Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

These tech heavy benchmarks doing better than what we saw on friday. We are watching hong kong closely after we saw them arrests made after protests returned to the city. Looks like they are shrugging that off. Pretty steady for the euro. That ecb meeting on thursday. A lot of questions about how to tackle this euro strength. This has been pretty volatile of late. We get another round of brexit negotiations. Your off to your offshore revenue will be continuing. They onshore rate has had the highest stretch. Bond markets have been falling. Pickuptreasury yields after the u. S. Job report. These are back to the prepandemic levels now. Hedge inll a good these markets. Brent crude still following what we saw with oil markets. Around 42. Lets get more analysis now. With eight Market Strategist. What is your assessment of what the key drivers are behind markets in this part of the world . Good morning. Thank you for having me today. I think we are seeing an interesting trend. We have the situation where went until last weekend expecting what we had heard. This is kind of a selloff. You to find a situation where in the market once again. You want to mention the start of this week. They are slightly holding on. We have the equity markets with concentrated gains and the tech going a little bit too fast and. Erie will see this across other asset classes. That is why we are seeing asian markets doing this. Updatea chinese data over here. And overtly bullish trend in the market. Suggest that you aggest expect to see continuation . It is a little bit of this Inflection Point for the market. We have seen them slowly grappling with this. They are compelling us to continue. We have seen this data in the u. S. And in asia. In the north asian economies. There are some concerns about the possibility of this kind of momentum. There are concerns for what the market will look like. In the next stage of recovery. There is still a lot of uncertainty. There could be a shift in the market continuing. How do you compare that to a vix that has stayed elevated for some time. How long can we stay above 24 the vix . Is this a sign for a deeper correction ahead . [indiscernible] equity markets have come across a bit of a surprise. The option market behaviors have continued. Think that is finished. With that being the case, we will not be surprised by what continues to come in the shortterm. That is the next stage of recovery. A bit more of this tapering off. You mentioned about the options market. This is what we have been tracking with softbank. They have been fueling this tech rally. This is a controversial move. How do you see this changing the investment landscape . Does the market more prone to these big pullbacks . Not necessarily. I think it is observations with what they are doing. This is kind of a market view to what the tech stocks are continuing to do. His is a trend what softbank has been doing. We do find this situation. Shortterm this is the volatility we would see. That is the reality and the market. Thisll be grappling with for the next six months. Market reaction if we do not get additional fiscal support out of the u. S. . That is high on the list. We will be looking at more of these discussions. I think the Market Reaction so has looked at that fiscal stimulus coming through. We will be looking at business as well. This will be a surprise. We will be suggesting that these markets require continued monetary support. Situationof market will be a downturn for the u. S. Economy. A shock to the market. It will reinforce the difference andeen the covid19 winners officials. Theill be coming back to point. Yvonne we are expecting something before november 3. Thank you. You dont want to miss her at our Virtual Event that is happening this week. That is this wednesday. Other lenders will be subject to this imposed by a super came Supreme Court ruling. That will take away the biggest revenue driver. 881,000 deaths. The u. S. Reported 45,000 new cases and 24 hours. That was in line with the previous weeks average. Rose by 3000. That was a 64 jump since the previous day. And the biggest increase in late may. Coronavirus cases in italy have now topped 4 million. The country is set to overtake brazil as the second most affected nation behind the u. S. India reported 90,000 new cases on sunday. More than 70,000 indians have died. The testing rates remain low compared with other countries. Australias business lobby is warning of further economic damage after a strict walk lockdown in melbourne was extended for two weeks. It has 90 of australias debt. Germanys top diplomat has warned russia that berlins support for the nord stream 2 gas line is at risk. If the country does not offer answers over the alleged poisoning of a dissident area. They said he was attacked with a nerve agent. Almost half of the companies are german. Still ahead, we will talk more about currencies. What chinas domestic focus means for strength. The trade data we are waiting for from china. Show, protesthe begin to flareup in hong kong. We will get the latest details. This is bloomberg. Tom welcome back. Google says it does not object to the recent australian law on news businesses. Australian policy that would require Media Companies to charge or pay media funds. Facebook pushing back. Who will saying it does not object to the australian code. We will bring you more as we get it on that story. Moving on to hong kong. Police have made hundreds of arrests as prodemocracy protests returned to the streets. What really happened here and why now . The protests have been fairly wide since july 1. The implementation of the National Security law. It had a chilling effect. But also we had the coronavirus. That has gotten people of this truth. Yesterday was the date the Legislative Council was supposed to happen. This was a direct protest against carrie lams postponement for one year of that registered of counsel. Needless to say, police were out in will force. To 70 people as of the last count. Thereition, there were no 19 people. Not under the National Security law. Charged withre obstruction of justice and some of the violence against the police officers. Looking at the screens here in beijing. In hong kong theres a push to boycott mulan. What is going on there . This is something disney saw coming. Their lead actress in this a mainland is chinese native, an american citizen. She retreated a social media post that supported hong kong and set the protest movement was a shame. She has backtracked from those comments in an interview with the hollywood reporter. She said it is a very complicated issue. And that she is not an expert. But a little bit of the damage was done on this film. It did not hit theaters yet. It was moved to the disney plus streaming app because of the coronavirus worldwide. But now we have activists all across asia, including island, who have put out calls to boycott the movie. Wongan see what joshua said. He said disney cow towels to beijing kowtows to beijing and endorses Police Brutality in hong kong. They have said to boycott the phone. Disney has not commented. Saybloomberg analysts because they moved it to the streaming platform, they need to have billions of downloads to make this film even breakeven. Coming up, the frontrunner to become japans next Prime Minister is widely seen as a continuity candidate. But some of his past statements suggest he could shake things up. Details coming next. This is bloomberg. Tom welcome back. The frontrunner in the race to become japans next Prime Minister is widely seen as a continuity candidate rate but his past statements say he is a reform advocate who could change up some of the country cozier industries. For more, we have our politics reporter joining us from tokyo. What are some of the areas we may see a divergence . There issues he has mentioned over the years. Even though he has seen like the right man to shinzo abe. One is the mobile phone industry. Incensedstantly being thate high charges japanese individuals have to pay. He said he will enforce competition on that front. Thing is regional banks. He will be pushing for some consolidation in the smallscale banking the street. Yvonne he was seen as the candidate who was the. Ontinuation what policies will you keep in place . In several speeches he has , he said he is content to continue with the extreme monetary easing. Change on thatno front. He has said if something is afloat,o Keep Companies he is very prepared to do it. There could be more in terms of monetary easing. Could be Government Spending to support individuals. Our politics reporter joining us tokyo. Its get the latest business flash headlines. The company may trading gains around 4 billion. There were bets on equity derivatives. There were some unrealized profits. Ever grand will its properties the prices slash for its properties for sale in china. They are aiming to boost sales. Chinese chipmaker smic has heard that the u. S. Might blacklisted as a security risk. The company denied having any relationship with the chinese military. They say it is only for commercial use. Seek a license to ship to smic. They have raised a number of shares they plan to allocate. Due to Strong Demand. Debuting on the Hong Kong Exchange this week. Biggest ipos this year have been on Mainland China or hong kong. Check in on some of those stocks that you just talked about. We look at how the stock prices are reacting. We had the report from reuters suggesting that the company could be blacklisted. They are down more than 80 at this point. Down more than 6 . Reporting thatof they have had positions in the tech sector in the u. S. Just a look at smic. They did have ethics exposure. 27 in north america. We are looking at alibaba. It will have some of its Interest Rates cap at 15 . Some of the real estate here in the mainland. We can look at the japanese markets. About thest been talk reform agenda. Softbank is dragging down the nikkei. Currently down 4 10 of a percent. This is what the dollaryen is looking like. Practically unchanged. Plenty more ahead. This is bloomberg. The big events are back. Xfinity is your home for the return of live sports. It is 10 29 a. M. In hong kong and try and shanghai. Here are the first word headlines. Protests have returned to the streets of hong kong after weeks of relative calm. Police arrested almost 300 people including key activists as demonstrators marched through neighborhoods. The main thrusts of the protest was against the delayed Legislative Council in elections, which were supposed to be held on sunday. The government in britain, a law. A person familiar with the internal markets bill says it has fullback measures related to ireland rate if the u. K. And eu cannot agree. It has the potential to undermine ongoing trade talks. We have got to a position where there are only two points really old and us back. Week really holding us back. We cant accept the eu controlling our loss. No one goes into negotiation on that basis. A powerful storm has slammed into southern japan, bringing fierce wind and rain, with flooding and some mudslides. To 160ght winds of up miles per hour. It forced toyota and others to shut factories. The storm is now headed for korea where the president s office is warning it could cause great damage. The worlds top seeded tennis player exited the u. S. Open after he accidentally hit a line judge with a ball. Forfeited the match, ending his attempt for a title for violation of what they called reckless actions on court. I watched that one. That was a bit tough to watch. A quick check of the markets. Where keeping a close eye on the renminbi. Asiapacific stocks, it seems like we have stabilized a little on after the text selloff friday. The nasdaq futures are still seeing quite a bit of red for a Third Straight day. We are watching how india plays out. Futures. Ower for nfte virus cases in india is set to over to kate set to overtake brazil and become number two in the world when it comes to virus cases. Individual stocks, tom has been focusing a lot on the tech sector. Samsung electronics, that kind of its bucking the trend, of about 1. 2 in seoul. It as the next target in its blacklist, samsung could benefit. That is why that stock is higher. The hang seng index falling once again. 515names like tencent, right now for the stock. Alibaba is down 1 . To 20 tending gains lower. When it comes to currencies, the dollar will still be the focus after we saw a resurgence in strength last week. 1. 18. Ollar at onshore renminbi continuing to go strength for strength. 6. 83 for your onshore rate. A sixweek of gain, the longest streak in two years for your onshore renminbi. That is helping currencies trade pretty much flat at 106. 26 for the dollaryen. We are waiting on the trade data. Questions about how strong the rally will be. We are expected exports likely continue to rebound strongly from a year earlier, reflecting higher external demand. Some believe beijing is allowing faster gains as well as it seeks to bolster week spending. Lets bring in the Market Strategist at arcadia securities. I am just wondering, is it the same recovery in china . Alls this alstom is this still dependent on where the dollar goes . I think a lot of this is dependent on where the dollar goes. Chinese states have been encouraging in weeks and months. It has outperformed elsewhere. I think the rally has been largely dollar dominated. Against a Broad Spectrum of currencies. The fact that the fed will moving toward targeting and inflation pressure remaining very benign. Confidence in the dollar has really come under a lot of pressure. I think the rmb has capitalized. Going forward, i think that will continue to be the big driver for dollar rmb. How do you look at the theme of dual circulation, where xi might want to boost imports and be more reliant on some of the technologies. Do you think there are currencies that can benefit if china becomes more selfreliant . Is a complex issue. Clearly the fact that u. S. Has sanctions on Chinese Technology companies and import of u. S. Technology goods has had some impact on what china has been doing. They are obviously investing a lot more money domestically on building up tech infrastructure. I think it really does depend on how china moves ahead. It involves much more demand from other countries to help build up Chinese Technology production and exports. That could benefit the rest of the reason. China seems to want to try and move towards boosting its ability tocompanies produce technologies, which could come at the expense of some producers in taiwan and korea. It wont necessarily be great for the rest of asia as taiwan builds up its technology infrastructure. The domestic story and priority for the regulators and policymakers is to continue to open up the Financial Sector. We heard from the regulator over the weekend percent they want to see changes. Do you think there is a real catalyst . They talked about how Foreign Investors own just in the lender 5 of stocks at present. Do you expect to see enough to propel momentum . Clearly think there is a Strong Demand for chinese assets. Up more andning more, especially in terms of the Financial Sector. As you mentioned, the Foreign Ownership is still fairly low proportion. There is a lot more room to do that. Equities has gone a long way on this front. On the other side of the coin, china, while it is opening up its market to some extent, it still has reflect still has restrictions on capital flows out of china. I think given the capitalization of chinese equity and bond markets, they will be more inflows into these markets. Especially as more and more Companies List in china. The sanctions the u. S. Is putting on listings in the u. S. May entice more companies to list in china and hong kong. I think the path is clearly there for more info for Foreign Investors. Part of that is linked to politics and the election in november. Do you have an idea of how the election will affect the fx space . Mitul overall, we would argue that there will be uncertainty over elections. Their arguments over whether the u. S. Election will be recognized by the president or even democrats. There is a lot of uncertainty likely to build up. Polls still show some lead for the democrats and biden. If this uncertainty persists, it could weigh more negatively on the dollar. It could be a short rally. I expect the dollar will come under renewed pressure in the next several once. Currencies like the rmb will do reasonably well out of that if the dollar continues to remain under pressure. Some of the emergingmarket currencies which are doing well. I think that would continue in the next few months. Dollar weakness has not most of the fx that is struggling right now, what do you think is driving that we and could spark a turnaround . Centrale not banks have been intervening to prevent currencies from strengthening. We know that emerging markets are under a huge degree of pressure. They dont have the capacity as some of the developed economies. The fact is that the currency many, especially in asia, where the region is very export oriented. Keeping currencies to some extent suppressed against a weaker dollar is a means of trying to boost competitiveness and exports. I think that is the reason we have not seen emergingmarket currencies benefit. The fact that growth pressures are not going to be dealt with quickly. Covid infections rising in some countries such as india meant there has been less inflows back into emerging markets in recent months. I think that cautiousness is going to continue. Inore we see any rally emergingmarket assets. The ecb meeting later this week. Is there anything that can do to tame the euro strength . Mitul aside from jawboning, it is hard to see what the ecb will do. We have seen a number of the policy levers already having been called. We may see lagarde, ecb president , highlight some of the flexibility of the ppp, perhaps suggesting that the pickup in the downbeat inflation outlook. As for the euro, it is highly unlikely they will be saying or doing much apart from kind of talking the currency lower as we saw last week. I dont think we will see any significant action on the euro. Alwaysl kotecha, appreciate your insight. Thank you so much. Coming up, beijing is dusting off its old stimulus playbook and is splurging once again on construction for growth. The question is whether it will have the intended gains. More on that. This is bloomberg. Tom welcome back. Cycles such ass after the Global Financial crisis, china splurged on roads, rail port roads, airports, and railways, and built up debt. It seems that is the strategy at play now. Chief asia correspondent has more on this. What is driving the latest stimulus . Essentially what is happening is the government does want local authorities to accelerate their borrowing and essentially to speed up their spending on Infrastructure Projects. That has taken a while to trickle through to real activity. We know that investment in infrastructure is trailing from a year ago. There is a lot of pressure coming down from the pipeline. They must sell special bonds by the end of october. Our own colleagues in beijing found that Infrastructure Projects around urban centers, roads, rail, and the like. It speaks to the idea that even though the industrial side of chinas economy is recovering, we know that the Public Sector is playing a key role. Yvonne we are still waiting on that trade data out of china. What is expected . Enda we have something of a bumper story for china. We know that factories have come back on about three months ago when the virus has controlled. They have taken advantage of the rest of the world coming out of lockdown for that pentup demand. Medical goods, electronic experts have been strong. It is trickling down to that yearend holiday season, too. The trade story in china is quite strong. The export story is expected to continue to be strong. I guess the big question, over the months ahead, can china continue to get the growth dividend or will that start to fade away too . Enda curran, you, chief asian foreign correspondent. Coming, softbank shares sinking in japan. They call the company the nasdaq whale after huge bets on tech stocks. This is bloomberg. Tumbledsoftbank shares in tokyo after reports that the japanese conglomerate made substantial bets on technology derivatives. It is reported that the company is sitting on gains of about 4 billion of the founders debts. The founders bets. They are labeled the nasdaq whale. This seemed to be a controversial move even within softbank. How big of a risk is it . We already knew that softbank had invested about 3. 9 billion in Technology Stocks which include amazon, tesla, netflix, and many in china as well. What is new from these reports is that it is accompanied by substantial bets on equity derivatives. It is a fairly complex story but it seems that softbank is using the options to drive the value of existing publishers. Existing public shares. They have said softbank is sitting on about 4 billion in trading gain. It is not clear how many of these have been realized, if any at all. Considering all the concern surrounding the tech valuations bubble, it is not surprising that investors are spooked that softbank might have the wherewithal. Risks forare the softbank . Is it about climbing the market . That is a very good question. As part of the reason that this move had been controversial. We know that during earnings in august, they said that softbank has created an Asset Management arm. We suspect that is the group guided. The group behind it. The argument against this internally, even if softbank makes a few billion dollars in profit, this will not meaningfully increase their shareholder value. But if they do lose money, this could be a considerable blow. Shareholders trust in a company, which a considerable blow to shareholders trust in a company, which is still recovering. This is all downside, no upside. Thate we are seeing reflected in the stocks, down some 7 in japanese trade right now. Is this likely to weigh on the stock Going Forward . There is always some uncertainty, and this is another new wrinkle. You have to keep in mind there are countervailing forces. We know that the result of the vision fund are improving. But more importantly, softbank about 40 billion worth of Stock Holdings in alibaba, tmobile. They are flush with cash in committed to another ¥1 trillion of buybacks. Youll Asian Technology reporter pavel alpe yev in tokyo. Morelimination of 1100 jobs or so is necessary to ensure the survival of the airline, said the ceo, who spoke exclusively to guy johnson earlier about the companys cash burn and how long it might last. In our minds, we have set ourselves up to deal with continued uncertainty on your major market. Also the u. K. s major market, worthis u. S. U. K. Travel, 262 billion. With this 1. 2 billion and an injection of money coming in lender, virgin group, a plus the cost cuts we have put into place, should allow us to be in operation even if demand from the u. S. And u. K. Is curtailed well into the end of this year and even into the beginning of next. When do you expect and also pick back up again . Are you effectively grounded until we get a vaccine . We are not. What you would have seen over the past few months is that we have had a very thriving cargo business. Now, we are launching and have launched Passenger Services on top of the cargo business. So whether it is los angeles, new york, hong kong, shanghai, delhi, no tel aviv on sunday, this is how we are how tel aviv on sunday. This is how we are running the operation. 50 stimation, it could be next year, but hopefully a bit better. Uncertainty with the u. S. Elections which impacts the opening of this border. What is the path to profitability . What is the point that you think will put you back into the black . And how flexible do you think that number is . The actions we have taken, we have been leading from the front. I think we have been the first to do many things. We suspended our flame to china our flying to china on february 1. The idea is that the recovery starts from today for aviation. 2021 would be in estimate probably on the long haul side. 50 of 2019. Our goal and aim, assuming that things become a bit more normal once vaccines are possible in 2021, 2022, we would likely be profitable. We have the right cost base, fleet, market for partnerships, but we are subject to demand and opening of those borders. Which is why it is so essential that we introduce testing across the u. K. At the leadership position so that flying can resume freely. What does that Testing Program look like . How would you like to see it work . The idea would be testing before departure, so people know when they arrive at their destination, they can go about it. I think we have to accept that beginning we can do a trial where we can do at departure and arrival, which are more rapid, cheaper, easier to facilitate, and not distracting from testing at the nhs, schools, and other infrastructure. The idea would be to give confidence and get rid of quarantine yvonne that was the Virgin Atlantic ceo. Still waiting on that china trade data that could come from the mainland any minute. Deathing that every taken that recovered expecting that recovery to continue. Whenve eased the selloff it comes to tech from friday. This is bloomberg. 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. Welcome to Bloomberg Markets asia. This is a look at our top stories. Stocks finding stability after the tech lead selloff. It is a risky week ahead for markets. Pressure points from foreign exchanges to oil and we are waiting chinas august trade numbers. U. S. Nda reports that the may like last a chinese ship maker in spite of the company denying any military links. Rishaad china and india continuing talks. We will ask a former indian officer if there is any pathway to peace. We have jitters off of the two days of. The biggest since june 2020. Slashing to the lowest since may. Concerns after the five month rally. The benchmark in china down a 10th of 1 . Done for a third day. Down for a third day. We are awaiting chinas trade data, which may suggest momentum is being sustained. The p, up by 1 , rising for a third day. A report suggesting the president giving the ok for the gradual resumption of tourism. The government is in talks with pfizer for covid19 vaccines. Rishaad we are just getting data coming through. This is the trade numbers we are waiting for. 11. 6 year on year. We got slightly less than the 12. 4 . Imports coming in at 6. 4 . A contraction in imports of half of 1 . That is where this data is pointing to. Some weakness within the economy. The domestic economy. Exports slightly quicker than expected. That is the position. Still better than the previous month, july, we sell 10. 4 percent increase. This august, it was an 11. 6. That compares with estimates at 12. 4 . Imports estimates at 6. 1 . A contraction, a big miss. Half of 1 . In july, we had a 1. 6 increase in imports. That is the data coming through. Terms. The yuan we are waiting for the dollar numbers. They should come out soon as well. Haslinda lower than expected but still an expansion. Lets get perspective. A seniors now is chinese economist at jp morgan. What do you make of these numbers . Falling short of expectations. 12. 4 urges estimates of versus estimates of 12. 4 . I think the export numbers are little weaker. Generally, i think the trend is solid. Remember, in july, we had a big upsurge in the export side. If you put the two months together, it does seem that chinas momentum is holding up well. If you look back to the past couple months, chinas exports overall have been surprising on the upside. That is on the back of the fact you have Strong Demand for medical equipment, tech sector exports have been holding up well and china has been first in first out in terms of the supply chain recovery. The interesting thing would be Going Forward, where do we see the export momentum . Can that be maintained in the coming months . We are pretty constructed on that in the sense our global team does believe the demand be solid in the coming months as demand recovery expands from consumption side to an inventory rebuild. And that now with recent signs of pickup in spending. In that sense, the nearterm outlook should be on the constructive side. Haslinda fair to assume as well that china will benefit from the reopening of asian trading partners also, the e. U. As well as the u. S. . Yes, that is why we were saying the outlook on the export sector will be constructive. If you look back, in the Second Quarter when we did benefit from the fact that china was the first to reopen its supply chain and therefore, its all some nearterm expansion of the global market, in the coming months, the reopening in the other markets including the u. S. And europe and the rest of the world, while you would see production activity picking up in other parts of the world, depend demand will be picking up as well. Overall, that should suggest the demand environment overall from the global front could be supportive should be supportive of chinas export sector in the coming months. Haslinda looking at the imports, a contraction of half a percent, how much does it have to do with chinas highly congested port . Is a very that interesting point. We have still yet to see more details of the august import data. I think that would imply for the domestic demand side is that we do see the investment part of the economy as still being the important part of holding up further economic recovery going into the Third Quarter and second half of the year. There could be some shortterm complications as you mentioned in terms of the inventory cycle or in terms of the operation at the port sector. We do not see this as a signal suggesting a weakening in domestic demand. If anything, we do see investment growth will continue to be an important driver of the Overall Economic recovery going into the second half. If you drill down into these numbers, you find that there is some news that is not going to be pleasing for donald trump. For chinas august trade, the Surplus China had was 1. 3 trillion yuan. If you look at the imports from the u. S. , they are up to tenths of 1 . They are not going up 2 10 of 1 . They are not going to like it in the white house. Yeah, it will take time. Whiley we see it is that it will not take further time for the trade adjustment to show up further in terms of the bilateral trade between the u. S. And china, in the near term, while we have seen increasing signs of difficulties on the relationship between the two sides expanding from trade to the Financial Sector and the Technology Sector to politics including issues about hong kong, taiwan and so on, indeed, we see the phase one deal between the two countries is one area which is still going on reasonably well. What that means is that in the near term in the next couple of months, china would still put on more effort to increase its imports under the u. S. In that sense, the phase one deal is indeed one of the few areas of the bilateral relation, which is still going on fine at this moment. There anys readthrough from this data to where we are with growth given that the imports showing the contraction of half of 1 perhaps may not go to the domestic market perhaps working as well as it should be and what does it tell us about the certain circulation policy that has been bandied about . Yeah, it is quite a complicated issue. You raise a number of important points. Seen anearterm, we have solid rebound in the Second Quarter gdp when we do see growth continuing to recover into the second half. However, if we talk about the momentum of recovery, we do see the growth recovery momentum to be moderating in the nearterm in july and august. That is partly related to the heavy rain, the flooding, but also partly reflecting the fact that your Domestic Production activity, that sharp rebound, momentum is moderating somewhat. What is important going into the second have is that while we continue to see policy support on the Infrastructure Investment side and also with stabilizing activity, you also still have the boost coming from the external side as we mentioned given that constructive global outlook. One key area we are watching out for is the recovery on domestic consumption and service consumption, which has been generally lacking in this rebound phase. We seeh further recovery in those sectors, consumption and services into the second half will be quite crucial to determine much further recovery we will have. At this moment, our focus for gdp growth is 2. 5 . That means the second half in terms of your on your growth will come to something between 5. 5 to 6 . Haslinda a pretty resilient yuan, mainly because of the weak dollar. How tolerant is the pboc of a stronger yuan and will that impact on exports going further . Yeah, i think that is an important question at this juncture. As you mentioned, the yuan has been strengthening against the dollar on the back of a general dollar weakness trend. At the same time, it is also reflecting the fact that your fundamentals are constructed for the chineseterms of economy and the positive growth differential as well as the Interest Rate differential. The pboc seems to be easing but a less aggressive pace than the u. S. If you look at the renminbi, it has been coming up in recent weeks. But if you look back to since the beginning of the year prior to the virus situation, it was actually only modestly higher compared to early in the year by about 1 to 2 . Given the ongoing momentum in the export sector any the overall growth picture, it does seem the policymakers are still reasonably comfortable with the current level of the yuan and in addition, as we mentioned, the difficulty between the u. S. And china relations at this moment in time has shifted to other sectors such as financial, such as technology and so on, which have less to do with the renminbi. In addition, the stronger at renminbi seems to be stronger renminbi seems to be helping with the Financial Market opening to the Foreign Investments and internationalization rishaad always a pleasure. The senior chinese economist at jp morgan. Lets move into the first word news. Chinas financial regulators planning a cap on Interest Rates. Other consumer lenders will be subject to a ceiling imposed in Supreme Court ruling last month. The move could curb the fintech giant. Global coronavirus cases have passed 27 million with 882,000 dead. The United States reporting 45,000 cases in 24 hours. That is in line with the previous weeks average. Cases in new york, arizona and florida. Infections in the u. K. Rose by almost 3000. That was a 64 jump. The biggest increase since late may. New cases in india have topped 4 million with a country set to overtake brazil with the secondmost infected nation hind the u. S. India reporting 90,000 cases on sunday. More than 70,000 indians have died. The testing rate remains low compared with other countries. Lets get some more trade data coming through. This should be in dollar terms. Termss up 9. 5 in dollar year on year in august. That is opposed to the estimates of 7. 5 . If you look at the import side of things, we are looking for a slight uptick, to tense of 1 in dollar terms to 2 10 of 1 in dollar terms. That is the appreciation of the chinese currency. Still ahead, we get the military perspective on the border dispute between india and china from a retired indian army colonel. Haslinda next, softbank shares tumbling in tokyo after reports it made substantial bets on equity derivatives amid the surge in tech talks. We will have the latest on that. This is bloomberg. Haslinda welcome back to Bloomberg Markets asia. Lets recap those china trade numbers. Atde balance coming in 58. 93 billion versus the estimate of 49. 7 billion. Imports coming in at a track at a contraction of 2. 1 year on year in dollar terms. The estimate was for 0. 2 . It is worse than expected. Imports falling to. 1 year on year in dollar terms. As we heard from our guest earlier, exports were slightly disappointing at 12. 4 . 11. 6 versus a survey of 12. 4 . We have got a situation with global stocks mostly stabilizing. Investors are remaining nervous. Crude oil extending. Techtors worried that stocks highlighted by softbanks tumble in tokyo after reports came out that it is sitting on 4 billion in gains. Lets get more from mark. A load of call options being taken. They do not normally move the market. There is evidence to show they have been responsible for the nara rally we saw up to what we had the nara rally up to what we had thursday and friday. Softbank is the flagship name that is late in this trade. They are not the main part of this. This was started by the Retail Sector. The total volume traded by retail appears to be much larger than what is traded by softbank unless softbank is devoting their order. This is Something Like softbank is a flagship name, but they are late to the trade. The paper profits are going to be a lot smaller by today already. Not only do we have the pain from the end of last week, but on friday, we had tesla not getting to join the s p 500. That will be a further blow when the nasdaq reopens on tuesday. There is more downside around this trade. People have realized this is held retail will be traded in the market this is how retail be traded in the market. We may not see the full repercussions until tuesday. Haslinda in the broader market, some stabilize asian but still swinging some stabilization but still swinging between gains and losses. Whether this is correction to the uptrend orifice is a breakdown to the uptrend uptrend or if this is a breakdown to the uptrend. If markets can roughly hold their own by the end of this week, i think people will get back into the rally. The fact is that much of the market did not catch this rally, the Retail Sector caught it and some people caught it with enthusiasm, but many people who profess to be bearish, what they want is a correction so they can buy the dip. Where they buy that dip depends on where the price action will happen this week. If we have another painful week, this can gain Downside Momentum through september. If we tread water, we tread water by the end of this week, the dippers will come back in soon. Haslinda you can follow more on this story and all of the days trading on the market blog. You can get a market rundown in one click. There is commentary analysis from bloombergs expert editors so you can find out what is affecting your investments right now. Rishaad coming up next, shares in smic plunge after reports that maybe the next we will have a closer look at this company as its stock gets smacked down. This is bloomberg. Haslinda smi t shares tumbling the most in seven weeks following a report the Trump Administration was considering blacklisting the chipmaker. The Defense Department is working with other u. S. Agencies to determine whether to take action, which would force american suppliers to seek a special license before shipping to the company. Lets get to asia tech reporter debbie wu for more. The stock keeps falling even though her even though smic came out to say the relations with the military is not true. Debbie right. Is [indiscernible] championnas national when it comes to the manufacturing of chips, which are required to Power Electronics including smartphones and self driving cars. Wise, technology as to why the u. S. [indiscernible] a pentagoned spokeswoman. The official did not give out the reason why washington [indiscernible] reuters also cited people family that the company is under scrutiny. The Chinese Company has denied as a relationship has denied it has a relationship with the boe. We will have to see what happens next. Rishaad we have also got various other companies here, which are also in washingtons sites. What would be the impact of a chipmaker to be sanctioned by the white house . Indeed theht, so if Trump Administration decides, that means u. S. Shipments of suppliers would have to apply for get newbe difficult to equipment from these suppliers. That could seriously undermine chinas ambitions. They are indispensable for ai andchips required for highperformance computing. Debbie wu, asia tech reporter in to one in taiwan. Pharmaceutical giant esl says it has signed initial deals to supply coronavirus vaccines upon successful completion of the nickel trials. Under the agreement, the company will make 51 million doses of a vaccine developed the university of queensland and could be done and could begin production by next year. Areng property giant among those receiving tens and millions of dollars in governmentfunded wage subsidies according to bloomberg data. The payouts have raised questions about one job losses have been concentrated among low skilled labor, construction, retail and the food industry. Rishaad lets get to Chinese Markets as we head to the lunch break. Msci china at the index, it is down by half of 1 . These losses being led by the. Hinext price imparts unexpectedly dropped. Exports rose 9. 5 . Imports contracted by 2. 1 . This all coming from the customs administration. What they did leave is a trade surplus of 58. 9 billion u. S. Dollars. Forecasts had seen that up by 7. 5 and imports rising to 2 10 of 1 . A lot of this is down to the yuans strength we were seeing in august. Perhaps that is why we are getting some skewed numbers as well. A lot more on Bloomberg Markets. Stay with us. Haslinda pictures of the lion city. Almost 11 30 a. M. In singapore. Have singapore food set up. The founders may be mulling over an exit, having reached out. They have raised over 6. 7 million. Among the backers, vendors. Up to tenths of 1 up to wonths of 1 up to tenths of 1 . Rishaad Major Trading partners resumed activities. Imports unexpectedly dropping, raising questions about the strength of the domestic led recovery. Exports jumping 9. 5 on the year in dollar terms. That was better than anticipated. Imports fell 2. 1 against forecasts for a narrow gain. The British Government is said to be preparing a law. A person familiar said it contains fallback measures relating to Northern Ireland trade if the u. K. And the you cannot agree. The bill may be published on wednesday and has the potential to undermine ongoing trade talks. It is a wakeup call for the e. U. We got to the position where there are only two Points Holding us back. We cannot accept the e. U. Will control our laws. That is the reason we are leaving. No other country goes into negotiations on that basis. Rishaad a powerful storm has slammed into seven japan, bringing fears wins and rain with the fears wind and rain. The storm is now heading to korea where the president is warning it could cause great damage. The worlds top seeded player exited the u. S. Open after he accidentally hit a line judge in the neck with a ball. He defaulted from his fourth round match, ending his bid in accordance with the rulebook for what it calls reckless actions. He smacked the ball in anger. Asian markets stabilizing after a two day global selloff. We have the asia index currently flat. The nikkei 225 back from its break. Some say fundamentals are not bad. No need for Japanese Equities to lose so much ground. The kospi leading gains in asia. Five new indexes today, focusing on future Industries Like internet, battery. Deflect, 24, index 714. Regaining some of the losses. The hsi with its worst week since may. Nasdaq finding we have softbank among the stocks we are tracking today. Softbank dropped the lowest in four months after reporting it spent about 4 billion focusing on tech stocks. Alibaba down by 1 . Trading in hong kong. China set to plan caps in lending rates to control risk. U. S. Is suggesting the mulling blacklisting and company. It says blacklisting a company. Rishaad well lets have a look at india and china. They have agreed to diffuse porter tensions after defense ministers held talks over the weekend. Both nations have been clashing on the himalayan border since june. Beijing has refused to withdraw troops. Our next guest believes india could resort to military action. Lets bring in our guest who served or than two decades in the indian army. Who served more than tuesday more than two decades in the indian army. We have been here before when both sides have tried to diffuse tensions, but it has not held. What would bring stability here . It is a situation where one country has occupied territory of another. It is a situation where generally stable border situation between the two countries that has held for years and which has been governed by a set of written agreements, four written agreements between india and china to maintain peace on the border. It has effectively and suddenly and unexpectedly been thrown out by china when it moved troops into indian territory or indian claimed territory i should say in the month of may. Now, indian has a simple demand. That is that you have to withdraw your troops and we get back to the status quote of april status quote o of april. China has flatly refused. They say this area, which it has never claim to before or has never occupied before, has suddenly come under chinese occupation. The indian demand is clear and simple. Please speak please vacate our territory. The chinese have so far refused to do so. Rishaad the danger is with thousands of troops up there now when there were hundreds a year ago, that something could actually could escalate by accident. Yes, absolutely. It is made even more dangerous by the nationalistic politics that both sides have in their domestic political arena. Xi jinping wants to appear to be a strong leader. So to does Prime Minister so too does Prime Minister modi. He has exerted a muscular posture and muscular repot. It anda does not take india does nothing about it, will be a blow to Prime Minister modis image. [indiscernible] of are having a large number military troops in contact with one another and you are having domestic politics exerting a malign influence on the situation. As you said, it is a dangerous situation. Rishaad we have the line of actual control between the two sides. Not far away as the line of control between india and pakistan. It is there a danger this could be a two front war for delhi . Strategic the dilemma. How to avoid a two front war. I far, pakistan has played it should say responsibly in so far as pakistan can play anything responsibly. They have avoided making inflammatory threats. They have avoided giving the impression they read into it they would intercede on the part of china were come down or come down and liven up the border in case china does resolve. So far, there is no threat or indication of a two front war. Things could change very quickly. If china exerts pressure on pakistan either to live in of the border or step up the insurgency of kashmir, india could find itself in a situation where it is facing multiple threats at the same time. The indian army is a big army. It has a large amount of experience maintaining law and order. Still, this would be the first time it is facing off against china and having to deal with these internal problems and the pakistan problem at the same time. Perhaps should india except u. S. Assistance to deal with china . Well, that assistance has been forthcoming. Between four occasions india and american leaders have taken place. The United States has offered assistance. India wants to give the impression and i already spoke about Prime Minister modis muscular nationalistic politics, india wants to give the impression it is capable of handling the situation on its own. It does not need assistance from socalled big brother sitting in washington. It has declined all forms of assistance except for intelligence assistance or information about what china is thinking and planning. So far, the United States has not been in position where it has come down on indias side, but if a war starts going wrong for india, if china starts making gains, if china starts occupying large amounts of indian territory or if this two front war comes about, then the situation could change. India could start accepting greater amounts of american assistance and then you would have this polarized situation in the south asian region. Haslinda since coming to power, Prime Minister modi has invested a great deal of personal and Political Capital in his relationship with xi jinping. Has that been undone completely . Is completely under the bus now. Prime minister modi has had several meetings with xi jinping. The conclusion himself based on many statements over the years that he has forged a new relationship between india and china. This sudden action by china and it has to be said that it came on the heels of india already being tied up in handling the covid situation and one of the reasons why indian troops were not on the border to stop the chinese was that they were taking covid precautions. Chinas actions are seen across india as a stab in the back, as something deeply damaging to china and india relations. Coming back from here is going to be a long, hard grind. Haslinda what is central to the tensions between the two sides . India has insisted the area belongs to india. How do you read that situation . Is a clear border dispute. It is a territorial dispute between the two sides. But what is important is that so far, starting from if you do not count the 1962 war, and that was a long time ago, the two sides have managed this dispute rather well. The border with pakistan has been inflamed and a lot of firing and killing an action taking place on that border. That has not been the case with the china indian border. It has been handled responsibly by both sides. They signed agreements to make sure the situation does not spiral out of control. China has suddenly gone back on all of that. It is not clear in the Indian Strategic thinking why china has [indiscernible] that is what is the real talk the real problem, a stable border that has suddenly become unstable and no one knows why china has done. Has done that. Rishaad it is not the only border that is contentious between the two sides. Bhutan asne near uta well. There is a complaint from the Defense Ministry that they are blaming india for all of this. They are that when india comes to the negotiating table, take the attitude of what is mine is mine. Is there any truth to the . Two that . To that . That chinale fact is has gone back on a stable arrangement that existed. Indian troops used to patrol the line. Chinese troops used to patrol their line. That never lead to any serious confrontations. There was a little bit of jostling here and there, but within the border agreement, these situations were always handled. Now, it is not being handled. China thinking that india changed the status quote, it uo hasot status q not gone down well. By chinese groups and territory it had not occupied before and the stopping of indian patrols from going up to their claim line. As i mentioned before, accusations and counter accusations are to be expected in situation like that. Hason ground status quo been changed by china and india is not accepting that. Haslinda thank you so much for your insights. General. Red indian a moment of reckoning. U. K. Foreign secretary dominic raab stands up against the e. U. Ahead of the resumption of brexit talks. This is bloomberg. Rishaad going to go to indian markets. We have at the moment what is over here is over there as it were. Nifty banking and ticks down two thirds of 1 banking index down two thirds of 1 . Vodafone considering a credit enhancement to provide additional comfort to global investors. It has this huge tax bill to pay off. It is perhaps looking at a capital raising, almost 12. 7 billion rupees. This is according to the economic times. Could be part of a debt restructuring. Vodafone Leadership Team calling a press Conference Monday to make a strategic announcement. This is from the economic times. Up over 7 . It is a company that is fighting for its survival. Brexit coming back to the fore. The u. K. Stepping up preparations for brexit talks to fail. Boris johnson is set to tell the e. U. On monday he is willing to walk away rather than compromise on what he sees as the Core Principles for brexit. Joining us now is our Senior International editor, jodi schneider. What plans are they going to make if time runs out . Jodi time is indeed running out. They have only until the end of the year when the stranded when this brexit transition period expires. The two sides have been at an impasse for months. If they do not come to terms of the deal, there is going to be a return of certain tariffs and quotas as well as extra paperwork for businesses. Some are saying it could be aaotic for u. K. Businesses if deal does not come to the fore. Boris johnson is going to tell the you he is willing to walk away tell the e. U. He is willing to walk away and will set an october 15 deadline for a deal. We have seen this in the past with him. He would say if i do not get this this date, i will walk away. Two undermine the already this could undermine the already fragile negotiations between the u. K. And e. U. We will see whether this gambit works or not. Chaosd you mentioned possibly if a deal is not struck before the end of the year. What are we talking about . Jodi there are a number of things that could occur if they cannot work out this deal. It is things like border crossings, the amount of paperwork that needs to be done for businesses. Right now, they go ahead and are able to process things and able to move over borders pretty easily. The two sides being at this impasse over things like state aid means they could it could be a very chaotic, long queues at the border, new tariffs on a variety of goods. Will leaveecause it the Single Market and Customs Union at the end of the year, means they will be on their own if some deal is not struck. Rishaad thanks, jodi. Toing up, from canopies fabric barriers, airline cabins are set to look very different the next time you fly, or will they . Having a look at all of that next. This is bloomberg. Rishaad you are back with a Bloomberg Markets. Airlines are changing how cabins look as they try to assure passengers over health concerns. That means cabins could look very different the next time you fly. Lets get the latest from our business reporter. What sort of changes are we looking at . One of the biggest seat makers and interior makers in the industry has introduced a range of modifications that divide passengers, split them off from each other and the aim is to protect them from any infections. Theare trying to reduce chance of catching the coronavirus. They could be there could be barriers along an entire row of seats to protect coughing and sneezing behind you. That is one option they have manufactured and they are pushing to airlines. Other things, for instance, canopies that sit over your head and go on to the head rest. You look like looks like half an astronaut helmet. Dividers that sit on the edge of the seat. You could be in her chair, canopy over your head and a divider underside and a mesh barrier along the row of seats. It is all aimed at reassuring passengers they can get on the plane even when there is not a vaccine and even if youre sitting next to a passenger, trying to minimize that risk. Haslinda have airlines been receptive to these changes to these designs, actually, there is little chance of you catching the virus on flights, right . That is what they say. The Airline Industry has long pushed this argument ever since the coronavirus grounded flights around the world that the chance of catching the virus on an aircraft is very low. They argue an aircraft is fitted with hospital grade air filtration systems. The same type you would have in operating theaters in hospitals. They argue there is little evidence that of catching the virus. That said, there are instances of flights that have carried upwards of a dozen infected passengers and the whole aircraft has to selfisolate after the flight. The industrys argument is undermined in that way. It is very hard to see when they can introduce that. Ist they are looking for when these longdistance flights particularly get off the ground, there are very few of those now. Downnational travel is 90 . Easy to install, easy to get rid of. It is not like refitting the entire cabin but a quick fix you can put in and try to reassure passengers and get them back on the aircraft. Reporter Asia Business Angus Whitley in sydney. Slumpedchipmaker smic after reports the u. S. May blacklist it as a security risk. The company has denied having any relationship with the chinese military. Reuters reported last friday the u. S. May force suppliers to ck license to ship to smic to ck license to ship to smic. Citigroup says that would sees softbank fell the most in four months after the Financial Times reported the company made trading gains of around 4 billion. The report said softbank spent over 4 billion over the past few months on options focused on tech stocks. Withys softbank is left large but unrealized profits. Ground will slash profits. The chairman made the offer on sunday night. He is seeking to boost sales to the equivalent of 16. 5 million by september and october. A bit ofwe have stabilization taking place after the selloff we saw on wall street. This is the scene in new delhi. Morning. He we do have trains at this station as the new delhi metro does Start Services after 169 days of the not functioning. You would have thought the coronavirus would have been stabilized. India is set to cross brazil as the second worst hit country by the pandemic behind the u. S. We have metro trains resuming service in the capital after more than five months. Million. Ses topping 4 a Record Number of people infected. 90,000 in a single day on sunday. That is something which is going on in the country as it is almost above brazil. The hang seng flat. This is what we have. Kospi, 7 10 of 1 higher. We have these global stocks stabilizing. Investors are on edge after the biggest two slide for shares since june. Shares dipping in japan. They would not be if it were not for softbank. That is it for Bloomberg Markets. Daybreak middle east is next. 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. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, affiliates or employees. Announcer the following is a paid presentation brought to you by rare collectibles tv. The 10 indianhead gold eagle containing nearly half of an ounce of pure gold is one of only two coins that the legendary sculptor augustus saintgaudens was responsible for designing. The inception of this stunning coin began with Theodore Roosevelts famous letter to secretary of treasury shaw on december 27, 1904