Transcripts For BLOOMBERG Bloomberg Markets Asia 20240714

730 7. 3 . Of i want to bring you this. What do we have at the start of the year . We are just 52 basis points now. That is probably factoring armageddon. What could possibly be going on in the eurozone to have yields that far out that flow . That is a thought. To new york and join su keenan. With germany,t this is a could muster 55 million in stimulus funding. The governmenth says it spent last time a crisis hit more than a decade ago. And it says it has the reserves to do the same again if necessary. The Prime Minister says action is not needed yet. The biggest problem is uncertainty costs in ongoing u. S. China trade wars. Senior white house advisers fanned out across the sunday talk show circuit to push back at fears of recession here in the u. S. They said the economy remains robust and consumers are still spending. Top economic aid larry kudlow and trade advisor Peter Navarro said there are no additional plans for not staying the course. I sure do not see a recession. We had some blockbuster retail for the end of last way. Really blockbuster numbers. , moste a lot of worries economists on wall street were marking up their forecast. For the 34th quarters. That echoes our view. Su argentina has been downgraded further into junk. The president was soundly defeated in a primary election. That puts argentina on par with zambia and the congo. Its Sovereign Rating was lowered to band a negative outlook was added. A peso has fallen to a record low. Tens of thousands of protesters decide heavy rain in hong kong on sunday to march for a 11th straight weekend. Hong kong finance secretary says there could be an economic typhoon in the city because of the continuing unrest. This is bloomberg. President trump has indicated that trade talks with china remain generally on track. Trump went on to tie negotiations to the protests. He pushed back on media reports Commerce Department is going to do business with huawei. We will see what happens. Im making a decision tomorrow. Now is a guestus to talk more about all this. Good morning. Nice to see you. Short, yields are below zero. Would you still be buying this today . Portfolios are still pretty defensively positioned here. The world is a pretty uncertain place. Sovereign bonds still offer a lot of protections for investors from a total portfolio perspective in terms of what my protect you if things go wrong. Before we brought you in a, we heard from President Trump. He talked about how u. S. Officials are pushing back on the notion that there may be a recession. Obviously no one knows and we will have to wait until it actually happens. Is there anything over the next six months in your view the could be a potential deflation event . I think we may have seen a little clumps of that late last with talks of a potential stimulus out of germany. The scope policy is now the one thing that market investment should be in very wary of. Providing banks are all the stimulus and they are in full on easing that. To really get Bond Investors worry, you have to see a significant amount of stimulus coming through. That has been largely absent. Europe, weeaking of the bonding about yield in austria. About half of 1 . What is that pricing . It does seem for 70 years, we will be in a quagmire. Absolutely an extraordinary environment that we are in for the bond market. We are heading more into negative territory. This point, we still have not found the bottom. Just to tie in the , the threathe chart ,f potential fiscal stimulus with government yields that way, it is almost a nobrainer to borrow and spend. Germany said they would spend annexed or 55 billion. How do i know when it becomes a real risk to bond markets . , the noise onnt fiscal stimulus is very patchy. Of itbeen cashed in terms would only come if germany would fall into recession. What bond markets want to hear it now. That of course brings us nicely to talk about what is going on. Is it a fear of a deeper session . [no audio] we have nothing to fear about a recession right now. People seeing a lot of seeing a trade were continue. Rishaad it seems this is coming from two angles. Of a recession begets a recession because people are so scared. The other one is, is there a genuine reason for us to fear one in the first place . The fact is, the Global Growth backdrop here is not strong. Outside of the u. S. , the growth picture is soft. There is a concern. I would agree with the comments on the u. S. Consumer. , thetil really recently u. S. Retail picture is incredibly strong. The risk of that negative feedback loop that we can talk ourselves into a recession is there. I was quite interested in the u. S. Consumer confidence readings that came out on friday night. These are numbers just offer the after the fed has cut rates. Confidence of fallen to the lowest level since 2016. These rates seeing cuts as a negative thing that. No iw would agree with him that it is one of the top indicators to watch to see if theres Something Real happening here. Have talked at length about how an inversion and the Treasury Curve begets the u. S. Recession. Does that apply to australia . You have not had a recession in years. Yet your yield curve is that. Does that apply to you . Do we eventually invert over in australia . Obviously as you have mentioned we have seen a flattening and the australian yield curve in the past two months. There is much less evidence of the impact of australian yields having a curve inversion. I certainly would not be reading into anything in terms of aussie specific developments. The inversion of the yield curve in the u. S. And the u. K. Is a bond market telling the world that it is a little bit concerned with the outlook year. Here. About. Lots more to talk we will talk about what you are buying and what you are avoiding. Coming up, we will talk about the man behind Southeast Asias top budget Hotel Service. Ceo tells us how he convinced investors with his frugal spending plan. Rishaad a new marketdriven rate system in china. This is bloomberg. David we will get you out of there was some intellectual competitions here. This looks confusing and complex because that is the point. Starting tomorrow, they will try to simplify this. They will try to do it libor style. They will ask banks to try to submit where they think rates should be. Hey will compile that at the 20th of every month, they will come up with a new prime rate. We have cleaned this up for you to show you how it works. Let me shift this for you here. What you have is your average Interest Rate on loans is the green line. Below that white line is the primary. Your loan prime rate. New rates could come in the forms of easing. They couldome come between these two rates. There is a way of cutting rates without cutting the benchmark, which they have not touched anyway and a long time. Rishaad it comes tomorrow in beijing. How does this all fit into chinas Interest Rate Reform Program . Reform in significant terms of Interest Rate changes here in china. There has been a problem for the pboc in the transmission mechanism. Getting the cheaper rates to the parts of the economy that need it most. By initiating this Interest Rate change, they could get some way toward that. This is the loan prime rate. They what businesses and commercial banks to do is price their loans to businesses and households more on this loan prime rate than the benchmark rate. It will be lower than the benchmark rate. Youre talking about cheaper liquidity. How they can regulate it is by having 18 banks submit once a month there rates of loans based on open market operations. With a bit of a spread. They can take the mean number. That becomes the lmp. They want banks to price their loans on that lmp rather than the benchmark rate. That will helpt stimulate parts of the economy that are currently under pressure. David any Immediate Impact we are expecting . What can we surmise at this point . We are expecting tomorrow a drop in the rates. It will end up being priced into loans. Packed off to commercial businesses and households. Currently the rate is 4. 35 . They have not moved it in some time. 3. 3 . G is at drop inld see a Interest Rates. The Banking Sector could get hit by this. That is why you have some reducests say they may the reserve requirement ratio to help soften the blow for the Banking Sector. Others say you could see property prices rise. Those are some of the implications that could come about as a result of this. What is the impact . With the trade war in place, what does the market and foremost about what is going on . How does it dovetail on what is going on with the u. S. Markets . I think it is another big headwind for Global Growth at the moment. We have a lot of uncertainty about the way these trade wars will involve. We are getting news on that everyday. The market is having to adapt to that news. In the meantime, the overarching impact is on the business uncertainty. Probably consumer uncertainty. What still looks attractive to you and i world where there is almost no yield and negative in some cases. We keep going on and on about these flat yield curves. People keep chasing this rally. If you had to chase this rally, what would you buy. We are still positioned in the u. S. Long end. We have been for the last couple months. We are hitting new lows. Alltime lows. Pointsve fallen 60 basis in a matter of weeks. It is not without risk. Having had such large moves. At the moment, we do not see a lot of catalyst for higher yields. We are heading into an interesting. Period of meetings. In onehoping to deliver way or another. Bond markets will get what they want from Central Banks. We are earning the u. S. Long end. We are happy holders. Rishaad we have the question of the day. Which political crisis should investors care about the most . Or which political crisis keeps you sleepless . Brexit. Not been really invested in u. K. Bond markets for quite some time now. It is such a binary and an uncertain thing to deal with those kind of event risks. Those sorts of development we think are important for the u. K. And europe. But probably not big enough to affect the global picture. We are not laying awake worried about the italian election uncertainty at the moment. Probably a consensus after. Chineseu. S. Political developments are certainly at the top of our wrists list. Can blow eight deal a blow to the global landscape. David if you have to worry about changes in the Political Landscape of italy, you would be sleepless for seven years. Thank you. That is right. David coming up, we are at hong kongooking protests. This is bloomberg. Rishaad we check in with the business flash headlines. Call fores climb volatile calls. Jpmorgan will be hosting a call. Is all amid worries on wall street that current volatility could cause quantitive fronts to dump billions of dollars worth of stock. Tesla is trying to revive its Solar Division with a rental scheme. Elon musk describes it as having money printed on your roof. Less thanlaunch comes a month after tesla reported its third quarterly decline in solar inflation. Buying Industry Leader solarcity for 2. 6 billion. Rishaad indias largest lender says credit growth will slow this year. Theirlso need to overhaul lending practice in the agriculture sector. India ve brink of bank of india looking at a credit crunch. The economy has been slow down by the consumer. David reports from tokyo say scrutinystepping up and Foreign Investment in the chip sector. New rules will be introduced that will learn overseas and under will go a government review. It is fairly complicated there. But give you something simple. How about a look at the philippines . We are looking at the property developers. The Gaming Authority will stop accepting new implications for what they call pogos, Online Gaming centers. It is a big political issue in the philippines. We will not get into the details of this. The benchmark is not a quarter. Speaking of Southeast Asia, have a look at where we are with the thai bhat. We should be getting the latest gdp numbers coming out in just a few minutes. Rishaad looking out for that. Here is the nikkei at the moment. It is up. Im so used to saying down. We are back after this. This is bloomberg. My family and i did a fundraiser walk in honor of my dad, who was alzheimers. I decided to make shirts for the walk with custom ink, and they just came out perfect. [announcer] check out our huge selection of Custom Apparel for every occasion. Youll even get free shipping. Get started today at customink. Com. It is 10 20 9 a. M. In hong kong and shanghai, 10 29 p. M. In new york. Im su keenan with the first word headlines. President trump has indicated that trade talks with china remain generally on track, and has scheduled meetings in washington next month. He tweeted that things are doing well and that the two sides continue to be in contact. The president s top economic advisor, larry kudlow, says recent phone calls with beijing have been positive, with more planned for the coming days. Japanese exports fell for an eighth straight month in july, with slowing growth in the trade war continuing fears of a global recession. The finance Ministry Says the value of shipments abroad dropped 1. 6 from a year earlier and economists surveyed by bloomberg estimated they dropped 2. 3 . The trade balance was up ¥250 billion, or 2. 3 million. Easing the lockdown and cashmere, partially lifted on communication links. Mobilephone services have resumed and schools and local government offices will reopen later monday. Un Security Council has open discussions for the First Time Since 1955 with united settlement. 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. Thank you for that. Areland evp numbers, what we looking at . Estimate, anddian just in case we get it, that should be the slowest pace of growth back to 2014, which if i remember correctly was when the flood inundated the city. Looking out for those numbers against the backdrop of a barton, it includes the dollar as well. It is a race to the bottom. That was when we had those five Big Decisions coming through. As soon as we get it we will bring it to you. Let me just go through the numbers last time we had gdp that is currently what we are looking at, that should hopefully be in the next 20 seconds. Headline tells you one of the other teams we are supporting, planning a 10 million economic boost to hit 3 growth and if the estimates come in, we are some distance from hitting that target. It is a package of government theding and loans, economic slowdown caused by the trade war across the region as well as the currency strength. Bangkok, of course, is the most visited city in the world for tourists. Amazing. Learn something new every day. I think we will leave it here for now and we will get you those breaking numbers otherwise we will run out of things to talk about. Lets talk about hong kong. Defying the heavy rain we saw yesterday. One of the largest onstrations begin in june yvonne man is out on the streets for us this morning. The rally was largely peaceful. It seems theres been a change in the tone as far as the crowd was concerned. Change of tactics, as well. It seems like the message was peaceful, rational protest and no violence. We saw a stunning show of people, one point 7 Million People according to organizers, the government put it at 128,000, nevertheless it shows that Public Opinion has not changed despite the condemnation of these recent escalations and despite the fact that we saw these violent clashes at the airport last week it seems like it gave police less of a need to act with more aggressive tactics. We saw officers take a handsoff approach over the weekend, three days of rally and no teargas was fired. Breathing a sense of relief. We have gdp numbers for hong kong friday, secondquarter growth contracting more than anticipated. How much can we really put at the doorstep of these protests and how much was down to a slowdown that was taking place anyway . The finance secretary mentioned on sunday that the political unrest, even with the trade war, is leading the economy to falter. They slashed the forecast last 2019, and the steeper contraction we saw a raises a lot of questions on whether hong kong can prevent from falling into a technical recession in the recorder. He also mentioned how bad it is at the moment, he says it is level three danger. Heres the terminology we use during storm coverage. The scale goes all the way up to level eight, the city basically shuts down. We are not quite there yet, but we are still talking about the Material Impact it could pose. Reports saying the Hong Kong Monetary authority is talking to banks, making sure they check with small and Medium Enterprises on the difficulty they have in supporting these businesses. Speaking of the poster child of difficulty in the corporate world, Cathay Pacific remains under scrutiny. We had the ceo stepping down on friday. Is that going to be enough to appease beijing . Well, we are getting some mixed messages at the moment, this is an airline not just dealing with the cancellations and the tens of thousands of customers that were stranded, but this layer of uncertainty. How is a Company Going to tow the line between appeasing beijing, one of their key markets, and dealing with staff in hong kong that take part in these protests. It seems to be a cautionary tale for a lot of businesses and how they will keep that balance. Beijing state media it is a departure, not enough to satisfy them at the moment. They say its not enough to atone for their lukewarm attitude in dealing with radical employees. At least when it comes to the Civil Aviation regulators, it may pacify them for now, this may not be the end. A lot of work for the incoming ceo. Right. Thanks. So meanan on the not streets of hong kong. Lets have a look at the potential impact on the property. Analysts say the market will withstand the unrest with other parts of the economy. With us now a lot of people are saying we wont see a crash. What gives them that optimism . Stillht now demand is pretty strong and supply is pretty limited. The same day when police fired tear gas, there were hundreds of people queuing up for hours just to see it. It shows how Strong Demand still is, and at the same time supply is limited and researchers estimated there would be a shock fall of over 30,000 homes in six years, and with the political tensions weve seen the government would be less likely to carry out any controversial supply policies like the reclamation project. With Strong Demand and supply, we wont be seeing a crash. You are really lucky to be able to get an allocation its almost an ipo. You learn up does that also mean property has not been affected at all . The government is saying the crisis to the economy might be quite large. For sure the market has been hit over the past two months, we have seen things fall by 35 year on year, with developers that delayed their sales of the project because of social unrest. There are also numerous news reports saying that they have to slash their prices to make a deal. We think things will get worse if protests are not settled in the near term. Coming up, sleepless in singapore. 70 million. We speak with hotels about their latest rounds of funding and what to do with the money. This is bloomberg. Welcome back. Finally, we have the Growth Numbers out of thailand, heres how it looks in context. We have a chart that shows you five year lows. We got. 6 line growth, but really inline overall with what we have currently. Lets talk about our next guest. Our guest went through many sleepless nights when he began pitching the idea the idea of a budget Hotel Service which helps them find a bed in 1400 Hotels Across 18 cities today the company disclosed to 70 million the company has no raised about 140 million since it inception investors include 500 startups and joining us about what they plan to do is the ceo. Very nice to see you, good morning what do you plan to do with the money . Expansion, Southeast Asia is a huge opportunity, 600 Million People, giant justraphic, and we are scratching the surface. Business expansion vertically and in the cities, thats part of the agenda for the next couple years. I just want to go by the basics what does the company hotels. Com ora or booking. Com doesnt . Right. I think the fundamental difference is that we are a creation tool, which means we are like an we are not an aggregator like expedia, these are distribution sites. Chaine do is we create a of two star Hotels Across Southeast Asia using technology this is something which cannot be done in the traditional way and it is impossible to put manpower into Start Properties it doesnt make sense. But if you use technology and then franchise branding to allow these to Start Properties to have the same access to Technology Like any fivestar chain, then you have the opportunity with a large franchise of asset Hotels Across the region, and this is exactly what we do. Yet butont make money are you profitable yet . Tell us about your financial positions. Startup, and we are in the growth stage. Right now we are growing at 5dx year on year. Each of our individual units or hotels are profitable but in totality we keep growing the business, just because the opportunity is so big. Today we have 1400 hotels, but there are a total of 125,000 two star and three star and below properties in Southeast Asia. Wet that really means is have the Business Model worked out, we have the funding, but the opportunity is so big that we are mandated to keep going after it and then reach profitability as a company may be a couple years down the line. Do you honestly see a path to profitability . Have been several tech companies, already listed if it is not clear how they get from the current point to the point when they make money. Absolutely. Can count these companies in single digits, companies that are funded by large amounts of capital, and therefore making money it comes later to them and is not always part of the mandate. But if you look at a company like ours based on sound fundamentals, also backed by andstors, not making money crecy growth is not part of the way we do our business. Very firm i on the company profitability. At any stage we are always looking at how far we are, but just the way the ecosystem works, it rewards growth. Wants a small and Medium Enterprise to be formed by a tech company. This is not a lifestyle business obviously Everyone Wants a 5 billion outcome. Wayventure capital the they are looking at things this company will make sufficient returns for them to give them the returns over that fund, and also to take care of some of the other companies which probably did not make the cut. Everyone is looking for the big outcome. The way we look at our business, we are focused on keeping the fundamentals intact while being in while touching distance from profitability and not ignoring growth. You are looking at a potential ipo of two or three years ahead what are you looking at down the road . Very, very is still but invery speculative, that isous company, logical to understand the amounts models and the of understanding and appreciation for businesses and emerging markets like china, india, and Southeast Asia. I dont know yet, it is still very far away. We are not so close to have made any decision on that. From ifferent are you and are you worried about it . We are very focused in Southeast Asia. I think fundamentally, it is a diverse and fragmented region and we believe it is a really complicated feature. Obviously its not a homogenous that we are think extremely focused on accommodation. We are veryappeal, focused on other regions and accommodation and on doing a really good job in what we are doing. Look they are trying to solve the same problem , doing it in a global way and a reasonable way. Andopportunity is so big therefore its natural there will be multiple ways to solve the space to doh enough extremely well and have excellent outcomes for the investors. Thank you very much. Counting down to the open in divina, is with us, markets are looking better . Hopefully, if nothing happens in the second half of trade we should manage to hold onto those gains. Clothes is in the negative and so far in august you have a big sell from the partners, it has already been sold out of indian equities and hopefully we should see some selling. There was anticipation over the weekend that there would be financials coming from the market that didnt happen. A lot of industry has been asking for some amount of growth stimulus you have the chairman, the old industry waiting for some stimulus. Midcaps, Broader Market space, it seems to be still lagging as they continue to widen. Whether or not the interest comes in, there will be a lot of polarization taking place and people want large quantity. Trade will be driven by whether or not we see any change in the Global Equity markets. Thank you. Joining us from mumbai. Lets see what we have all the way. We are going chart to chart, headtohead, next. This is bloomberg. It istle of the charts, going to be pitting the best charts against one another. You can see at the bottom of your screen lets kick things off in sydney. Andrea . H, guys. The indonesian rupiah has been one of the bestperforming asian emerging market currencies is quarter, having largely withstood what has battered other emerging markets and my charts show why that is likely to continue and why they will have trouble moving higher against the rupiah. Technical indicators signal that the 200 Day Moving Average is currently capping the rally. You are also seeing the resistance layers above that. What has been supporting the rupiah . The central bank. It has been committed to maintaining currency stability and as a result, rupiah denominated bonds are of the highest yields in the major regional market. 7. 4 on the 10 year bond. The bank of indonesia meeting this week, expect it to hold rates steady, that will further support the rupiah and even if they cut, it is still one of the highest inflation adjustments in the region, very supportive for the rupiah. See what we have. About theing to talk hong kong stocks. Line is the hang seng volatility index and the blue line is the vix. It has widened the gap amid chineseof paramilitary on the border but the weekend protests and very peacefully, no teargas, no rubber bullets. Scene foret the retreating hang seng volatility which can even now close the gap with the vix. That means hong kong stocks are backing some of their losses. They are both quite good. Wasight up until the end i going to give it to andrea but that i think in the interest of time, congratulations. Its a good trade idea. Its a good investment idea. Theres also argentina to choose from if you want high yields. If you are a bloomberg terminal user, you can use it to browse recent charts featured on the bloomberg television. Save those charts for future reference. Equities are moving to the upside, a hugely volatile week last week, thats hong kong looking fairly calm. I think the best companies succeed as a team, and our shirts from custom ink help bring us together. We just upload our logo, and if we have any questions, Customer Service is there to help. [male] custom ink has hundreds of products to help you look and feel like a team. Get started today at customink. Com. Its almost 11 00 here in the lion city, 8 30 a. M. In mumbai, im haslinda almond. And i rishaad salamat. The last hour of the morning session in hong kong. This is a look at our top stories. President trump indicating progress in negotiations with china, but says he is still not ready to make a deal. Cathay pacific falls into turbulence amid protests in hong kong, criticism from beijing, and the loss of the coo. And singapore grappling with slowing exports and the trade war fallout as its leaders prepared to hand over to a new generation. This is Bloomberg Markets. Reprieve in the market, expect turbulence and perhaps volatility in the week ahead with the data out this week. Of course we have the jackson hole and fed minute posting turbulence in the market. Eight cks are up by by. 8 . The weaker than expected export numbers, down for an eighth consecutive month. Taking a look at where the hang seng is, up by 1. 8 with some in the market saying the limited downside up by. 6 . It is expected that 2. 3 , the weakest growth in five years. Lets turn the page on where the bond markets are at this point we know that yields are going downward, china 10year pretty much unchanged at we. 0 3 china is one place you want to be, seeking also the indonesian tenure. And with indian bonds 6. 54 , a bit more Risk Appetite on the table today, we are seeing the rupee appreciate, pretty much in line with something which will be fixed income impactful, to the government and the reserve bank, they are changing 3 billion usd worth into longer dated maturities. Futures are having a positive just ao the day, thats brief look at what we have over 43 minutes. Lets move things on and have a look at the first word news in beijing with selina wang. Thank you. Muster 55s it could billion of stimulus spending in the event of a Global Financial crisis that is how much the government says it spent last time more than a decade ago and they say they have the reserves to do the same thing again if necessary. Olaf scholz says action isnt needed yet but the biggest problem is uncertainty caused by the ongoing u. S. China trade war. Argentina has been downgraded deeper into junk as markets brace for a potential default after the president was soundly beaten in a primary election. To longterm rating was cut triple c, putting argentina on par with zambia and the congo stop the s p lowered its Sovereign Rating and added a negative outlook. The last seven days have seen the peso fall to a record low. Italys teetering populist coalition looks more likely to collapse after one of the leaders says it is no longer believable. The antiestablishment fivestar Movement Released a statement saying that partners in leadership arent credible. They are set to address parliament on tuesday which sets the stage for a new election. Leaked government documents suggest the u. K. Will face fuel and Medicines Shortages after no deal brexit, along with job losses and disruption. The sunday times says the operation Yellow Hammer file warns of restricted supplies of rush food and interruptions of supply chain. The government ministers say it is only setting out the worst case scenario. It is the case as everyone knows that if we have no deal exit there will be some disruption. That is why we want to deal. But it is also the case at the u. K. Government is more prepared than it was in the past and it is important to recognize that what is being described in these documents is a worstcase scenario. 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. Bloomberg President Trump has indicated trade talks with china remain generally on track ahead of scheduled meetings in washington next month. He tweeted that things are doing very well and that the two sides continue to be in contact. Hes pushing back on reports that the Commerce Department is poised to renew the license to buy u. S. Supplies. Ultimately, we dont want to do business with huawei for National Security reasons. We will see what happens. I making a decision tomorrow stop. Lets bring in our guests. The firm has 332 billion dollars management. Clearly keeps the Downside Risks which reinforces sentiment in one part of the world. Where do you hide . In bonds. [laughter] where in bonds . Most of the market has been and the yields, so evenbe attractive, the likes of india, malaysia, and china. A place to hide is still stuck. We still find various attractive opportunities across the world and in asia, given the relatively lower yields that we have. I think it works well for us. Do you agree yields are on a oneway bet . Down . Cant rule out or ignore the risks, that they have a sudden improvement in the trade tensions. You might see some other which couldsk on turn it slightly higher. But broadly, given the macro outlook, we do feel that there are much greater chances going on from here. Do you think that this enthusiasm for Interest Rate cuts has gone too far . Not really. Even ignoring whats happening in Central Banks, the cycle that they are on, the growth data has been fairly poor and inflation seems to grow even without the external influence we would have expected more to come through and with the fed cycle starting to turn, other Central Banks are on a fairly even approach. That is just acting as a catalyst. There is still attractiveness to be found in the region and the focus of the Central Banks is clearly on supporting growth. Rateast two to three more cuts will be coming through. Real rates can be attractive in various parts of Southeast Asia it varies with each jurisdiction you are in. How do you hedge the currency risk . That is the part that we have to be cautious about, clearly with growth concerns it cannot be ruled out. At least in most of the bond markets we have been hedging out forward options. In most cases we are slightly underweight. And i cant ask you a question like that without asking about the currency war and what you are seeing whether there is one, and if there is, what are you witnessing. There is a currency war going on, broadly looking at the macroeconomic pictures, the currencies are under general pressures. Leadshould automatically and if yourrencies are looking at political events like u. S. China tensions or even japan and south korea turning to negative views on asian currencies. It is very clear we are not looking at any specific weakness driven by policy unlike the macroeconomic issues. Hang tight. He stays with us. Still ahead, the biggest Recession Risk is fear, according to the bank of america. We will get our guests take on that, next. Turmoil at the top. Why Cathay Pacific remains under scrutiny even after the fall of the chief executive. This is bloomberg. We have nothing to fear about our session except for the fear of recession. That is what youre seeing. You are seeing people going about the trade war continuing, and you can see this finally getting to the Consumer Confidence in the u. S. , which is the critical thing to maintain. Our guest is still with us. Ceoad the bank of america talking to us well, if you look at the this is one of the most reliable indicators down the road. The last 50 years or so they in that sense, the Downside Risks have certainly risen. The numbers in isolation are Still Holding up fairly well but at the same time theres is a lot of other major economies. I would say that the Downside Risk to growth is putting into recession. This brings us to the question of the day, which is about what keeps you sleepless what political crisis keeps you sleepless . What are you most concerned about when you are making Investment Decisions . When it comes to geopolitical risk we are seeing the headline risks in japan and south korea, talking about geopolitical flashpoints in Southeast Asia, and then iran and the oil prices that dont seem to go away. List, put them in a long all of them have effects on the markets and for now it is driving opposition to a slightly more cautious approach. There seems to be consensus that asia is set to go on this easing of Monetary Policy the question is whether record low rates can boost growth in demand is the issue. Thats a fair question. Day, most of the reporting is in line to demands to address the demand aspect hopefully they will start having a meaningful impact but you could equally argue that about the impact of the state of accommodation with how much more impact can be reasonably expected and that is a fair question and we are all looking for answers. Deeperu could also look into the policy toolkit and see what more can Central Banks do. We are leading to a situation where theres not a lot that is obvious. The matteract of remains that easy policy is still the way to go. Another 25 basis point cuts, indonesia another 25 . Specifically if the currency remains within a reasonable bank. How much more . Difficult to put a number. If you have to . We are looking at multiple policy cuts. Korea and thailand are probably limited on the downside, even malaysia has more to be seen. I think you just alluded to the first answer our Central Banks pushing on a string with particularly in developed economies . If you look at the broader risks i dont think we have seen a lot of that at this point in time, liquidity remains fairly flat, it doesnt seem to be going anywhere, it seems very contained. The levelvironment, of accommodation is fairly high, but given that this is normally associated they dont seem to be manifesting. You could argue for more then when easing and the old issue start to come up, that could be a call for policy easing, but for now it is still fairly stable. Ultimately, given where many how muchcountries are, efficacy does Monetary Policy have if consumers largely dont borrow . The banks dont even pass on the cuts. Fair point, which is why we are also seeing a lot of Central Banks focusing on translating into the regular economy. China data, puerto rican, the bank of indonesia has been talking about it for a long time and in india they are talking about a broader system of issues and policy rates. Do understandnks the issue of Monetary Policy not being translated to the real economy and we are starting to see steps being taken. Quick question on thailand. How attractive is thailand right now . We would still probably think that a lot of that attractiveness is already in the price and we have seen the long and rally more than 150 basis points over the last. Question, do we still have enough attractiveness left in that part of the curve is to mark i would still struggle to see it go meaningfully higher. Seetill continue to political issues coming up and in that scenario we think it is emblematic and unlikely that we are going to see it in the near future. But remains resilient. The em debt portfolio manager, thank you for your insight stop still to come, a pledge to work longer and build higher in singapore the Prime Minister gives his National Day Speech next. This is bloomberg. This is Bloomberg Markets. Im rishaad salamat. Im haslinda amin. Long is shaking things up as he prepares to hand power to a new generation. He gave his annual policy address on sunday. Difficult now is a time for singapore how does he think singapore can fair . They are projecting for they alsois year said there was no stimulus retrenchment and unemployment rates are pretty low. It is certainly nothing to celebrate but relative to other economies in the region they are fairly resilient. He did mention the u. S. China trade war, hesitant to comment on this. The last time we heard an extended speech on this was a couple months ago here in singapore. He said in his manner and speech that we must always be principled and not swayed by emotion, reinforcement of the message that singapore needs to stay independent. Partners,very strong very hesitant to pick sides. He has been trying to address the asian population one about building higher . Higher, it really speaks to the Climate Change initiative. Line withority in National Security, and it is important as a military defense. He said singapore will probably have to spend upwards of 100 billion over the next century and when you talk about longterm planning that is something he has reinforced. In the near term he said his developments will have to be dealt at least four kilometers above sea level. That is something they are concretely trying to hammer in terms of how they will thwart Climate Change challenges in the years ahead. I think a lot of people were looking for more concrete announcements, and im sure there will be. There are other ideas they might borrow, so we will hear more from them in the days and months ahead. Thank you so much for that. Lets get a quick check of the latest business flash headlines. A report from tokyo says japan is stepping up security of scrutiny of Foreign Investment in the chip sector, focusing on the purchase of shares of Voting Rights. They say new rules will be introduced for overseas investors to undergo a government review, if the transaction results in 10 or more on Voting Rights basis. Chinese investors are treating the hang seng index as a bargainbasement after weeks of protest sent hong kong stocks to their cheapest valuation in more than two years. Hang seng index traded at just 1. 1 times book value, benchmarks still down. Net inflows are nearing 6 billion usd over 21 straight sessions, the longest run weve seen in 18 months. Is due to start liberalizing its Interest Rate system as part of the ongoing reform solution. The pboc is set to replace its current benchmark lending rate with a new effort for an clones that will be announced. The move will bring chinas policy closer to the approach taken by other major aims to let markets play a bigger role in the economy. Lets have a look at whats going on with the Chinese Markets this is the position where we are replicating the rest of asia. Shares in hong kong leading the gains. Up, the big 1. 5 winners at 2. 7 . Kong, we are seeing a lot of moves by brokerages, which are moving to the upside. Broker could lose up to 4. 4 , theyve been talking about that money coming in and into the stoxx. It reforms the way bond markets the pboc has been reformed. That could have a bearing on all this as well. Pacific will be suspending its ticket sales at the hong kong airport counters. That is shanghai heading into the lunch break. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Are looking at live pictures of the lion city, 11 30 up by 6 10 ofore, 1 . This is a country that is planning to spend big over the weekend they spent 100 billion with the impact of Climate Change, singapore is on ireland, which means rising sea levels. It is going to be a matter of national survival. Lets get the first word headlines with selina wang. Thank you. White house advisers fanned out across the talk shows to push back at fears of recession in the u. S. , saying the economy remains robust and consumers are still spending. Larry kudlow and Peter Navarro say there are no plans for additional measures to boost growth, adding that the administration will stay the course on its current agenda. I sure dont see a recession. Blockbuster retail sales and consumer numbers toward the back end of last week, really blockbuster numbers. That ita lot of worries is a volatile stock market most economists on wall street have been marking up there forecasts for the third and Fourth Quarter as goes our view. Japanese exports fell for an eighth straight month of july as slowing growth in the trade or continued to stoke fear of a global recession. The finance Ministry Says the value of shipments abroad brought them 1. 6 from a year earlier and economists estimated a drop of 2. 3 . It was a deficit of ¥250 billion 253 billion. India is easing the locked down with a curfew partially lifted. Landline and lowspeed mobilephone services have reserve and schools and local government offices will be open later monday. The un Security Council discussed the disputed region for the First Time Since 1955 but failed to produce a united statement. Requestr has rejected a to hold an Iranian Oil Tanker and investment has now left court. It was detained early last month on suspicion of smuggling fuel to syria. Iran denies it but has not disclosed the investigation. I ran sees a u. K. Flag tanker, further raising tensions between toronto and the west. 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. A rally for an 11th straight weekend in hong kong, organizers claim 1. 7 million took to the streets in a largely peaceful rally. Yvonne man joins us. Is this a reset on both sides . The polarization was seemingly a lot more friendly. Less confrontational for the as we are entering 12th week of protests. But we seem to be seeing a change of protests from the tactics, learning that violence doesnt really yield anything when it comes to government. You mentioned 1. 7 Million People, but the government put it at 128,000 that showed up on sunday. Nevertheless, it was a stunning show of people, they flowed into the streets and disrupted traffic and closed off the roads. The fact that they were sending a message of no violence, there was less of a need for police to take action. There were three days of rallies from the prochina and the opposition this weekend, and no teargas was fired. Potentially a chance for both sides to press the refresh button. Secondquarter growth contracting more than expected. How much of it can be attributed to the protests . In a blog post on sunday they said this political unrest was part of the reason why they have but honghe forecast kong has suffered earlier this year. That is where we saw the stimulus package from the of 2. 4 billion, giving out cash handouts for students and whatnot. Be here is what they had to say. That is a very small stimulus for a hong kong economy that is still slowing down in the first and Second Quarter this year. We should wait for more stimulus to come. Secretary did warn of an economic typhoon as these protests drag on further. There is one part of the economy that is showing resilience. What we have seen for when these started, they are marginally higher. The just goes to show you chronic lack of supply we still deal with in the city, that is putting a floor, potentially, on how far prices could fall. It hasnt been smooth sailing for some of these developers. They had to delay some of their planned builds. Lets stay with hong kong and do a check on Cathay Pacific. South as investors digested the news of the coo resignation. It has gotten strong criticism from beijing over the participation of some employees. The asia pacific reporter joins us now it is in oversold territory. It is. It has been the highlight of the news right now, at the brunt of this protest. Being the Iconic Company in hong kong obviously attracted beijings interest, and given the workforce they have in hong kong, it has definitely gained the rest of china. Asking whether it is in oversold territory, certainly some are suggesting that, such as the center for asian nation chief analysts. This could be a shortterm bit of turbulence, as it were. Hopefully the outlook will brighten, but obviously this quarter will be a major impact on the longterm outlook, especially if hong kong can recover from this, which is usually the case. Your thoughts . I do have to agree. This is definitely giving a shortterm negative impact. Say thating ceo did their inbound traffic has been heard by the protests with falling by double digits. The second half tends to be a stronger period for Cathay Pacific, and they are expecting that to be still true. Holidays, we of have the auto festival coming up. It tends to be very much better forecasts. Doesnt projects through a long period eventually things will turn out better. Hand, theother pressure could go for a while, as we have the ceo resigning last week. Is that enough . Thats the thing. Big think thats the question that everyone is enough toat it is pacify beijing. But itsnk it is, really up in the air. More can they demand on cafe . Thank you very much. Up, the bluescope fouryear profit ahead of our interview with the ceo, thats on the way next. This is bloomberg. You are watching Bloomberg Markets asia. Check Bluescope Steel and see what they are doing, the share price year to date down, the companys fullyear year underlying profit beating expectations. It did flag a sharp decline in andings as steel spreads australian Steel Production division. We, but the ceo and talked about the outlook and his views as to which way the Global Economy is heading. That show spreads they have started to correct as coal costs come off and share prices recover in north america. It is still softer in the Southeast Asian markets regarding to us softer effect and i suspect that is what the market is looking at. Approvedms of you expansion in ohio. My question is given the outlook you just outlined, how confident are you that the market can absorb additional capacity . We are really confident. What i would say is it is a 30 that is a 30nt, Year Investment for us. In a good region with Strong Demand, theres plenty of scrap supplies, and the longterm potential we have a. Reat team we continue to be very confident about the longterm outlook for the United States economy. Theres obviously growing concern im wondering what are the steel markets telling you about the health of the Global Economy . Please see a bit of a mixed story. In europe there is no question we saw some softening and we have certainly seen a reduction. For our markets in north america, it is still ok, which sees price softening in the Southeast Asian market. The chinese economy is still very strong and a lot of it is being consumed internally. For the full year, a slight softening in residential activity, but from our point of justtached dwellings a moderate softening from High Historical levels. Generally the regions we operate in, the markets are ok. That was the bluescope ceo. Lets get back to markets, where india is just about to open. The rupee and the 10 year bond already online. Lets get to india, where our correspondent can take us through whats going to happen. Let me start off with the indian rupee, which has been weakening for the last six weeks. We are seeing some strength coming through, which is trading at about 71. 11. You are definitely looking at a positive start. Last week we were off half a percent. Still continued for the week, but looking at the nifty futures, we have a gap of nearly 3040 points. Little bitas also a better and you can see it is a 50 point game, trading very close. Last week we also defended the 11,000 market. The nifty bank is up 109 points in trading. The nifty 500 Index Trading with gains of half a percent. It is a positive opening we are looking at for indian equities. Are there any stocks we should be watching for today . Oh, yes. The first one is driven financial. It is seeing a week session. With heading for sectors whylators, and the reason the stock has tumbled is because it would be assigned a Holding Company discount, which is between 30 and 60 , highlighted that Financial Services could get a discount of 50 . That has given some clarification on its debt position and is looking to reduce the debt, and they are suggesting they will be able to reduce the debt. Thank you. Lets bring in our next guest, cio a fixed income at mahindra asset management. What is on your radar, in particular with regards to the bond market. Specifically the bond is globally headed toward negative trying to give a cue on an impending recession in the month ahead. The home in india are dropped. We are probably looking for more front, from the indian with respect to any potential fiscal slippage. There was to be a plan number two is what with the contours be if there were to be a Sovereign Program outside of india. A combination of these two factors, i would say, are to some extent muting the impact of the global rally in bond yields, and most of them are trending into negative territory. Outlier,is a bit of an a selloff in the last couple weeks. The rest of the world has been rallying. What explains that dichotomy, and was there too much easing priced in by Bond Investors . Actually, you partly answered the question. Just ahead of the rate cut early this month, the markets were in a euphoric mood, where we saw almost 50 basis points of a rate cut being priced in. Had more thans written into the 25 basis rate sense it washat closer to 25 times 50. That was one reason. The second reason, as i mentioned, the markets remain uncertain about if there would be an additional governing body announcement, and if so, how much would that be. Every 10 bases of additional clip edge would mean about 2. 2 billion worth of additional borrowing. Slippage wouldts drop about 4. 5 billion of additional supply. Who would be willing to absorb that supply . Thats the milliondollar question. Banks obviously go on the path of credit lending. There would be takers and sovereign bonds. I think all of that is weighing on Market Sentiment right now, and there is clarity, which i think we would see arranged with markets without much joy in the nearterm. Perhapsese concerns become more of a worry, do they if the Indian Government enacts a Stimulus Program as some are suggesting it is likely to do. That would cause more even further slippage. As long as you announce a stimulus package and tried to maintain a balance of harmony between not borrowing very aggressively or finding a means to absorb the demand, i dont think it should be very disruptive. And markets are going for the overkill and aggressive rate cuts. Markets are equally going on in overdrive in terms of the excessively pessimistic. I think these scenarios are not warranted. Even if there were to be marginal slippage on the fiscal deficit front, i think markets should take it in stride. There are enough levers off demand, including portfolio investors. Slippage, how concerned are you about the inability to meet techtargets . They have already given a start toward the f rv fiscal responsibility management, in the budget which was announced in the month of july. A small announcement of marginal slippage would not have been construed very negatively by the markets, especially given the fact that there was a slow down in india. We continue to be the Fastest Growing economy in the world. Even this course correction, markets will not be very punitive, because there is obviously enough liquidity in the banking system, and the absolute gap continues to be fairly attractive, given the fact that indian inflation is fairly subdued. I think it is more of an intermittent discomfort which wants the announcement outoftheway. We should see things returning back to normal. Where do you see 10 year yields by the end of the year, and what are you looking at . At 5. 4 on the intraday right now. We are expecting further rate easing by the central bank of india. Maybe another 25 basis points of rate cuts is what we are expecting, given where we are in terms of the economy. The 10 year bond yields right now is trading around 6. 55 to 6. 6. We certainly believe that these are weighted levels, and there could be further downward movement. So on the terminal repo rate by march 2020, can the 10 year bond yields head toward the six quarter region over the next six to eight months. The answer is definitely a yes. Well, not bad for given where yields are headed today. Thank you to our guest from mahindra asset management. Remember, bloomberg users can interact with the charts shown using g tv. Browse recent charts featured on bloomberg tv to catch up on key analysis and save charts for future reference if you wish. This is bloomberg. You are back with Bloomberg Markets in hong kong. Quick check of the latest business flash headlines. To revive itsng struggling division with a new scheme, offering no contract packages that the ceo describes as light having a money printer on your roof. This comes less than a month after they reported their third consecutive quarterly decline, almost three years after buying an Industry Leader for 2. 6 billion. Taking a look at the countries largest credit slowdown, demand is falling away. The bank of india says it also needs to overhaul lending practices in the Agricultural Sector due to high levels of bad loans. The reserve bank of india is trying to avoid the credit front by relaxing rules about lending to consumers in an effort to boost what has been a slowing economy. Seems that volatile times call for volatile calls. Ap morgan hosting a special conference to acquire a deal with the recent market swings. The call will focus on how to manage the impact of highfrequency trading amid worries from wall street that current volatility could cause funds to dump billions of dollars worth of stocks. Plenty of big names here on bloomberg tv tomorrow. Hear from the boston fed president as we count down to the annual jackson hole symposium on friday. And jay powell will be talking about any clues about adding to the rate cut we saw in july. Australia, we get the first interview after a report. I think the best companys succeed as a team and our shirts from custom ink help bring us together. We order custom ink to welcome new employees, personalize team shirts, and even for company events. The design lab is so easy to use. We just upload out logo and if we have any questions, Customer Service is there to help. Seeing our Team Together in custom ink gear is an amazing reminder of how far weve come as a business. [narrator] custom ink has hundreds of products to help you look and feel like a team. Upload your logo or start your design today at customink. Com 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