Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Stronger then expected. It is year on year for the month of december. In terms of fixed Asset Investment, we are looking. Investment for december. Context stabilizing. Of the early indicators are looking robust. Of course, some of at the localimulus government level, supporting fixed Asset Investment. We are looking at the bottom of this slow down. Lets send it to our next guest. Next guest. Theuse i would say that december number was picking up further. Especially with the help of more , i would say that we are turning more bullish. It is the secondbiggest in terms of growth over the last two years or so. Can you elaborate . We have seen that ip demand picking up. More demand coming out from southern china. Been drier than usual. People are waiting to frontload some of the orders, particularly early this year. You probably need to get most things done in the fourth quarter. Into the first quarter, we saw demand and names holding up pretty well yvonne . Retail sales have held around 10 . Inflation is upsetting the sales . Is both. Also, at the same time, i would say that the overall consumption momentum has held up ok. Early september october, we are looking at retail sales. Retail sales were slowing. We are seeing stabilization and better ones going into january. Drivers . What are the is the consumer coming back . We do think that the growth. Omentum has come back the most rishaad as we saw in that important data. That is a boost to the upside and possibly through infrastructure. David one of the drivers you mentioned, you are assuming that they would get taken out of the deal. Does that affect your forecast . Part of that. We are still here to see if it would be rolled back. Sawhe previous version, we that there could be some hope. Deal which was signed yesterday was probably not going to lead to a substantial removal of additional tariffs. Then we look at it again. Debate. Has been where are you on this . 6 . Bout it looks like a magical number. Definitely much more interesting, we know about this slow down, but how much of it is structural and how much of it is cyclical . Example, we will do nothing about the policy adjustment. We think it is all warranted. This is a economy that is maturing. It is a fact of life. I completely agree. What is the fair potential growth level. , you should doth more. Right now, we think that is the case. I think they are laudable and we have seen a lot, but we think it is focusing primarily on the heavy industry side, but more nice to be done for the downstream. Think about it. Probably improving the productivity in certain sectors. David it is quite large, obviously. Growth for potential china . At the very basic growthotal productivity usually, they justify how much needs to be grown, to the extent that enough resources would be mobilized. According to our forecast, we still have potential growth slightly above 6 at about 6. 1 to 6. 3 . Towardsl gradually ease 5. 9 and 5. 7 . We think that right now, there is clearly a sign. Inflation is being suppressed. These ones are the telltale signs that we are not necessarily at a potential level yet. Rishaad we did see a little bit of a spike on some of these market. Up. Ave the hang seng look. Move and have a as being a reflection , pretty much where it was before. 110 20. Pretty much identical. Bond deal later this year. David an update on other things happening in the world. Here with your first word news. Su lebanon, the country had we areos ghosn told that they root was being pushed by tokyo to exert he releasedore names and details of his escape. The u. S. Now, President Trump plans to nominate judy shelton and Christopher Waller as new members of the fed board. The economists have widely itergent backgrounds, but would be inclined to support the call for easier monetary policy. They said that the fed should reduce rate while waller has been consistent in his calls for more dovish approach. , the phasee deal now i trade deal between the u. S. And china may face a legal challenge. Wtoaccord could violate rules and is being screwed closely scrutinized. Compatible with wto regulations. A signal that the deal could have implications for the rest of the world. In the u. S. , the senate has begun the formal process of impeachment, swearingen officers for President Trumps trial. The democrats will try to force a vote, including acting chief and to other white house officials. Documents theng white house has been withholding. 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. This is bloomberg. Ahead, a collect call for the company. They of 13 billion in government duties after this Court Rejects their appeal. We will have full details of the head. Take a close that the possible impact of the latest ecodata. John woods joining us, next. This is bloomberg. David welcome back. If you missed it comes a longterm story on china, 6 growth. The latest numbers from the stats bureau is 100 trillion inen be, the total size 2019. The shortterm story, you are seeing a pickup in monthly activity indicators, not to mention Industrial Production seeing its second biggest pop over the last two years or so. Rishaad our next guest is thinking that we will have more policy support to boost domestic demand. Does it needit it . Give us your reaction. The ip number is telling. It speaks to the bottoming out in the action go, which we have been looking for for the last six to nine months. It suggests more broadly that ip is picking up and the economy is on a recovery path. , such asoff factors the gm strike, billing disruption at even closer home. T japan, the typhoon ip. All impacted it appears to be gaining some traction. It is a quotation. I think it is a rotation to the credit of the private sector. That has been the challenge for china. It is not going to change. It is the central challenge for 2020. Deleveraging is still an issue. The private sector, which is so important demand in general overall, it requires credit. Fuelingit is basically this rally, apart from the trade deals signed now, what are you looking for for 2020 . Can they actually spend further . For 2020 at a policy level, i will not describe it as a sideshow because it was not. It had a meaningful impact. I think the trade dispute, moving from the front burner to the back burner, the focus shifts to the level of aggregate demand. The crying out and demanding need for credit to the private sector. Equities, il impact am a little more positive. We are seeing the analyst earnings bottoming out and ticking higher. Strengthen. Ey will we are overweight right now with interest. Is commodity story multifaceted. It reflects our view of an enduring risk premium due to the middle east challenge. We do not think that will diminish anytime soon. It reflects a continued bid for precious metals. Energy and gold flows a good percent. Industrial metals are on a bit of a tear due to the uptick that we are seeing in china. Round we are overweight. Youre looking at commodities showing a huge disconnect. We were looking at record lows. The question was, how were we going to sustain it . You are absolutely right. There was a disconnect. We think that will close. Like minusis sort of one side of the deviation. From the china numbers, i gently we will see ip accelerating, giving an overall bid for the industrial component and the Energy Components of commodities. I think it will remain supported. Have been asking about this amazing tech rally we have seen been seeing. Does that make you nervous for stocks in this part of the world . One cannot help thinking about the likelihood or risk for rotation into other areas. Is, liking tech is like liking the olympics. Many events that you can pick and choose from. And we do. We particularly like field, may be the one meters or track. I jpeg. In asia, we think it will outperform tech. A cloud associated with equities. Explore. Ng to any new investments or themes that have emerged for you . Because there is a bit of head scratching. An extraordinarily huge amount of money. That, i think the market two. Cusing on phase we suspect that will not be a smooth journey. A lot of volatility in that set of negotiations. There is likely to be upward pressure on dollar renminbi. Yvonne john, you will stick with us. He will be joining us at the bottom of the hour and you can catch up with all of our interviews. You can watch us live and dive into any of the securities and functions that we talk about. You can also become part of the conversation by sending us instant messages. Feel free to send it our way. Check it out at tv. This is bloomberg. Latest lets get to the headlines. The airline has been hit by months of protests in hong kong. They saw inbound traffic plunging 46 in each of the last two months. It will be significantly lower than the first. Drop 30 plus percent after the company warned about a disappointing fourthquarter sales. It may quit this joint venture. Iny say that sales will come at over 4 billion, well below the lowest sentiment in a survey. It means extra investment, which will push back the breakeven point. Boeing has suffered another blow with a Loyal Customer in china turning to its rival, airbus. It is now inviting bids from for 83 jets. Nies it is planning for deliveries in the second half of next year, through 2023. Rishaad here is a look at what is shaping up. Making moves on msci asiapacific index. Looking at some of those companies that are moving to the upside. Involvingng a deal boarding gate facial Recognition Systems at the airport. Actually outperforming that index. It looks like norway could be looking to buy part of that. It is moving to the upside. Now we have technologies, this is a Waste Management company and also provides electric power. Aboutl reason, but down 6 . We are seeing some pretty solid gain. The bank of korea is making headlines. David they are crossing on their decision to keep rates unchanged. 1. 25 . The market expects rates to be lower there as well. A briefing out of beijing. We will be back with a full market roundup. This is bloomberg. 10 29 in hong kong. I am sticking in with the first lot first word headlines i am su keenan with the first word headlines. Five new online banks were licensed by the regulator last year with more expected in 2020, but according to the latest survey from Consulting Firm rfi, seven out of eight austrians have no interest in trying a digital alternative. Panel inndent washington says the Budget Office broke federal law when it withheld 200 million in security aid to ukraine. The Accountability Office says execution of the law does not allow the president to substitute his own priorities for those approved by congress. It is central in the impeachment case against President Trump. Philippinesin the continues to vent smoke , but it appears to be weakening. A warning is still there for the chance of a massive explosion. Earthquakes continue to rattle in the surrounding area. Access to nearby towns has been blocked with more than 120,000 people seeking safety and emergency shelters. Total claims reached 920 Million Dollars this week, rising one third in just the space of four days. The Investment Bank will set aside all the money it will learn from trading security next wednesday. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan and this is bloomberg. Rishaad to the markets, a quick check as we had that positivity coming through the data. Really, either meeting or beating expectations. Green across our screens for the time being. We did have no change in Interest Rates. We do have two dissenters. We had one last time. We could see a change coming at some stage. The market is pretty flat here as well. A look at what is going on elsewhere and there you have it. Much much to the better. David seven weeks of gains, our longest streak going back to 2014. Lets bring back john woods. Investorsare telling that great moderation will not survive 2020. The great moderation reflects an economic sweet spot since 2009. Particularly in the last come this is the longest period of unbroken growth since the 1850s. It is an important point because the u. S. Has been expanding at a moderate pace with low levels of inflation, recently high levels we suspect it will continue over the next 12 months or so. The market felt like it was falling over. Last year we had these risks of recession in the market. The fed stepped in and eased rates, calling troubled minds. This broad sense that growth can continue. Continue . An it nothing lasts forever. 2021 orpoint come into 2022, we will see a deceleration of growth. Thathe time being, we feel growth is likely to continue in the next 12 or so months. You are basically saying 2021 or 2022, we could be some kind of recession . It is likely that the great moderation is probably going to moderate somewhat. At least for the next 12 to 18 months, we are comfortable with the trajectory growth and a medium and longterm progress position. Rishaad two questions in one. What is that price again and what difference do these bonds make to the yield curve . Toi think yields are going move a little higher, moderately of towards 2 . Reflecting this recovery in ip that we are seeing today in china and we suspect in the second half, we will see it in the eu, but it makes a lot of sense to take advantage of rate at these low levels and not look at these refinancing opportunities. It is long enough for the issuers to forget about it and for the investors to feel like they will be paid at a certain point. Thes underexplored part of yield curve and i expect there is demand. I think it is quite opportunistic for them to identify. David part of the reason they are doing that is because the market is clamoring for the yield. What it does in the equity market is it keeps the risk premium up as well. Do you think the equity markets priced out . That is an interesting question because it is central to our expectation for continued equity gains over the course of the year. With Interest Rates so low and earnings expectations low, i think it is sufficient to keep. He momentum moving if we had earnings expectations to these low singledigit expectation, the equity reality rally would falter. Rishaad we have a positive look rates world and keeping on hold, predicting. Where does that economy go given your optimism . Not rapidly optimistic, but more of you are normally. That is true. The title of the outlook sessions are constructive. The reason is pretty straightforward in my mind. We have seen a slump in Industrial Production. It has been ticking down relentlessly and only now appears to be bottoming out. We have been waiting for it to happen. The data from china and the u. S. Suggests it is being reflected in the markets. This is where we are seeing earnings expectations. Consistent with a continued increase in performance of equity, which is consistent with moderate and slow growth. As always, it is the geopolitical risks. If something happens in the middle east that could cause problems. It would shift focus from china to the eu, which could also cause some problems. Oil is always an issue. There are a lot of geopolitical risks to think about. We want to focus on the trajectory. We feel there is a reason to be cautiously constructive. Coming up, from iphone to the open road, the apple supplier reaches for the key to the ed market. Key to the market. This is bloomberg. Yvonne a quick check of the latest headlines. Working with lenders to revive lands for an ipo, part of the early discussions. A dual listing of shares in hong kong and china. A spokesman said there is no firm plan or timetable for a sure sale. A revenue well above estimates after recording profits that also beat expectations. They are banking that the rollout of 5g smartphones will galvanize growth, brushing aside terms of tighter u. S. Sanctions. About thiss talk fascinating corporate story now. The electric car market is about to see more competition from an unlikely source. , producingaming up electric cars. Rishaad debbie, tell us a little bit about this field. For you to getme into the electric car market . Yes, indeed. Nightnouncement came last and it comes at a time that chinese consumers are buying electric vehicles. They are cutting back subsidies for electric vehicle. The situation is deteriorating. Ares of electric vehicle falling in china. To make that they want electric vehicles and china for the domestic market and they may consider exporting these cars worldwide leader. Weakness macroeconomic , it remains to be seen. Want to can say that i win the gold medal. It does not mean that i can do it. What can i actually bring to the table . What does foxconn have to do with electric vehicles . Have cartsnot really in experience before. The chairman told me yesterday that the company will be responsible for design, making a supply chain for this venture with fiat chrysler. Know the Chinese Market very well, so that will help with the yearlong struggle to crack into the Chinese Market. Yvonne our asian tech reporter joining us out here. A lot of interest among global players. Mainland expand on the by tapping into the growing demand for investment services. Our coanchor Tom Mackenzie spoke exclusively to the ceo about this phase i trade deal and his plans for china. That weood news is finally have some agreement between the government after a long time of insecurity, so it is a good step in the right direction. Tom is there a risk that European Countries may face some bias as china focuses on approving licenses for u. S. Businesses and counterparts . Is that a risk tied to the deal . China i wish that the u. S. With the same has committed to multilateralism. They always say it is part of the wto rules and applies to everybody. Promised that whatever they do, they do any multilateral way. I am optimistic. The second reason i am optimistic is china has a strong tied my home country, germany. We are working to make sure that the relationship become stronger. Tom you are the first Foreign Insurance Company to have a Holding Company in china. What opportunities does not open up to you . What Revenue Streams will be coming from the Chinese Market . The first allows us to harness synergies. In the past, we needed to keep them separate. Ignificant cost savings it allows us to expand into other businesses that we were not able to get into like Asset Management. We see that the investment side is the next to rise. Maybe more important than insurance. Global grow into their role, it needs support in terms of how to balance risk and return as they put their money to work outside of china, and we are happy to help. Tom to fully take advantage of that prospect, what are you doing about headcount how much are you investing in that part of the business . Need additional licenses going back to the point we had earlier. It is the entry ticket, but we beyondcenses to operate what we are today. We are in the process of preparing that. We are full steam in terms of building the present. Leveragedo you plan to that state . Stake . We are still waiting for the formal approvals. It is very important in strategic investment. With that caveat, would you potentially raise that stake . I cannot say. First step is first. Sorry. We are being very careful. I think just a smidge off the record high. David we will likely get there. We are looking at what futures are doing. Lets bring in vienna. Lets start things off individually because we have earnings coming through with some big news in the corporate space. Yes, david. The biggest news, reaction to the stocks. Was a reportere from Telecom Players with they have toat pay. It got dismissed. In january, a lot of money has to come out. 6. 5 billion. They need to seek an extension or asked the government if they can make these things. If not, this industry is headed for just a two player market. Aside from that, a lot of money will have in order to accommodate subscribers that come in. Expecting a big open for all of these names. Rishaad tell me about the broader indices . For todays session, the bigger focus will be telecom. They are not heavy on the index, c do not see too much of a drive on the index based on the telecom stocks. You have big numbers coming out. Lead tohe stocks could the index. Startingm that, january, it has been announced and we are expecting that to continue. Yvonne thank you. Joining us with the latest out of mumbai. Morgan stanley joined its wall street rivals with a roaring comeback. We drive into the bank numbers. This is bloomberg. Yvonne Morgan Stanley has plans to add dozens of staff in hong kong and singapore this year. It follows record profit for not 2019. Exclusively ats its global after the conference global alpha conference in hong kong. It is about quality. 2020 is toon for additionalhen 35 hours. At least 15 to 16 more Customer Service specialists. It is a big number for us. Strong Morgan Stanley earnings were banks have blown past expectation. Maker, baby formula lets go to su keenan. Su the chief Financial Officer saying the huge increase was primarily due to to an asian private equity firm that was a large shareholder in its underlying ipo, subject to sales. So that is why Morgan Stanley had a huge increase in its share price in the most recent session in the u. S. , joining the party sachs,ed banks, goldman j. P. Morgan chase, bank of america, all coming out with a surge of profit, which was largely due to an increase in their trading revenue, which Morgan Stanley also reported. They noted and you heard in the interview that their wealth clients are risk on and they are citing a lot of their Strong Performance to the wealthy clients, especially in asia. They announced they would expand in singapore and hong kong, adding 30 to 35 relationship managers in asia. Of questionslot about asset restructuring amid the hong kong protest. They do not believe the protests are having an impact on their plan to accelerate their expansion in 2020. Fifth,stanley is ranked excluding china in 2018. Performancestrong by Morgan Stanley. About some ofus these Financial Institutions reporting next week. Su we are getting into the peak of earnings period. It will be very hard for Financial Institutions to follow this, but some of the big names we will be hearing from our american next rest, capital one and j. P. Morgan, kicking off the financial earnings this week, setting a high bar with huge surges in profit. J. P. Morgan reporting the biggest profit in history for a u. S. Bank. David su keenan, thank you very much. Googles parent alphabet also hitting a milestone, joining the trillion dollar club for the rst time. Two companies are part of that club. Microsoft and apple. He global list that one. Ery small on lets have a look at what is happening with the trading day. Alphabet and all that positive sentiment, as it were. Trillion, it is basically the size of is now the entire australian stock market. Rishaad what is apple bigger than around the world . Anyway, it is mindboggling. Now lets have a look at what is going on. Growth in china might have been important today. These sales, all of coming in line with what the economy is thinking. Hang seng is really picking up. We are seeing a lot of these gains. The bank of korea decided not to do very much in terms of interest rate. This is bloomberg. Feelgood friday. I am haslinda amin. Rishaad i am rishaad solomon. This is a look at top stories. Asian stocks lifting higher. To hang seng index looking equal its longest weekly streak in 13 years. Datanda investors cheer from china. Retail sales called beating expectations. Rishaad a hefty collect call for telcos in india. Losing an appeal to the Supreme Court. This is Bloomberg Markets. Haslinda the global rally continues. Consumer data that is pretty strong. China out with strong numbers, meeting or exceeding expectations. Up 0. 2 . Pac index we have the cfx 300, up. Pretty much gaining a bit of momentum. The question is whether china stocks can erase this weeks loss. Nikkei to 25 by 0. 5 . Up by 0. 5 . Singapore bucking the trend by going down 0. 1 . Here is where we are in terms of the yuan. Strengthening. Eller and en, lower end of the range. Oil, currently flat. 58. 54. Ght. 54 india, 40ets look at three minutes before the session kicks off in mumbai. Futures, kicking down a bit. Earnings coming in thick and fast. Looking perhaps as though we could be a bit lower at the start of the day. Highs weoff the record did see, putting in just a small game thursday. Rupee, below the 71 level against the dollar. 10 year yield continuing to decline after the massive spike last week. 6. 6 at the moment. Economy chinas stabilize last quarter after slowing to the weakest pace in almost three decades. Fourth quarter gdp rose, matching estimates. Fix Asset Investment figures eight estimates. Tom mackenzie joins us from shanghai. Key takeaways here . Broadly a positive set of numbers. If you look at the fourth the the full year of 2019, the weakest since 1991. December, did take up. Tick up. You are seeing that stabilization. If you lift up the hood and dig around, retail sales improved. Asset investment beat Industrial Production. At least a 1 tick up. Versus the surveys. You have the demand picture improving, the stimulus response from the pboc factoring in. Tradesing of the tensions. Retail sales have been in focus. The auto sales, part of the equation, have been week. But starting to stabilize according to some economists. Helen chow gave her view in terms of how the economy is shaping up. The december number was giving a lot of confidence. Possibly picking up further. Of data points worth mentioning, the jobless rate which ticked up to 5. 2 from 5. 1 . For may be concerning policymakers. Even though it sounds marginal, the size of the working population makes that tick up not insignificant. The birth rate falling to a talking to concerns for pressures the economy would be under. In line with the kinds of pressures japan and south korea are facing. Rishaad tell me about this good data. Do the authorities look at it and have a look at, examine their policy response thus far and maybe tweak that . The view from the economists we have been speaking to and indeed Bloomberg Intelligence is the policy prescriptions will be largely in line. Bloomberg economists, they say may be the pboc is going to be slightly less aggressive in terms of support and 2020. 2020. The toolkit is to some degree running out. Targeted approach, targeted support particularly for the small and mediumsized interprizes. We heard enterprises. Frontloading of those special issuance government bonds. It should be pointed out it is the state sector that continues to drive up fixed Asset Investment. Be continuous response on the fiscal and monetary response side. It is about trying to channel that liquidity. Ofiffs remain in the bulk those exports to the u. S. , 350 billion worth of goods. This roadpointed out remains bumpy. Rishaad thank you very much. We are going to get you back to the Morgan Stanley Alpha Investment conference. Stephen engle is at the event. Take it away. Instant analysis to the gdp numbers as well as the monthly figures out of china. The chief economist with Morgan Stanley joins us. You saw those numbers. What is your hot cake immediately after those numbers . For the full year, 6 . Fourth quarter, 6 . In line with what you protected. Is the bottoming out of the chinese slow down already happening . Yes, i think the numbers confirm the economy has bottomed out. The december data is more important. Investment, i. T. When we may the annual forecast 20 will be the year of manufacturing recovery in china, these were based on self indicators. Tmi. Even the hard data are picking up. It is pretty confident to say the economy has bottomed. How long can it go without further easing . Or is further easing in the cards . Yes, it is in the cards. There are both domestic effects trade tensions. Continued policy support at home. Deficit, bonds. Domestic policy, we are focused on recovery and china. In china. How much of a headwind was the trade war with the u. S. . They have not solved all their problems. Phase two, which gets into the structural issues, tougher issues. There could be even a phase three. Does a phase one deal, does it have a lot of significance to the chinese . Or are they going to buy more of what they need . You are right, there is uncertainty. We call this the phase one deal, uncertain progress. Firstarks the deescalation of the tariff war since may, 2018. Restoring some business sentiment. Number two, it is the low hanging fruit. A firm consensus between the two countries, Financial Markets opening up, at tost it is providing a floor the financial relationship to prevent other effects to be deteriorating more rapidly. Things likek on if the u. S. Is going to buy more u. S. Goods, mitigating deflationary pressure. They can actually attract inflows to finance their decline in savings. I would say it is in line with the interests of both sides. With the phase one deal, i have much higher convictions you will ecovery. Nir are you convinced china will follow through . A number of Different Industries opening up to foreigners. Is this promising or slow in the implementation . If you look at china, facing structural challenges such as declining savings rate, they need foreign capital inflow. By opening up the Financial Services sector, they are setting up the financial structures. Getiding the foundation to these supporting entities investing and china. You are saying they are doing it for their own needs, more so than because of calls from trading partners like the u. S. . I would say if you go through the trade document, you will see a lot of these terms. Reform with their own agenda. Getting foreign capital inflow. Productivity growth for china. How are we going to get the consumer back into the domestic, me . Domestic economy . You had awo years, . Financial tightening. Consumer credit growth, particularly for the nonconventional consumer credit. Peertopeer lending, that is gone now. At mediumf you look to longterm, one sector has been overlooked. If we talk with all these firms in this conference, they have we call it globalization 2. 0. For the first time in decades, they gave up on the regional balance. Promoting reconcentration of firms. Migrate the population over the next nine years. I want to ask you before we of anp, we have heard uptick in the chip cycle, 5g spending. What is the inventory restocking data telling you about how china will play in the Global Supply chain . The sectors are basically one of the key factors behind our recovery. It look at industrial is basically the lowest level since may, 2016 because of the trade tensions. A lot of firms delayed or canceled. With the ease of trade tensions, you will see resorting in the manufacturing sector. When they are doing restocking, it is leaning toward the tech sector. China is spending money on the new infrastructure. Like 5g. Uptick why there is an from the tech sector. Thank you so much for joining us and having us at the conference in hong kong. Back to you. At the steve engle morgan conference. Xing. G to robin lets look at some of those. Irst word News Headlines lebanon has asked carlos ghosn not to name officials in japan. We are told beirut was being pushed by tokyo to exert n before he ghos spoke january 8. Lebanon agreed to speak to him as a way of maintaining good diplomatic relations with japan. In the u. S. , President Trump christopherinate waller to join the fed board. Suggest tos support the president s call for easier monetary policy. Waller has been consistent and calls for a more dovish approach. The phase one trade deal between the u. S. And china may face a legal challenge. The European Union says the accord could violate wto rules. It has been closely scrutinized in brussels. The eu wants to know if the pledge to raise goods and services by 200 billion is compatible. The deal could have implications for the rest of the world. Global news, 24 hours a day. This is powered by more than 2700 journalists and analysts. I am su keenan. This is bloomberg. Still to come, more from the Morgan Stanley global Alpha Investment conference. First, we are going to be talking to the global head of strategy James Mccormick about what he is doing investment wise. That is next. This is bloomberg. For the first time, there is movement in the chinese side to accommodate the United States request to deal with intellectual theft in terms of the intellectual property area. This is an area where we can build some positive agenda. Eu trade the commissioner phil hogan speaking about the phase one deal. Lets bring in jim mccormick. Good to have you with us. Dont come to asia often enough. Deal, china data showing a stable gdp. Also i. T. Exceeding expectations. On . The big thing for us is emerging markets are in a sweet spot. It is an asset class where if we asset picture,ss valuations are very attractive. China is stabilizing. The fed has told us they are not going to hike rates ever. Talk about earnings beating expectations. That s p keep testing new highs . Like earnings. We guide earnings expectations so low it is easy to beat them. Therefore, we guide expectations for growth. We have a narrative it is global growth. As long as we keep on matching overall, then, environment can stay very supportive. I would be curious to know where your weak spot is. Have said there are some weak spots. The big change for us this year is we want to focus on the manufacturing heavy countries. Korea, asia. Whereak spots are places things are getting expensive. India is a problematic story. Indonesia is not quite as attractive as it was. Getting aion is little bit more extreme. On the equity side . Mostly in the currency and bond side. Curious, how much is it about fundamentals . You talk about liquidity. Banks are pumping a lot of money into the system. What will drive growth Going Forward . Liquidity is a fundamental. It is a supply of cash. That is a fundamental. By the end of 2020, we could be worried again about a u. S. Recession. I think the growth session story can come back into the picture. That is not the driver at the moment. There is a lot of cash. People are under invested. There are opportunities, just not in the assets last year that worked. There is still a good macro environment. Even if some assets like u. S. Stocks look stretched, the environment is positive. I think complacency is a strong word. Mark would know the last two years, whatever volatility was whenever volatility was at these levels, i was looking to buy. Hi see a world where we have the phase one traded deal. I think it is a low volatility environment rate we talked about asset price expensive nest. That is really a u. S. Story. The global pe is well below where it was in 20072008. The u. S. Ratio is higher. People get caught up at levels of the u. S. Equity market. Levels outside the u. S. Are attractive. Haslinda china, small caps, where would you invest right now . I would invest globally in a stabilization and manufacturing. Inventory cycles has been acute, painful. Anything that has the look and feel to manufacturing is a goodbye this year. Buy this year. Asia is the prime spot. I think indonesia is one of the stories i like. I except india is very expensive. India is always expensive. It is one of those macro darlings people love getting excited about because the longterm structural story is very good. I think india will have opportunities. Volatility. I think most of asia can do well. Risknda why the phase two negotiation a huge risk . Surprised if phase two starts before 2021. We have taken two headline risks off the table. We are not going to have a reescalation of trade tensions. I think that is what phase i gives us. We do not go 9 00 p. M. In the London Office every week to look at votes on brexit and the u. K. We are moving away from geopolitical risk until the u. S. Election. We are moving into the Business Cycle and for the first time in a while it looks more friendly. Haslinda this is too much optimism for me. Jim mccormick, thank you so much. You can follow more of the story and wise go mwise. Latest isook at the this flash business flash headlines. Cathay pacific warning their struggles are likely to continue this year. The airline has been hurt by months of antichina protests in hong kong. Seeing traffic plunge 46 and the last two months. Warning second half profit will be worse. Rolling out more highend seats for the u. K. Market. Boeingrier started using 777 jets for the london dally delhi route. It has fewer seats in business. Have a look at the stock of the hour. Are looking at malaysias quite a can validity story convoluted story. Haslinda rising as much as 9 today. They have revived talks to sell a stake in axiata. Being revived. Are paving the way for more deals. 16 hold, one cell. This is a company you may want to keep an eye on. Bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Oh no, here comes gthe neighbor probably to brag about how amazing his xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays xfinity Customer Service simple, easy, awesome. Ill pass. Sitting singapore pretty after exports rose for the first time in 10 months. This is an economy that escaped a recession last quarter. 11 30 a. M. In the lion city. Fascinating study done by the National University of Singapore Business school, in what is called Insider Trading among property developers. The government announces it is selling land executives bidding for the sites, these Companies Pay less for land at auction. Governmentes the hundreds of millions of dollars in revenue. But cheaper prices for consumers. Get the story from bloomberg. First word headlines with su keenan in new york. Philippines, continuing the volcano continuing to billow smoke and as. But there is still a chance of a massive explosion. A lake has dried up. To rattles continue the surrounding area. Access to nearby sounds towns has been blocked with people seeking safety and emergency shelters. In the u. S. , a panel in washington saying the white house Budget Office roque federal law when it withheld more than 200 million in security aid to ukraine. Government Accountability Office says execution of the law does not allow the president to substitute his own priorities for those endorsed by congress. You creating ukraine essentials of the impeachment case against President Trump theukraine is essential to impeachment case against President Trump. Total claims reach 920 billion u. S. , rising just a third in four days. Dayries plans to donate a to help trading fees the disaster. Internalns investigation into the carlos ghosn affair says many other people were involved in financial impropriety alongside the former chairman. Says those people worked in japan and overseas. Ghosn drama has upended nissan. Global news, 24 hours a day, powered by more than two 2700 journalists in 120 countries. I am su keenan. It is risk back on. Lets look at the markets. The rally continues on the back of u. S. Consumer demand. The s p eating another record high. By 0. 5 . I 225 higher towardg seng, sliding positive territory. China numbers helping to boost sentiment. Growth stabilizing, production rising more than expected. Perhaps it is time to get the wish in china. Rishaad is it time to get bullish in india . Record highs, can they continue . 30 minutes until trading kicks off there. We have at the moment, the rupee weakening. Industries,eliance therting you have also got reserve bank of india, reverse repo auctions. As well as weekly Foreign Exchange data. That is what we have. National bureau of statistics in china saying china is facing demographic changes. An aging society. Something just coming through there. Going to get you back to the Morgan Stanley global Alpha Investment conference taking place in hong kong. Steve engles is there. Mood is good,e given the phase one trade deal is signed. Record earnings from Morgan Stanley. You have what many are calling a our nextt of the guest is cheng hye. You think capitalism is in crisis. Your profits doubled in 2019 despite the headwinds in the economy we have been talking about. Why do you think capitalism is in crisis . Let me backtrack a bit. Anhink we have to be investment environment that is attractive and refinement verified. There are two reasons for this. Capitalism is in a systems crisis. Thereok around, you see is a lot of financial activity going on. Capitalism has developed into a system where giant monopoly companies are basically dominating economies around the world. The excessive use of liquidity, even negative Interest Rates, is creating gaps in wealth between the rich people and the majority of people with no income increase. This is for minting social crisis is. Fermentingtoring social crises. We have excessive money printing, creating an atmosphere overall, you have social media and appearance of tribal politics. Which in fact makes many countries fall back against fight back against globalization and free trade. This creates a dangerous atmosphere. At one where you need to keep investing. What is your advice for investors putting money in your hands . You have 16 billion in assets. Personally i am doing well. My strategy can best be described as a combination of aggressive and defensive. I think you have to keep on investing. Supplied,quidity is centralbank borrowers for any theet failure implies trend will continue for a while. Nextever know when the financial crisis happens, where they will be a systems breakdown. I advocate having a certain amount of money in gold, in cash, just in case. Defenses part of my strategy. You say avoid markets that have vulnerable social turmoil. You are talking about your home listed market. Hong kong has been through turbulent times. We dont have an end in sight necessarily. You have done very well. 2019 was very good for you but this is a turbulent market. Are you indirectly saying, avoid hong kong . I would be very wary and cautious. Good point, by the way about the mystic hong kong. The truth of the matter is about domestic hong kong. Is, many of the Matter Companies are Companies Whose business is predominantly on the mainland of china. In general, i agree. Classify countries and Asset Classes subjected to attentional social in venice unrest and those who are stable. I much prefer stable. Do you think the u. S. China relationship is more stable . Or was that the low hanging fruit . Agreementse one trade wase relationship deteriorating rapidly and people were getting worried. Markets seem to be excited about this. Specialist ina asia related stocks the agreement implies the Chinese Renminbi will stabilize. Market at favorite the moment, the china market. You think they are entering a sweet spot, 2020. Yes. Way the world the when you see the world the way i defined it, the Chinese Government has been able to iniver amazing increases Living Standards to the people. The gdp per capita exceeded 10,000 u. S. This is the upper end of the middleclass range. How are you going to get more clients from china question mark 1 of your assets were controlled by last year, it was a percent. What is the feeling there . 8 . For the Asset Management market, china is the fastest growing. Orare hoping in the next two three years, we will be allowed to gain entry through the retail market. We raised significant money from china, meaning a few billion dollars. From institutional investors, which is what we are allowed to do. Are you encouraged by the steps authorities and china have taken any Financial Services sector . Has that spelled opportunity for you . Very much so. I cant emphasize how important it is. Chinadium term future of will rest partially on the ability to give a bigger role to the private markets. Small and medium companies. And private enterprise. China is deftly moving in that direction. Dear regularization, liberalization, allowing the price mechanism to work. Allowing more competition. Any air share plans for you a share plans for you, listing . We are not at a stage where we can talk about it. Im confident we are moving in the right direction. All right, thank you for your time. Good looking 2020. It was a very good good luck in 2020. Engle with Value Partners cochairman cheah cheng hye. Reuters reporting seeking a majority stake. At 1alue china we work million. Wework ousted its founder. We will bring you more on that one we have it. Rishaad the trading day in india, just started a short while go. Three minutes away, i should say. 10 . One, following losing this court battle at the Supreme Court. They risk Something Like 13 billion of telecom dues. That is what we have at the moment. Belooks like they will opening significantly weaker and adding drag to the overall market. We will have that with the india open next. This is bloomberg. Market prices, vodafone , india Wireless Companies ordered to pay 13 billion in dues to the government. This came after the supreme over rejected an appeal how much was owed in the two decade dispute. Tell me what has happened. What happened in the Supreme Court . Does this pose an existential threat to any of these companies ultimately . Well said. Orderedeme Court Carriers in india to pay past dues of 13 billion. Have put ariers petition before the Supreme Court. However, the Supreme Court refused to accept that. Now they are told to pay up these dues. The deadline is coming around the 24th of january. Existingosing an crisis for vodafone india. Vodafone and bharti and other Internet Service providers, there is a petition will put a petition again before the Supreme Court. They are expecting some sort of waiver. Industry, the telecom is in trouble. Vodafone will have to pay. Brokerages are pointing out vodafone is more in trouble. I raised some fun so they have some sort of financial month will muscle to pay. Posting reliance earnings later today. What are investors watching for . Reliance industry is in a profitable, it is going to announce its earnings. They are keen to understand, what are the additions of foam subscribers . Phone subscribers . Very keen to watch what kind of subscriber addition for the phone unit. They are turning an oil conglomerate into a consumer conglomerate. They are keenly watching what kind of additions there are two reliance industries. Haslinda thank you. Indias markets have just opened. Lets get right to mumbai. Take us through what to expect from the sessions. It is risk in for asia, is it for in for india risk on on fours it risk india . The nikkei is trading up. 14 points. Level. Important support as you can see in the last five sessions, we have seen returns for the indian market. The most important point is how the broader markets have started to participate. The 500 index, trading flat. That is the index traders are watching out for. There are a lot of stocks that have started to outperform. The banking space is under pressure because of the telecom verdict from the Supreme Court. A lot of banks that have exposure are under pressure today. At reliance,ing they are due to report. Vodafone down 15 at the start. Tell me about that and these companies which are due out. These are heavyweights among the constituents. Remember, the december quarter saw weak growth growth. For tcs, expecting margins to expand by about 50 basis points. That will be on account of rupee depreciation. Some positiveseen ticks. Food reliance industries, we will be watching out for. Oil and gasat the business, the revenue is expect it to go up 6. 5 . The profits are expected to be remain flat. It is the Telecom Performance to be watched out. Expecting revenues to go up 11 . Expectedwill be on to go up about 3. 5 percent. That is on account of the tariff increase. The stock in the last year has given returns of about 3738 . Rishaad all right, thank you very much. Up, where in the world . Naming the most expensive cities on earth based on all things luxury from whiskey to handbags and personal trainers. We are back with Bloomberg Markets. Questions whether the u. S. And china can make much more progress in the trade talks after signing the phase one deal. The minister saying he hopes both sides will implement the current deal successfully before looking at the second page. We are hoping we can accomplish that goal, even if china is under a lot of pressure. I am confident of that. This phase one deal stipulates if u. S. Officials decide china is not upholding promises, the Trump Administration could slap more tariffs in china. What do you make of these Enforcement Mechanisms . It is fair to both sides. It would not only supervise the Chinese Government, it would allow china to supervise the u. S. Government doing these same. I think the Chinese Government was honors its commitment always honors its commitment. Parks are you concerned tariffs could go up again . Are you concerned tariffs could go up again . Like everyone else, we are concerned. If u. S. And china fail to reach an agreement. We do not want to see them theyll to failed to carry out their promises. The u. S. Administration says tariffs will remain until a phase two agreement is reached. When you think that can be reached . Stopped adding more tariffs, both sides have lowered tariffs in phase one. I think there will be more improvements in phase two. Chinese commerce minister speaking to selina wang. Lets take a look at the business flash headlines. Toshiba said it could take trading speed to a new level if thatdevelop an algorithm punches data faster than supercomputers. It is designed to harness the principles behind Quantum Computers without requiring the use of them. Caniba says its Technology Run on sybil pcs made from offtheshelf components. Simple pcs made from offtheshelf components. Google alphabet has reached a valuation of a chilean dollars for the first time. 1 trillion for the first time. The other two u. S. Companies are apple and microsoft. With aalso flirted trillion dollar valuation. Morgan stanley plans to add dozens of staff to its wealth business in hong kong and singapore this year. The Bank Reporting record profit for 2019, help by its wealth business that makes up half its revenue. The head spoke to us at the elf investment conference. Target forational 2020, additional rms. That will translate into 5060 more consumer servers and specialists. It is a big number for us. Rishaad we have this new survey, saying hong kong is the most expensive survey in the world city in the world. The caveat, this survey is based on luxury goods and services. I think singapore comes in second. We can look at all of this as well. It is down to the luxuries, i would think. Singapore. , rishaad well represented. Sydney, jakarta. It comes at a time when inequality is really rising. Globally. Greatas come under scrutiny. Protests in part of latin america and europe. Hong kong, you have to question whether the protests would mean hong kong would not be among the most expensive cities in the world may be in the next survey even that the economy will be of pectin as well will be impacted as well. Tohaad this is down luxury. You look at other surveys, the worldwide cost of living report, having paris, singapore, and hong kong in joint first place. Different metrics of course as well. Get to what we have next week. You are flying off to switzerland. You are going to go to the World Economic forum in davos. Haslinda that is right. Make sure you tune in to see our interviews. Great lineup. That is it from Bloomberg Markets asia. Daybreak middle east is next. This is bloomberg. Taylor im taylor riggs in san francisco. This is bloomberg technology. Coming up in the next hour, streaming surge. Comcast debuts its new streaming service. Can it stand out against others . Plus, climate control. Microsoft makes a major push into removing carbon from the earths atmosphere. We will get details from the microsoft president and chief legal officer. And keep pedaling