The press. Shes saying the dialogue could resume but shes saying the stop. Ue needs to she asks the republic whether they want to see hong kong full abyss. E pretty Strong Language from carrie lam. She says hong kongs economy is suffering further. Of course, shes already warned about the impact on the economy. David . Yeah. Dialogue can only resume after all the violence stops, which is line from what we heard from yesterday. Uptodate on everything she mentions here. In the meantime, of course, lets have a look at the damage far. Hang seng index down. The politicaling turmoil spread. That chinaat shanghai composite down, thats of thatgesting some gross falling to the Second Lowest this year in july, reflecting weak demand in china. Possibly more stimulus from the government to juice that economy. 6 . Hang seng down almost 1 hong kong stocks under pressure all morning with the airport to a standstill, even though things are starting to come back online. Those airline better. Et mcci, down about 18 . Of the big gainers included enn energy. 8 10 . Own about this trend of growth being across asia. Were seeing that continue. Flipping boards for a quick look yen has been, strengthening overall. Haven assets continue to rally with that political uncertainty. Not just hong kong but also argentina. Gold has been on a roll. Many actually expect that to keep on growing up. Usd, cnh, the the offshore yen stabilizing a bit. E we did hear that theyre disorderlyo weakening, despite those external shocks. Tom, david . Yeah. Certainly if there is a need for first and it is foremost perhaps in the currency shortterm. Story, this our top continuing unrest in the city. Chief executive carrie lam has few speaking in the last moments, after a weekend of disruption that brought the airport to a standstill. Said that demonstrators are damaging the rule of law, adding that the society is now in, quote, a chaotic situation. Lets get it over to steve, at the airport for us. Steve, where do things stand right now . Me just goell, let line by line through these comments coming from carrie lam, can be so frank, theres not a lot new here. Thats what a lot of people from hong kong are wanting from carrie lam and the government here. They want to have these concrete steps that the government keeps on talking about, that theyre tong to have some bold moves help boost the economy and to also, of course, bridge the trust gap between the protesters the government. In fact, carrie lam over this weekend had said that she needs to connectter ways to the young people. But basically shes saying, isin, hong kongs economy suffering further. Dialogue could resume but only after the violence stops. When they talk about the economy suffering, this is what many of hardcore protesters want. Its how they get the attention. The finance secretary, paul chen or carrie lam talking about the economy getting hurt, that is kind of the goal of these protesters. Thats why thousands of to the hong kong airport with their message yesterday. Remnantstheres still of protesters here today behind me. Calling foryre protesters to come back to the airport later today. Its why theyre calling for mass protest on sunday. They want to keep this pressure you affect do dialogue in hong kong . How do you get movement if you will that they want . You strike at the lifeblood of hong kong and that is commerce, economy. Right now im not seeing anything new, concrete from carrie lam. Youre talking about the economic impact. One of the most highprofile in all of this, in terms of the economy, in terms of the arguablypact, is Cathay Pacific. Tell us about whats going on airline. Absolutely. Cathay pacific, in a way, a Colonial Heritage of hong kong. In fact, when they founded this 100 plus years foror so, the basic mandate the name of the from airline was it has to have cathay in it. Up with Cathay Pacific. Colonial wordold for china. This kind of rubs beijing wrong anyway. Airline that is struggling to come out of a period of losses. Been antability has issue, on top of these that are hurting the economy. You have the ongoing chinau. S. War, which is damaging cargo flows. Hong kong is the worlds biggest cargo hubernational and a quarter of cathays from air cargo. Its no surprise that squire cathic which owns 45 of thai pacific Cathay Pacific, the chairman is in beijing, the deputy head of the Civil Aviation authority, caa. Know what they were talking about specific but i can theres a bit of kowtowing perhaps going on. One can imagine. There, chief north asia correspondent, live at the airport. Speaking of squire pacific, 6 yesterday. , we believe that the chief executive is speaking english now. Lets take you to those live pictures now at the chief and listen tofice what she has to say. Carrie lam. The police have had a very last two time in the months to enforce law and to enforce law and order in the hong kong. As everyone will observe, they are under extremely difficult circumstances. I was just explaining, Police Operations can not be likemined by someone myself, who is outside the police. Policemen have to make onthespot judgments on the best be in interests and safety of people around during that particular situation. The police have that code of practice to follow. Very rigid and stringent guidelines in the use of appropriate force. Lowestt requires the level of force in dealing with those situations. Mrs. Lam, what is your responsibility . Youre talking about the responsibility of the police. And the people of hong kong. What is your responsibility please ease for the situation . To answer inue no tell me what is your responsibility . Kong . Leader of hong and the people, what is your responsibility . Sorry. It is not my choice to concentrate on the police. The questions now have been focusing on the police, despite [yelling] [indistinct conversation] [speaking foreign language] no. Give a veryly serious response to that question about the chief executives responsibility. The chief executives thatnsibility is to ensure hong kong remains safe and lawabiding city. That is my utmost responsibility. Because without the rule of law, without law and order in hong is extremely difficult to ensure that seven million kong couldong continue to live in a peaceful manner. So that is my utmost responsibility. And that also requires my support for all the Law Enforcement agencies in policies, with their their rules, their guidelines. That myo means responsibility goes beyond this particular range of protests. I have said, after the violence stopped, and the chaotic situation that now we seeing could subside i beldnt say it will eradicated totally. I, as the chief executive, will to rebuild hong kongs economy, to engage as possible, to listen as attentively as possible, to my peoples grievances and try to help hong kong to move on. My very serious political commitment and the people of to hong kong at this point in time. [yelling] go ahead. Go ahead. Mrs. Lam, reuters. Its your utmost responsibility to restore order to hong kong. Utmostot also your responsibility as hong kongs public . O listen to the all of us here in this room, all the reporters, weve been out on the streets. To protesters over the past couple of months. Veryhave made the demands clear. Now, i would like to ask you, in the bill,ithdrawing using this specific term, which called for,rs have do you as hong kongs leader decide toutonomy to withdraw the bill . Yes or no. That this something beijing has to approve as well . In other words, have your hands by beijing in not allowing the bill to be withdrawn . This a point of political doingon your part in not this and refusing to meet this demand of the protesters . Well, actually yes or no. This question has been on previous occasions. But youve evaded the question on numerous occasions. Allumber one, as we have heard from the spokesman of the hong kong and affairs office, Central Government is still confident that i myself, as the of the hong kong, together with the police force, that we are still capable of resolving this crisis. Do you have the autonomy or not thing cond to withdraw the extradition bill the second point i want to make could you you respond to the specific questions . Alle have considered factors and came up with the response that we have rehearsed, time and again, over the last months. Thank you very much. Do you have the autonomy or extraditionraw the bill . You have not answered the question. Question. Vaded the please, chief executive. [overlapping speech] autonomy tove the withdraw the bill or not, or does beijing need to give i have already answered the question. [overlapping speech] youve not answered the question. [speaking foreign language] [speaking foreign language] ok. So these are, if youve been very eventful discussions, live press conference, ongoing right now. Executives chief Executives Office at hong kong. That was the chief executive, lam, appearing. Not to answer certain questions, of course, from the press. Update you imri guys on more of those lines coming out, once become more clear. Lets bring in tim, goldman equity strategist. Hes also been listening to there. Been happening whats goldman telling your how to play this . Whats the play . I think the key issue, david, impact onuld the growth be . So weve weaving in the situation, which of course is the escalation in u. S. China trade friction, and of course overlay that with whats happening discoly, key domestically, for investors, its earnings growth. Earningsngraded our gross estimates yet again for the region as a whole, minus 1 for this year. And a modest rebound of about 10 next year, really because of an easy bases for comparison for earnings. Ny for hong kong specifically, theres a distorting factor in the aggregate numbers. Away those dis torsions, were distortions, for zero looking growth. Clearly the risk to earnings thatto the downside, theres disturbances and uncertainties in the economy that goes without saying if you close the airport, obviously. Thats going to have an impact. Right. Needshink what the market to be careful in judging is, to capitalize do you one area of disturbance into a continuing Growth Outlook . In other words, just taking the airport as a topical example, if you close the airport one day, obviously thats negative for the economy, but its limited if its closed and the for a longns proceed period of time. Of course, thats much more damaging. Tohink its very difficult handicap exactly what will happen. But i think its fair to say if the market has reacted, a lot of news has been in. Ed for china for broadly, for the region even more broadly, the valuations currently are a lot of negativity about the Growth Outlook. But its also hard to see valuations recover significantly while we have a continuing uncertainty. Whether its on the trade front or in terms of the immediate Growth Outlook. Right, because we dont know where sentiment goes as well. Very true. To contextualize this, if you look at just perhaps how the china index has traded since the trade friction the United States began in the early part of 2018, at the hit about 9. 8ve times forward earnings, twice, up at the high, we were sort of 13. 5. Currently were about 10. 4, percentile of that range. So were not at the absolute bottom but were very close to it. Much closer than the top end. So clearly the market is pricing in a great deal of continuing uncertainty. But its quite clear to say that thats reasonable, because one the changes weve made to our base line view is now we no deal to be done between the United States and china before the 2020 president ial election in the states, in november. So whereas previously we were thinking there would be an escalation of tariffs, which actually transpired, but there afterprobably fairly soon that, later this year, be some sort of trade agreement that would be reached. Developments suggest to us thats much less likely. Shifted our baseline to thinking there will not be any trade resolution until the in the u. S. Late next year. And given that weve got more than a year to go between now it seems unlikely that theres going to be a lot of opportunity for valuations to not to the least same extent that we might have thought before. So the bigger is picture is, valuations have compressed. Theyre pricing in a lot of bad news. But the ability for them to recover in the current environment, barring some surprise in terms of news, is limited. On top of that, we continue to take down the growth expectations. Returnans that your expectations over the next 12 months have to be moderate. Targetve taken a price down 10 . Youre still for china. Emphasize that as well. Does that worst Case Assumption assuming theyll get a trade deal until next year, does it also come with an of more policy support . Its the exact correct is weon to ask, which have not taken our china growth the tradewn, despite tension, which on its own is clearly going to be growth negative. Lots of sensitivity that would subject, if you the second fact, just taking everything alone without any corresponding policy offset, you could be impacting chinas economy by close to a percent. But we think there are offsetting factors. It probably gives you about a 30 effect overpositive time. We also expect further policy accommodation to come through, given the credit numbers we saw just yesterday. So we think thats a little bit payback for acom a the numbes are still pretty good. Bit of aly there was a tightening of the reigns. And we think theres going to be corresponding accommodation as well as fiscal accommodation to help buffer the growth impact of trade. Ok. Out of Goldman Sachs. If you have any questions for be back to wrap up these markets. This is bloomberg. [music] welcome back. Lets bring back tim now, sachs, chief asiapacific equity strategist. You were talking about the shares. Just wanted to get your views in terms of the corporates, their ability to pay down dollar debt, given what were seeing now in terms of the slightly yuan. Well, its a great question, tom. Obviously very topical. The answer is yes, we are analysis. This in our our credit strategists are focused on this and we have that wereckers running, in terms of the companies that are u. S. Dollar extent toted and the which theyre able to service that. Right now i think its fair to say that we are quite far from anything that would be systemic as far as a broaderbased issue would more widely affect the Profit Growth for the a shares. Our more specific recommendations and we drill down into the market, one of the things we just published on was a list of stocks that are more or less responsive, either positively or negatively responsive. Our is something that in conversations with investors were finding that people are quite focused on. More microstock specific aspects are resolving sensitivity axis. Mmm. Recently Goldman Sachs put out a note saying that the view in the markets was there is rising risk of recession. Weve got the two year, ten year that gap. O close theres another argument which is that the bond market is disconnected from the fundamentals, from growth fundamentals, from inflation fundamentals, because of all this qe. Something we should pay more attention to as a possible factor in whats happening in markets . And how does that play across to equities . Its a fantastic question. You for asking that. And we actually have written on this. Past. And youre spoton with saying careful about looking at traditional indicators, which have a track yield in terms of the curve inversion of signaling a the United States with a lead time of a year to 18 a bit carefuling about the current situation, because the key point here is read across from other bond markets globally, notingly, for example, europe and japan, is that for fixed income investors globally, the United States bond market, the long attractive, even last night with the yield going down. Thats very attractive when you have negative yields in germany and zero yields in japan, especially with the u. S. Dollar being strong. So even though u. S. Treasuries are, quote unquote, overvalued a pure u. S. Perspective, they look actually very good crosssectional, global perspective. So this kind of wash of money borders isng across distorting the traditional signal in terms of the relationship between longterm and shortterm rates. Were not saying theres no risk of recession in the u. S. But we be saying you need to be careful about overinterpretting invertedl from an yield curve at this point. Last question. , islamist there has to be a dividend yield 2 . There thats better than david, absolutely. And, again, thank you for asking the question, because its absolutely topical. The quick answer, in the current environment, weaving together previously with your question, there are two generic strategies which we think make eminent sense. One is looking for companies ideallye visible and secular growth, which would than higherre growth aspects, not just for china but for the region more broadly. Second, to your point, dividend yields. Identified a number of stocks above 5 . Even if you haircut those, theyre still giving you a yield of 4. 3 or thereabouts. In a world where youre getting 2 in the 30year bond and 1. 63 on the 10year, that has to be attractive. Tim, thank you, as always a pleasure. Sachs, chief asia equity strategist. They recently downgraded their targets. Well continue to track whats here in hong kong. The press conference out of carrie lam. A couple minutes ago. Well talk more about that a lit later on. Cathay pacific, a big story as well. Yesterday. Protests in hong kong draw beijings ire. Speak with a transport analyst. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Hong kong. 29 a. M. In 10 29 in new york. We start in singapore. Singapore is revigse downward its growth forecast this year to almost zero. This it is a global downturn deepens and the trade war rumbles on. They see the economy as 1 . Nding 0 to singapores outlook has darkened as the u. S. And china spar over trade. Huawe