Transcripts For BLOOMBERG Bloomberg Markets Asia 20240711

Is theail sales number only surprise i suppose. Juliette that is quite interesting given this had been this consumer driven recovery and the positive numbers we have seen and domestic travel. Gold is a miss. Still seeing the incredible strength coming through in offshore youuan. Onhave been seeing a risk momentum coming through in equities across the region. Signing havinghe a positive boost to markets. We are seeing momentum on the asiapacific index. It is going to close at a record high. When we look specifically at Chinese Markets themselves, we did have the csi 300 already near the fiveyear high. The csi 300 a little weaker, down by a 10th of 1 . Korean airlines coming out and saying they are going to to buy. 8 trillion yuan an airline. Raising 2. 5ng to be trillion. That is a bit of corporate breaking news. Lets get over to julia. She is at jp morgan. Thank you for joining us. What was your main takeaway . Controls glance have been maintained. Still looks like their recovery is pretty strong. I think the key watch today was the retail sales number to gauge underlying Consumer Sector recovery. I think the underlying recovery is still ongoing. If you look at labor market data, they have shown that 50 million Migrant Workers have been coming back to the urban areas. If you look at consumers services, these are where most of the jobs for Migrant Workers have been. That is in theory supporting a more sustainable recovery because labor market growth, wage growth in china is the driver of consumption growth. I think we are still seeing incrementally positive news in markets reporting consumption recovery. Hink the retail sales data one piece of evidence is not everything because we do not have a lot of the Consumer Services activity. We only have online and retail sales. If you look at golden week data, if you look at tories and data, if you look at restaurant sales, they seem to be supporting this recovery in the Consumer Sector, which i think by next year should be a much bigger driver of the post Pandemic Recovery in china. We have a News Conference happening in beijing. While you are talking, we will bring the headlines that emanate from it. When you look at these numbers, what implication what do you do what do you deduce about growth looking ahead . There is still the structural driver we are expecting to see. On the one hand, for now, chinas growth recovery has been export sector led. We do not seen of any weakening anytime soon. I think as we look into the next 12 months, the pace of recovery will have to be more driven by the consumers. Chinaswhere precovid growth was led by consumption. We are expecting that structural shift to be more consumption led in terms of overall growth contribution. I think in terms of the implication Going Forward, we are looking for what we think is the most important data to watch out for. There is still some structural pressure in terms of jobs, especially for younger College Educated college graduates. There is still some cyclical pressure. In terms of the recovery, we think in the next 6. 5 months we should see more labor recovery. What kind of gdp forecast you have for 2021 . We think we should be looking somewhere between eight and 9 . That is taking into account the fact that the consumption led recovery will be taking over. It is not as strong as the industrial side of things. The recovery will be more gradual. It is taking into account the fact we are likely not going to see a whole lot of policy stimulus in china next year. Shiftht see some policy toward tightening for certain sectors. It is taking into account the Global Recovery we still think is ongoing. We are expecting a pretty decent global rebound next year. That should help in terms of the overall growth backdrop. We are expecting a rebound of between 8 and 9 last 8 and 9 next year. Juliette as you mentioned in terms of whether or not we see further stimulus, the pboc indicated it could be exiting from some of the heavier stimulus. When we look at the strength of the currency, we have been talking about the june 2018 highs. A chart showing the strength we have been seeing. How much further do you think authorities are willing to see this appreciation . We are still going to be looking at the broad dollar trend to gauge where the rmb is next year. Our best case is the dollar will still in 2021, reflecting this more fundamental few fundamental view. In that environment, you see the dollar performing a little bit on the weaker side. We have at the margin a reduction of geopolitical tension here. That should put a little more pressure on the dollar. If that continues next year, i think the rmb will be compensating for that. It will be strengthening versus the dollar. I think that is going to be the biggest driver. If we stay on a mild downward trend for the dollar, we could easily see another 3 to 5 appreciation in 2021 for the rmb. Rishaad thank you so much. That was julia wang from jp morgan private bank. We have the Industrial Production number, which is a slight eat slight beat. That has engendered a bit of a rally for copper. The highest we have seen since june of 2018. It does come immediately after what we saw with the Industrial Production number coming out of china. This is where we find ourselves with copper futures on this contract up to. 4 or thereabouts. Up 2. 4 or thereabouts. If you want more on this data we have had out of china, you can turn to your bloomberg for more. More commentary analysis from bloombergs expert editors on those figures. Lets get over to new york and join karina mitchell. Australiaina, japan, and other asiapacific nations have signed the Worlds Largest free trade deal. Agreed theformally Regional Partnership, but the virtual asean Regional Partnership at the virtual asean. The Australian Stock Exchange has identified the issues that prompted a halt in trading today. The asx says it is working on a resolution and will continue to provide updates although it has not revealed what the problem was. Other leading exchanges have offered disruption. Trading on the tokyo board was halted for a whole day while new zealand markets were shot for three hours last month. In the u. S. , President Trump is still refusing to conceive the election, but appears to have admitted jode biden admitted won. Biden may have 10 routes a plane gauff, the president tweeted he is conceding nothing and there is a long way to go in the white house race. Pollutionissued a alert. The beijing area is expected to see potentially heavy air pollution this week due to poor weather conditions as the economy starts to recover. Officials say a missions have exceeded levels seen in recent years. 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. While still ahead, the worlds biggest trade deal has been signed. A former assistant u. S. Trade representative for china on the impact of the agreement. Donald trump continues to cause trouble for china despite being a lameduck president. We will look at what the white house may be planning. This is bloomberg. Reports from washington say President Trump as planning to hit china with new hardline moves as he seeks to box in joe biden in the remaining weeks of his term. Lets get more on this with Tom Mackenzie. What do we know . Tom this is reporting from axios quoting sources from within the trump omissions trajan the Trump Administration saying on one front, there planning tough actions on china. Int of the reason is to box biden and to make it more difficult for the Biden Administration to reset relations with beijing. The other component is to submit trumps is to cement legacy as being tough on trade. They are apparently lining up additional sanctions and perhaps trade restrictions not just on Chinese Companies but Chinese Government entities and Chinese Government officials. They would link this to human rights abuses in chin zhang and hong kong by the chinese regime and threats to u. S. National security. Move lastfter the week by the u. S. Administration in 31 investment links they say has they say have links to the chinese military. Rishaad Tom Mackenzie in beijing for us. This as the korean they are using this money korean areas spending 1. 5 trillion yuan. The purchase of the airline by korean air would result in them becoming the 10th Largest Airline in the world. Ceo distressed debt investor telling us how he is providing financing during the pandemic. That is on the way next. This is bloomberg. As Coronavirus Infections continue to rise, distressed debt investor is providing financing to companies on the expectation a vaccine will provide recovery. To bloomberg about the current state of the u. S. Economy. Parts of the economy are doing well and are parts that are not. The parts that are on the leader side are on the leisure side. I think if it had been a democratic senate, it would be somewhere around two to 3 trillion. With a republican senate, it will be around one to 2 trillion. Lets talk about the pandemic and the markets. The vaccine rollout, does it come in time to save some of these Companies Holding on or will we see a wave of bankruptcies . I think what you are going to see is a wave of lending. The reason for that is what wall street was worried about was nobody knew how long everything was going to take. If you thought about it, people would say you were optimistic, it was six months. Now, if you are optimistic, it is three months. If you are pessimistic, it is a year. What that means is you are going to be more willing to lend money to companies because you know things will be working out sooner. There is going to be a cost to that. You will have some companies that will be filing. The opportunity to do rescue lending and to lend money, that is going to grow exponentially over the course of next year. Pandemic, you the invested in Companies Like macys and bankrupt companies. What have been the changes to your position that you can tell us about . On frontier, those bonds have gone from 30 to 45. They have gone up about 50 . We have tried to keep the same percentage. Because of the price of how high they have gone, we have had to sell a bunch of the bonds. I would save macys, we have continued our position. Offshore, we have increased our position. I think for the majority of the petitions of the positions we have had over the course of the last three to six months, things have been working out. We have been taking some profits investing in new situations. Do theaters survive in some form and when do we see them with audiences . I think people are going to go back to movies. I think that is a pretty good situation. Unless youre going to tell me people do not go back to movies, they will. You may not have the same number who went back, but it is still going to be a pretty good amount of people. I think amc and a bunch of the Theater Companies will survive. And airlines . Airlines, we are continuing to invest. For us, we were a big believer people were going to fly back again over the next couple of years. I think that amount of time has gotten reduced. I think on the airline side, you are going to see that this summer as more people have gotten the vaccine. Things will start getting back to normal at least by the summer. You mentioned you had to selloff of your positions because ping stocks got so expensive. Nowe is the opportunity that you see . Is anything cheap anymore and what is the pandemic discount . Cheap. Gs are still there is a lot of specialty lending. Just did a deal literally i think we closed on a week ago in the u. K. Where we are investing around the 14, 15 . You are lending money. You are lending money anywhere between 10 to 15 . Is reason you are doing that because people need that capital. You are going to see an increase in those specialty lending. You are still going to find special situations. There is this belief that because things are working out and the vaccine and everything is back to normal, it is not. It is getting back to normal, but you still have hundreds of billions of dollars of opportunities out there on the leisure side, the energy side and special situations. Rishaad marc lasry speaking to vonnie quinn. Pnc announced a deal this week. No final decision has been made. Agreement would create giant in u. S. Regional banking, which has been under pressure to consolidate. Ashley on irelands off afteready taking a business papers said a group that would require them with the support of a development bank. Katie p will spend more than 720 million to help Korean Airlines finance the purchase. Juliette getting some breaking news that nissan is said to be exploring cutting its 34 stake in Mitsubishi Motors. Ofs is a sale of part or all mitsubishi. Is according to people familiar. 200 ¥37 billion for the stake in Mitsubishi Motors. The shareholding now worth around ¥968 million. Just reiterating here. Nissan said to be exploring cutting the 34 stake in Mitsubishi Motors. Cracks have appeared in this threeway partnership two years after Carlos Ghosns arrest. We understand there are no plans to change the capital structure with mitsubishi. A look atets have markets as japan heads off for its lunch break. This is a day of positivity. Index, itasiapacific would be a record high for the overall regional index. Taking a look at the nikkei 225, up 6. 1 . Getting a boost from the gdp numbers earlier on, which did show quarter on quarter growth opposed to the 18. 9 that had been penciled in by the economists who had been calculating that. China, the shanghai comp positive. We are looking at banks as well in japan, which are moving to the upside. Even though the biggest banks in japan have been running of a we are getting, the record cases of parts of japan at the moment, we did have banks report profits that generally exceeded expectations. The likes of mitsubishi, they raise their four year profits to slow results on trading and also serving cashstrapped corporate clients in the six months to the end of september. A programming note, bloombergs annual new economy formed is in session. We will bring you pennell discussions throughout bring you Panel Discussions throughout. Newcan watch it on the economy formed. Com and bloomberg. Com. To tell you about this data we had come out of china, and austria production managed to be at expect 8 Industrial Production managed to beat expectations. We were looking here for a growth of 5 . Instead, we got a figure of 4. 3 . A slight miss with regards to the china data and also the National Bureau of stats holding that News Conference at the moment. This is bloomberg. Juliette it is almost 10 30 a. M. In singapore. Morgan stanley has cut singapore stocks to equal weight. Equities and allocating more to em markets, saying structural changes caused by technology and covid19 are more important for asian 2021, we se. Asian stocks hold at the record high. It is finally here after difficult negotiations. The Regional Comprehensive Economic Partnership includes 15 countries with china, japan, australia and all of asean. Lets look at the importance of this deal and the timing. We are getting breaking news on thailand gdp. Thirdquarter gdp falling 6. 4 year on year. A little better than. Estimates lets talk about our step in the timing of this deal. She spent eight years with the office of the u. S. Trade representative and was assistant u. S. Treasury representative. An incredibly important milestone here in asia and something that has been around 10 years in the making. Interesting the timing of it as we see the u. S. China relationship to couple. What you think the u. S. Makes of ourstep . A i think in many ways, it is shot across the bow free United States, regarding its viewpoint regarding in how it wants to engage with asia. Two substantial economic deals that could shift supply chain focus to and interasian supply chain with u. S. Exporters being left out. Juliette there is concerned that it could lessen the importance of the u. S. On the trade front. Does a Biden Administration turn this around and we see the u. S. Rejoining the tpp . You know, president elect biden has made very clear his prime focus is going to be on rejuvenating the domestic economy and bringing back jobs. I think the United States become population has much more focused on domestic issues and less aware of what is going on in the international arena. s strongresident trump bash the other guy approach to International Trade makes it hard for a Biden Administration think about tpp earlier on tt tpp early on. Rishaad we had a guest earlier rcep iswas saying ou a lowquality trade. What is your view of the deal itself . A kind of oldschool deal for sure and it is not breaking new ground with regard to trade. That a lot ofing trade analysts talk about as being very important. It takes the spaghetti bowl of rules that apply to all the different bilateral ftas and creates a singular set of rules, a streamlined bullet train for goods to travel across and around the region now. Itm a practical perspective, could be very helpful for businesses. From a geopolitical perspective, it is important when you think about the fact it is the First Agreement that japan has had with china or korea. It is the first multilateral Free Trade Agreement china has had. And obviously indicates again to the United States that the world is moving on. All of the u. S. Trading partners in asia are moving on to try to create more efficient, productive trade in the u. S. Is not at the table right now. Does the transpacific playership come back into as of january the 20th and the inauguration of a new president in the u. S. . I think the attitude to the outside world takes the paradigm shift. I think a Biden Administration even with a strong focus on combating the coronavirus pandemic and bringing the u. S. Back to prosperity [indiscernible] and to those who are important competitors like china to understand how the United States can prosper effectively. There are too many things going on in our globalized economy to think the United States can actually come back to a robust Economic Future. I think it is probably more a shift at least at the outset rather than the Biden Administration wanting to plunge into doing some kind of big headliner International Trade deal. Juliette we know your focus is mainly from the u. S. Point of view, that i do want to get your thoughts on the fact that india has not signed this rcep deal but there is this clause that they can if they want to join at a later date. Likes of china giving a bit of a hand to india if they do want to join down the track. Say all of the nations in that region of asia are trying to encourage india to join and obviously india is such a huge economic powerhouse itself that it would enhance the scope and importance of an rcep if india were to join. Indias concerns relate to the fact that it is afraid that china will be flooding Indian Markets with cheap goods and that will be hurting a number of the lower income elements and industries in india. Skeptical of the desirability of joining. Hasink india generally evinced skepticism toward joining these multilateral deals. I would not hold my breath on india joining soon. Give us a sense of the Biden Administration may not and looking at rcep as well, where will asia be in the list of priorities for trade partners in the new administration . That is going to be a complex question. Sensek the United States of its Economic Future requires it to reach out to allies both to help structure a sensible Economic Future with regard to technology for example and with regard to National Security and economic security. I think there is going to be partners the u. S. Partners in asia for sure to try to work out some of these issues. Some of them of course relate in a backhanded way to china. If there is a concern from the National Security perspective about chinese infrastructure, chinese technology, Chinese State owned enterprises, a nonmarket economy that is driving lots of exports onto World Markets and hurting market economies in other countries, reen there is a need for thei to be a lot of work in together space for safe Economic Growth among reliable trading partners. Over each other] juliette great to have your insights. Former u. S. Trade representative for china joining us. We are just checking in on markets. The thai baht has been trading in a narrow range. Thirdquarter gdp numbers coming out of thailand. When you look at the quarter on quarter figure, a rebound coming in at a 6. 5 growth. Rebounding from a near 10 drop we saw in the second quarter. We are still seeing weakness as you would expect in this pandemic year with gdp down 6. 4 . That is better than estimates of 8. 8 contraction in better than what we saw in the prior movement of 12. 2 . Lets have a look at what else we are seeing because we are seeing markets in asia pacific rise for an 11th session. The asiapacific index looking like it is going to close at a record. A lot of momentum coming through in the tech players. Washighest since the index formed in 1995. We have been watching what has been happening in currency markets. We had the china data dump earlier. You have the offshore yuan holding at the june 2018 highs. The yen has been falling after the rcep deal was signed. That has been giving a boost to japanese stocks. We are seeing the kiwi lead gains among g10 currencies. Watching some momentum coming through on the australian bond market. The australian equity market trading has been paused due to a market data issues. Lets get to new york and get all the first word news. Karina a little more on the china dump. The economic recovery strengthened with consumer nding picking up spending picking up steadily. Sales grew 4. 3 percent, below the 5 that was expected. Also nt your today investment yeartodate beat forecasts. Spacex has launched four astronauts into orbit. The falcon nine rocket lifted off from Cape Canaveral with the on a drone landing ship in the atlantic. A crucial milestone in private sector space launches. Virus cases in the u. S. Have topped 11 million with new jersey reporting a Record Number for a second straight day. Borisrime minister johnson is to selfisolate after being exposed to someone with covid19. Downing street says he does not show any symptoms. An australian newspaper is reporting that legislation forcing tech giants such as google and facebook to pay for news will become law within a few weeks. Hopedreudenberg says he the law would come in after july. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im karina mitchell. This is bloomberg. Jd. Comscoming up, thirdquarter earnings. The ongoing shift to online shopping. We will have a preview. That is on the way. This is bloomberg. To alibabass turn biggest homegrown rival. We. Are talking jd. Com. A result like that would underline a Greater Consumer shift to online. We expect on antitrust here and anything on the Chinese Consumer recovery that has almost certainly taken hold . The consumer a recovery first. Signsors are looking for that Chinese Shoppers many of whom have migrated online during the pandemic are finally ready to spend again and that will underpin the chinese economic recovery, which has to be one of the worlds biggest Growth Drivers this year. Intelligence expects a big jump in thirdquarter sales. We have seen a big singles day improvement on the previous year. Valuek jds merchandise was up Something Like 30 from the previous year. All of that points to a resilient if not a rebound in Consumer Recovery in Consumer Spending. Juliette lets also talk about the ipo of the Online Health unit of jd. Com. What we know about this . Jd has a couple of units headed toward a public float. One of them is jd health. Is one that is less certain what we call the jd digits arm, which is the fintech division. It is very similar to ant as own fintechents division. That in many ways maybe the more interesting aspect of the judy empire. It will be interesting to see how that proceeds. I do not think there is any question you will have to tinker a bit as the ipo advances. Rishaad thank you. Bloombergs latest scoop, which could have big implications for the japanese motor industry. Nissan said to be looking for an exit from mitsubishi motor. This is bloomberg. You are back with Bloomberg Markets. Acquiredeg rutan have a stake in a japanese supermarket chain. They say they see an opportunity to grow the business. That as demands for Home Delivery expands during covid19 restrictions. Nikkei news say they are looking to operate it jointly. Twitter has suspended the account of the Iranian Oil Minister in what appears to be a move linked to u. S. Sanctions. The Trump Administration imposed measures on him last month. Sources in tehran say the decision baby associated to that move. Twitter has yet to respond to bloombergs request for clarifications. Beginne is said to raising its ipo. That would make it the biggest share sale on the European Exchange for Something Like three years. Sources say talks are ongoing. The final timing of any ipo may well change. Nissan is trading at its highest level since june. Nissan is said to be exploring a possible exit from its investment in mitsubishi, a move that could reshape the worlds biggest auto alliance. Some or all of that stake or all of its stake. What do we know . The timing is also noteworthy. We are most two years since the shock rest of carlos ghosn in tokyo in late 2018. This goes to show how far we have seen the reverberations from that incident. Everything from new leadership at the alliance, which also includes Mitsubishi Motors and renault to the downturn in the Auto Industry and added onto that, the drop in sales not just at these three automakers but worldwide due to the pandemic. We are starting to see the first cracks in this alliance about two years after his arrest. Just very quickly here, what does it mean for renault . That is still an open question. Renault owns a 3 of nissan. 43 of nissan. The details are not clear yet. Obviously, it has been a strained relationship. It is probably going to take a lot more time and negotiation until something happens. Juliette Reed Stevenson in tokyo. I thought we were going to go to some live pictures of spacex. Regardless, we are seeing some live pictures of spacex and nasa executives speaking on this dragon launch. We see four astronauts cruising to the iss aboard the capsule. This is the companys first regular nasa mission to the iss. We are expecting the dragging capsule will arrive at the lab around 11 00 p. M. Eastern time on monday. This is 27 hours after it blasted off from the Kennedy Center in florida. That was delayed duces due to some bad weather. Rishaad about noon for singapore and hong kong by the time it does make contact with the iss. Stage of the falcon asked did land on a drone. There. Ks success it marks a milestone in space industry that is not dominated by private Sector Companies for providing business and tourism services. We are talking about the likes of Virgin Galactic as well. The worlds around have injected trillions of dollars of stimulus to save the economy from the pandemic. Bloomberg looks at where the money has gone. 12overnment unveiled trillion to stop the fallout from covid19. For a full recovery, trillions more will need to be spent. In march, the u. S. Senate passed a 2. 2 trillion stimulus bill but nothing specifically for green interest. China has published an invasive slate in ambitious slate of infrastructure goals. It has rolled back regulations on coal plants. Around the globe, green measures 1 oft for less than coronavirus spending. Some 7 is specifically targeted at intensive companies and sectors like transport, industry and oil and gas. So what are the implications for the future . After the 2008 economic crisis, Carbon Dioxide emissions dropped 1. 4 in 2009 before rising 5. 1 the following year when the economy started to bounce back. The most Efficient Solutions for rebuilding the economy are those that also reduce Carbon Emissions. Studyord Economic Policy for a majores climate benefit such as Disaster Preparedness and zero carbon transportation as the preferred Public Sector response. The study asserted that unless policymakers keep Carbon Emissions top of mind, the world rests leaping from the covid frying pan into the climate fryer. Juliette the new economy form is in session this week. We will you live interviews and Panel Discussions throughout the event here on Bloomberg Television while terminal subscribers can see it on live go. Are seeing a pretty good start to the trading week as u. S. Futures also rise. The Msci Asia Pacific index at a record. The highest level since the index was formed in 1998. This is bloomberg. Businesses today are looking to tomorrow. Adapting. Innovating. Setting the course. But new ways of working demand a new type of network. One thats more than just fast. You need flexibility to work from anywhere. And manage from everywhere. Advanced technology. With serious security. And reliable coverage, nationwide. Forwardthinking enterprises, deserve forwardthinking solutions. And thats what we deliver. So bounce forward, with comcast business. It is almost 11 00 a. M. In singapore. Welcome to Bloomberg Markets asia. At our topve a look stories. A wave of data from china. Factory output and investment both beat the estimates. Juliette 15 asiapacific nations formally launch a freetrade deal. A decade in the making. Rishaad as a high inflation keeps rba rate cuts off the the housingeak to sector and the economy as a whole. Lets have a look at markets. At the moment, looking at an open in bangkok. Better than expected economic data. Looking at 1. 2 gain out of the gate. Also appreciating first appreciating further, we have now 11 month high compared to the currency. The futures contract in singapore up 0. 8 . We will talk about that and more with our guest coming up in about a half an hour. Juliette brought gains across the region with the msci asiapacific index on track for the 11thit is up for session in a row. The positive china data that we had and the fact that it does not look like the u. S. Will enter into a National Lockdown despite surging virus cases. The end is starting to gain a little against the dollar. We are seeing some strength against the offshore you one i was holding at june 2018 eyes. Stocks have been fluctuating a little bit. That data dump pretty positive despite a slight miss in retail sales. Lots of china data. The economic recovery strengthened last month with Consumer Spending picking up and investment rising faster than forecast. Theil sales grew 4. 3 below expected 5 rise. Year toset investment date also beat forecasts. China, japan, australia, and signed aions have trade agreement encompassing about a third of the global population. 15 nations agreed to the Regional Partnership at the asean summit. The packed covers more than 26 trillion of global gdp. President trump in the u. S. Is still refusing to concede the election but appears to have admitted that joe biden won. He said a weight of that a wave of tri a wave of tweets on sunday saying he won because the election was rigged. On the way to playing golf, he tweeted that he conceded nothing. The treasurer had previously said he hoped it would come soon after a relief of a draft version in july. Serious lobbying has led the government to consider some of these rules. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im karina mitchell. This is bloomberg. Our first guest this hour says equity valuations remain rich. Manager at principal global investors, which manages about half 1 trillion in assets. We have been talking about the movement in equities. Records in the u. S. Butsia today, valuations, are you thinking these markets are overpriced or are you still a buyer . Onif the markets do sell off disappointing news. Alternative to not owning , returns potentially even lower. Government bonds, about half a percent on average. Therefore, for investors looking to get some kind of nominal return in the portfolio, the way to go for 2021. Juliette lets talk about what we have been seeing with the rotation. You are still looking at some u. S. Largecap tech changes. What do you like here . Factors, a potential winner in the long run. When you look at the largecap Tech Companies in the u. S. And uptrend. Sia, a secular the more relevant, from value sector, and therefore, the outperformance of the sector over the past decade, the fundamentals still remain strong. Having said that, a vaccine potentially makes us allocate more to markets not doing well. And we have chosen some all caps. Also in asia. Technology. Rishaad the question of the day, how far will bonds price vaccine optimism . We have seen this big move on the equity markets as a consequence. What is more . Surge inrogress or the the virus globally right now . Side, the vaccine use is very important. Maybe kind of edging higher. Flexing potentially higher growth and inflation. Better vaccine news. Nearterm headwind out there in back of cases rising going a little bit. The other thing that is very relevant for bond markets, the support that bankers will provide. Theite the recovery, it isnt for example partly the pandemic program. To aed, how do they react recovery . Far, fairly cautious so pulling back from the markets. And, what is the reaction . Unctionality 10 years conditions, aial key part of the program you need to see a significant cap in growth in the coming months to move up beyond 1 . Rishaad the fed is like other central banks, isnt it, that they have been able to provide recovery and for support for various asset classes. Policy impotent . You look at what the ecb is doing . They have deeply negative Interest Rates and they want to do more. They want to be seen to be doing more. Of actual feedback increasing your bond a few hundred billion dollars in euros. Central banks seem to be wanting to seen to be doing enough. On the fed side of things, we think they will be very engaged in the markets. They have a lot to travel before they get to their target. The fed starts getting worried about the negative impact, you could see them change to the longer end of the curve. The Balance Sheet Expansion Program as well. Juliette what does all this mean for the dollar . We have been focusing on how economies in asia are doing out of the virus. We have been looking at some gdp figures for the likes of thailand and japan, seeing some strength. This is a dollar weakness story. Does that continue . There are two conditions. Theis valuations for dollar. The second is the situation between growth in the u. S. And outside the u. S. Suggest that the growth situation is broadening out. That the dollar tends to kind of week in a bid. Marketsn emerging starts coming back because they are overdue they are able to overcome the covid hump. The dollar weakened a little bit. Are of the currencies fairly cheap on many metrics. Ultimately, that will be determined by investor belief in the growth and recovery of emerging markets. We are watching the dollar carefully and we think emerging deepeningould have a 2021. Juliette we see that with several indicators flashing positive signals. Thanks so much. Still ahead this hour, we have an exclusive interview with indias largest lender. Indiasus to discuss Financial Sector as it tries to bounce back from the slump. Rishaad next, in the year of sentiment, asian nations sign on to the largest freetrade deal ever. This is bloomberg. Rishaad after years of sometimes difficult negotiations, the largest ever trade deal has finally been signed. It includes 15 countries with china, japan, australia, and all of asean involved. What is in this deal in what does it mean for its members . This is almost a decade in the making. There are 20 chapters in this agreement. Tariff elimination is massive. Of singapore, at least 92 traded goods will be exempt from tariffs now. There are simplified customs procedures, intellectual Property Rights agreements. And it tries to tackle things like Ecommerce Company changing supply chain, and give a lift to small and medium enterprises. A lot of these are big covid era topics. Have a timely agreement to asia make its mark on how we develop these economies and prepare them for a postcovid economy. A lot of topics like rules of origin around how to identify where products are made, temporary movement of persons, a topic that india is sensitive to. A lot going on here. It is not come into effect immediately. We will need six of the asean countries and three nonasean members to ratify it domestically before it comes into force. Singapore has pledged it will get it approved in the next few months. Juliette massive for the asia region. More broadly, how significant is it for the Global Landscape . Huge statement, especially as covid has forced countries to look inward. Especially with a new administration coming into is ae on the u. S. Side, it sign of what the region wants to do Going Forward. They account for 30 of gdp globally. Japan was among the countries talking about how this agreement will surely put them on a sounder footing for the new post covid economy. Energy to get it done this year and sort of make this statement. But asia is moving ahead. Was brought tod impact this region earlier than others. We are all looking at the fighting team coming in to see how they will look at both rcep and tpp. It is setting the rules here in asia for ecommerce and other big issues, and we will see where this takes future trade agreements. For our up next, time morning calls. A look at some of the top Analyst Recommendations across asset classes. This is bloomberg. Mastercard sees a slowdown in u. S. Standing. Talks for a new round remained stalled. Speaking exclusively to the bloomberg chairman and ceo, he said spending is still in good shape but warned of the impact of a recent certain of a new surge in Coronavirus Infections. Consumer spending, nobody is going to the theater, nobody is out at public entertainment events. We have been managing through four stages. The first was containment, the marchapril period. Then,cond, stabilization normalization, which is a big word for better than stabilization but not very normal. A new normal. We are living through different stages of that. It goes back and forth. Vaccines and the like, sometime next year, we would be looking to getting back to a precovid phase. Consumer spending domestically as in pretty good shape. Most companies have been growing on Consumer Spending domestically. The second wave passing through the u. S. But travel is certainly challenged. Is goingat everything digital. Using some form of a contactless card or ecommerce online. The second part is that our data analytics, cybersecurity business, that is doing very well. It is kind of a mixed bag over there. Plenty to unpack within that. Lets talk first about what is happening with travel. You talk about the weakness we are seeing. Andlked to a number of ceos asked them, how much are they traveling. They say a not that they say a lot less. A ceo told me has budget will be down next year by 30 . When doeshink travel come back, when does Business Travel come back, and how different do you think Business Travel will be when it comes back . I think personal travel will be back before Business Travel. Like personal travel will come back. I do believe that travel requires not just a vaccine, but and a degree of testing crossborder possibilities for travel. You can see singapore experiencing with corridors with countries, as is china, japan, and australia is beginning to think about it. Domestic travel already has commenced. I look at the u. S. , more than a million passengers per day at the bottom of the crisis and that stabilization phase, they were down to 100,000. Precovid was 3 million. Domestic travel is up there. One thing that we are around,his time spending was holding up because governments cut checks in the spring. It may be a different story in europe. I want to get your perspective on the urgency, the dropdead date for when your customers say, i cant pay my bill anymore. Not issuing institutional banks. I am not the best one to give you the perspective. When stimulus checks were flowing into fiscal stimulus, you could see Bank Accounts beginning to grow in size. You could see spending and the kinds of stores where people to. Lower income tend to go see a slowdown in some of that as stimulus checks dried up in the u. S. And elsewhere. We do need to think again about how to provide that fiscal stimulus. Juliette that was the. Astercard ceo and chairman time for the morning call. Sophie camerin has been tracking some tough calls and recommendations. What is one take on your will pan out . Stanley,t morgan strategists are keeping the faith in a vshaped recovery despite the rising cases. They expect conditions in 2021 that will be supportive of reflation every early cycle dynamics. They are going overweight global stocks and credit against government bonds and cash as they forecast global real gdp growth of 46 next year. Keep in mind that these are on the back of weak levels. Morgan stanley cautioning that the right ahead is not expected to be as smooth upwards given the challenges likely to materialize. Rishaad what is the play on the rcep trade deal on this . Sean darby at jeffries thatng that rcep shows globalization is making a comeback. Another is bullish on chinese tech and appliance players. Also, Chinese Consumer electronic brands are seen getting more of a foothold in the region when it comes to asia, which could improve the longterm valuation. They say establishing common rules of origin is one milestone for the deal. When it comes to economic benefits. The biggest to be loser. Its not neglecting in reception of rcep that the diplomatic message is this test important as the economic. Lunch break, looking at upsideent, a mood to the generally speaking regionally. About 1 up for the shanghai market. Data out earlier. Production beating estimates. Sales shelves retail just a little bit shy but showing growth. This is bloomberg. Rg. 28 degrees centigrade in mobile. Mumbai. In another hazy start to the day. I day without trading because of the diwali or festival of lights holiday. A secondquarter profit posted ahead of estimates. Better issued are than most of the nonbank lenders. To benefit from the recovery and demand for domestic housing loans. S viceget more from hdfc chairman and ceo, keki mistry. Tammanybe getting over short while. We will first get to new york and some of those first word headlines. Reported virusy, cases in the u. S. Has now topped 11 million with new jersey reporting a Record Number for the second straight day. U. K. Prime minister Boris Johnson is himself isolated after being exposed to someone with covid19. Sources in berlin say germany will face considerable social restrictions well into next year. Reactingagement firms to a surgeon in investment demand as they push a green new deal. Next month, and offering. Werene, they said they selling the first debt fund. President mont wants Carbon Neutrality in korea by 2050. China has issued a pollution alert as air quality worsens with the approach of winter. Seearea is expected to potentially having air pollution this week due to weather conditions and higher heating emissions as the company as the economy continues to recover. Is, an australian newspaper reporting that legislation forcing tech giants like google and facebook to pay for news would become law within a week. He previously said he hoped the code would come in soon after the release of a draft version in july. Lobbying in recent weeks has led the government to consider weakening some of those rules. The worlds topranked golfer has won the masters. Dustin johnson claimed his second major after a string of near misses. That gave him a new tournament record of 20 under, beating the previous tally of 18 under said i tiger woods in 1997. Johnson is the first topranked golfer to win the masters since 2002. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. Im karina mitchell. This is bloomberg. Indias largest movie profits above secondquarter estimates. Bloomberg believes it is better positioned to defend earnings against the impact of the virus lockdown. All of that should engender more demand. s viceet more from hdfc chairman and ceo keki mistry. Give us an idea on where the market is evolving. And. Lockdowns come to an what is actually happening on the ground . Has in my mind, growth come back in a big way. I would say that from september onwards, september was higher than september of last year. Growth is coming back. Probably thehis is best time to look to buy a house. Interest rates are probably as low as they will ever get. Basisght see a five, 10 point Interest Rate cut because of the festival season now. In my view, the ability of our bia to cut rates Going Forward will be limited. Secondly, a kind of a discount if you go to the site to try and buy property. Thirdly, many states have cut their local taxes. Registration has been cut. Affordability, this is the most affordable time for a house. Rishaad india is not out of the woods ultimately, is it . We could see further waves of this pandemic. How do you protect asset quality when approving home loans against that possible backdrop . Keki we feel reasonably comfortable with loans because of several reasons. One is that the average ratio at the time, only about 67 or 68 . The individual has at least a one third equity upfront. Secondly, most of our loans, we have coborrowers. Theoretically, if one of the borrowers is having some difficulty with their job, the other one can take over the mental of servicing the loan. Our loan is a more ties to every month so every passing month, the ratio is declining. If i were to look at the loans in the Balance Sheet, to me to my mind, it would be somewhere between 40 and 42 . Foreclosure in india is relatively easy to do. 912an, within a period of months, take possession of the property if you desire in auction the property and get your money. Juliette you are saying that you are seeing market prices falling across the board. In the high end, people are staying indoors. Does that create the momentum where people upgrade or go to a higher property. You rates so low, how do inspire people to take loans more and whether or not they want to get to the next level . Keki the structure in demand for housing in india will always be high. Not just because of the pandemic , people staying at home in wanting larger homes, but much of indias population is below 35 years of age. The average age for a firsttime homebuyer in india is about 38 or 39 years. With two thirds of the population being below 35, what that really means that over the next 1, 3, 5, 7, 10 years, all of these younger people necessarily have to buy a house. So there is a structural increase. Mortgage to gdp ratio stands at 10 . In china, it is in the mid to high 20s. 45, 50, 60 . India is only 10 . Affordability has never been as good. These are the reasons why housing has become attractive. Interest rates are extremely low. Rates,w interest borrowing money. Plus, fiscal benefits that the government has given to individuals who want to buy a house. Juliette you are sounding very optimistic. I want to ask more what you think in terms of government support. Repenting with the effects of this pandemic because it has been hit extremely hard. Keki particularly in the middle income site, it was not as high. Levels,he very low there might be a bigger impact. Of course, there is an impact. Jobourse, there are some losses. Is risk to this assessment the risk of a second wave coming through. Not,er that comes true or frankly, no one at this point in time nose. That is the risk of the economy reviving. And the economy has revived. People are taking precautions, wearing masks. Businesses are back to normal. People are going to shops. Malls are pretty full. People are reluctant to go to restaurants and sit in crowded places. Most offices are operating at the maximum amount permitted by these local laws. Got this Deputy Governor of the rpi, mr. Of thatbi, mr. Rao, saying indias shadow lenders must convert themselves into regular banks or scaleddown operations. Keki they have not given us any indication of what they have in mind. Gentleman, the Deputy Governor, he was speaking and some form. So, frankly, i dont know. The regulations for Housing Finance companies is not very different for banks. With respect to a almost of other things. Rishaad no doubt, we are data,g a big rebound in particularly with pentup demand. We saw how much the economy was hit earlier this year. How do you see it fanning out next year . Keki if we do not get a second wave and we do not get a second lockdown. Very honestly, that is something completely out of our control. , every month not we have been seeing that commercial activity, Economic Activity is increasing so, i would expect that by the time we 2021, which would be the end of the winter season in northern india, i think almost all industries would be back to 200 capacity. As i mentioned in housing, we have seen that september and october were better than september and october of last year. Individual loan disbursements in october were 35 higher than in october of last year. Having said that, october of last year was a relatively weak month because of certain reasons like festivals. There was a festival in november last year as opposed to october in a recent year. Compare that to october of this year. Individual loan disbursements. Economic activities going back to normal. The airline industry, hospitality, hotels. Hotel rooms are getting filled, particularly in the outskirts of the city. Cities, people are reluctant to eat in restaurants and things like that. You are sounding very optimistic, even when you take this seasonalitys out of the equation. What is the forecast for your company for the next year . Are you looking at potentially hiring more people . Keki we have not stopped hiring. Even this year, we have hired people. First of all, we dont have too many people working. Lowperate with an extremely costincome ratio. It is high single digit. Ratio, weuch a low dont have that much of this capacity. Business grows, we have to hire the minimum number of people. Rishaad all right. Tell me, what about the office itself. I am sure you told me many people were working from home. Are you seeing people returning to the office or is there a reluctance and people want to continue doing what they were doing earlier this year . Our office is operating at the Maximum Capacity permitted by the local government. There are places where they permit 50 . , weever is permitted operate at that capacity. , peoples reluctance ond a certain age, people women who are pregnant or women know have just given birth, these kind of things this is part of the hr policy. You so much for your time today. Hdfc vice chairman and ceo rcep and ceo keki mistry joining us. Coming up, loreal cna makeup demand. The ceo saying that it is one area that will not completely shift to ecommerce. Annuale bloombergs Economy Forum this week. Live events on Bloomberg Television and terminal subscribers can see it all on live. This is bloomberg. Juliette you are watching Bloomberg Markets asia. Asian stocks moving higher. The msci index at its highest level since 1998. Cosmetic giant loreal sees a revival after the pandemic. Ceo jeanpaul agon told bloomberg that even though ecommerce has gained traction during the crisis, the market will not completely move away from brick and mortar stores. Seen, wek, as you have were already back to growth in the third quarter. The market is still negative, so we are doing better than the market. But the market should recover. There is a very strong appetite everywhere in the world for beauty products. As i explained several times, the crisis this year is not really a demand crisis as we used to have in the past. It is more a supply crisis because consumers could not buy the products. We are back, for example, in europe, back to lockdowns. Becauset when there will be a win the virus is gone, i think we will be back to very good consumption. The appetite for beauty is absolutely still they more than ever. Chief digital officer was talking about how it is your biggest market now. All of this clearly fueled by the pandemic. Will it ever be 100 and we see a phaseout of brick and Mortar Retail stores . I dont think so. I think it is a new option for consumers and part of consumers are switching every year more from brick and mortar to ecommerce. Acceleratedt was this year. Last year, ecommerce sales were growing by 50 , which is really very fast. This year, even faster. Closed, andlls were it represents now 25 of all sales. It is going to keep growing. Consumers will always want the opportunity also to see products installed. I am a great believer in what jack mott described a few years described ajack ma few years ago as offline and online as a combination of options. Seeing are you currently given that europe is dealing with a second wave . It does not help. Partners,professional department stores. It is really difficult for them. That small customers, with no more than 100,000, and we accelerated payments to suppliers. We tried to help our ecosystem. Of course, it does not help consumption. I hope it is not going to last too long. Moremers also i think are now aware of other action. In ecommerce, they find solutions. But of course, it does not help. It should not last too long. Brexit coming up, the back and forth continues with the European Union and u. K. Entering what could be another part of a pivotal period in negotiations. This is bloomberg. Rishaad the British Government indicating that the abrupt departure of two brexit architects from downing street, as negotiations over the European Union enter another critical week. Lets get to Senior International editor Jody Schneider. What can we expect next . Is there enough time to implement any deals before the end of the year deadline . There will be a tight deadline. December 31 only gives folks another six weeks or so. Of course, they have to ratify and implement any deal they come to right now, they are pretty far apart and u. K. Is saying they will not move off their position. Saying that what is on the table is what they want now and they will not race to compromise. Boris johnson has lost two of his key supporters. Communications director but also e, dominicrusted aid cummings. So he is an absence of two key members on his team. The u. K. Telling businesses to prepare for a crash out without a deal because there might not be enough time and they dont want to compromise. Juliette i think we have been watching this movie for about four years. Went do eu leaders in brussels say has to happen soon . They say they are willing to u. K. And negotiate, but the has to bring them something. At this point, they are not going to move off their requirements on the irish side and some of the agricultural rules. In some of the things francoise. They are not moving. They need something to be brought to them before that can happen. The u. K. Saying, we are just not in a position to give it. Is going to come. Juliette Senior International editor Jody Schneider in hong kong. Lets take a quick look at the markets. The msci Index Holding out for a record the session in a row. We had the deal signing over the weekend. We had some pretty solid moves in terms of chinas economic recovery. Risingial production faster than expected. The nikkei 225 holding at those june 1991 highs. We did see some weakness after the deal was signed. China on we had that dotted that data dump coming through. The offshore yuan continuing to strengthen. At june 2018 highs. As you can see, u. S. Futures rise on the back of hopes that the u. S. Economy will not go into a complete lockdown according to president elect biden even though we are seeing a pickup come through. Looking positive on the equity front. Asian Stocks Holding at these records. Looking like it will close at its highest level since it was formed in 1998. A lot of momentum in the tech players. The Msci Asia Pacific tech index also holding at a record. Rishaad programming note. Bloombergs annual forum this week. Terminal subscribers can see it all on live. You can also watch it on new economyforum. Com and bloomberg. Com. Taking a look at the hung saying. At the hang seng. 24 stocks up, 24 down. The market up 0. 4 as we had to lunch. Daybreak middle east is next. Manus yousef markets begin the week on a positive footing as two of joe biden drove say they uphold an oppose a nationwide lockdown. Global stocks pushing further into record territory with more trial data do as early as this week. Morgan stanley says goat risk on and trust the recovery. An economic bounceback strengthened with Consumer Spending p