More Domestic Travel to a little more overseas travel now. Theaad lets get to markets and have a look at what is going on. Nikkei, in with the leading japanese shares, just seeing stocks drifting to the upside. We did see jobless numbers come out. Slightly better than expected, looking for a 3 jobless rate, but 2. 9 . Looking elsewhere, retail sales out of hong kong, looking also at the futures for the u. S. , pretty much flat. Asian equities drifting slightly to the upside. Looking at the shanghai composite, lets look at how the gpi is behaving as well. Just about flat. The shanghai comp, 0. 2 lower. Chinese Economic Activity continued to rebound. Expansion in manufacturing activity, just slowing slightly there. A Rate Decision out of australia later on. Expecting the rba to keep rates. And the singapore market 0. 6 lower. Quick check on the currency is, weve got a fifth straight monthly drop for the dollar. Bloomberg dollar index down by 0. 25 . The yen, a tad weaker. Euro currently moving to the upside, as is sterling. Just got to tell you that weve got bullish bets on the euro. Lets look at what else is moving these markets. August,allying hard in despite calls for a correction. Big tech at the forefront of this. What are people suggesting . Can tech continue to outperform . [indiscernible] momentum this august was so strong. Changesee things will the way they were changing. [indiscernible] surprised to see some coming in. But any major correction is toely in the tech sector continue to be the core of the bull market. What is happening now is something interesting. Some signs of rotation into the value sector. Concerns. Help ease china, especially in the trend is clear. China is one of those markets that is functioning normally. Materials, industrials, and Consumer Discretionary sectors are leading the market. Some moreere will be interest in these sectors that , keeping ongoing positive progress. What has been underpinning this rally has been the weaker dollar, with the bloomberg dollar index registering its fifth consecutive six monthly decline. And other currencies really benefiting now. What is really going to be next now . That is right. Dollars path lower looks clear. New fedlearer after the policy framework. It has been a kind of game changer, and what the everyday inflation target means for the dollar and other assets, the fed is committed to keeping rates lower for longer and keeping liquidity in place until a recovery in employment. Roleuro played a key driving down the dollar index. May be driven by the chinese currency. There are fundamental drivers that make a compelling case. Economic growth is recovering faster than any country in the world. And the stimulus is quite different from the fed approach. What i think is most important [indiscernible] i think theres a good potential that they can drive down the dollar index in the future. Rishaad thank you so much. You can follow more on that story and all the days trading on the bloomberg terminal. You can get a market rundown in one click. You can find out what has been affecting your investments right now. The first word news, talking about global coronavirus cases, we are heading towards 26 million with the u. S. Tally now above 6 million. Astrazeneca has begun widescale human testing of the vaccine in america. The European Union is to contribute 400 Million Euros. Canada is buying 100 million vaccine treatments from novavax and johnson and johnson as the who says the only solution is unity. Hong kong is launching a mass coronavirus testing plan amid calls from activists and Health Care Workers for a boycott. Half a million residents have already volunteered for the test. It is billed as an attempt to ward off a new wave of covid19 infections. India has reported the biggest Economic Contraction among Major Economies with a surge in covid19 infections dragging on the prospects for a recovery. A fractionht under 24 , the sharpest fall since new delhi begun publishing figures in 1996, worse than any leading nation tracked by bloomberg. The median analyst estimate was a contraction of 18 . President trump and joe biden are trading barbs about racial inequality and subsequent protests. Dealresident is vowing to with violent demonstrators and while his rival says the white house has whipped up the growing anger, the comments come at a time as the president prepares to visit kenosha, wisconsin, where jacob blake was shot last week. He intends to go ahead despite the fact that state officials want him to stay away. Still ahead, we are taking a look at more exclusive interviews coming through from the Hong Kong Exchanges biotech summit. We will speak with christina. Plus, the ceo of the science and technology corporation, albert wong. Rishaad and later, the outlook for india after it posted the worst gdp slump among all Major Economies. This is bloomberg. You are back with Bloomberg Markets. The latest business flash headlines. Young china launching its stock sale in hong kong. The stock will continue to trade in new york, but will enter the Hong Kong Exchange under the code 9987 hk. Young china seeking up to 2. 5 billion in the sale and the public price will not be more than 468 hong kong dollars apiece. A top developer has seen debt rise this year after vowing to remake itself as a leaner company. Bloomberg data shows no net debt swelling to a record among weaker cash prefers. Operator hong kong says it has received interest therenvestors, adding will be a good chance it will find the funding it seeks next year. They reported a firsthalf net loss of 687 million u. S. Dollars. Earlier this month, it suspended all payments to creditors, blaming a virus triggered cash crunch. Hong kongs Exchange Operator kicks off its Virtual Summit today, bringing together Industry Leaders, global investors, and market stakeholders. Guest, whoo our next looks after Hong Kong Exchanges. Christina bow is head of global issuance services. Thank you so much for joining us. It was just two years ago when Hong Kong Exchanges changed up the listing rule. We have really seen health care go on fire here in the markets. There were some initial concerns for these companies. It is hard to value rnd. They dont make much revenue, let alone profit. How do you think it has evolved since then . [inaudible] yvonne christina, i think we have some issues with your sound. We want to hear you clearly. We are going to try to reestablish your audio. We will talk to christina after this short break. Stick around. This is bloomberg. His time as director general of the wto has come to an end. He helped negotiate a trade deal with the u. S. And canada. He has the experience to lead, but faces some obstacles. He worked on creating the wto and his career spans the world bank, imf, and universities in china. He talked to bloomberg about bringing the United States and china back to the negotiating table. The trust has been lost among negotiators. Intohas turned itself nonnegotiations. Which is always the soul of the process, negotiations. Negotiations have broken down. The system is not functioning anymore. Pandemic,u have the the u. S. China crisis, the chaos in trade. If you were able to jumpstart and get people talking, how would that affect the u. S. China trade war . To try to find ways to help them in the dialogue. You need a director general that knows the different sides well, which i do. I just negotiated with the United States. I have worked a lot in china and europe. I would seek to bring them to the table and find ways to move forward on negotiations. I have ideas. It doesnt feel like they want to talk to each other. How would you get them to come to the table . Toughrybody has to be when you are negotiating, but i cant imagine china not wanting to sit down. China has benefited hugely from the wto. If the wto ceased to exist, china would be the main one suffering the inner radel the unilateral actions of everyone else. Alsonited states is speaking very loud, very tough language. Confident with caution of being able to bring them to the table to figure out how we move forward from here. How do you feel like your role would play in Something Like tiktok that isnt necessarily trade, but it is intellectual property. How do you think you could play a role in that conversation . You said on Technology Questions . On tiktok. So if china doesnt want to sell the u. S. Portion of tiktok because of the ai, etc. It is for them to work it out. There are different entities in the states looking to take it over. It happens all the time. If it becomes a u. S. Controlled as farhat would be fine as international is concerned. If anybody places obstacles it is a very complex issue. It is basically a corporate issue. So less of an issue for you. Have you spoken to the u. S. Trade representative robert sighthizer and his ca counterpart in china . Those things are confidential. I cannot say. We can Work Together very well. , the usmca, the u. S. Mexico canada agreement, it was he and i negotiating. I believe he also approves of my approach. That was mexicos Deputy Foreign minister for north america speaking with bloombergs alix steel. Lets try to get back to our guest, Christina Bao from Hong Kong Exchange. Christina, i hope we can hear you clearly now. We were talking about how much the market has evolved since these new listing rules came into effect to benefit these health care companies. Tell us what sort of evolution you have seen. Christina indeed, there are a lot of evolutions going on. Intoong Kong Exchange came a better stature in the Health Care Sector at the right time and the right place. Raising a total of 48 billion hong kong dollars. This is benefiting the entire ecosystem as a whole. The Health Care Sector currently kongs at 2. 6 trillion hong dollars. In this market that we observe, a lot of variety of diversity. Not just in terms of geographical locations. For example, there are specialist exams, which are really professionals investing. That actually sets a very good benchmark in terms of valuation. There is much more coverage on this sector. Yvonne and the goal for Hong Kong Exchange initially was to try to go after Global Biotech companies, including those in the u. S. If you take a look at the listings here, they are mostly china focused. What do you think is the missing link here . Christina i think it is natural for any market to take off at a very early stage. Almost kind of certain that we are gaining on a journey. In addition, i think it has a lot to do with the recent reforms in china, which encourages development at a rapid pace. There are a lot of talents also coming into china to develop their own career. Of environment. We are also actively looking at opportunities here. We are also looking at the international potential issues, not just from Southeast Asia or the asia time zone, but potentially into europe and the u. S. There are International Collaborations in this field. All very common practice in this industry. There will be good news from the International Side very soon. There Different Things that chinese Biotech Companies need versus nonchinese Biotech Companies . Is the Hong Kong Exchange going to have to do more . The industrythink is very much globalized. I think theres very little difference between what can work in china and what can work elsewhere. Ambivalent in terms of providing the regulation, providing the guidance, but in terms of specific sectors or subsectors, i would say that they would be different. China has a lot of investment go into oncology. This has a lot to do with the prevalent cancers that are going on in china. Demando the marketing putting more money into a particular area. Of the profitmaking model, a lot of them are in common. They are setting out their own manufacturing. Rishaad this is risch in hong kong. With the amount of companies coming onto the board here, it is tough to really go through all their Balance Sheets and do the due diligence. What do you think about scrutiny of these Companies Given Something Like total education group, and avoid fraudulent Balance Sheets . Christina you probably partly that because the Balance Sheet is the same range, the same sort of essence. A lot of the Drug Development to becomeyears revenuegenerating. Focus has been given to Clinical Trials. Only companies passing Clinical Trials are cleared to go into phase two, and we also require investments in the private realm for them to be eligible for the hong kong listing. In addition, as i mentioned before, the specialist investors are critical. We couldnt expect all the investors to have full knowledge of this specialized area. Is why specialist coverage and specialist participation is critical. Our listing has found rishaad christina . Christina yes, sorry . Rishaad can we get very quickly to what is going on with them marketing themselves very aggressively. What advantages do you perceive for the Hong Kong Exchange over them for people to list in hong kong . Christina i believe a lot of really verys are international. ,hey do actually focus a lot whether or not they could receive international recognition, especially from the firms that are operated globally. If you look at the current listings already that is a particular strength in hong kong. Essentially, i think, its important to have the sustainable founding for these companies because the bank consumes cash usually and consistently. Regard, hong kong is extremely convenient. Here. Ld see it over very markete oriented approaches that would support hong kongs attractiveness in this area. Have you had any taking a dimple view of the Hong Kong Exchange since the National Security law . Is it putting people off of china . We have been operating in this region for a number of years, for decades. Years, its actually, you know, extremely resilient of a market. Extremely deep and liquid. In addition, i think the of the regulations around listing would provide a lot of uncertainty in this area. We are very much looking forward to a fruitful 2020. Thank youhristina, very much indeed. Hong Kong Exchanges head of global issuance services. Lets get you the first word news. Australia confirming china working with a mainland government station as relations between the two countries worsen. Canberra says it was informed on august 14 that had been arrested. She has yet to been charged. To have been charged. South korea saying it is expecting its debt ratio to reach a record next year for a further increase in spending to support an economy reeling from the coronavirus. Boostvernment plans to fiscal expenditure to 470 billion in a draft budget that would push debt to 46 of gdp. Koreas debt load was less than 40 . Germany is set to be seeing the economic fallout from the virus not being as bad as anticipated this year. The economy would contract more than 6 before rebounding by 5 next year. That would be germanys worst recession since the second world war. The economy minister will present the new forecast later tuesday in berlin. Than 6s seeing more billion in new trade as it moves towards normalizing relations with goal state. Talks are planned for later this week following an initial accord with the uae and the firstever direct flight between the two countries. They will focus on economic matters with issues left until later. This week stocks will deal with tourism, trade, and finance. Protests erupted in mongolian communities in northern china. Requiring classes in school to be mandarin. Beingis rising at that taught in the language of chinas han majority. Critics say it is the start of a drive against mongolians. Snd also amongst uighur ancient jane. In china. You are seeing a bit of red on the asx 200, down 1. 8 . Other markets like korea and the philippines for example doing better with the kospi advancing after news that the government is going to be boosting their budget for 2021. You are also looking at a flat u. S. Future as well as india futures, just a touch higher ahead of the open in mumbai. Flipping the boards, it is the dollar weakness story, seeing the greenback on the back foot, and we are watching the euro moves here. 15 month ties for the euro. The aussie as well, from ahead of an rba meeting, not expecting change, but looking for comments from policymakers on the overall outlook for the economy, especially that lockdown in melbourne as well as the offshore yuan extending gains, at the highest since may of 2019, and the yen below the 1060 handle. Take a look at japanese markets. Take a look at the lunch break, flat for the nikkei. 6 . Slightly lower by more news from the lbp today as we see this list of contenders growing. I will get an update from tokyo in just a bit. That is coming up next. Rishaad. Rishaad exactly. Looking at this resignation, where it is less than the lbp, it is scrambling at the moment to come up with a possible leadership candidate as it were here, too, as well. Shinzo abes abrupt resignation last week, they are trying to find a successor. Leaders will meet today to formulate voting rules which could determine who wins. Lets get to our east asia government editor in tokyo. What is going on now with this meeting of the ldp . Generale ldps counsel are meeting to decide the rules for the election. The key will be how much influence is going to be given to rank and file members . The consensus candidate right now probably would not do so well if the election were expanded with rank and file. At this point, the secretarygeneral said it will be a bit of a narrow election, p lawmakers and three representatives from each prefecture. This is something that would benefit the leading contender, the secretary. Itld hurt someone would hurt the Farmer Defense minister former defense minister who did quite well in 2012 when he went up against abe , former Prime Minister abe. Abe says it will have different effects for the candidates as well. Im wondering, at this point, does it seem like any of these contenders have the power to did, similar to what abe where he had such a long track record, in order to stay on, in order to propel some of these policies, are we likely to return to the revolving door of leadership in japan again . John it is kind of unusual. When abe came back in 2012 after his first short run, people were not expecting longterm leadership coming out of him but he showed he could consolidate power around himself and went on to the record run. Saw howhis time, he it was done but at this point, we said we would get another person who will lead as long as abe did. The person who has been there the whole time has been through the been suga. We dont know if he will last one year or if it will be back to the revolving door of Prime Ministers in japan, where the factions drive who lead and we see a leader coming every couple of years. That is still up in the air, but at this point, the party seems to be coalescing around suga. Thanks. John herskovitz with the latest from the ldp in tokyo here today. Coming up, we will talk a little bit more about the Hong Kong Exchange biotech summit in full swing right now. We will speak with the ceo of the hong kong science and Technology Parks about how the covid pandemic is spurring innovation. This is bloomberg. Rishaad Hong Kong Exchange holding its flagship summit virtually. Brings together Industry Leaders and market stakeholders to suggest developments in the city, driving hong kong to become a regional hub for innovation. The corporation chief executive, albert wong. Tell us how things have been evolving here, albert. Albert in the past four or five years, the number of Biotech Companies has been growing from 150. 30 to altogether, we have 850 companies but the growth of biotech is a lot and one of the reasons there are many reasons. We have good institutions in terms of the universities that china a lot of talent. We have good infrastructures in that can be and npa done in hong kong and most importantly, with the market, hong kong is not by itself a big gba. T because of the huge opportunity. We are seeing a huge wave of biotech innovation. In particular with the biotech chapter, its from the investors as well. What company or what product are you most excited about to come out of your parks . Albert we look at this from different angles. We look at this from a diagnostic and therapeutic. These are two distinct types of companies or technologies. Medical devices of course cut across Different Things. In terms of diagnostics, in hong kong, its been doing quite well. Therapeutics, that takes a little bit longer time. Diagnostics and therapeutics we are excited about the merging of various different technologies into diagnostics. We example, in the pandemic, are seeing a lot of people doing different types of monitoring or finding solutions to pick out seeingected so we are Different Things. Vaccine discovery. Merging different technologies into translational getting out of laboratories. The word is translational applications. Rishaad ok, albert. You mentioned the pandemic. You have had some positive news come out of it. What has it been like working under these conditions . What have corporations found difficult here . Has it dampened innovation . Is not working from home ideal. Its a lot of things that are not normal. To see, we dont want innovation being dampened. A lot of people working really hard in terms of getting the next technology out of the door. A lot of new ideas coming out and the government is also helping to test out new ideas. I will be honest that things are slowing down. People are not slowing down. People do not want to slow down. People are working very hard to come back on this situation. Im seeing a lot of positive things. Its not easy. It is yvonne in hong bader hong kong. How do you see the incubator . These are some cities seeing a lot of government subsidies, tax breaks. How does hong kong compare . Albert we kind of have a slow start in terms of biotech incubation in hong kong. We have a very strong base. Strong universities. U. G kong u, china we turn out a lot of good professors and research. The challenge for us is to find the downstream innovation. We have a very good base. Closer to the bay area. Weill be honest, i had had a slow start. You might have heard about the initiative in which the government put 10 billion hong kong dollars in. Health with 28 to 30 institutions to do downstream innovation in the areas of health care and ai robotics. Some of the things happening in terms of infrastructure, Government Support investment, so we are catching up. Catching up. You mentioned a lot about greater bay area. What do you think is hong kongs role here . Albert again, i kept talking about universities. Topfive universities, the 100. The greater bay area needs this kind of institution, number one. From a hong kong standpoint, we are opening up from a 7 million population to 70 million population so there is a huge market for us. Finally, you talk about ip protection, investment ecosystem, and we played a big role in that area. People love to come to hong kong to do the research because of the protection of intellectual property and also the investment in the environment in hong kong the investment environment in hong kong is the best among a lot of places in asia. Does not exactly create jobs . The jobs come out from the labs. Hong kong does not quite have the space for a lot of these biotech firms to expand manufacturing capacity. How do you overcome these obstacles for some of these companies . Albert its a good question. Its an issue in hong kong. Space is an issue in hong kong. One of the things we do is to try to help with that. By the way, look at manufacturing of biotech stuff. We dont need a lot of space. We need to go to the greater bay or even further up. We would be partnering with the greater bay area and expanding our research and development into manufacturing. We will be providing most of the space. This would be a problem that we will be trying to solve. Another challenge, albert, is when it comes to talent and the shortage of talent, whether it is a supply and demand issue as whelp what sort of things are you doing to attract and retain talent here in the city . Albert this is very important. The first thing that comes to mind when you talk about innovation is assessment of talent. Im sorry. We have the universities and claiming as that are lot of good scientists and researchers to help with research and development. I think hong kong is a good place for overseas and mainland talent to, and realize the dream in terms of developing innovation. We are doing a lot of things in terms of residential building in the science part to help with the overseas talent and there are a lot of there is a lot of support from the government. Postgraduate program from the hong kong government. The company can use the hong kong governments money to hire a number of postgraduates, tocs. P talent is the strong base. We know how to train people from university. Intoob is to turn them innovators from scientists. It is not an easy thing to do. If you understand the difference between scientists and innovators, we are doing this with communal laboratories, funding programs. You may be surprised to see that they are available in hong kong. We dont have those things five to 10 years ago. We do now. Looking forward to what is ahead. Albert wong, thank you so much for talking to us. Ceo. Lets talk more about the data we have been getting. India could be set for its first annual Economic Contraction in decades as it becomes the global epicenter of the pandemic. We will look at the countrys dyer growth data, next. Dire growth data, next. This is bloomberg. Yvonne india posted the biggest gdp drop among the worlds Major Economies last quarter and it looks set for its first annual contraction in four decades amid a recent surge in covid19 infections. Lets go over to the data with the India Economy and policy reporter in mumbai. Than what the economists were expecting. What were some of the reasons for this sharp slowdown . It did not take long for india to move somewhere. Economy nowgrowing to the peak of contraction in Major Economies. Part of the reason for this slowdown was predictability for the lockdown but theres some really bad news in the details. Is to investment. It declined year on year and now only makes up 1 5 of gdp, down from one third before. Consumption also, which is the back of the economy, took a major hit, declining 27 from a year ago while exports fell 20 . The only Silver Lining was growth in the farm sector but so deep was the contraction in the services and manufacturing sectors that this economy will probably take a long and hard road to recovery in the absence of Government Support. Tooe looks of it, its not forthcoming. We have the first contraction in decades. The billion dollar question is when does the country recover from the slowdown, and is there room we discussed it 24 hours ago. What can the policymakers do to provide support . Anirban very good question. The chief Economic Advisor went on record saying it would be a vshaped recovery. Most economists doubt he is being a bit optimistic about this given the sharp slowdown we saw in the last quarter. While the worst is probably over, localized lockdowns and some of the wealthiest regions in india the rising virus cases means the recovery will be a rather uneven one. It expects a gradual recovery only in the last quarter of the financial year. Even that is because of a statistical , the government has been conservative in its fiscal stimulus, and it has to probably step up by doing more spending by either universal basic income or deficit financing, but clearly, the government has to bear the costs for this one. The bond market share is expected to rally after we heard from the r. B. I. , allowing the banks low flexibility and holding the government debt. Lets do a quick check of the latest business flash headlines now. Take a look at zoom. Zoom video jumped in late trade after meeting its annual revenue forecast and signaling confidence users will flock to its sites. Yearbillion in the fiscal through january. Almost . 5 billion more than analysts were expecting. Zoom is a clear beneficiary of the pandemic as covid19 curves facetoface contact. Intraday tesla hit highs. Apple announced a 41 split at the end of july while tesla set on august 10 it was planning a 51 division. Both came in during trading on monday. One analyst said it is a smart move and expects other Tech Companies to do the same in the coming months. Tesla is listed as neutral. Rishaad on the way, we will be looking at what is going on market wise. We are seeing for quite a lot of the equity markets. Its mixed out there. A lot more to come in the next hour of Bloomberg Markets. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with Xfinity Mobile. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. It is almost 11 00 a. M. In singapore and hong kong pit i am haslinda amin. Welcome to Bloomberg Markets asia. Rishaad i am Rishaad Salamat it. Worsening relations with partners and neighbors. Beijing detains an australian journalist. Troops clashing at the disputed border with india. The detention adds further pressure as the rba prepares to meet. Australia is already mired in a rare recession and fighting growing fears about the coronavirus. Also a majord19 factor as india posts the biggest gdp drop. It looks set for its first annual contraction in four decades as infection rates surge. Asia looking for direction. Lossesed of course in and then went to the green. Just a smidgen higher. Up. 1 . The csi 300 now pretty much flat. It was swinging between gains and losses, coming off a fiveyear high. Chinas manufacturing pmi coming in better than expected. The asx 200 index, the biggest drag in asia, down 2 right now, down the most in a month. China detaining an australian tv anchor in a sign of escalating tensions between canberra and beijing. Also, shares plunging as the ceo makes an exit amid a probe. It is down 6 . It started trading after two days of losses, currently flat. 13. 11. It is expected to cut its forecast for 2020 and 2021. Shot. Rishaad absolutely. What we can get out of india with the trading day, 44 minutes away, 43 minutes away, and it currently looks like the nifty is pointing to the upside. 6 . The big move down, 2. 2 , down for the nifty by the end of the session. Clashemerged of another between indian and chinese troops on the disputed border. Near the area of cashmere. The yields on the 10 year, 6. 1 one, and the rupee again, seeing some strength. Against this background here of a weaker dollar. We have the dreadful gdp figure as well coming out of the country, too. Lets get the latest on what has been going on with trying to find some way of preventing the Global Pandemic. Lets get to the first word news with Karina Mitchell in new york. Karina global coronavirus cases are heading towards 26 million with the u. S. Tally rising above 6 million. Astrazeneca has begun widescale human testing of a vaccine in america while the European Union is to contribute 400 Million Euros to secure covid19 shots and ensure equal access. Canada is buying 100 million as the whoatments says the only solution is unity. Meanwhile, hong kong is launching a mass coronavirus testing plan amid calls from activists and Health Care Workers for a boycott. When 5 million residents have volunteered for the test which will be conducted with help from china. It is billed as an attempt to ward off a new wave of covid19 infections but critics are wary of the governments motives amid widening public mistrust. India is reported the biggest Economic Contraction among Major Economies with a surge in covid19 infections dragging on the prospects for recovery. Gdp shrank a fraction, under 24 of the tune quarter from a year earlier, the sharpest fall since new delhi began publishing figures in 1996. Worse than any leading nation tracked by bloomberg. The median analyst estimate was for a contraction of 18 . The south south korea expects its debt ratio to reach a record after further increase in spending to support an economy reeling from the virus. Government plans to boost fiscal expenditure by more than 8 to 470 billion in a draft budget that would push debt to 46 of gdp. Koreas debt load was less than 40 . Ethnicst erupted in mongolian communities in northern china as measures requiring classes in school to be conducted in mandarin. Anger is rising. Classes are taught in the language of chinas hans majority. Critics say it is the start of a drive against mongolian and among uyghurs in shenzhen. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Rishaad. Rishaad thanks. We have beijing facing diplomatic challenges on several fronts at the moment in the past 24 hours and it asking related a dispute escalated a dispute in canberra. It detained a television anchor without charge. Tensions within your resurfaced after a clash on the disputed border. Lets get to the latest on this and get to our south asia government editor in new delhi. Lets start with a detention of the chinese born australian journalist. What do we know so far and how will this affect ties with canberra . China is looking at subsidies and the wine industry, too. Adding to theinly tension between the two countries. What we know is that australia found out on august 14 that cheng lei had been detained. They had a video link up with her on august 27, according to australias foreign minister. But so far, there no indication charged orshes been under what kind of condition shes being held. Australia is obviously trying to work out a way of providing further diplomatic assistance to her and the government says they are supporting her family as well. So as you say, is the latest in a line of escalating tensions between the two nations, which peaked a little while ago when Prime Minister Scott Morrison called for an independent inquiry into the origins of the coronavirus, which was discovered in wuhan. Australia has banned huawei from participating in its 5g network legislationlagged that would blunt any investment in chinas belt and road initiative. Theres a lot of assertive comments coming out from both sides on this and it remains to of thishow the arrest Australian Citizen will play out in this broader dispute. Turning to india, we have had a couple months of quiet on its border with china. What happened to cause tensions to flare again . Theres been months of highlevel military talks and some diplomatic level talks between the two sides to try and ease the tensions that really flared in june when there was a deadly clash on the border. Night indiasaturday says china tried to move its troops into an area that was agreed that no troops would be in. India says it then went in and fought back and pushed those back. From itscourse says, perspective, indian troops were the ones who violated the border iteements, and it says that has always respected the line of actual control, which is thousands of kilometers of demarcated borders. We have heightened military tensions along the border. Both sides have moved thousands of troops and lots of luxury hardware over the last few months. Highlevel military talks going on between the two sides. Theif they can escalate situation. Analysts are telling us maybe this is the new normal. Is how india and china are going to be on that disputed border into the longterm. Haslinda we will leave it there. Ruth pollard, south asia government editor. Still to come on the show, the banks outlook for india after it saw the biggest gdp drop amongst the world Major Economies, setting the country on course for a first annual contraction in 40 years. Rishaad just ahead, playing bridge saying risk assets are in the early stages of a multiyear expansion. The Portfolio Manager will tell us how she is adjusting her investments to take advantage. You are with bloomberg. Haslinda asian stocks are trading with a lack of direction at the start of any month, but theres been some encouraging pmi reads in asia snatch koreas export recovery is on track. Despite the street for global stocks into early 2018, traders saying we could see some turbulence over the next few months as we enter seasonably weaker periods. There could be coronavirus escalations. Our next guest says we are in the early stages of a multiyear expansion that will be rewarding for risk assets. Lets bring in the senior vp and Portfolio Manager of global multiasset. Good to have you with us. Here wemarket rally, are five months of gains, and the gains are likely to persist. Is our view as well. We believe that, as you mentioned at the start, that we are in the start of a multiyear recovery. If our forwardlooking view is one of three acceleration, we expect reacceleration, we expect growth to improve and that is why we have put in a lot of our allocation within equities into things like financials, industrials, and small caps, so those are more the cyclical sectors that we think will benefit from the start of a multiyear recovery. The markets also bracing for more volatility. What does it mean for asset allocations . Should we be looking at more fixed income, for instance . Noy there is theres question, especially when you have this multiyear recovery, coming out of what we have just been through with covid. We are still going through it. He could expect wobbles along the way, a bumpy recovery. That is essentially what is in our price and what we expect to see. That does not take away with the fact that we expect growth to persist and continue. That our equity allocation into cyclicals should remain but we also see that there is opportunity within fixed income. Within fixed income, we do like asian credit and the Investment Grade dollar market and we also like emergingmarket sovereign hard currency. Those are the two markets that we think that they have more opportunity to catch up. We have seen already a lot of spread tightening within the u. S. Investment market, Investment Grade market, so we are looking for other opportunities and the likes of asian credit and emerging market sovereign bonds. Is also the attention focused on the september election and we are seeing the lead for biden beginning to narrow. We heard from j. P. Morgan that perhaps investors should stop positioning for four more years of trump. What does that mean . ,ary in our view, the market if it sees another four more years of trump, it is more of the status quo. For markets, in our view, it does not affect things very much. Geopolitical risks have always been in the backdrop. We could get some wobbles ahead, especially as polls start tightening. Essentially, our view and the way we look at the market is on an intermediate time horizon. Nine months to 18 months. And for the nine months to 18 months, we are focused on what the fundamentals are and where the fundamentals are headed over that time period. Rishaad in hong kong. If we saw a dollar reversal, could these forecasts of years threaten the dustbin . A lot of what we have seen of late is down to the weaker dollar which is near twoyear lows. The weaker dollar has been obviously it has been crucial in terms of how we have seen risk a function of Risk Appetite and the improvement in Risk Appetite. Did still see, prior to this dollar weakness, and prior to tobit, that the dollar was strengthening and we did see an improvement in the u. S. Equity markets. It does not have to necessarily go handinhand in our view, especially if the recovery if the recovery is coming from the u. S. In the u. S. Equity markets are improving because u. S. Recovery is improving and i would feel supportive of the dollar. Essentially, we look at the dollar in terms of what has been pushing putting pressure on the dollar has been global Risk Appetite. The collapse in Interest Rate differentials that has pushed the dollar weaker as well. There are a lot of other catalysts behind the dollar that we think will drive the markets. Clarity we got more from the fed last week, did we not, with Jerome Powell suggesting they could run let things run hot, as it were . Which is something they have been trying to do since ben enkes time. A low interestrate environment for longer and allows more certainty in terms of your business decisions. Mary absolutely. That was our base case in terms of we expect a lot of rates lower for longer and now the fed has confirmed that. Now, with theed, certainty rates will stay a lot lower for longer, companies can make that Investment Decision and know where things are headed. There is no uncertainty about when rates will rise because the fed is happy to run things hot. Dovish way in a very from the fed but it also gives some clarity to a lot of on what to do on the capex side as well. Rishaad mary, always a pleasure. From lei mary nicola pine Ridge Investment spirit coming up, and her interview with the head of the Hong Kong Exchange as it launches a timely biotech summit to highlight the importance to markets across greater china. That interview with charles li on the way. This is bloomberg. Rishaad Hong Kong Exchange kicked off its biotech summit. The event brings together Industry Leaders, global investors, and market stakeholders to discuss biotech developments in the city. It does come at a time when Health Care Related listings in hong kong have surged to a record amid the coronavirus pandemic p earlier, we caught up with the Hong Kong Exchange chief executive, charles li. Charles this is just the right thing to do at the right time, and it is such a big sector. And china is such a big country population,ve aging huge health challenges, and lagging Drug Development. So all of this requires asia to have a center for biotech so we can support research and we can support the Massive Health care reforms that china finally takes off. Thats a big event because china literally for years ago brought the entire Drug Administration system into exactly the same as the fda. That reform essentially brings governingandard of the administration same as the u. S. It set the foundation for us to be able to again take a huge reform in the Biotech Sector in terms of listings because they have no revenue, obviously, before they can even sell anything and have government approval. They were really heavily regulated. That previous history of being able to be regulated allowed them to be listed despite the fact that they do not have the traditional financials that Typical Companies we asked for before we can list here. It was a great event. Its a milestone. We never thought covid19 is going to hit us, but now, looking back, i dont know how we can hope without this new sector that is allowing so Many Companies just to join the race, finding a vaccine, finding therapeutics, and finding solutions. Haslinda what is the edge for hong kong . Domestically has also been deregulating to make it easier for Unicorn Companies to list mystically on the star board or making it easier for them to list on the chinext as well. Whats the differentiating factor for going to hong kong . Seven outor the last of the last 11 years, we are number one in terms of ipos. We are the ipo center around the globe. Thats just the tradition. Drug development in this space is very international, requiring a tremendous amount of Scientific Collaboration between the u. S. , china, and europe, and the scientists are really all over the place. They are writing, publishing. There needs to be a Significant International component to it so hong kong provides that Great International connectivity, and we could not really handle this. We got three massive reform to really allow through a massive reform to really allow revenue. , think china is following trying to essentially do a similar review, similar reform. I think at the end of the day, its about money. Its about scientists. Its about working together. I think we provide that unique combination. Hkex is not done yet, right . What more will you see in terms of reform and what sort of tweaking and the rules could we see as you try to attract more listings . I think in the broader reform, chapter 18 a , which is the p revenue biotech chapter, is part of a very large, comprehensive reform of really changing the landscape and seeing the composition of markets, so a lot of reforms have to do with many of the u. S. Companies which have unique Corporate Governance structures which do not necessarily fit in here. For themo make it work eventually to come back. 18 a , thec biotech, bulk of what we needed to do is behind us. Tweaksre a lot of here and there, just to make the offering a little bit easier. There are few things we are working with our regulators, Listing Department colleagues. We are talking about fundamental change. Hong kong chief executive charles li speaking to haidi stroudwatts and shery ahn. A quick check of the latest business flash headlines now. Yum china has launched its stock sale in hong kong with set to be covered on the very first day. The stock will continue to trade in new york but will enter the Hong Kong Exchange under the hk. Yum china is seeking 2. 5 billion u. S. Dollars in the sale and the public offer price will not be more than 468 hong kong dollars apiece. Shares are expected to begin trading in hong kong on september 10. Haschinese tesla arrival boosted the size of its Fundraising Program by 20 amid investor lead frenzy for electric vehicles. The u. S. Listed shanghaibased company so more than 88 million at 17 apiece, having initially planned to only offer 75 million. The ceo wants new investment from eastern chinese cities. Top chinese developer evergrande is seeing debt rise this year even after vowing to remake itself as a leaner company. It rose 4 to 122 billion through june compared with 100 17 billion at the end of 2019. Bloomberg data shows net debt swelled to a record 92 billion on weaker cash buffers. In march, evergrande announced plans to cut debt in half in the next three years. Have a look at what is going on with the hong kong interbank offered rate, highvol. This is where we are at the just 45 basisg on points. Thats currently where we are with regard we started the year with it on 2. 7 or thereabouts. Its actually up for the ninth day in the last 10 and doubled since two weeks ago. That is currently where hiobr bors. We had some positive pmi data on the Services Side but manufacturing is a slight slowdown from the month before. This is bloomberg. His is bloomberg. Haslinda its almost 11 30 a. M. In singapore. We are in the middle of the trading day and you are looking at live pictures of the lion city. Down,. 6 ,ding contribute into the losses in the region, which is trading flat at this point in time. Singapore has agreed on a green lane after establishing one with malaysia. It helps to facilitate essential business and officials traveled from both countries paid that takes effect today. Asder measures will evolve the Global Situation changes. For now, no plan for mass tourism. That means we are limited to just that stake asian and the ycation in theta lion city. Rishaad lets have a look at some of those first word news headlines. Australia confirming china has detained an australian tv anchor working with the mainland government station as relations between the two countries worsen. Canberra saying it was informed that cheng lei had been arrested although the abc says she has yet to be charged with any offense. Shes being held under laws without access to a lawyer. President trump and joe biden trading barbs about racial inequality and subsequent protests. The president s vowing to deal with violent demonstrators while his rival says the white house has whipped up the growing anger. The comments, the president prepares to visit kenosha in wisconsin where jacob blake was shot last week. Reports that state officials want him to stay away. To see theset economic fallout from the coronavirus as not being as bad as anticipated this year. The government said in april, the economy would contract before rebounding by 5 next year and that would be germanys worst recession since the second world war. The economy minister will present the new forecast later tuesday in berlin. Italy has seen its economy shrank more than previously forecast. The virus off downs in the Second Quarter hammering growth. The decline was almost 13 in the three months to the end of june with Consumer Spending leading that drop. The figures are worse than anticipated. Smaller Italian Economy that it was a year ago. Damage from hurricane laura in the u. S. Gulf coast and the caribbean is expected to cost insurers as much as 9 billion according to two risk modeling firms. The category four hurricane has most of its damages spread across louisiana. The storm surge was not as powerful as first feared. Look at lets take a the markets. Index, upng for the. 2 . The nikkei back from the lunch ldpk, down. 2 ahead of the meeting to find abes replacement. The investment dropped last quarter by the most since 2010, a far worse than expected the kospi up. 9 , rising after x work recovery shows it is on track. Shipments falling less in august. It is up. 3 . Capitalnes keeping its under loose quarantine restrictions. Shares in focus. Pointing to a higher open, up. 7 after the decline yesterday. India starts trading after reporting its biggest gdp contraction in four decades. Turn the page. I want to show you this chart showing asian stocks are sinking below the trendline that supported them since march. They have a disputed himalayan border. ,he benchmark something 2. 2 the biggest slide since may. Of course, we also have a Third Straight monthly gain for the index as well. The gauge remains above all three of its key moving averages. The Economic Contraction putting pressure on the markets. Investors were told to reassess. Rishaad absolutely. A contraction of 24 in the Second Quarter of the year. It is the worst performer among Major Economies. This as the country has one of the most stringent lockdowns among nations across the world amid that surge in covid19 infections. Our next guest expects gdp to continue to contract and the rest of the three quarters of the full year. And senior vp as well. Thank you very much indeed for joining us. That number was awful. It was worse than anticipated here. It was down to that very stringent lockdown. The thing is, did those economic policies instituted by the government make things that much worse . Hi. The contraction was deeper than expected. Primarily, it was because of the shop down. There was a certain stop inactivity before the economy was under lockdown, barring essential services. The problem is if you have a deep trust, climbing out of it will take time. Hat is why we do things then the population of country, it has to be brought under control. Havef the cases accumulated after the june on theo certainly, one hand. We would see growth contract by a smaller measure over the next three quarters. It does seem as though the coronavirus is ravaging the is,try still so the thing if there are plans for another lockdown or anything like that, do you think it changes the structure of the economy itself in india . Think, youy i do not know, even though cases continue to increase since the lockdown it has entered into its fourth day of unlocking , so initially, the action was to import the lockdown. There are economic costs which are too high to bear. That is why the country continues to the number of cases go up. Sectors those are laborintensive sectors, so it would have impact on consumption, impact on unemployment as well. You have to balance that. I dont think the government would explore another full lockdown, nonetheless they have gone with localized responses now containing the pandemic or containing higher cases of infection, especially in the district. Totainly, the mood would be go unlocking but the speed would be dictated by how far the curve can be brought under control. At least theres some positivity. The monsoon seems to be better than forecast. Cannot help by reducing some of the food prices and perhaps alleviating some of the pain . Radhika certainly. The monsoon has been normal. It does suggest the summer crop will be healthy. Even in the june quarter for the data that came up yesterday, what you see is that farm output was the only outlier which registered from growth. All other sectors did poorly. There is much reliance on the farm output. The agriculture output contributes 20 of overall growth so you do need the nonfarm sector to come back, to be able to add to the recovery. Farm isto add that often confused with rural. Is now impacted firstly because you have seen widen tos dispersion the rule area rural area. Nonfarm sectors are also not playing that well. So in isolation, i think the farm sector certainly is counterbalancing the weakness elsewhere but it is not sufficient so you would need the nonfarm sectors, urban sectors, to do well. Haslinda not surprising that the government is under a lot of pressure to spend to provide a buffer for the slowdown but it has already busted its budget gap. How much with their wings be clipped . What can it do . Data came out yesterday and was suggesting the first four months of the fiscal year, april to july. You are seeing the budget target being used up. Situation. Ot an easy that is impacting revenue generation. We think there is not enough space, but even the condition of the economy in terms of economics, we hold out for one more fiscal stimulus that could be possible. This one will be different. Its more directed at boosting employment for longterm Public Investment as well as providing more cash transfers. We are Still Holding out for that. Toetheless, there is going be a doubling in the fiscal deficit from a project of 3. 5 to about 7 to 8 of gdp. Only ones which have very good multipliers for consumption. They have very important care. Haslinda what do you see the r. B. I. Doing . It has cut rates by 115 basis points already this year. Inflation above target. What can it do . Term is the very near certainly constrained by inflation and if you look at the nature of inflation, it is below target. In india, because of the lockdown supply disruption. Inflation proving to be more rigid than otherwise. Towards the later part of the year, going to the march 2020 one quarter, because of these effects, because of Farm Supplies that will calm, and then demand is still not doing that well. A combination of these factors. We do think they will bring the headline inflation lower, closer to the target, and that will provide a window for the central bank to go ahead and cut rates. While that is happening, in the nonconventional space, the central bank is looking at keeping bond markets, bond yields, at manageable levels which spiked because of fiscal worries. They considered action yesterday and we think that they would do more of that to make sure barring costs remain low. Haslinda how closely are you watching rising tensions between china as well as india . We know china is indias biggest trading partner after the u. S. The situation needs to be monitored closely. It happened earlier this year, the first skirmish. The Indian Government did take some action. Reliancewas policy. It was lowering reliance on china. That push got accelerated. In terms of the manufacturing mix, the reliance will continue to go down because india wants to boost its manufacturing. It will be able to have excess labor joining the markets every year. For now, shes watching it very closely. The impact on the economy has been very large. That it was not from here. It has much more sentiment than financial markets. Vp, radhika rao. The reserve bank of australia is expected to keep its matters unchanged as fiscal policy takes the wheel in reviving the economy. We will preview todays decision, next. This is bloomberg. Bloomberg. Rishaad you are back with Bloomberg Markets, about to start to get the trading day over in india. Looking at the companies where we are making headlines, having a look at the overall market. Its like drift up. Gaining after it won a court case for higher tariffs. We also have this telecommunications judgment likely to come through from indias top court as well as with the retrospective taxes as well. 5. 4 up at the moment. Looking also at what we have elsewhere. That unit now, getting a 4. 7 gain. That is currently the position at the start of the trading day. Take place. Ecline we had border sabrerattling taking place on the border with china. It has been quiet for too much or thereabouts. Meantime,in the asias factories continue their fragile recovery in august. Based on the closely watched manufacturing gauges from ihs. Not all economies in the regions are bouncing back. A senior asia economics reporter has been watching the members. What did we learn about asias manufacturing and trade outlook from this mornings figures . We thought it was a bit fitful. We saw progress in north asia. Japan, south korea, they were bright spots. Taiwan, the best in two years. The electronics story continues to be quite well with semiconductors demand up. Mixed picture in Southeast Asia. Indonesia looks good. Philippines, vietnam, malaysia remain in contraction. We see some signs of further improvement, but you know, nothing to write home about in terms of positivity. They are a, china little bit at odds with each other but overall, pretty good news as well especially in the nonmanufacturing side, looking particularly good. That will hopefully percolate throughout asia and the region in terms of helping other economies move forward. How is the data influencing the Central Banks . What can we expect from the reserve bank of australia in just a short while from now . Michelle they are all still dealing with the dovish fallout the fallout from the dovish message from the fed last week and yesterday from vice chairman clara reiterating how the fed will stay lower for longer idara data clar reiterating how the federal stay lower for longer, set expectations back a little bit on inflation in terms of average inflation targeting. Against the backdrop, course, we are looking at some pretty abysmal numbers on the Economic Growth so that is something Central Banks are continuing to deal with in terms of setting expectations for what they are seeing out of the Second Quarter. You mentioned australia getting the gdp figures tomorrow. Q2 could be the first contraction in quite a while and probably the worst contraction in records dating back more than a halfcentury so certainly a bleak figure expected. From the rba today, we expect them to stay on hold at 0. 25 . They are one of the Central Banks that dont have a whole lot more room and its notable when you look at just the month that we just finished, august was the first month this year across asiapacific Central Banks, 13 of them, that they did not have an Interest Rate cut, and that is not altogether good news. Its a sign of a lot of them being close to zero. A lot of them are running out of firepower, looking for other tools. They are looking to their fiscal authorities and saying we need some more help. We cannot be the only game in town. Bankad that reserve decision is coming up in 41 minutes time from now. Senior asia economics reporter Michelle Jamrisko joining us from singapore. Coming up, facebook threatens to stop australians from sharing news. That after the government unveiled a proposal to enforce it to Pay Media Companies for their articles. We have the latest on that. This is bloomberg. Rishaad lets have a look at the latest business flash headlines. The french utilities saying a bid from for its stake is too low and it will not accept the proposal as it stands. It will study the offer in the coming days and may seek a higher bid. It wants to create a global waste and Water Treatment company in order to stay ahead of the rising competition coming from china. Its initial bid is 27 higher than the friday close price. Hit mend tesla both intraday highs as their stock splits took effect. Apple announced a 41 split at the end of july while tesla said it was planning a 51 division. Both came in during training on monday. The analyst says it is a smart move and he expects other Tech Companies to do the same thing in the coming months. He was trading apple as an outperform her and tesla as being neutral. Zoom video jumping and they trade after raising its annual revenue forecast and signaling confidence. Almost . 5 billion more than expected. Zoom is a beneficiary from the Global Pandemic as the ray rice curbs facetoface contact. Amazon taking a giant step towards remote delivery by becoming one of a handful of u. S. Companies certified to operate as a grown airline area the faa designated amazon prime as an air carrier, allowing it to be in commercial deliveries under a trial program. Amazon and its peers were still will still clear hurdles. Haslinda facebook announced plans to stop users and publishers in australia from sharing news content, pushing back against a proposed law that outletske it pay media for their articles. Paul joins us now. What is this dispute about . It is part of a global pushback by governments. Thats right. Australia is not the only country exploring this avenue. The government is proposing legislation that would make facebook and google Pay Media Companies for the content people post on the social media platform, so really, the government wants to level the playing field. Traditional media puts the work into getting the articles, writing the articles, and they have been complaining for years that facebook and google get content. S on all this facebook today pushed back on this idea, saying its going to look at blocking people and publishers from sharing news on this platform, calling the law unfair. Publishers under this proposed legislation would be able to charge whatever they want. The facebook Vice President of global news partnerships says the decision was made very reluctantly but they are working on the technology that would allow them to stop users and publishers from sharing news. Bad news fors like those australian media companies, ultimately, but facebook truly has something to lose here, too. Paul its a classic no one wins , really. Facebook and google would no longer have this content to put on this content if it happens. Facebook says this would hurt and not help that content in australia. Freell put services at risk and lead to a worse youtube and worse Google Search function in australia. To put numbers on it, in the first five months of 2020, facebook said it sent to. 3 billion clicks from its news feed to Australian News websites. Itt is the kind of context is operating in. Facebook says removing these articles will be insignificant to its business. News was a very small part of what users see. To circle back to the original point, australia really not the only country looking to do this. Other countries are very worried about the impact on journalism and traditional media that these social media platforms are having. Rishaad thank you very much indeed for that. Paul allen just having a look at facebook and australian media there. Iss check in on what happening in hong kong because it was in september and the country has voluntary testing for the covid19 virus. That the moment, according to the chief executive, carrie lam, 10,000 people have been screened in this testing drive. It comes as though a radio said 593,000mpany people have registered online to be tested there as well. Haslinda. Haslinda taking a look at the markets, of course, asia is looking for we are seeing gains in india, revising the losses which we saw yesterday. India trading on the back of a contraction, a massive contraction in gdp. The sensex up. 6 . Adian stocks sinking below trendline after falling more than 2 . Here are some of the movers. Currently up by 3. 5 . It is rising after its power arm won an Indian Top Court case. The court allowing for tariffs. There you have it. The dollar index is 11. 57. Daybreak middle east is next. This is bloomberg. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions. Touchdown only mahomes. Expect anything different . The big events are back and xfinity is your home for the return of live sports. Yousef this is bloomberg daybreak middle east. Our top stories this morning. Manus more signs of a vshaped as aery in china manufacturing bmi comes in is the highest since 2011. Yousef s p 500 posts its best august. Big tech is continuing dominant. Raising the shortest bear market in the index is history. Manus israel sees more
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