Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

That is where we are at the moment. Another down day for crude. Brent also down. Tom lets get more analysis on the market. When you look at what happened with help things are playing out in asia, is it taking offer a stellar quarter . Probably a bit of both. Concern withys the cases we have seen. In cases like texas. They have a bit of a crisis going on there. The fact that new york, new jersey, and connecticut have now set a quarantine for people who travel from these hot zones and the rest of america. Imposing an economic constraint. They are worried there will be another abruptness to this. That the Economic Growth that america had. In states of new york, when they take this action, that is a worrying time. That would hurt businesses on a much bigger basis. That is what wall street is concerned about. The hit to the economy. There has been talk the u. S. Government is getting ready to do a fourth round of fiscal stimulus. There has not been any details yet. The market would be concerned. They would like to see this happening weekly. They need reinsurance reassurance that the government is not going to do this again. To help get them back on the right footing. House isthe white weighing new tariffs on europe. Is that being priced in . It has caused jitters on both sides of the atlantic. This is certainly something where the market has to take it more seriously. It is not just from the u. S. Side. The eu is considering banning travelers from the United States to europe. Because the u. S. Has been slow to clamp down the virus situation. Markets have gotten used to the u. S. And china. This is something that could add to more volatility. Way to gotill a long in the u. S. Election process. So nextay become whipping horse. Rishaad good stuff. A slower recovery than anticipated a few months ago is pretty to buy the imf. The head of the imf explained why. The firstseeing in half of this year when the lockdowns were more severe, the impact on economies was worse than we anticipated. That was one factor. There has been some conversation that the imf has been more optimistic than other agencies. When we put out our numbers on april, we were ahead of the curve. In terms of signaling this will be the worst recession since the Great Depression. And a truly global crisis. That is one of the alternative scenarios we considered in april. April, we unlike in can have an upside risk. We can have movement on the medical vaccine front. But we could also have a financial tightening from a second wave. At political tension. The risks are more balanced at this point. It why dont you think, and is not just the imf but other institutions as well, have been slow to realize the magnitude of what is happening with the Global Economy . What is it you think has caused that kind of creeping appreciation of the damage that is being done . This is a crisis like no other. Impactto figure out its is a true challenge. Answer questions about how peoples behaviors are going to change. Will they want . . To stay home rather than be out how long will they want to do that . These are very hard to predict. We have seen the lockdowns have been very severe. The Retail Sector has come up. This is what we are looking at. This is a global crisis. Even if domestically you are doing ok, he did not have growth. Thee are working out disconnect between what markets are telling us and what the underlying economy is telling us. I understand this is a consequence of two things. One is the unprecedented policies. By the Central Banks. That is one important factor. The second one is that given the , the marketsf this are focused on the upside. We are concerned about excessive risktaking in the economy at this point. Tom what does the bottom end of your chart look like if we saw a second lockdown in the u. S. Or europe . How wide is the fan at the bottom half . It would generate zero growth in 2021. As opposed to 5. 4 growth which we are projecting. We are getting closer to Great Depression levels. Tom lets get the first word news. Some of the headlines for other stories around the world. The republicans have moved their convention to jacksonville, florida. The High Mountain border clash between china and india heating up again. The Foreign Ministry reasserted chinas claim. The two sides have agreed to deescalate attention. President trump says he will not allow u. S. Police departments to be weekends during the black lives matter campaign. He accuses his opponents of trying to cripple law enforcement. Anate democrats blocked Police Reform bill. They said it fell short of the widespread changes needed in the wake at the killing of george floyd and other victims. It struggles with the coronavirus slowdown. It is deferring deliveries of new plans and grounding about 50 others, including superjumbos. They said they had enough liquidity to withstand Current Conditions until december of 2021. Still ahead, a private equity firm that has close to 50 billion in management. We will find out if the Virus Outbreak has changed the firms Investment Strategies in china. Recent actions from the north korean regime have led diplomats scratching their heads. This is a sign that kim jongun is stuck . This is bloomberg. Rishaad as the two koreas marked the setting the anniversary of the start agree more, kim jongun may be stuck. Afteromes just a week blowing up the Liaison Office after twobuilt and years two years after landmark summits. Lets get some analysis. She was a Senior Analyst on korean issues with the cia. Thank you very much for joining us. What has been happening of late, is it just going back to the old playbook that pyongyang has used , you up the ante, you vowed to conduct missile tests, and then you blow up an office. Return for a of. Anctions or lessening of aid to get back to the status quo. Surely with the north korea regime is looking for is fat. Kim jongun made it very clear during the hanoi summit. He was punishing the south korean government. He is continuing the pressure. I do believe they will escalate. They want to leverage for future negotiations, whether it is with President Trump or a president by then. John bolton has come out with his Controversial Book in which he contends that donald trump didnt want to do a deal at all. Ofjust wanted the optics meeting kim jongun in singapore and then those other meeting. What do you make of those comments . Do they make sense to you . Could that be why these actions of later born out of frustration . I read his book. He had to chapters on north korea. Clear thatvery President Trump was mostly concerned about theater. The theatrics. He was willing to sign on to this. Mostly out of fear. The reason why President Trump walked out was because she fears this was a bigger drama. Stayed up all night because of Michael Cohens testimony. He was very upset by it. He thought if he would not have a big deal with north korea, a small deal was not worth it. It was bigger drama to walk away. This is very disconcerting for the south koreans. And the North Koreans. Key issue right now is to escalate tension. They either need to get concessions or to increase leverage. Rishaad it is quite instructive that you have a chessboard behind you. That is essentially what is going on. Could we see further escalation here . Could we see the whole dynamic change as we had to the november elections . Is a very Cam Strategic thinker. He has mapped the audience out and he is playing Good Cop Bad Cop with his sister, making all the threats. Escalating tensions. A last minute deal with trauma. I do think we should not underestimate him. Very rational in terms of what he once. What his strategies are. The u. S. Is not necessarily prepared for that. President trump is clearly more interested in the theatrics then in the substance of the negotiations. Tom a longrange missile test seems to be one of the options for kim. What do you think the likelihood of that is . What would a Trump Administration response be . There are a number of things the North Koreans can do to escalate tension despised despite a longrange missile test. Show whatever their strategic weapons are. A submarine launch of a ballistic missile. Kim will be very calculating about this. In a nuclearcbm test is a redline for President Trump. There are a number of things the North Koreans can do short of a nuclear test. I do think it is possible he could resort to a nuclear test, lets say in october, right before the november election. Tom we have seen kims sister put into a position of greater prominence in the last few weeks , particularly with this fiery rhetoric for the south. What do you make of that . What does it tell us about the power structure in north korea, especially after we have kim jongun disappear off the stage for some time. You are absolutely right. The sisters status has actually gone out. She is no longer just quietly sitting by her brothers side. Role to ang of her and substantive role escalating tensions with south korea is quite interesting, particularly in the light of lingering concerns about his health. We still do not know why he was absent for such a long time. Participate in this april 15 event commemorating his grandfathers birthday, which is a very significant holiday in north korea. Caused some speculation about his health. Of her role is quite interesting. I do think she is being groomed to be a successor. Now, she isr right playing Good Cop Bad Cop. She has really emerged as his alter ego. She is definitely the most second most important person in north korea. Tom fascinating. Thank you for your analysis. Lets get you back on the show as we head toward the november elections. Hour, thelater this boss of Goldman Sachs says the stock rebound is out of step with reality. More ahead from another big interview. This is bloomberg. Rishaad lets have a look at the latest business flash headlines. The biggest shareholder is back at it. Give fresh momentum to the deal on the eve of a he owns 50 of the airline and he says he will support the move. Asias biggest construction Mining Equipment maker depends virus to bought about. Tesla, on a look at the way down after news of failures of touchscreens and computers. Regulators have received 11 complaints in the last week. Accidentich caused an or injury. It would not affect steering, braking, or acceleration. Markets in hong kong, taiwan, and the mainland here in china lows. Ares check in on how things playing in other markets. The kospi has some pretty big losses. Potentially a second wave moving slowing the move from a lockdown. Coming later in the day. Similar with commodities there in terms of using the dollar. It is under pressure. 20 more coming ahead. This is bloomberg. 10 29 a. M. In shanghai. Im Karina Mitchell with the first word headlines. The International Monetary fund is increasingly pessimistic about the coronavirus, seeing a deeper recession and slower recovery than it projected two months ago. The fund expects global gdp to shrink almost 5 this year. Growth also falling slightly in 2021. It fears a hit to the World Economy will top 12 trillion. Fears are growing of a new wave of Coronavirus Infections in the u. S. With the governor of texas warning a max of a massive outbreak is underway, forcing local leaders to reassess plans to open state economies despite pressure from President Trump. A new model from the university of washington seattle sees u. S. Fatalities surpassing 180,000. Covid19 cases spiked again in tokyo. Workplaces now seen as a focus. Authorities reported 55 new infections, the most in a single day sense mayt since may 5. The pandemic propped it the imf see theted the imf to japanese economy shrinking. The fund sees a contraction of almost 6 . Global news 24 hours a day on air and on quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Son at Masayoshi Softbank making these comments, talking about him donating all this years salary he received to softbank charity, saying his salary is zero, to take response ability for the debacle responsibility for the debacle that was wework. To keep myself under control. He is aiming to control the buybacks, all coming from muscle you shes on at Softbank Masayoshi son at softbank. Tom the coronavirus worsened after a dismal 2019 in china when a trade dispute with the u. S. And deleveraging weighed on growth. But private equity giants have benefited from the turmoil, snapping up assets after valuations plunged. Oaktree capital is also building billiondollar stockpiles. Carlisle on the other hand carlyle on the other hand is more wary. Joining us is partner at a u. K. Based firm. Us thisu for joining morning. Run us through how the pandemic impacted your Portfolio Companies to date. Thank you for having me. The covid19 pandemic certainly has been difficult this year. Outbreak, theemic intense focus of the portfolio their strength and ability to weather the rough patch. Observation one, the effect of the pandemic is quite uneven. There is a subset of the from the that benefits digital uplifting, the penetration of Customer Behavior in adopting more online the stayathome policies. There are other Portfolio Companies that have been impacted because of the disruption in transportation and production. I would say the recovery has been quite fast when it comes to. He disruption the presumption of production has been very resumption of production has been very fast. Portfolioy of the comes down to their investments and Business Model. Are they able to capture the trends of increasing online usage coming from the pandemic . On the other hand, they have the resilience to be able to go through a patch where their operations are disrupted. Tom right. What is the timeframe for earnings to start to recover for some of the companies you hold or have invested in . When did they get back to 2019 levels . Jie that picture varies significantly across the different sectors and industries. We had a pretty strong overweight on the tmp and health care sector. For those two sectors, Many Companies net have benefited from the pandemic. Their revenue, in many cases, growing and sometimes accelerating during the first half of 2020. There are, of course, other companies, especially in the travel and entertainment sector, that rely on the outdoor traffic , that will have a much longer recovery period. Very difficult to use a broadbrush to describe. For the vast majority of the sectors, the production has resumed normalcy somewhere around april and may. The consumption recovery will take a bit longer. Sector determined from to sector. Flight will take longer, whereas many of the other Consumer Sectors have already come back to the precovid levels. Do what evaluations what valuations look like . Are you ready to pull the trigger on some deals . Jie that is a good question. Theituations like this, companies who are positioned to cement their existing leadership. Valuation overall has come down and dealmaking has become subject to a higher level of scrutiny. The companies that tend to use this opportunity to consolidate morendustry by acquiring attractive valuations, there are also a fair amount of dislocations. Shareholders sharing their positions, which provide a good entry point for those who have the cash. We see some on the offensive by taking more stakes from the stressed situation. Rishaad there is not that much that many distressed assets out there at the moment. Does that surprise you . Tends to lagthat in the public markets. Think about a period of lag of several months, a quarter. I think you will see more distressed as that is coming out in the force distress as that is coming out in the first quarter. It is hard to be in denial of the reality. More assets will come out. We have already seen shareholders reorient their strategy or, being driven by the need of cash, liquidate positions. Rishaad a very quick final question. If this u. S. China trade war kicks off again, how does that affect what you are doing . In private equity and in our portfolio, the vast majority of the positions are oriented around domestic consumption. Exports represent a very tiny sliver of the underlying portfolio. Limitedct impact is when it comes to the effect of increased tariffs and so forth. Our portfolio is quite well insulated from the direct impact change on the agreement in terms of tariffs. Of scrutinyte a lot on the future listing of Chinese Companies in the u. S. Companiese to see listed in the u. S. As we speak. Garners a area that lot of attention. We will all watch it closely. Rishaad thank you so much for joining us. Jie gong, a partner at pantheon. On the other side of the break, the Goldman Sachs boos called for change boss called for change on the diversity front. So important if you are going to drive diversity. Many people start at the bottom of the organization. We start at the top. You have to hold people accountable if you want a diverse and inclusive workforce. We have been making progress, but we have a long way to go. We need to understand, listen, understand the concerns black community in particular are, and other minority colleagues. You have to think about who you partner with and who you do business with. If you look at the firms you work with, the vendors, and there is no diversity among them, both in terms of ownership of those businesses and the employee profiles of those companies, then you need to think about how you spend your dollar differently to drive that. The piece now is moving away from the ills and behaviors of the past and start converging on a positive vision for the future. It is a moment in time where leaders like myself need to spend more time listening, trying to understand, then actually taking steps that in the medium and longterm will move us along in creating more opportunity and fairness. Rishaad more news coming through from this News Conference being held by Masayoshi Son. He is saying he will be stepping down from the board of alibaba as of today. This is after he has been mentioning that he donated all this years salary from softbank and saying he is taking effectively zero to take responsibility for wework. To keep myself under control. If you want to listen to those gows statements on bloomberg, to live. I think it just finished, actually. Goldman sachs saying the rally erased this years losses cannot be justified by the profit potential, expecting to see a rebalancing. Discussed the impact that the pandemic is having on his business. We were clear that at the height of the crisis we would not be making any layoffs. We are running a business as we go forward. And we have not done it this year because it has not been appropriate at the time when we would normally do it at the end of the first quarter, but we 2000between 1000 and people out of school every year. We have a process. We look at the bottom 5 and bring younger talent in. That is part of the way our Business Model works. We will continue that Business Model. We have longer and mediumterm goals where we think there are opportunities to run the firm more efficiently. We are still committed to those. The crisis changes the timeline. We are focused on operating the firm. We will do what is right for our shareholders and what is right to make sure we are operating our firm as efficiently and as appropriately to serve our clients as we can. So these issues will become closer once people are back in the office. Yes, there is a period of crisis and a period of normalization. One thing that will be a drag on the economy globally i think all businesses are learning and seeing ways where there are efficiencies. That will have an adjustment on workforces more broadly into 2021. That is not specific to financial services. I think it is across industry broadly. Economistthing an wants to manage as we go forward. You were amongst the earliest to do that. When you came in, you set these targets. 11 black. 50 women as an entrylevel. When you did that, you didnt get an enormous amount of credit. Now you are probably getting more credit. I wonder what you thought about wall street and diversity, especially race. Why is wall street not been as good on race . What has been the block . Why did you seek to change that when you came in . Got focused on Diversity Inclusion at Goldman Sachs before i became the ceo. At first, to be honest, some of it was experience in thinking about gender diversity through my daughters, coming to understand how their experience professionally was different than mine might have been if i was a young man today. Really understanding those differences. I got focused on this when i was running the Investment Banking business and recognizing there were opportunities to accelerate and be more purposeful and aspirational in moving things along more quickly. I set goals in the banking division. I brought that philosophy when i became ceo to move the organization forward. You set aspirational goals. You have to hold people accountable if you want a more diverse and inclusive workforce. We still have a long way to go. I would be the first to say that we at Goldman Sachs have a lot more to do. We are focused on it. The industry has a lot more to do, but so does journalism and so does industry broadly. There are fundamental racial equality issues that are deeply rooted in our society. It is a moment in time when leaders like myself need to spend a lot more time listening, trying to understand, then actually taking steps that in medium and longterm will create more opportunity and more fairness. It is not just a question of at Goldman Sachs, it is across our site more broadly our society more broadly. Tom David Solomon speaking at the bloomberg invest global summit. Coming up, the imfs forecast for india swung from expansion to contraction, marking the sharpest downgrade in projections of the worlds main economies. More on indias challenges. This is bloomberg. Tom we are counting down to the opening of the session in india. Coming off of bloody wednesday for indian stocks, nifty snapping a four day winning streak amid concerns of a surge in virus infections at home and abroad. Financials were hit the most. Nifty index losing almost 4 . That followed the imf giving india the biggest gdp downgrade among major economies. Lets get more from our Indian Economy reporter in mumbai. The shark economic downgrade sharp economic downgrade from the imf, will it result in more policy action, do you think . Downgrade from the imf comes on the back of a sharp rise in joblessness. The economy depends on consumption. Activity is picking up as the below popens up well revirus levels. The government appears to be rationalizing spending of late. Our bluebird economist just put out a report that says fiscal measures announced so far are and leaves india more vulnerable to a deeper downturn and Slower Economy this means this effort to rationalize expenditure will see the economy headed for a long ushaped recession. This means policymakers have to do more. Whether they will do more or not is another matter. What about the highfrequency numbers . What do they tell us, if anything . Anirban as the economy opens up, the highfrequency numbers are showing there is a pickup in activity and a rebound in activity. , restaurantsweeks and businesses crawl back. But the demand is quite subdued, as unemployment is rather high and migrants have stayed away from the more industrialized areas and stuck in their villages in fear of the virus. Consumer discretionary funding, which is the back spsending spending, which is the backbone of the economy, has been focused on essential items like laptops boosted by the demand to work from home. There are fresh headwinds because of the border dispute with china rearing its head. The boycott China Campaign is gaining ground. India depends a lot of china for its imports. This cannot be good news in the recovery. Rishaad bloombergs anirban nag in mumbai. Reports from germany say a whistleblower warned about suspected market manipulation and accounting irregularities in a payment platform more than a year ago. The finance minister said it received papers from an anonymous source in late january 19. The regulator apologized for its tardy response which is seen wirecard loosed a must all of its values lose almost all of its values. India approving an investment in gio platforms gives the network under 10 of the company. Gio is the digital arm of reliance industries. Facebooks whatsapp has more than 4 million users in india. Staying with india, a bank is looking to raise as much as 3 billion to bolster its capital ratios. Bloomberg understands this lender is considering a share cell which could come as early sale which could come as early as september. Is down thisi year. Indian banks across the baord have been board have been struggling with issues due to the lucked out. Tom those virus concerns weigh on the market. We can check in with how things are playing out. Kospi was down almost 2 in south korea despite those tensions between north and south korea easing somewhat. It could be temporary. The australian index is under pressure. Concerns about a second wave there. Futures in the u. S. Looking down six tens of 1 . Jobs claims out later in the u. S. , as well as gdp numbers. We can change the next screen. We will be looking at the dollar, gold, and wti. Plenty more in terms of markets and guests from our invest summit. Stay with us. This is bloomberg. Almost 11 00 a. M. In singapore and hong kong. Welcome to Bloomberg Markets asia. Rishaad this is a look at our top stories. Stocks sliding on virus worries. The imf adding to the gloom. It further lowering its Global Growth outlook, saying the pandemic will cause even more damage then first feared. Than first feared. Covid19 infections continue to rise with surges reported in several u. S. States. New records in california and florida. The governor of texas warns of a massive outbreak. And the Aviation Industry makes plans for a postvirus world. Qantas cutting jobs and retiring dozens of aircraft. We look behind todays dramatic announcement. Haslinda across the board, red is the color in asia. Asia tracking losses in the u. S. Investors on encz, worrying about on edge, worrying about a surge in coronavirus cases. The imf downgraded its outlook for the World Economy, sees a much deeper recession. The Msci Asia Pac index lower for a third day. The kospi down 1. 8 . Almost all sectors of the index are in the red. Industrials, financials, Consumer Companies among the biggest laggers. The asx china index plummeting on anxiety over the virus. Asx dropping below its 10 day average. Valuations have stretched. We are keeping an eye on qantas, jobs, about 20 of its workforce. It is raising up to 1. 9 billion aussie dollars. We have the benchmark in new zealand down about 1 . Pete is reporting three new cases of the virus at the border of the virus at the border. The pcomp down for a third day. 4 10 of 1 . Wer by indonesia expanding to billion dollars to state banks to boost lending to industries. Rishaad lets quickly look at the risk radar. Active futures on the s p suggesting we could be taking down those losses, although those losses being deepened when we see a resumption of trading in the u. S. Seeing the dollar become a haven. That is moving up against a variety of currencies. Oil prices holding at the highest level. Down to coronavirus cases in multiple u. S. States. 4 10 of 1 . De up by it did recently have the biggest drop in almost two weeks. This is partly down to swelling u. S. Stockpiles. The Indian Trading day reflecting what is going on in the rest of this part of the world. 1. 5 down. Rupee seeing weakness. At least one analyst suggesting we could see a handle on that. Not much move on the bond market. That is what we have in prospect is the indian session, which about 43 minutes away. Haslinda the International Monetary fund forecasts an even deeper contraction in the Global Economy this year as Coronavirus Infections continue to rise. Bloombergs policy editor Kathleen Hays has the numbers. Lets start with new infections in several big u. S. States. Kathleen it is a small number but three in particular makeup nearly one third of the United States population. I am talking about california, texas, and florida. Overall, u. S. Coronavirus cases rose 1. 6 in the last 24 hours. The Texas Governor saying there is a massive outbreak sweeping the state. You are looking at a chart that shows you texas in white, florida in red, california in yellow. Blue state, arizona. Oklahoma is purple. 90 million people. Whiteow the red, yellow, bars have gotten so much bigger. In houston, demand for beds in icu units jumping. Arizona also reported a new high in covid19 hospitalizations. Texas having its largest daily increase in the last 24 hours. California also having quite a steep rise. Interesting today that new york, new jersey, and connecticut, its governors decided if you going to fly in from one of these hot spots, you have to quarantine for 14 days. If they catch you, fines start at 200 according to andrew cuomo. Cases are rising in germany, in tokyo. Not big numbers compared to the u. S. , but still rising. Coronavirus cases are nearing 9. 3 million around the world. Deaths topping 478,000. This pandemic will be with us for a while. That is what epidemiologists are saying. Vaccines, treatments, everybody waiting to see those. The deaths are falling in the u. S. As the new cases rise, but still it is getting worse. Imf nearly doubled the size of the contraction in global gdp it sees for this year. The main factor is the pandemic. How bad do they see things getting . Kathleen pretty bad when they made their original forecast in april. They said it would be the worst contraction the Great Depression. Soon after they warned of having to make it deeper. The chief economist pointing out the lockdowns disrupted supply. They hit demand. 2020is why they cut their global gdp forecast. It is 4. 9 . Nearly doubling. That is what they are looking for for the world. There is a high degree of uncertainty around the forecast because there is an upside risk. The upside risk is that things go well, the vaccines come to market sooner, so the economic recovery starts happening more quickly. The downside risk, more waves of infections. That is what we were just talking about. That will put a damper on demand. That will prevent businesses from fully reopening. That could cause more debt distress. She says the current economic downturn compares with a 10 loss of Global Income in the 1930s. The case we simulated of a second wave would generate basically zero growth in 2021 as ,ompared to 5. 4 growth in 2021 which we are projecting. That is the classic lshaped nonrecovery. That would be a really dire outcome. We are tha we are then getting closer to Great Depression levels. Kathleen over the next two years, it is estimated this Global Pandemic could cost the Global Economy to trillion dollars worth of output. The imf pointing out that with 11 trillion of Emergency Landing adding up around the world, that will push the global debt to gdp ratio above 100 for the first time ever. That is the problem down the road, how to deal with this debt. For now it is how to rein in the pandemic so economies can get growth going again. Rishaad Kathleen Hays, our Bloomberg Economics and policy editor. A couple bits of breaking news. Tencent confirming reports it required the assets of a streaming site. Tencent hitting record levels of late. Assety confirmed this purchase in an email statement. Son a short while ago said he departed the board of that chinese ecommerce tighten titan, saying it was the crown jewel of the companys portfolio. That is Masayoshi Son and alibaba. We have tencent as well. Haslinda lets get the first word headlines. Democrats are scaling back their National Convention in august, telling delegates to stay away from the gathering in milwaukee because of the coronavirus. That is in stark contrast to President Trumps campaign, who moved the campaign to circumnavigate social distancing rules. It is unclear how many people will witness joe biden accept the democratic nomination. Julian assange is facing more legal action with the Justice Department accusing him of conspiring with hackers linked to cyberattacks around the world. The new indictment says he worked with groups affiliated with anonymous, giving it targets in 2012. Assange is detained in the u. K. While fighting and extradition request from washington. Covid19 cases spiked again in tokyo. The workplace is now seen as the focus. Authorities reported 55 new infections, the most in a single day sense day since may 5. The pandemic printed the imf to warn it sees the japanese economy shrinking more this year crisisring the financial a year ago. The fund sees a contraction of almost 6 . Still ahead, the Philippines Bank is expected to stay on hold today following thailands decision to keep rates at alltime lows. We will get insight with oxford fenner. S sian rishaad one capital founder says he is expecting more unilateral extravaganza from the United States. We ask him what on earth that means. This is bloomberg. Rishaad you are back with Bloomberg Markets as we have a look at asian stocks on the way down. Worries about a surge in virus cases. The founder and ceo of the multifamily office with us. Have you ever known anything like this . You have perhaps the worst economy in the world right now and the best stock market. This decoupling between wall street and the real economy is likely to continue. The reason for that is the massive monetary and fiscal stimulus we are experiencing. Even though the economic numbers will be appalling this year because of Virus Committee valuations remain supported thanks to the very large amount of monetary and fiscal stimulus, the liquidity injected in the system, and overall the signal by Central Banks and governments that they are always ready to potentially. It stimulus ultimately or is it a lifesupport system . Hopefully it will be more stimulus than the last quarter. As of now, it looks like they are doing everything they can to prevent the economy from collapse. As of now it is more lifesupport. Hopefully as virus cases eventually will be managed over the mediumterm, then all of this will eventually become stimulus. If you get environment where the virus is more or less kept at bay and you have zero to negative Interest Rates worldwide, this will eventually become stimulus. Right now uncertainty is high, so it looks more like lifesupport. You are right. Rishaad with the imf saying what they did about the World Economy, reiterating it is getting worse than they first thought, is it concentrated in the minds of people in the markets at some stage . Perhaps, with all this liquidity, it will of course go away and be a bit like the realization that hte economy that the economy is not doing well. Sure. What we are that seeing is stockmarkets overall going up, but concentration of the winning stocks is much higher. The winning stocks are ones with solid balance sheet. Even if there is a resurgence of cases, they are not likely to witness any shortterm the quiddity crunch. Term liquidity crunch. Names will remain more under pressure. As of now, the market has gotten ahead of itself in terms of valuation. There will come a time of reckoning, but we feel it will not come over the next few weeks just because of the fact that Central Banks and governments are likely to keep injecting more. Eventually valuations do take over. That is why we are always advising Global Investors to hedge your bets and invest in a riskadjusted manner. Haslinda i want to look at asia. President saying the recovery has been pretty sluggish. When will that start weighing on asian stocks . Massimilliano that is likely to come a little bit later. We think around the end of the summer, where you have more visibility in terms of how economies have actually been doing since the reopening. If numbers continue to remain disappointing, that will weigh on stocks. Investors now are giving the pickup after the closure the benefit of the doubt. There is a strong fear of losing out in the markets. There is lack of alternatives in terms of where to invest in the market as compared to the equity market. We think it will take a little bit more time for the fundamentals to push through in terms of valuations. Fundamentals always come back to the forefront. Topinda one of your conviction calls is gold. Gold has broken out of its recent range. It is 7 away from its record reach in 2011. Much upside will we see from gold from here . At what price will gold remain by . Massimilliano it can rally much further from here for a number of reasons. We expect depreciation to continue. That is likely to benefit gold. This uncertainty overall on the economic environment is going to keep the price of gold supported as a safe haven. Eventually there will be people starting to worry about inflation. Not now, but more down the road. Again, gold is a good hedge for that. We can easily see it to 2000 by year end. Once the dollar depreciation comes, given how highly valued the currency is, will have some way to go. Haslinda goldman calling for 20 00 as well. Thank you so much for your insights. Pandemiccome, the hammered the Global Airline industry with qantas the latest to announce an overhaul. More details in a moment. This is bloomberg. Haslinda this is Bloomberg Markets asia. Qantas announced plans to slash planesd ground about 100 as it continues to grapple with the impact of the coronavirus. Paul allen has more. Dramatic measures announced today. Saying thes been company is going to become a Smaller Airline in the shortterm. You contrast those remarks with what was said in may, qantas has enough liquidity to withstand all of this until 2021. Turns out that is not the case. Alan joyce says no one has experienced any thing like this before. In terms of these measures specifically, there is a plan to raise 1. 3 billion. A Share Purchase Plan for shareholders. 6000 jobs are on the chopping block. 20 of the workforce. There will be 1000 jobs in ground staff, 630 in engineering, 220 pilots and about 100 planes to be grounded with International Flights likely to be canceled through the end of october. All this is a threeyear plan. The board asked alan joyce to remain as ceo. Qantas in a trading hold while that raising takes place. Rishaad qantas not the only airline of course struggling. Nobody is successful at the moment. Making headlines from its bailout from the german government. Shareholder vacillating between wanting to back the deal and not wanting to. Paul the vacillation appears to be older. The shareholder you are referring to, he will vote in favor of that 10 billion bailout at thursdays special shareholder meeting. But you are right he said earlier he was not happy about the discount offered to the government on its proposed 20 stake. He alone had the votes to block all of this. With him saying he will support it, it is likely to get the two thirds majority it needs. Live tons of shares live rose after this choice. It was take the bailout or face insolvency. The airline can get on with restructuring, negotiating with the unions. Hansa in thet luft cabin crew reached a deal. Job losses there were going to be more than 20,000. Paul allen in sydney. Lets do a check of the latest headlines. Masayoshi son is stepping down from the board of alibaba immediately. A similarsion follows move by alibabas jack ma, who left the board of softbank. In whati son backed ma is considered to be one of the best bets ever. He owns still about 25 of the chinese ecommerce giant. A construction and Mining Equipment maker expects a recovery being driven by china. For machinesdemand may fall 30 in the current period, with weakness everywhere outside china. Komatsu failed to give an earnings forecast starting in the year because of the pandemic. Reports from germany say a whistleblower warned about suspected market manipulation and accounting irregularities at wirecard more than a year ago. The finance Ministry Says it received papers from an anonymous source in late january 2019. The regulator apologized for its tardy response, which has seen wirecard lose almost all of its value. Getting to the markets. Here we go. It is tending to go in one direction with these equities. The dollar, there is strength there. Currencies falling back against their american counterpart. The thai baht having a rough time of it. Back. Korea stock futures in the u. S. Not helping. They are suggesting we will see future falls. Quick look at tokyo as we head toward the reopening of lunch break. Softbank worth watching. Masayoshi son departing from the board of the Chinese Company ecommerce titan alibaba. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. 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Singapore pushing ahead with its nationwide rollout of its 5g coverage in the country. Gawei has lost in its bid to ain access to the 5g network. We heard from the minister earlier this morning that singapore never excluded any 5g vendor. Sti down. Karina the International Monetary fund is increasingly pessimistic about the coronavirus, seeing a deeper recession and slower recovery than it projected two months ago. The fund expects global gdp to shrink 5 this year, more than the decline in april. It fears a hit to the World Economy will top 12 trillion. The case we have simulated of a second wave would generate basically zero growth in 2021 as compared to 5. 4 growth in 2021, which we are projecting. Lshapedhe classic nonrecovery. That would be a really dire outcome. We are getting closer to Great Depression levels than we already are. Karina fears are growing of a new wave of Coronavirus Infections in the u. S. , with the governor of texas warning a massive outbreak is currently underway. Cases have been spiking across the country, forcing local leaders to reassess plans to reopen economies, despite pressure from President Trump. A new model sees u. S. Fatalities surpassing 180,000. President trump says he will not allow u. S. Police department to be weakened amid the black lives matter campaign, accusing his opponents of trying to cripple law enforcement. He spoke after Senate Democrats blocked the Police Reform bill proposed by republicans. They said the legislation falls short of the widespread changes needed in the wake of the killing of george floyd and other black victims. A border clash between china and india is heating up again. Beijing making new allegations that its neighbors provoked the clash that left at least 20 soldiers dead. The Foreign Ministry reasserted chinas claim that the clash happened on the line of control and Indian Forces entered chinese territory illegally. The two sides agreed to deescalate attention. Global news 24 hours a day on air and on quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Karina Mitchell. This is bloomberg. Later today, the philippines announces its policy decision. Economists are split on whether the central bank will lower its rate from 2. 75 after doing much of the heavy lifting to cushing ushion thehit to c virushit economy. Contractingt sees 8 , the worst on record. Lets bring in sian fenner, senior asia economist at oxford. Muted inflationary pressure. It does mean the central bank has room to cut rates. Sian they do in terms of inflation. They do have room to lower rates, but we are expectingn expecting no rate change today. We expect a boost to the economy. We have already got two additional stimulus bills in congress. There is a lot of liquidity as well. We are thinking they will pause, gauge how the recovery is going to take place given the stimulus already in place. Haslinda have you been ofprised by the loss recovery after the philippines emerged from quarantine estrogens . Consumption is down 8 year on year. Sian the restrictions were very strict. We compare it to some of the other countries in the region in terms of the stringency index, still fairly rigid. Be a likely there will recovery resumption in activities. Haslinda is there reason to expect a further cut in terms of growth estimates for the philippines for the year, given what the imf said today as well . Sian you could very well see another one. We already think with q2 that the economy is already in recession. Even with a substantial pickup in q3, it does look like the economy will remain in the doldrums for the time being. A further downgrade in the official forecast is not unlikely. To type i want to turn and. To thailand. The bot decided to keep rates on hold. Its growth projection. Were you caught by surprise . Sian we were not caught by surprise that rates were kept on hold. They are up 0. 5 . Even with inflation falling, they want to retain some buffer. In terms of the growth forecast, yes, it is more pessimistic than we currently have. Is primarily in respect to the view on tourism and spending. We remain quite cautious in terms of that. Provide that should some boost, at least in the q3 recovery on the export side. Forecast slightly more optimistic, but still a large follow large fall off. Rishaad those trade numbers we got before the Interest Rate decision were quite shocking. What do they tell you about what is happening not just in thailand i am sure huge elements of this downgrade are due to no tourism whatsoever. What about the other countries it is dealing with . What does it say about them . Sian for the trade numbers, it fell 22 year on year. That surpassed what we saw during the Global Financial crisis. As you look at the countries, everywhere it declined sharply. China, we saw growth increased by 15 . It was not enough to offset the declines from the eurozone and u. S. , for example. Isare thinking global trade contracting at the moment. Economy, the chinese at least in the near term, the outlook for exports is very weak. That will be a drag in the coming months at least. Rishaad sian, looking at the region as a whole, which countries are going to do better and which will not do so well . Which countries we think are going to perform better, we look not just at how they contain the virus and ease these lockdowns and policy support we think north asia economies ha d more success in containing the virus. China and vietnam appears to be ahead of the curve. On the other side, countries such as india, philippines, and indonesian we see as struggling to get past the pandemic. Risks of a second wave as well. Their policy in particular is fairly meager in india. With the stringency [indiscernible] will not be able to enjoy the recovery for the region, particularly north asian economies. Rishaad what about china . Not thrown in the kitchen sink, as they did in the Global Financial crisis in 20082009. Theyve got a lot more tools, or levers at their disposal, do they not . Sian compared to the other economies in the region, you would say china has more tools to support the domestic recovery, but there has been more reluctance. In terms of fiscal support, there doesnt seem to be any great enthusiasm to increase the fiscal spending to the point they did during the Global Financial crisis. It is not going to see the kind of growth we saw and the Financial Risks associated with that, the increase in leverage. I think they will maintain a cautious approach. Saying that, there is indication there will be more monetary easing policy ahead. We will see likely another Interest Rate cut in q3, but also rrr cuts and liquidity injection. Rishaad sian, thank you for your insight. Sian fenner, senior asia economist at oxford economics. Citigroup says it is seeing worrying signs in the consumer side of their business on the virus. It continued to weigh on sentiment, as you can well imagine. I caught up with the president of the company at the bloomberg invest summit, warning that consumers in asia are far from firing on all cylinders. We have been surprised. While we had about 2 million or so customers that signed up for relief programs in the state, a very large number of them carried on making payments. We have seen the reinvolvement rate into these program reenrollment rate into these programs down from previous in role enrolees. The feature is anyones guess. We saw a significant government stimulus in the first part of this crisis. 1200 checks given to americans. Do you think when this first round of stimulus wears off, we will see defaults from the consumer . Jane it is a distinct possibility. Have seen people come out of relief programs and go back to paying credit cards in full. The big question will have seenf relief programs and be how much of it is from the stimulus programs and how much of it is people going back to work again. Lookingoment, it is optimistic, but really the Health Situation is going to drive what happens, whether it is a w, or how strong the v ends up being. Asia has been sluggish in the return of the economy in many sectors. Consumers being more cautious about spending. Even the Health Impact there has not been as great. The consumer is far from firing on all cylinders in asia. That is a point of concern for us in america. The consumer is becoming such a big part of what Economic Growth rates could look like going forward. Can you hone in on what your biggest concerns are . The areas where we may see the most pain points moving forward . Jane from the can bloomberg from the consumer perspective, who got hit the hardest youth, minorities, low income. Many individuals who are able to work remotely from home tend to be in the higherpaying roles. Hit theth crisis elderly, whereas the Economic Impact hammed youth and minorities. That is a point of real concern for us to think about how we help them recover. The other question that we will find out before too long which of the different corporate sectors will need to restructure because the demand doesnt recover. What does that mean in terms of a round of corporate layoffs in the sectors hit the hardest by this, or that may be hit by a longerterm macro slowdown . There are additional acts of this play to come. I am hoping there are only two of them and the second is positive, but there could be several. Haslinda citigroup president jane fraser. Still to come, the outlook for the indian Banking Sector as the imf slashes the countrys growth forecast. Does the system have enough liquidity to fuel the economy . We discussed that next dis cuss that next. This is bloomberg. Haslinda risk off for asia. India coming online. Joining the rest of the region. Countryseeing the declining. Its marchounded from low. The Health Care Stocks rally in period. Ame a divergence in the indian market. Sensex down 1 . Nifty down by as much. Rishaad lets have a look at what is going on. Our bloomberg Senior Intelligence analyst joins us. What does the slashing of this growth forecast mean for the banks there . It means they may need to ensure more liquidity. Good morning. Yes, the Economic Outlook has deteriorated sharply. Bloomberg economics expects a steeper contraction of 10. 6 this year than the imf projections. A longer lucked out, slower recovery lockdown, slower recovery. Does impact factors the Banking Sector, most notably weaker demand for credit and wersses her work borro inability to pay loans. Haslinda what do you make of the potential share sale of icic i . Why are they coming to market . 13. 4 ,general view is at they should not need more capital. I think this is a smart move to be ahead of the curve and build Capital Buffers now than when things become troublesome. You heard imfs comments that the impact of the virus globally will be deeper than initially thought. Investors are wondering if management is seeing a bigger issue from covid exposures. I think it is a pretty smart timing. The stock is up 19 on the month. The timing is pretty good on this. Still to come, huawei loses its bid to get a major role in singapores 5g plans. Our interview next on how nokia and ericsson beat out their chinese rival. This is bloomberg. Haslinda huawei wont be building singapores 5g network. The city state is instead giving the green light to a joint venture. The minister for communications and information s. Iswaran explained why to me earlier. S. Iswaran from the outset, we emphasized the requirements in terms of performance, resilience, and security of our network. It was key to our regulators that whichever Service Provider is finally awarded the license is able to meet the requirements. We never explicitly excluded any vendor. Mobile Network Operators have their own competitive processes. The outcome is that you have a diversity involved in different aspects of the 5g system. That is a positive outcome from our perspective, because it means we will have a vibrant 5g ecosystem in singapore. Haslinda are you then saying singapore trusts huawei enough to use its gear . S. Iswaran i am saying we have very clear security and resilience requirements. Our mobile Network Operators have to meet those requirements. Our regulators studied their proposals carefully and are satisfied they meet our requirements. Haslinda we know that huawei is under sanctions. Given those sanctions, are you confident that at some point singapores 5g networks wont be under threat at all . S. Iswaran as i said, if you look at the choice made by our mobile Network Operators, they have taken into account very clearly the security and resilience requirements. That has been the key point of. Ocus in the final award from that perspective, it is quite clear whom they have chosen. There is involvement in other aspects like the localized networks and some other aspects of the network where the telcos have spoken about. The outcome is one where we are satisfied we are going to have a worldclass, resilient, and secure 5g network that will be the backbone of our digital economy. Haslinda the u. S. Has been lobbying its allies not to work with huawei. Has that effort intensified this year from singapores perspective . S. Iswaran we have regular conversation with all of our international partners. Ultimately, our focus in this entire process for 5g has been on what is in singapores interest, what will ensure that highperformance, secure, Resilient Network that will enable a more productive and efficient digital economy. That has been our focus throughout the process. Haslinda is singapore concerned that the u. S. May take action against the lion city should andy should any of its vendors work with huawei in some shape or form . S. Iswaran that situation right now remains to be seen. The considerations have been thought out clearly. We think they have been met as required by our regulators. Haslinda the u. K. Is looking to perhaps form a club to develop its own 5g technology to counter that of huawei. Has singapore been approached to be part of that club, and what is singapores take . S. Iswaran 5g is an evolving technology. There will be many aspects to 5g. Use cases, for example, the standards that need to be established. This is something that needs to be worked on collaboratively across countries. Regard, singapore stands ready to work with our partners. Singaporest is minister for communication and information, s. Iswaran, talking to haslinda earlier on tonight. A quick look at the latest business headlines. India has approved facebooks 5. 7 billion investment into gio platforms. It has triggered widespread interest in the company. Dont forget jio is the arm of reliance industries. Facebooks whatsapp has more than 400 million users in india. Mukesh ambani selling more than 20 . Pilots who fly for American Airlines called on the was government to pay for enough seats to allow social distancing, as carriers look to ride out the virus pandemic. The average cost of the proposal would be shy of 2 billion a month for the 10 largest u. S. Airlines. This is what we have at the moment. India opened a short while ago. The nifty at the moment down 6 10 of 1 . Seeing these virus concerns playing out. Also this tumble on wall street at the moment responsible for what we are seeing. Quick look at the s p futures contract. Gives you an indication of what could happen in the u. S. Later. Is down by 0. 5 . We see a slide away from riskier assets. Gold hovering near the seven year highs. York crude on the way down 4 10 of 1 , the wti contract for that. Haslinda risk off for today at least. That is it from Bloomberg Markets asia. Daybreak middle east is next. Keep it here with us. This is bloomberg. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affliates, or its employees. The following is a paid presentation brought to you by rare collectibles tv. In 1792, as a young country, the United States of america needed to assert its status as a new global power to the leading countries around the world. As a way to firmly declare to the world that the United States of america was now an independent country that would continue to propel freedom, the first president of the United States, george washington, signed the coinage act of 1792