Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

Southeast asia, gdp out of fullyear growth for 2019, philippines not playing ball the first trading session and dollaryen, gold, oil and treasury futures looming, looking at where we go moving forward as well. Dollaryen 108. 66 and gold futures pulling back slightly, by a futures contract. That is the markets. Uneventful. Here is the first word news. Kim jongun says he is no longer bound by a pledge not to willmissile tests and debut a new weapon. He says u. S. Sanctions leave him no choice but to reconsider commitments that underpinned his meetings with President Trump. Trumps reaction was muted, repeating that kim agreed to denuclearize. Hong kong kicked off the new year with renewed protests, vandalism and tear gas. Demonstrators and Police Clashed into the night after tens of thousands of mostly Peaceful Protesters took part in a march. Protesters vowed to maintain their fight for more democracy and less chinese control. Willdent trump says he finalize the first phase of a trade deal with china january 15. He is planning to go to beijing to begin talks on a second phase. The first part will see an agreement to increase purchases on u. S. Goods in exchange for lower tariffs. Japan is expected to speak with lebanon about Carlos Ghosns escape. Japanese Officials Say the government is unaware of details including how ghosn managed to flee and his exact whereabouts. The countries dont have an tradition treaty. An extradition treaty. News 24 hours per day, powered by 2700 journalists and analysts in 120 countries. This is bloomberg. Numbers, 50 1. 5, slightly lower than expected but a good reading in expansionary territory, lower than 51. 8 we had last month. This compared to the official manufacturing pmi numbers which we saw in expansionary territory last week. Smaller exporters and generally, this has been painting a positive picture, more than the official gauge that has been in expansion for five months for this caixin reading. We are seeing anticipation that trade talks would lead to a phase one deal. Sentimenturing that in december. It is not all clear ahead. Early signals show headwinds and external demands. The pmis of the eurozone and japan fell into contractionary territory. David early signs we may see the end of the jungle. To talk us through how far we need to go, the head of asian economics at Oxford Economics is with us. Happy new year. Lets start off with china. Any incremental addition to growth from a phase one trade deal . We have had two items of good news. One was the trade deal, the other is that we see the soft and hard data in the industrial sector, it is not as married and as varied and the pmi Data Confirms that. Upgraded our forecast to 6 for this year, which is kind of the same as the target. I think what it means for us is that in that december Central Economic conference, they gave policymakers a mandate for some more easy policy, and reflection rrr is a of that. At the same time we dont need a huge amount of stimulus this year given what is happening to the economy. I would say this is not going to array of newa vast stimulus measures. It will make sure the economy is on track but i dont think we will see massive amounts of additional stimulus later. David the 6 growth forecast, does that consider the offset in terms of the rrr and future offsets . Someat forecast included more stimulus along the lines of what we are seeing but not a huge amount. Beijing, a question, in terms of the trade deals, seems like markets priced that in. What is the risk that relations could deteriorate again and tariffs could snap back after the deal is signed . There is still phase two and phase three. Yes, this news about the phase one trade deal was positive for us in terms of how we look at the economy, not just for china but for the world. Quite some risks. To me, the biggest risk, if you ask people in washington on the one hand and beijing on the other hand which side has gained a most and the most and which side has given the most, you will get different answers. I dont care who is right or wrong but that means there are, there is risk of reescalation this year as people start to reevaluate this deal and as we start to move to this supposed phase two. Data showat does your in terms of who has given up more and in terms of who could benefit most . We still havent seen the exact agreement. We know how long it is, it is apparently in english, 86 pages. Think it is exaggerated to say there is no detail in this deal, i dont think it is true that the deal has no teeth. The key question is, at the end ,f the day, washington has holds the springs over here. It is up to judgment of the Trump Administration to tell us whether they think china is doing enough in those areas, like tech transfer and intellectual property rights. It is a political judgment, i would argue, not up to a lawyer. It is up to politicians. David another part of the chinese economic story is the default story. Im guessing investors in the credit markets are trying to extrapolate to what extent that continues the default story for next year. Do you think conditions that led to certain parts of corporate china leading into defaults, do se conditions possessed persist . Definitely. There are lots of companies with poor financial results. They are part of the financials there are parts of the financial sectors that are exposed to that, smaller banks, shadow banking entities. If you look at the landscape of chinas financial sector, there are risky parts. For me as somebody looking at the overall economy, i only get worried if there are significant risks of systemic problems, something that could freeze up the interbank market, something macroeconomic. I would say if you care about Credit Conditions for individual companies or whole sectors, you should continue to be worried as we are moving also to a new phase in chinas reform programs where it looks like the government does want to make the consequences of their decisions, that investors are doing. David the fact that they are able to continue pursuing reforms means some of the arent asisks perhaps present anymore. What would you consider the biggest risk this year . I think on the one hand, still relations with the u. S. Domestically, it is going to be interesting to see how they will thate that game or quandary of reform and opening up on the one hand, and stability to produce on the other hand. All of us, we like reform but that means opening up and opening up to allow people to shift their money in and out easier and that can at times be difficult for financial stability. There has been criticism that instead of reform, china has been reform and closing. There is not a lot of real opening. What is your view on matt . That . I dont know. I definitely think i consider myself lucky that i am an economist and not a Political Science person. There are a lot of areas where we cant point to progress or reform in china, but i would argue only the economy, if you look at the Technical Levels on the fiscal side, looking at reform that has to do with the labor market, the financial side, we are seeing things, i feel that at the technical level there is a decent amount of economic reform taking place. I think the key challenge for those reformers in beijing is to make sure that they dont lose those its of the apparatus parts of the apparatus that are critical to those reforms. Selena stay with us. We would love to get more of your views on reform up next. In the newkong rings year with clashes and tear gas as protesters vow to keep the fight going in 2020. David the economy in singapore, slumping as the trade were between the u. S. And china takes over. What 2020 holds for that economy and the rest of the region as well. This is bloomberg. Selena we are seeing thailand headlines crossing the terminal, considering implementing more measures if necessary on the thai baht. We have seen appreciation with it following falling below 30 per dollar. The thai bank could be curbing outflows for stocks and bonds. This is the first time it reached that level since 2013. The bank of thailand noted it was due to low trading and volatility, 30 further adding volatility will lessen. The bank is concerned about appreciation, that it needs policy coordination. This is in the minutes for the policy meeting. Now we will go to marcus. Why did we see the currency reach the 30 per dollar level monday . I think the baht has been the top performer learned by a robust [indiscernible] level. Below the 30 [indiscernible] liquidity amid year and liquidity. We saw italy above the 30 level this morning we saw italy above the 30 level this morning. David that leaves the question what we have been asking, because of the currencys strength, is there any other thing the central bank can actually do to manage the strength in the currency or is it down to other policymakers in the country . Lets rest retrospectively look at 2019. Cut policy bank has rates to a record low of 1. 25 and eased policy [indiscernible] easing the rules on outflows. The next meeting is scheduled for february 5 so it is possible the central bank will contemplate [indiscernible] last but not least, intervention. The central bank is fearful of moving [indiscernible] may ber the central bank labeled a currency manipulator by the u. S. David always a risk but when you look at where the currency is, might be something to mull over. Thanks, marcus. Economy Southeast Asian to another, talking singapore. Out this morning with gdp numbers slumping in the final month of 2019. Trade sectors struggling to gain traction despite the easing of tensions between the u. S. And china. Advanced estimates show gdp annualized 0. 1 in the fourth quarter. Everything else, the growth for of theas the slowest decade. Our chart takes us all the way back to 2000 back to 2004. , that is not the annual figure but trust us, the annual figure fullyear is at zero point 7, 0. 8 . Singapore dollar come little changed. Inal thoughts from louis. Want to get to where we are in the cycle for a lot of these emerging, including singapore, recoveryare in the story. Last year was a tough year for asia because of that week global trade story and added to that, the u. S. China trade war. As we see things improving a little on the u. S. China front, within china, we can see if you look at chinese imports, how are they moving from monthtomonth the echoes we have seen a bit of fromvement since monthtomonth . We have seen a bit of an improvement. In terms of the outlook we are not as varied in terms of what trade means for asia. Trade is important for asian economies, so that is helping a little. We are not out of the woods and as we continue to emphasize, if you look at the forecast, which economies we think will be best positioned for growth, those are the ones where domestic policymakers added to growth in terms of fiscal or monetary easing. David lots of people talk about fiscal stimulus as something to consider and watch. No one seems to talk about whether they can afford it. Whether they can afford to fiscallyy to stimulate their economies and whether we will see debt hitting these markets. There is definitely in europe , japan, those are countries where we need to worry that debt , Government Debt is high. Numbersjapan, the asian dont look as bad as they do for europe or other emerging markets. We feel that, especially in the developed asian economies, korea, hong kong, hong kong is wellpositioned for a fiscal easing. It depends a little on the country but overall, because asia has been so conservative in recent decades, they still has have some powdered to use if they want powder to use it they want. Kong hasong implemented fiscal stimulus. How much more are you expecting in 2020 . Does that provide a floor under the weakening economy . We expect more fiscal easing. Looks like it is quite data dependent. The more that the weak data comes in, the more willing the government is to spend. We still think the fiscal easing in hong kong is relatively modest compared to the shock infringing on the economy. The overall effect is that the economy will continue to weaken. We expect hong kongs economy to shrink, not just in 2019 but also in 2020. Selena what are your expectations for the strength of the u. S. Economy . We spoke to our previous guest who said the strength in the u. S. Consumer shouldnt be taken for granted and we could see significant weakness next year, this year actually. We definitely expect growth to weaken from Something Like 2. 3 in 2019 to maybe Something Like 1. 6 this year. Business slowing, investment is weak, and Employment Trends are likely in our view to moderate but we dont worry too much about a very large moderation because there are quite a few buffers. , the Balance Sheet looks healthier than 10 years ago, so that gives them a little, a buffer. We think there are buffers in the u. S. Economy so we are not that afraid of a sharp slowdown. Usena thank you for joining right after the new year celebration. You can catch up with all of our interviews by using our interactive function, tv. You can dive into the securities and bloomberg functions we talk about. Become part of the conversation by sending us instant messages. We will look at them and talk about them. This is for bloomberg subscribers only. Check it out on tv. This is bloomberg. David welcome back. Thank you for joining us, happy new year. The latest headlines, cheers. Shares are tumbling in china after the Company Reported incomenary fullyear net slightly below analyst estimates. Liquorer of the potent u. S. 5 billion dollars dollars, a 15 rise from last year but short of estimates. They are targeting a told total revenue of 5. 5 percent. Tencent shares rise after it led a consortium to buy a stake of Universal Music Group. This ends talks for a deal that values the company at 30 billion dollars. Tencent and partners offered to increase their stake to up to 20 at the same valuation until january 15 next year. In macau, the industry slumping, gaming revenue slipping for a third month in december, marking the gambling hubs first decline since 2015. Gaming revenue was less than 3 billion for the month, down almost 14 from the year before. Struggled to learn high rollers lure high rollers. Selena lets take a look at mrr, the movers in the asiapacific gaining about 0. 2 , the biggest gainer is a company that manufactures products after a new years eve report that china will have significant certificates for genetically modified corn. One of them will be developed by this company. They stand to gain from this policy. I want to bring up this company, their projections missed estimates. This is the first time they since 2015. Ates this raises concerns that the economic slowdown is spreading to the resilient Consumer Sector in china. David not so much recession proof. A look at what is happening in , yesterday you would have seen protests, some of which turned violent. The markets are still moving up. This is bloomberg. Selena it is 1 29 in sydney. These are the headlines. A trade deal between the u. S. And japan has kicked in. Japan is reducing tariffs on u. S. Beef, pork and other agricultural products. Japan is pushing to secure tariffs on cars and auto parts it exports to america. Japan says u. S. Officials have given assurances that new tariffs will not be introduced. And localsf tourists are leaving areas south of sydney as the bushfire crisis is set to intensify in australia. Seven people have been killed and hundreds of properties destroyed. The fires have been burning for weeks and the scale of the seen criticism of Climate Change policies. I want to thank allah those fighting the fires, all of those supporting them in these difficult times. The conditions remain tough. Of stayinga matter safe and being patient and doing what we need to do to put ourselves in a place of safety. Been killedle have in indonesia as monsoon rains hit regions around the capital, jakarta, triggering the worst flooding in normal seven years. The down shut one of their airports the downpour shut one of their airports. Rainfall will continue for the next few days. Commissionera david stern has died after suffering a brain hemorrhage three weeks ago. He was the longestserving commissioner of any professional u. S. Sport and is criticize boostingedited with than 5 billion. He retired in 2014. Day,l news 24 hours per powered by more than 27 hundred journalists and analysts in over 120 countries. This is bloomberg. On the for a check mainland and hong kong markets, a strong start for the Asian Session after we saw rrr cuts on the pboc that that was expect it and priced in. Donald trump said the signing date and place, january 15 for the phase one deal. That is boosting optimism. Xiitive comments from jinping about chinas gdp Economic Growth in 2019. Good news except for this company which put out preliminary earnings not as good as expected. Taking a look at this terminal chart, this shows expected volunteer volatility for this index falling to 2018 lows. We saw it jump 22 from december 24, perhaps a sign this market isnt going to continue despite the increasing geopolitical about protests, december was positive for hong kong. It was the bestperforming major market in december. Precisely on that note, a good december, very calm markets, then what we saw over the past few days, hong kong kicked off the new year, renewed protests, vandalism, riot police and demonstrators fighting and running into new years eve and new years day. Tens of thousands of mostly Peaceful Protesters flooding the streets. Lets get the latest. Stephen engle is outside to give us an update of what has been happening over these past few days. It is a new year but nothing much has changed. There is angst on the streets. We saw the march yesterday go from Victoria Park to central in hong kong. It was justrs say over one million people. The police put the estimate at 60,000. That is quite a discrepancy but that is not uncommon, the police put the numbers lower. They took estimates from the initial gathering in Victoria Park. It was probably more than 60,000, perhaps less than one million, but tens of thousands turned out yesterday in support of their pursuit of protection of their civil liberties. Not everybody is violent that this did turned violent late into the evening as the police they had permission originally granted for the march because of fears of violence. Nd violence it happen on another did happen. A number of atms were vandalized, there were roadblocks set up by protesters, were petrol bombs thrown. Police responded with tear gas and other measures to disperse the protesters. 2020 looks like it is going to ofa redux of the latter half 2019. In front of hsbc which saw the brunt of vandalism. We heard them condemning the violence. What is the significance of that location . Has evoked are a lot of emotion from many people who have come by in the morning. You see one of them behind me, they have been for 85 years to face at one queens road central of the iterations of the hsbc headquarters, guarding it and providing feng shui for the bank. The 1941 invasion by the japanese. This lien has shrapnel lion has shrapnel from the attack by the japanese. Toh of these were scheduled be melted down by the japanese during the war but they were rescued and brought back to hong kong. They have been defaced with red and black paint with graffiti saying that hsbc has been dyed red by china. A businessman came by and said, see it, they were set on fire. I saw the pictures on instagram and facebook and social media, set ablaze as part of the violence we saw last night. Yet they are still there. Resiliency is something to talk about as we make our way into the new year. New year, same old story. Thank you so much. Coming up, Chinese Health care was a performer in 2019. Weget sector picks when return. This is bloomberg. Selena the Chinese Health care sector easily outperformed the Broader Market over 2019. Our guest says there will be more momentum in the new year. Analyst joinsrch us from hong kong. We saw china grant faster ,pproval for novel therapies faster than europe and the u. S. Do you expect that to continue . Great question. I expect the trend to continue. Chineseext is that Health Care Systems, especially the drug r d, just started structural changes. This is like a wto for drug development. The second part, the market authorization policy not requiring the company who wants to do r d to have to own a manufacturing capacity. Basically right now, the china are rendy is fully integrated with the world. China, we have 1. 3 billion population and the treatment standard has been lagging behind. It is easier to recruit patients in china. With the strong fundamentals the chinese, the earlier approval, and even sometimes earlier than global, will keep happening. One thing that is exciting is that chinese Drug Companies will go global. The big news 2019 is that one company i cover, they have the first ever drug developed by a Chinese Company getting a u. S. Fda approval and usedrug is an inhibitor for six types of nonhodgkins lymphoma treatment. That is exciting for chinese drug industry. Another trial going global. Ena in which areas are to chinese drug trials most promising when it come paris other developed countries . Comes to other developed countries . Definitely cancer. This was driven by a lot of science breakthroughs. Going to survive and live longer if i get diagnosed with cancer. Followingmilarly global trends. Another fundamental change, the chinese regulatory and global a review pathway for cancer drug stem reach the market drugs to reach the market sooner. David kids, that is not a good reason to continue smoking. Absolutely. Prevention is the key. I guess a lot of people are wondering, because the last couple months have seen breakthroughs here and there. We will get to the alzheimers drug in a moment. Is that a function of time that they have been investing in this space, or is there anything in particular that changed within the r d space this last few years that led to these breakthroughs . There are two aspects contributing to this. One is the fundamental, that takes a long time. The investment is one, the second is the talent, the science understanding, and the other part is the industry and also especially driven by the government regulatory. For example, for cancer, rather than using phase 1, 2, three which takes 10 years to get the trials finished, right now china is following global standard for that and for diseases dont have good therapy before. Government can allow conditional approval. They need to finish phase one drugs toor smaller reach the market first. The site this cycle, from a scientific idea to approval, has been accelerated significantly. The other thing is that chinese are very good at doing a type of lower risk, easier innovation. This means that the mechanism has been proven by global multinational companies, but at the same time the multinational entering china has been relatively slow due to legacy reasons. Chinese companies are good at catching on the target. That is working. They accelerate the drug development. Drugxample is a cancer with the potential to treat all different kinds of tumors. It is exciting, good news for excitements but also for the industry, as well. We foresee this will be an area of the Chinese Companies in total will dominate in this space, unlike before where the multinational captured 70 of the volume of the market. David the standards are changing. Arguably, right or wrong, the goalposts are being moved. Just because it is granted conditional approval in china doesnt mean it will get the same treatment outside. You mentioned the alzheimers drug. That was given conditional approval. We saw a massive move up of the stock. What is the prospect of that . Will that get rolled out globally . This year . Or how long will that take . The drug has been controversial within the industry. Because of the design of the debate, whether that is the most rigorous one to really tell the efficacy. The regulatory attitude is that it is conditional approval. The drug Company Still need to collect 400 patients data between the treated and nontreated to really compare the compare the efficacy. For the individual stock, or for any drug with a shaky mechanism, there is a risk it may not work with a bigger pool. Then there will be a retract of the label and they will have to exit out of the market. Has is why the regulatory been comfortable with the accelerated conditional approval, but it doesnt mean the bar has been lowered. It is just letting the industry collecting data while promoting the drugs. Government chinese has been expanding this program. We have seen some of the International Drug makers. How do you see the price were playing out between domestic and International Players . This could be called volumebased procurement. It falls into the big backdrop of the china government, the biggest payer of this region, is trying to build a Health Care System that is Cost Effective but at the same time, tries to reimburse as much as possible because there is a lot of headroom to improve. Government working on multiple areas with the low hanging fruit of saving, and the patents falling into such category. In 2019, there have been the 125 rollout of molecules and in early november and december, more molecules have been announced. The tender will happen in january, january 17. Again, this is the first time where government put a huge chunk of volume on the table and because of the quality of the multinational and generic has been verified by the quality consistency evaluation, therefore the winning factor is price. Our view is always that once the competition has been very fierce , then therefore there will be at least an 80 drop for the retail price. Wouldnt say this is a value destroying exercise for the industry because all of these drugs have been in the market for a long time. The return for r d has been exceeded already. Again, between multinational and chinese, so i think this will be again where the cost of manufacturing is. In the 2019 example, we still see one or two, several multinationals didnt bid low enough. They feel like their costs can be profitable offering the price. The simple messages that i think for generic, we should expect a lifecycle curve should bend. There will be pricing for both multinational and chinese generic, so going forward, the company has to do really good low cost quality manufacturing. To be like a global company, have a long pipeline or list of hundreds of molecules to become the white pill, the bread and butter type of provider for the drug market. Selena giving given the market the market dynamics, which companies are you most bullish on . I am bullish on the companies that in the drug r d innovation space. The companies which such as as ecosystem Contract Development organizations, it could be the pr rose. For the preprofit, for biotechs i like the companies who not only have china but global developments. That touch upon hundreds of thousands of patients and they are the frontrunners. For this category, i like this company. For the second category, i like wuxi biologics. I think these other companies will do well. David thanks so much. Come back soon. Analyst. Search coming up, we are talking the big escape out of japan. Hasr that, carlos ghosn scores to settle. That is coming up next. This is bloomberg. Selena Carlos Ghosns dramatic escape continues to pose questions. Beirut pressed for the return of the former nissan chairman a week before he slipped out of japan. Angus is tracking the story. Lebanon doesnt have a next edition treaty with japan at this point. Next edition treaty an atradition treaty with japan this point. They can upload and open a diplomatic channel. , they wouldin japan pose the question, how did carlos ghosn and up in lebanon . End up in lebanon . Treatys no extradition and it seems unlikely ghosn will soon. To japan anytime meantime, everyone is asking the question, how did he pull this off . The internet has lit up with theories, all unconfirmed at this stage, about how you managed to get out of strictly controlled house arrest in japan and tokyo. Beirut. Ed to end up in everybody is trying to figure out this. There are reports a private Security Firm orchestrated the affair, his wife was involved, possibly in multiple countries and as you said, was there a connection with the lebanese authorities . The international times, suggesting there is government involvement and there may have been a meeting between ghosn and the lebanese president. The president s office denied this. , thisfascinating to see time next week, he will break his silence to the media in lebanon and reports suggest he will hold a press conference january 8 where we think he will air some dirty linens. David some stories to tell, and the world will be tuned in. Do we know when japan and lebanon are set to talk . Part of that story as well, what would be the next thing to watch when it comes to this narrative . No indication on when those conversations will take place. You would think they would be kept secret at this stage. Might take talks place is unclear, whether it is in tokyo through ambassadorial channels or in lebanon is unclear. And hisfrom ghosns familys statements, there are toious targets for ghosn pick out next week when he starts his media assault. Maybe nissan itself, the japanese government,. Nd perhaps the legal system he long i sailed the legal system as unjust and he said he fled from injustice. Several people will be perhaps a bit worried about what he says. Been revival has of concerns about the fairness of the japanese judicial system. Thanks for bringing us that report. A check of the latest headlines. The philippine securities is asked is implementing guidelines to address concerns over shortselling and air transactions. The possible impact on traders risk capital ratio. The chairman says the move will make stock market trading in the philippines more robust. Asias richest man is taking on s man and about lebron line shopping. Reliance industries started testing a portal. They are aiming to take on amazon in india. They promise more than 50,000 grocery products. Commodities traders are closely watching the platinum price after a surge in interest at the end of last year. They focused on the precious metal jumping in popularity in december, bringing the 2019 investments to 850 million, the biggest ever annual inflow. Platinum is used to curb emissions from diesel cars and had fallen out of favor after volkswagens emissions scandal. David living into the last 16 minutes of the session in hong kong, the hang seng on its best day of the year. Im kidding. We are back to levels of july 2019. This is bloomberg. Su happy new year. 2020 but we do not have flying cars. We will get to that at some point. We are entering the last hour of the morning session. Lets get your top stories as we kick off the trading year. Asian markets starting on a high. New stimulus measures out of china. The official dates for the u. S. China trade deal. Haslinda President Trump believes kim jongun will honor his pledge to denuclearize despite kim jongun warning. India,it is a battle in he richest man takes on jeff bezos. We will have that story later. This is Bloomberg Markets asia. Haslinda a pretty tentative 0. 4 . Asian stocks up we heard about the trade deal, the january 15 target. China injecting liquidity. That is the first move, more to come. Take a look at where we are. Gains, upading the 1. 5 . The pboc injecting liquidity into the economy come up possibly the first of several moves to provide more funding, great news for risk assets. Protests,ff the currently up by 1 . Flipping the page, where we are with currencies now. This is despite disappointing gdp numbers. It could have been worse. It is more of a relief than anything else. It is resilient despite the economy being tested. Gold inchingt upwards of 1500, some say there is a lot more to go. Goldman saying it could reach 1600. , with theude 61. 30 biggest gain in three years. David speaking of oil, it might provide a challenge for this market, india that is opening up this hour. , rateson on the way up falling to negative. It looks like we will get a better start to the trading yield 6. 5 , 10 year essentially flat. There is a lot to talk about with india. The time is rising across the region. Lets get an update of first word news. Kim jongun says he is not bound by his pledge, and will debut what he calls a new strategic weapon. He says u. S. Sanctions leave him no choice but to reconsider commitments. Trumps reaction was muted. Trump says he will sign the first phase of a trade deal with china on january 15 at the white house, he is then planning to go to beijing. It will seal an agreement with china to buy farm goods in exchange for lowering tariffs. Hong kong kicked off the new year with renewed protests, vandalism and protests. Demonstrators and Police Clashed again into the night after tens of thousands of Peaceful Protesters took part in an organized march. To maintain their fight for more democracy and last chinese control. Japan is expected to speak with lebanon through diplomatic channels about Carlos Ghosns escape. The government was unaware of details including how ghosn managed to flee, and his exact whereabouts. What the clear japanese government can pursue in these diplomatic negotiations. 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. Thank you. More on the u. S. China trade deal story. Beijing, january 15, is it set in stone . Markets were largely pricing that in. Peter navarro said it was a done deal. Robert lighthizer was expecting this to be signed in january, and we have a place in a date. China has not given any official response on this date and signing. To recap, this deal so far which we have not gotten the full text , we know the u. S. Will roll back existing tariffs, and chinas agreeing on agricultural processes, agricultural purchases. It really covers the lower hanging fruit. When it comes to future rounds of negotiations, the view is trump is more optimistic than beijing it comes to making progress that are at the heart of the spat between the u. S. And china, and that includes chinese subsidies and support of the state owned enterprises. In beijing, those areas argued as something they will not are viewed as something they will not compromise on. Releasing quite a bit of money into the Financial System. Details on that . Selina that is a triple r cut, 150 billion of liquidity into the Financial System to help the lending rate to businesses from the bank. It is expected to trigger alone prime rate reduction. We also know in january there will be an increase in local debt issuance in cash demand ahead of the chinese new year. Traders were expecting this. There are expected to be two more cuts down the road, but the pboc is maintaining the prudent Monetary Policy that signals a major shift. And more positive economic policy. David great stuff, thank you selina wang, our china correspondent. Lets bring in frank benzimra, head of asia equity strategy, Societe Generale. Very nice to see you. Frank good morning. David january 15, now we have a date, do we need to talk about phase two . Frank that is good that we have thee one, and finally scenarios we can see, we are going to deescalation. That, we might have on the trade some better news coming. It is not the end of the story. Concern with investment is the beginning of the story. One, phasehe phase two complicated, and on the 1. 9 to 2 ,we have how much more can it go up . Period where in a until the Monetary Policy the spring in our view, and we are in a period where two of the major risks on the market which are the trade war and brexit are somewhat fading. That canomething support risk assets, and we see a number of risk assets where the valuation is ok. We can have further good news in the months to come. Haslinda we saw the triple r cut from the pboc, some say the first of many more measures. How do you play chinese stocks . Isnk the triple r cut sending a signal that the monetary easing that we have seen and the gradual easing will continue. Coming on the equity market we have other considerations. One of these considerations is with ahe valuation number of stocks Means Companies we have to be aware of that. The stocks have led that share increase. One of the things we have been discussing has been the value theme, and the value trade is more value investment. Of things inber that still have legs. David i know you cannot talk specific names, but are there any specific sectors or the size of stocks where you do find more value . In china, the chinese banks are in interesting sector. We are taking bad news into and most of this is japan. Us, frankstay with benzimra. Isll ahead, kim jongun calling for shocking action against the u. S. , the President Trump says he is not worried. Up next, we are looking to possible risks and headwinds this year. Will the u. S. Election drawn investor attention away from any resolution to the trade war . We will try to answer the question, next. This is bloomberg. David welcome back, you are watching Bloomberg Markets asia. Happy new year. Frank benzimra, head of asia equity strategy, Societe Generale is still with us. I want to talk about earnings. Main trading session of the year, this time last year i was faced with a , i believejections most of them i wouldve been heartbroken. Are the ones we are looking at for 2020 more realistic . In asia there is a cycle what we start to see and have started to observe over the last three months, earnings have done great. In asia and taiwan and korea, very strongly in korea. That issomething leading us a bit more optimistic when it comes to earnings. We are seeing high singledigit increases in earnings in 2020 which is plausible. And which is going to be more widespread, not just from china but from korea and north asia. David talk more about that, within the conversation you prefer markets within the region, northeast asia over southeast asia. Frank that is still a trade we taiwan. Rea, there is an earnings story in the growth story. Growth is not great in any of these places, but in attempts of profits and sectors and more comingwe find than akorea and taiwan market like indonesia or malaysia, in which we would like to see acceleration of growth. See beforeke to getting more aggressive in this market. Haslinda why would emerging markets in asia play catchup . Frank i am sorry, i cannot hear you well. Haslinda why would emerging markets in asia they catch up, underperforming the rest of the region . Frank they underperformed the , and you havegion some element which is linked to currency which have been detrimental to these markets. Which we thinkng we seegger will be when growth coming back and reaccelerating, and this is not something we are seeing at the moment. At this stage of the year where we are standing, it is premature to come back to these markets. Some say oil will stay above 60, but below 70. Howard you how are you factoring that into your strategy . Frank some scenarios we have an oil is bearish. We think there will be demand slowdown and the price of oil will remain around 60. Which will Something Likely derail the growth in india. Is there is a risk india. Ets, indonesia, issues, and some not the scenario we are at in the moment. Element fortral asian equities. Of theour first question day for the year is out, and something i wanted to ask you as well. Which central bank you think matters most for risk assets . If we do not get the Earnings Growth story or the economic recovery, i trust Central Banks will be there. Usual i think the action of the fed is what whether there will be further cuts to come. We are in the camp where we think from spring they will resume Interest Rate cuts, and that could drive the market. Frank, wishing you a prosperous 2020. Frank benzimra joining us in hong kong. Still to come, thousands of tourists are told to flee australias south coast as the bushfires will intensify. This is bloomberg. Haslinda welcome back, extreme weather in the coming days to intensify australias wildfires. Thedeath toll is rising and military has been scrambling to help thousands who have been cut off along the coast of New South Wales. Here, it is still bad and the sky has turned blood red. Yes, there have been terrible scenes this week on the south coast of New South Wales and across the border in victoria. Terrifying bushfires swept through the region on new years eve, and into new years day. In new seven people dead south wales this week, and one person dead in victoria. Out onisis has played social media, the images have been striking, posted by people in the path of these fires blown. Hrough by Gale Force Winds the sky turned pitch black and as the day progressed it turned blood red. Ashain down on beaches rained down on beaches. About theave to ask political fallout, and for the people who are trapped, can the government get them out . Lets deal with the second element, there are sustained efforts to help people get away from these endangered areas. First and foremost the township in southeast victoria, there are about 4000 people cut off by road. Offshore isrd evacuatingo start locals and holidaymakers. There are thousands more holidaymakers up and down the south coast of New South Wales trying to get out of these areas, roads have been closed. Power is down and communications are down. They are taking advantage of the colder spell of whether to contain colder spell of weather. Roads are clogged with thousands of cars. There are reports of fuel stations running out of petrol which is making it increasingly difficult to get out of these areas. Haslinda thank you so much for that update. Lets do a quick check of the latest business flash headlines. Hares tumbling after preliminary falling, the jewel maker would have 45 billion yua, a 15 rise but still fell short of expectations. They are targeting your revenue rise of 10 in 2020. After buying 10 of the Universal Music Group from the French Media Company vivendi. It values the biggest Music Company at more than 30 billion. Tencent and its partners have an option to increase its stake to as much as 20 of the same valuation until january 15 next year. Macau revenues slipped for the Third Straight month in december, marking the worst decline since 2015. Was less than 2 billion for the month, down 14 from a year ago. Casinos has struggled to lori and high rollers amongst an economic slowdown in china. It is thetime start of the year, we do not have to talk about diets. Made for people who have a resolution to look like beef cakes i am kidding. , 2 , not a lot, but the volumes are substantial. What you have is cutting the on one of its units. This is bloomberg. Whether youre out here on lte or here on a wifi hotspot, Xfinity Mobile has more coverage to keep you connected to what matters most. Moooo. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. Save up to 400 a year when you switch. Plus, unwrap 250 off our best phones. Click, call or visit a store today. Ine pictures, 11 30 a. M. Singapore, we are in the middle of the trading day. Up by 0. 4 . The u. S. China trade tensions weigh on the economy, it could have been worse. Some were saying we were looking at a possible recession, that did not happen, pretty good news. This is an open economy, one of the most open in the world susceptible to exports. Ascounts the u. S. And china its top trading partners. Growth coming in at 0. 8 , the slowest of the decade. Lets look at the overall markets and see where they are now after a slow start. Markets in asia in positive territory. , with very positive start the exception of the philippines. Nifty futures in singapore are flat. Yesterday, 6. 5 . A decent run for indian stocks. This chart takes you all the way to the year that was armageddon, that does not really matter. Of winning in india, the nifty index including last year has registered five annual declines since armageddon, and bruce willis save the world in the late 1990s. And what Central Banks will do, that is the question today. Economic growth slumped in the final months of 2019. Despite an easing of u. S. China tensions. It when the numbers are not so good but the markets choose to see it positively. I hate to use the words mixed pictures, but there are a lot of numbers out of this release. Mark cranfield said it was more relief than excitement, and that is a good way to look at it. We saw thirdquarter revisions to the upside, but the fourth mentioned you manufacturing contraction on the quarterly and year on year numbers, we see that slump with a trade were continuing, and trying to shake off the tariff pressures. Services in contraction were providing support that they have, modest growth there. The slowest since 2009, nothing to celebrate. We heard the Prime Minister talking about how it was less vigorous than the government would like, that is putting it mildly. A few months ago he was saying it would be lucky to see growth. No reason to be too festive. Haslinda if you are optimistic and looking at a rebound in manufacturing, how soon can that happen . Across the board and pmi numbers, the numbers look good. Singapore was in this basket, but a lot of markets coming out of. The tail end of last year was looking ok, some modest improvement at the singapore government has been looking for for 2020. That is good coming off the back singapore industrial production. We should see brighter days on the policy front. U. S. China january 15 coming up, hopefully something out of the phase one trade deal, and other trade deals looking ok, some brighter news with japan and south korea. There are reasons to be somewhat optimistic. Haslinda bloombergs Asia Economic reporter. Now for first word headlines. A trade deal between the u. S. And japan has officially kicked in. Japan is reducing tariffs on u. S. Beef and pork. Japan is still looking to achieve its goal and say u. S. Officials have given assurances that new tariffs will not be introduced. Benjamin netanyahu says he will Ask Parliament to grant him in unity from prosecution on corruption charges. He vowed to tear up the allegations against him. It does not appear he has the majority backing in parliament. Dear citizens of israel, the immunity law is to protect elected officials. Meant to ensure elected officials can serve the people according to the will of the people. Nine people have been killed in indonesia as heavy rains hit the capital jakarta triggering the worst flooding in seven years. The downpours have shot one of jakartas airports. The rains will continue for the next three days. Nba commissioner david stern has died at age 77 after suffering a brain hemorrhage three weeks ago. Stern was the longest serving commissioner of any u. S. Sport and is credit for transferring the nba in twitter multibillion dollar powerhouse. During 30 years at the helm he boosted revenues from 118 million to more than 5 billion. He retired in 2014. 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. David lets talk about north korea. Kim jongun has declared he is no longer bound to halt major debute tests, and he will what he calls a new strategic weapon. President trump and his Immediate Reaction was muted, saying he and kim were good. He did sign a contract, an agreement talking about denuclearization. That was signed. That was done in singapore. I think he is a man of his word, but we will find out. David lets get more on this and the implications. By inporters standing seoul. About a new strategic weapon, do we know what it is and does it matter . We do not know what the strategic weapons are, but north korea is reporting having conducted important tests without elaborating what they are. But what this means, this announcement from north korea, it means kim jongun will take a step away from what he promised to donald trump, that he will not be testing intercontinental ballistic missiles, the ones capable of reaching u. S. Mainland territory, as well as Testing Nuclear bombs. Walking away from this moratorium, he is indicating he is applying pressure on the u. S. To meet the demands of north korea, including ending sanctions and securing his regime and leadership within north korea. The u. S. Has not given north korea any of that because it sees north korea has not taken any steps to what he considers denuclearization. David how is this message delivered on north Korean Television to the people . Delivered in an unusual way, none like ever before, at least during kim jonguns rule. ,e normally delivers it himself you hear his voice on state media. This time it was just a north Korean State Television anchor reading the summary of a four day Party Meeting that includes a speech that was seven hours long by kim jongun. He did not deliver it himself this time, it was through the north Korean State Television, which means kim jongun was focusing on his domestic audience, and hinting at a policy shift toward the international community. David thank you so much. Down top, we are coming of 2020 in india. We will get to the opening action and the lowdown on the Economic Outlook for the country. That is coming up next. This is bloomberg. Haslinda lets turn to india, investors are banking on economic recovery in india. A slowdown in economic expansion on the back of the nations planned 1. 5 chilean dollar infrastructure push. 1. 5 trillion infrastructure push. Lets bring in teresa john, economist, nirmal bang equities. Growth may be picking up, but we look at inflation that is likely to remain elevated. Doesnt mean there is limited room for the central bank to move . As you said it is likely as early as later this month. See 6 in remain at that level for months. I do not see it coming down below 5 . Probably will get room for a rate cut that might by december 2020. Haslinda what kind of growth are you looking at . We are expecting growth around 5 and gradually pick up to 6 in the second half of 2021. I have a question related to what you mentioned earlier, they might get a rate cut out of the r. B. I. How much do rate cuts help in india given that a big part of the economy is on bank, and loans are priced accordingly. The last part of the slowdown at the moment is driven and theyedit freeze, are finding it difficult to raise money. Now banks are more reluctant to lend. That is a problem that is leading to the slowdown. The margin rate cut from the down to some extent, and it will help at the margins. It will probably not be a game changer. , and if they cut further you take the repurchase rate and inflation, they cut further. Is that a problem . At the moment because we are in a slowdown, possibly negative rates will help, but it could become a problem once recovery starts. We are not expecting Central Banks to cut aggressively even as they do cut. It will probably not be more than 25 basis points. We were getting this fractions last year. You are staying with us as we count down to the open. We were mentioning this statistic earlier, over the last 20 years the indexes only registered five annual declines. Has been good for the most part. A couple of seconds away from the open, here we go. The opening of the second session of the year in india. Good morning. It is a positive start, an important day as well. We could be looking at a volatile session for indices like the nifty. One of the few markets that open in january. The nifty act above 12,200, that looks like a positive figure. Higher. Scaling ,or the Broader Markets improvements the last many days, a quarter percent gain. You are keeping an eye on otto stocks, how is december looking . Auto stocks, how is december looking . We did get a few numbers and estimated sales number for the month of december, but overall if you look at the nifty auto index, it has opened higher. They were better than estimated numbers. Numbers will be released today. The numbers do not look great, but one segment that stood out is where the monthly numbers were up 3 . There. A we believe it lets bring in teresa john, economist, nirmal bang equities. I want to look at the rupee, in 2019 it was down 1. 6 , among the in asia. Erformers what assumptions are you making for 2020, and how concerned are you about the fiscal position for india . Expect depreciation , one factor going against the rupee, the higher fiscal deficit. And the growth differential with the emerging markets has narrowed in 2019, probably the same going into 2020. Because of those factors, a Research Suggests a weaker rupee is good for growth. But we think liquidity will be late 2019. Om global Central Banks opened the liquidity taps, and i think the rupee will benefit to some extent to that opening up again. Stays, butation bias might be limited. You partly look at the equity markets as well. Ofm looking at a projection rough consensus, 22 increase in eps on the nifty. Can i believe that number . Given that the growth slowed down into 2020, Earnings Growth will be muted. It will be in line with nominal gdp growth. 22 looks elevated. David thank you for that, and apologies for putting you on the spot. If i had heard that number last year, i would be shattered and heartbroken. They give her joining us. Teresa john, economist, nirmal bang equities. Coming up, could there be a new thelenger to amazon in ecommerce space . We will look at asias richest man who is stepping up to the challenge. This is bloomberg. David time now for a quick check on the latest headlines. Implementing new trading guidelines on rules over concerns on the effective shortselling, and the possible impact on traders riskbased capital ratios. The fec chairman says it will make the stock market trading more robust. Commodities traders are closely watching after a surge of interest last year. On their 2019 investment to 850 million, the biggest in inflows. They had fallen out of favor among investors after the 2015 emissions cheating scandal. Up inis talk of a big tie the u. S. Sports entertainment space. Poised to a deal valuing 160 million. It offers Luxury Travel services and exclusive Fan Experiences including the super bowl and the ryder cup. President says is a ministration will issue new regulations on flavored vaping products. The fda sent a proposal to the White House Monday to restrict the product. According to bloomberg sources, the regulation will require prepackaged flavored vaping pods of tobacco and menthol to be taken off the market. Times,a behind the vaping. Amazon has sent billions of dollars into india trying to crack the market. Ni is gearing up to take on both of them. We are joined from mumbai. We are talking about a man who added 17 billion to his coffers last year. Is this a full swing launch . No, this is not a full swing launch but an enhanced Pilot Project which has been launched in three provinces of mumbai. They are tried to understand how products iniver the delivery mode. They are trying this in three cities in mumbai, and they will take the learning and rollout later this year across the country. Modeled onhis portal what we see from amazon . Not really. They are claiming a slightly different model. They are trying to include as many momandpop stores. Iti am placing an order and is available from my neighborhood, that Neighborhood Store will deliver so the delivery time will be cut short, and the Neighborhood Store will get something out of it. They have to add millions of retail outlets of momandpop stores. Haslinda is this a game changer . Is the richest man about to get even richer . Interesting question, of course. This is the next big thing for ambani. He always stated publicly it is no longer in oil and gas company but a retail company. He has launched the Offline Retail footprint. This will be the big thing that will add more value and money to ambani. Seed great stuff, we will if the rich get richer. Thank you. Fascinating story, the battle for the indian retailers. , pmicap some of the things numbers lower than expectations. Theut a chart together with official numbers and the trend has been up these last two months. One has been above 50 and the other state above 50 which adds to signs of stabilization in the economy, and part parcel of that story is the export story. It has started to pick up or stabilize, and the latest numbers out of south korea falling less than expected. Gdp numbers out earlier on out of singapore. A mixed set of numbers, but leaning toward the positive side. Haslinda we are optimistic, always optimistic despite disappointing numbers. It could have been worse. We did not fall into recession. Perhaps better days coming in 2020. This is Bloomberg Markets asia. Middle eastarkets is next. This is bloomberg. Yousef hong kong starts the new year just as it ended the last one, with protests, vandalism and teargas in the streets. Iranbacked iraqui militia. Iran is ready to strike back at any time. Japan is ready to speak to lebanon