Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713 :

Decision tomorrow. Ok cutting rates during the sars outbreak. Stimuluspecting fiscal measures out of south korea, not to mention a hong kong budget so lets get a check of the markets with our cross assets reporter. Downading at session lows, 1. 9 . The nikkei two to five bringing yeartodate losses to more than 6 . Beensi 300 stocks have paring some of the losses, but still down. Hong kong done more than 1 . Fluctuation in 0. 25 . Ow up 0. 5 i want to look closer at the technicals when it comes to the nikkei 225. When you are in a deep selloff, when does it end . Can bees moving averages looked at as Technical Levels of support. It already dropped to the 50day and 100day moving averages. Moving average currently holding, bouncing off that level. We will see if we can close above it. If not, it could portend a super selloff. Lets get more Market Reaction in korea. David ingles is in hong kong. What stands out to you . On top of the price declines in the south korean won , for example, we are on the verge of the level we are watching, so volumes have come through this week. Almost oneo, we were billion shares. Yesterday was the most volume we goingeen on the kospi back to when i was a teenager. And we areay, halfway into the session, look volume ther large day in south korea. Watch thoseue to coronavirus headlines. One u. S. Soldier in south korea has tested positive for the virus. Emergingeing any value in the korean market now . That is where the issue is. Before the Virus Outbreak, one of the big market stories in asia last year was this routing we saw in everything, the entire south korean market, and that actually took valuations to the highest level in a decade before all of this took place, so it gives you a very high incentive if youre looking to sell and scared or uncertain how you price this in. It is a very high incentive for sellers at this time because of those valuations. That comesto see how to fruition sooner than later. In hong kong,s thank you for the latest on the markets. , china has reported 400 six additional cases of the coronavirus, bringing the National Total to just over 78,000, as fears of a pandemic arise with officials warning americans should prepare for a potential outbreak at home. Through the numbers out of china and hubei province. An additional 406 cases reported today out of china, comparing the 580 yesterday, so a decline with the total now over 78,000. The numbers today underscores chinaeory and data out of that there is a continued moderation in terms of the infection rate. A vast majority of the deaths reported today out of hubei china. E, 52 now in discharged over the last 24 hours. Youre looking at a total of 30,000 people who have reportedly recovered, but it is not just china in focus, the korea the world, south with over 1000 deaths. Where youin italy, have had 11 deaths, and in spain, about 1000 people quarantine. New caseys in switzerland, caray should, and austria. The u. S. Stepping up its preparedness. The cdc saying they have an could seeplan that School Closures and some events shut down, but they point to be in the position where if this , theyncrease in the u. S. Want to be in a place where they can effectively control that. The white house is saying they already have it under control, larry kudlow saying we have is contained. A different message from the cdc though. Chinese businesses, most smaller businesses in a race against the clock to survive as activity remains affected. What is china doing given that a lot of these businesses have not been able to Access Funding despite liquidity injections and Monetary Policy loosening . Chart froma terminal the Business Survey released a couple of hours ago. It is a Business Conditions index. They described it as shocking what they are seeing, a record drop for this index falling from 56 to 37. They look at profits and sales to investments. That is a reminder that the pressure private companies are under, and that is why you are seeing the state council coming out and outlining additional vat tax forcluding Companies Operating out of hubei , those costs will be held throughout march and may. They are stepping up funding for banks. For, lending that they want commercial banks to lend to private companies. The private sector accounts for 6 of gdp and 80 of jobs in china. Thank you. Lets get first word news with su keenan. Seesesident trump tremendous progress being made towards a trade deal with india, although there is no timetable for an agreement. Mayp suggested a new deal have to wait until after the elections before that could be signed. American officials have been trying to open up to agriculture and medical devices in return for indias preferential export status. Violence erupting in new delhi, with rival groups clashing over a new citizenship law. At least 10 people died and more than 180 were injured in two days of violence. India has seen widespread demonstrations since parliament approved a law that fast tracks while excluding muslims. Hosni mubarak has died. He was 91 years old. He ruled for 30 years, before being forced out by the arab spring uprising in 2011. He went on trial for the killing of more the nation at 50 protesters by security forces, but was only found guilty of fraud. President trump said he is considering an official response to chinas expulsion of 3 wall st journal reporters. Over ane expelled in which china was mentioned as the sick man of asia. It comes with a titfortat expulsion of chinese journalists from the u. S. We would look at what to expect from the budget later this hour. Plus, betting on support from the pboc, we hear from one Senior Fund Manager next. This is bloomberg. This is Bloomberg Markets asia. Another ceo fred for asian stocks after concerns over the coronavirus triggering a slide in stocks. The global bond rally is continuing as well. Investors are looking for signs of accommodation. Lets bring in our guest. We have seen the pboc doing what it can. We are expecting further monetary easing. Turnover, margin lending, is there a sense that confidence is being restored may too quickly . Yes, thats true. We saw a quick rebound in china heyshares, because it is retailinvestordominant. The Retail Investor is restoring their confidence quickly. We think at this moment that investors are more looking at the fiscal stimulus and monetary policies, but i think there could be a further correction when the numbers come out. , the current expectation for their gdp number for q1 is still quite high, so they could be further downward revised. As long as the outbreak is shortterm, it would not last until q2, and for the overall year, Economic Growth was to be sustainable. Investors will quickly after seeing the numbers go back to looking forward to the stimulus and economic recovery. Be lookingould you at if you were trying to structure your portfolio for the worst case scenario, that we dont know, one quarter, one year . Proofoes that coronavirus portfolio look like . We are still overweight equities in our strategies. Selective inry terms of stocks. The biggestse, problem is uncertainty, the worst thing the market doesnt have gradualwe inking and then come down q2, we will have gone through the four phases of recovery. Technology such as not affected by the outbreak come with those who we found first, then the industrial sectors will follow because of the fiscal stimulus. Later in the second half, the will recover,rs but those will take time because they are the hardest hit sector. Will be looking at the data. At this point, the market is more expensive. Investors are pretty much guessing what will be the economic impact. , and when the numbers are up, people will see policy support in the numbers from the companies will come out and they will have more solid expectations going forward. What about sectors that will not be able to make up a the loss of revenues from this outbreak . Be selectived to in terms of sectors and stocks. Revenuetors will lose for all of q1 and cannot make it back up. They definitely need to cut rent , so thert the retailers revenue in q1 will be a huge retailers, also especially restaurants or the Consumer Services side. Up what they lost in q1. Bee sectors might technologyrelated. We dont believe people will not buy smartphones forever. Theyve purchased delay the decision, then catch up later on when this situation is more stabilized. That is why we are selective in sectors right now and already sold some positions that will be impacted. Four you are overweight in chinese equities, so how do you gauge your preference, whether . Arge cap or small cap we have seen some resilience. , we do not differentiate between small cap and large cap but look specifically to company fundamentals. The government stimulus is important. Actually before the Virus Outbreak at the end of last year been pboc has already cutng policy with the rrr in the measures. ,he next stage will be stimulus is to stimulate in the demand. We would look at specific companies that profit from the consumer side. Time. Nk you for your , the asian currencies we are watching and that the Virus Outbreak. This is bloomberg. Has weakened won to at threeweek low. Bloombergsin emerging market and singapore. We have seen the korean won take a hit during the sars outbreak 17 years ago. Model puttingnew the path towards what aspects of a Virus Outbreak because currencies to react in certain ways, so what are you seeing . Isthe first big take away the model explains currency movements quite well, and the components are the countrys economic relationship with china , plus the local caseload for the virus. To theare referring Infectious Diseases vulnerability index. In terms of how the data is compiled, can you elaborate on what we are looking at here . Yes, i should say i started modeling it with the Infectious Disease index, but we left that out because one of the interesting findings was the markets did not care about Infectious Disease vulnerability , so those countries most vulnerable like indonesia, india, and the philippines are actually relatively unscathed. Globaluld change with a outbreak or another phase of the coronaVirus Outbreak. That was an interesting finding. Otherwise, as you were noting at was hit the korean won harder than our model would have predicted. The peso and taiwanese dollar are slightly more would say one would expect. You are saying that the to haveon seems overreacted. Are there any Currency Pairs that look resilient now, but infectious be reacting to the outbreak more . Would it would depend on what happened. The peso is somewhat surprising. Taiwan has moved less than you would have expected with the model. The real standouts are those countries that will be vulnerable in the event of a truly global pandemic. Issue, know as a side pandemic risks is something that could occur on multiple occasions in the future as well. With greater human population , andty, Climate Change increase consumption of Animal Protein make it more likely that these sorts of episodes occur. Thank you. Lets get the business flash headlines. Been criticized for a cycle of disruption. He is calling on the board to take matters seriously. Bloomberg heelling could leave the bank as soon as next year. Says the bank is looking aggressively at acquisitions. He says the bank is looking at targets across business lines and could fight anything that is not another u. S. Bank. He added j. P. Morgan has a greater appetite for deals, accommodative regulators. We are looking to be aggressive and acquisitions, so apple, facebook, google, payments, white label, black label, marketplaces, that is the world we will face. , we shouldes to m a be very creative. There are christians over one company ties to china. Oversees theo pension fund has been repeatedly accused as being a source for the chinese government. Stephen schwarzman and howards marks are pushing back, saying they are unwarranted. A lot more to come. This is bloomberg. 10 29 p. M. In hong kong and shanghai. Which isd south korea reported an additional 169 coronavirus cases which brings its total infection count to more than 1100 people. The countrys death toll rose to 11 after a mongolian man was confirmed to have died from the virus. The latest infections were centered in a city which has become the epicenter of the korean outbreak. The u. S. Centers for Disease Control and prevention here in the u. S. Has warned americans to prepare for a potential coronaVirus Outbreak. The cdc says that citizens should be prepared for disruptions to their daily lives. Ncluding the Closing Health Officials Say its not a matter of if, but a question of when the virus becomes widespread here in the u. S. 60 americans have contracted the virus so far and none have died. Its not so much a question of if this will happen anymore. Rather more a question of exactly when this will happen and how many people in this country will become infected and how many of those will develop severe or more complicated disease. We have been preparing to address this type of threat and limit the impact on our communities for many years. To tokyo now. The 2020 olympics scheduled to take place in tokyo are now in doubt as organizers say they are much more likely to be canceled been postponed if the coronavirus at wake outbreak worsens. The Committee Says organizers to decide,months adding that the skill of the event means it cannot be delayed or moved. Japan has spent almost 13 billion in preparation for the event, twice what it budgeted. Havesh authorities isolated 1000 workers. An italian man and his wife who were staying there tested positive for the virus. They may have been infected during a recent trip to italy. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Thank you so much for that. Breaking news crossing the bloomberg. Out kong is set to hand 10,000 hong kong dollars to each as wen over the age of 18 prepare for the budget presentation today. We are expecting a bump in budget in terms of spending big to alleviate the economy from some of the impact we have seen of the most recent coronavirus threat but also six months of ongoing social unrest and protest. A slump in retail sales and Business Sentiment as well as in the property sector. We are expecting that annual budget to really address the fact that this is a city in recession and we ask that are expecting more recession to come. Expecting to see another contraction. We are learning more from Cathay Pacific in terms of the impact on the airline sector. 25,000 of their staff have taken up the offer of unpaid leave. We continue to watch the fallout when it comes to the tourism and airline sectors. We are getting the latest tweets from President Trump well saying that the cdc is doing a great job of handling the coronaVirus Outbreak, saying that this includes there he early closing of the u. S. Borders to certain areas of the world. Hes criticizing the democrats for opposing the closure of these borders as they said that it was too soon. This is Democratic Candidates debate in south carolina. Its interesting to point out that although President Trump and larry kudlow have been saying that the coronavirus has been contained outside of the u. S. , the cdc has come out warning americans that there could be disruptions to daily life. The cdc also really worried about the lack of these testing kits. They have developed some test but they have shown inconclusive results. Only 12 states and regions actually test for the virus. All these coronavirus headlines are having an impact on the market. Lets have a deeper look at what is happening across asia. We are joined now by sarah ponczek. What is the latest when it comes to this investor positioning as we continue to see the latest headlines on the virus . The selloff deepens. Were seeing investors shy away from areas of the market that are tilted towards cyclicality. X l. A. Is a fun that tracks industrial stocks. 850 million of outflows in one day. Seene past two days, weve 10 billion exit the largest s p 500 fund. , this is a funds fund that is heavily tilted towards japan, the largest geographical waiting. It has lost more than 18 of its assets this year. Shying away from global stocks. We see a steep selloff once again in japanese equities. On the flipside, we do continue to see investors move towards gold through the likes of gold etfs. We are seeing a little bit of a pickup when it comes to s p 500 march futures, rising. Nasdaq 100 contracts up by close to 1 . A little bit of a green shoot. Other investors are relying on the next report. Someed will come in at point, maybe in april, to save the market. Absolutely. The fed particularly is alive and well. Many investors pointing to Interest Rates and saying, we have record low Interest Rates on 10 year treasury yields. Markets are calling for the fed to act. We did have the vice chair come out overnight and say that its too soon to speculate. As of now, he believes that policy is in a good place. Theres one area of the market that is questioning the ecig efficacy. How substantive will the fed actually be in helping markets turn higher . If you were to take a look at stocks with low balance sheets, a Goldman Sachs back skit of companies with weak balance sheets. High debt loads. They have underperformed. They are about to enter a correction. Record low Interest Rates would be good for stocks with high debt loads. The problem is, if you believe that a recession is coming,