workers set to arrive until june. That may overwhelm their facilities. Already more than 27,000 repatriated workers are staying in isolated centers in the capital pair the president of the philippines not ruling out stricter curbs if there is a second wave. India,a the surprise in allowing airlines to resume domestic flight, despite the faster surge of cases. It sounds like a gamble. Yvonne yvonne sources say that airlines were actually caught off guard by that speech from the aviation minister. Many had suspended ticket sales until june 1. They were expecting a longer stint of this. This short notice makes it harder for the airlines to prepare for operations, get staff at work and arrange for protective gear. This marks exactly two months after a lockdown that grounded 660 planes in the country that Prime Minister Narendra Modi tried to gradually restart the economy, even as you say infections are jumping at the fastest pace in asia. State governments have expressed concern that perhaps they are allowing people now from these socalled red zone areas to enter their borders. So far, Major Centers like delhi and mumbai are still considered to be red zones. The aviation and ministry will lay out a few rules and regulations that will be in around theirlines world struggling to remain in business. As theirhaving boeing top customers, more than 1000 planes in recent years. Rishaad lets shift to china and there is evidence the coronavirus is mutating. How is it coming back in a morville your link virulent form . Yvonne they are seeing differences between wuhan and a cluster of cases in the northeast art of the country. Patients are appearing to carry the virus for a longer period of time and take longer to test negative as well. It is also taking longer than the typical one or two weeks for people to start developing symptoms. Bit of its making it a a challenge for authorities to track these cases before they spread. They are seeing more family infections in these clusters. Scientists are trying to figure out, is this virus actually mutating . Or are they just absorbing these observing these patients more closely from an earlier stage and wuhan . When the outbreak exploded there, they were only able to treat the more serious cases. Officials believe the latest cluster may be linked to arrivals from russia, which is now one of the worst outbreaks in europe. Our markets coanchor yvonne man in hong kong. Lets get a check on where the chinese stocks are doing at this lunchtimeime toward the csi 300 slightly positive. U. S. China tensions weighing on sentiment. The u. S. Passing a bill that could prompt the listing of chinese stocks on the u. S. Exchanges which is impacting stocks across the board in asia. We have the shanghai comp currently at 2885. Stay with us. This is bloomberg. Haslinda its 11 29 a. M. In singapore and hong kong. You are watching Bloomberg Markets asia. Here are the first word headlines. Could seeenate Chinese Companies barred from america. As relation shall bit. Sour between washington and beijing. They are not controlled by a foreign government. John kennedy says they want to play by the rules. Lawmakers are critical of beijing and midst the coronavirus outbreak. The governor of hong kong has added his support to democracy, saying they should stand up for their beliefs. He was addressing the foreign correspondents remotely on the citys future, saying he has no problem with china, but criticizes the communist party. Hong kongs economy has collapsedth the due to the fallout of the coronavirus. Where will the Chinese Communist party be in 24 7 . I dont know 20 47 . Jinping is going to live forever. I doubt it will be the same as it is today. I dont think you can kill or lock up an idea. The cyclone has made landfall in indias coast, forcing millions of people to seek shelter. It hit the coasts with winds of up to 200 Kilometers Per Hour late afternoon, and is making its way towards kolkata as a tropical depression. Biggest ng indias police in the u. S. Have arrested two men charged in japan for aiding the escape of former nissan boss, carlos ghosn. They face possible extradition. He jumped bail late last year to escape trial for allegedly financial crimes. Onwill appear in court wednesday. Carlos ghosn denied any wrongdoing. At tokyohaving a look as it comes back after lunch. Its seeing a little bit of pressure. The nikkei 225 is indeed lower. A turnaround is taking place with optimism giving way to a degree of pessimism. All on the doorstep of the latest tweet by donald trump, escalating his rhetoric against beijing, saying xi jinping is behind propaganda attack in the u. S. And europe. Saying that china is desperate that former Vice President joe biden when the president ial race. Nikkei is back lower. Hang seng was down further. There you have it. Haslinda. Haslinda lots to look at. The airline industry. Far be over rush me for the airline industry. A lot asia has potential to outperform other regions. The bloomberg asiapacific airlines is up 4 from its industrywide gauge. Cannot Stay Grounded for two long. Joining us for an exclusive chat is the new director general of the association of asiapacific ofies and trade Association International airlines based in asia. Good to have you with us. Grounded,ey will stay and maybe they are flying too soon. India is allowing airlines to fly next week. No doubt, its domestic flights. Yes, i think the Aviation Industry cannot stay down for too long because too much is at stake. Aviation is a driver of economic and social activity. The sooner you get flights the better it is for the economy and social wellbeing. Is india making a mistake of allowing its airlines to fly domestically from next week, even though virus cases continue to climb . Subhas this pandemic has created a crisis in an unthinkable magnitude. Time. L take some to start thinking of flights while covid19 is atll a reality until we can least discover a vaccine or an antiviral cure. If you are going to restart the aviation under the consensus, we need to have certain safeguards airprecautions so that travelers journeys can be well safeguarded. Rishaad fine. The airlines were illprepared for this decision. They got to actually think about nes to get people on pla so that they are safe, so they are not in contact with anybody who possibly has covid19. It seems ill thought out and fundamentally irresponsible. I think the airline community, led by the International Civil aviation organization, leading efforts to come up with measures that will take the health and hygiene of air travelers. These discussions are ongoing. By end of next week we expect to have a proper framework in place. Subhas, lets just look at the asiapacific airlines. How many of them are likely to go under, in your view . I know you dont want any of them to go under, but there are stresses and strains. Are you expecting bankruptcies, and at what magnitude . Airlinethis is not an crisis, nor is it a crisis of the making. This is a crisis of global proportions. It affects all sectors, all industries. Is concern for government the impact on the economy, on society. Tourism,is a driver of trade, and also of jobs. One job in aviation supports 75 other jobs in the rising economy. It is no wonder that the is talking to airlines to see how they can survive through this crisis. Kickstarting aviation is as good as kickstarting the economy, as well as they are safeguarding the wellbeing of the society. I think everybody wants the answer to this question, is flying going to change . Will it be an entirely different experience when these airlines carry passengers . And what will that experience be like . There are three critical sectors that need to be addressed. The reason why airlines are flying now is because of the breezy these three sectors. Travel restrictions imposed by government. Two, the weakening of finances of individuals. And three, the fear factor. Travel restrictions are imposed because governments were concerned of cases, which led to a spike in local transmission. Thinningthe cases are out, and local transmissions are in more countries, governments are relaxing travel restrictions. We introducehat should be pragmatic. For instance, 14 day quarantine, a measure like that will only increase the cost of air travel when we should try to make air travel more attractive. Thirdly, fear factor. If we have pragmatic measures that are supported by evidence for industry experts, measures that are easy to follow, userfriendly, as well as devices, then air travel and optimism for air travel will return. We had allen of qantas say that he expects airfares to surge eight to nine times because airlines wont be able to fill the planes, given the social distances and measures distancing measures that will be implemented, or expected to be implemented when Airline Start to fly. What is your take on that . Always the airfares are a function of demand and supply. When demand is suppressed or down, it is only natural that airfare will also go down to try to attract more people to fly. Airfaresment is that will be attractive to get people to fly again. Thatnda so you disagree fares will go up eight to nine times. You expect fares to be cheap still . Subhas that is the law of economics. It is the matter of demand and supply. That is what i think will be the most logical consequence of restarting aviation. Restart is not going to quickly, or to the same volume as we saw in 2019. The International Air Traffic Association estimates that domestic air travel will only ink up to the same levels 2023. International air level, probably a year later. It is probably going to be in baby steps. An extending framework and countries. States are probably in the same level of stabilization after the virus. That being the case, demand is going to be suppressed and going to be pretty low. To move inll have tandem. My own assessment is that since asia is ready by the start, probably asia will lead the start of flights in a measured way. Thank you. Menon from asiapacific airlines. We are looking at aviation and the closing in on the 10 billion state. They are in advanced talks with the stabilization fund. It would take a 20 stake in lufthansas capital. 3 billion would be a loan. The fund would get normal voting rights. Ifcould vote as a block there were, what it called, exceptional circumstances. Delta airline is boosting flights next month, and allowing for more personal space. The carrier sees 60 on the route, that will be the trigger to add more aircrafts. Delta is expected to bring 200 extra flights on board next month and 300 in july. The output for aviation remains uncertain. Amongst airlines, emirates landing what might be the final for the superjumbo. They want to scrap their last orders. The carrier will accept three planes, but they told airbus they do not want the remaining five. Airbus is proposing a deferral of payment on deliveries or both. Emirates has the largest fleet in the world. A three 80s. Looking at the tictoc video app said to be worth more than 100 billion. We look at the latest share transactions. And a possible idea. This is bloomberg. Haslinda we are counting down to the open in india. It has been flipflopping across asia. Of thefor the rest region. In india we are tracking the Indian Airline stocks. A surprise move by the government to allow indian allies to resume domestic flights from next week. We have the sensex opening in positive territory. We have spice jet, interglobe rising on the back of that news. Never mind the surprise. Youre still china figure out how they will carry on with the from of ticket tickets the twitter feed that they can resume domestic flights come next week. Indiaa surprise as far as is concerned. Many people questioning what they are actually doing a what they are up to. Is owner of tictoc tiktok growing. They are going to keep pulling in advertisers. Our asia tech reporter has the story. Propping up this valuation here . We have had a higher valuation. That 100st want to put billion entry in context. It is four times the market cap of both twitter and snapchat. In china, 100 billion also put by chance put by dance ahead of it. Value, itsmarket only lagging with tencent. This thing about by dance internet leadership, because they have so many viral social media platforms that join the users in. The key to their success so far. Sense outwhat is the there of if can bytedance truly be a Global Player . Zheping globally, they are the tiktok operator and owner. Especially in] the u. S. About how it handles u. S. Data. The company is interesting is addressing the concerns. To be the ceo. Pressure. Elp ease the that is the first thing, a political one. They are looking to finding its next big hit. The livestreaming, music streaming and gaming, they are in the early stage of the experiment. Our asia tech reporter. Lets get a quick check of business headlines. Returning to trade in new york after being told of the scandal. The company was considered a to starbucks and was suspended last month when it fell 80 , given the executives fabricated numbers. They are disappointed and have been given the d listing before we can give a final report. After theyy rose beat expectations and said their revenue came from outside the mainland chinese market. Net income climbed 11 to 324 million in the three months through march, while sales jumped 14 in overseas demand. 6 omi managed to grow by even as total worldwide sales fell. Huawei says the latest u. S. Sanctions could damage the american sector and calls for dialogue with washington. Chiefr from huaweis Security Officer next. This is bloomberg. Huawei says additional u. S. Restrictions on its operations will only hurt American Ship industry, calling for dialogue with policymakers in washington. In an interview with bloomberg, while his security chief addressed concerns from the international community, and how the u. S. Is affecting its business. We are working through it to determine what we have to do for our priorities and our products. That will be worked out over time. Way. Over 12ile huawei bought over 12 million. Yesterday, the press secretary said it will help maintain in the u. S. I would help i would love to see it maintained. But blocking us will hurt the american Semi Conductor industry and hurt them permanently. Emily last year you had a gap and 12 billion in revenue, fourthquarter growth was impacted. It has been difficult for huawei to win contracts. How much of a gap the you expect to see Going Forward if these restrictions continue . Able to make at prediction yet. We do know that we will work through it. We are going to come out on the other side. If we are forced to not buy from companies, we will go elsewhere and will come back. The american jobs will be gone for good. That effort of the u. S. To hurt china by hurting huawei will cost american jobs, and it will not help america maintain its advantage in the world. We have been speaking, the u. S. Commerce secretary has been on fox business talking about huawei, reiterating the u. S. Position, saying that huawei remains in espionage threat. What is your reaction to that . Andy it is disappointing. The u. S. And china are among five or six countries that are top for hardware and software. We are asking to meet with the United States government to address risk. The kind of mechanisms that need to be in place for our competitors. Havedversaries of the u. S. To be worried about hacking into equipment. We are willing to be more transparent than any country in the world. We are ready to address larger cyber activity malicious cyber activity, and strength in the activity to protect intellectual property. We would love to engage in those types of conversations with the u. S. Government. Emily even as much as you have been pushing back on these comments from u. S. Officials, saying there is a lot of expertise on u. S. china relations. Take a listen about what she had to say about huawei. A bad actor. There is a lot of intelligent saying they are close to the Chinese Military and chinese intel. This particular expert control that you mentioned really seems designed to put huawei out of business. It is quite true quality and white draconian. Emily what is your reaction . Andy i think the effort to focus on what the facts are, what the impacts of these escalating efforts of these governments hurt china by there isuawei, i hope no escalation after this by the u. S. Or china. The u. S. Look at this and say, how can the u. S. Maintain our advantage and innovations . We need to have an effort not need anurt huawei, we effort to promote technology and innovation in the United States. Technology strategy to have the benefits brought to our people and organizations. That should be a major priority. The chief Security Officer of huawei usa. Turnaround story taking place after comments from donald trump blaming the chinese and saying they are being deceitful. On,ing at whats going nikkei is down. Hang seng went to its lunch break. A look at india as it opened 11 minutes ago. There you have it. Moves slightly to the upside. The rupee at the ground. Very little change on indias bottom market on the 10 year. Grabbinghave been peoples headlines. Singapore airlines 2. 5 up. Transport them having passenger. Indian aviation getting a boost with domestic flights starting as early as next week. Haslinda looking ahead to some important data due later today, we will get pmi data from where we are expecting to see signs of a slow recovery. After that, u. S. Employment numbers are expected to show a decline in jobless claims. Lots to come. That is it from Bloomberg Markets asia. Bloomberg daybreak asia lease is next. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. The following is a paid presentation brought to you by rare collectibles tv. Host in a letter dated back to december 27, 1904, to the secretary of treasury, president Theodore Roosevelt wrote a short twosentence letter, in typical Theodore Roosevelts direct bravado style. My dear secretary shaw, i think our coinage is artistically of atrocious hideousness. Would it be possible, without asking permission of congress, to employ a man like saintgaudens to give us beauty