Transcripts For BLOOMBERG Bloomberg Markets Asia 20240712

Nikkei, last 30 minutes of trade. Final stretch of the morning session paid south korea is being dragged down. Currency markets. Sterling, cable, eurodollar, aussie, the sing dollar. 136 following this weeks mas decision and policy response. Fairly flat. We could see more action later tonight and into next week, when you have the likes of chinese gdp numbers coming out. Gyrations on the political scene, i would imagine. Lets go to your first word news and get you updated on the virus situation in europe with the u. K. And france facing tough virus restrictions as global infections are heading towards 40 million. Households indoors going under overnight curfew as they have a new wave of covid19. Daily infections hitting record in germany, italy, ireland, and spain. Reporting the most new cases since april. President trump is ramping up rift with Senior Republicans, saying he supports a bigger stimulus package. He is blaming democrats for delaying an agreement, but says he goes further than 1. 8 trillion. Majority leader Mitch Mcconnell earlier rejected it. He said there is little you need prospects for any agreement. President trump is warning the u. S. Will strike much harder if the European Union goes ahead with tariffs on american products. Brussels has won permission from the wto to put duties on u. S. Aids in a ruling over state to boeing. The eu is weighing tariffs on a range of products, including aircraft and food, but it is likely to delay any move until next month election. Supreme court nominee, amy coney barrett, is said to with majority leader Mitch Mcconnell expecting a vote on october 23. Thats about one week before the election, and would complete the entire process in less than a month. Democrats have little chance of stopping the confirmation, and says it has been rushed for political reasons. Those were your first word headlines. Tom lets get more on the market context now. We are joined by mark cranfield. As we count down to the weekend, what are the key factors were focused on you are focused on . One of the reasons we have a subdued session in asia, is potentially, you have a busy day ahead in europe and the u. S. European stocks got hammered yesterday as more lockdowns happened across europe in major cities, like paris and london expecting something, as well. Then we have a big option in the u. S. Thats increasing, having a big role in the direction, at least in the shortterm of where u. S. Stocks go. Particularly because Retail Investors have become so heavy involved. Last few months, much higher volumes, particularly in the options space, from Retail Investors. They tend to be shortterm players. When options expire related to the indices and some of the big tech stocks, we can see swings, at least intraday basis, and that will affect the wider markets. Tonight will be big for u. S. Markets. People will be anxious to see which direction. They have helped drive the market up, but equally, if people are unwinding, they can push the market down quickly. A lot of people will be waiting to see that air action until they jump in and follow the momentum. That wont happen until later in the day. David speaking of initial direction, the big story as we started out was what happened with the pboc and yuan, tweaking settings when it comes to ethics forwards and the rrr market. Now that its friday, talk about how the week has progressed on the chinese currency. What have we learned in terms of medium to longer term trends for the currency . If you just landed today and have been away for the past week, you would not realize anything happened to the yuan. It is practically unchanged from a week ago. We saw the dip last friday. But offshore, very little difference. What the pboc did was only meant to be a slight tap on the brakes. It wasnt meant to reverse the direction of the yuan. If you look at the fundamentals, so much more positive for the chinese economy. We will get a reminder monday. There will probably be a good gdp number. That contrasts with the rest of the world, particularly europe. The situation for china is better. It should be reflected in the yuan more. Money is going to the securities market. The pboc doesnt want to risk gettingg anything and people panicky about a sudden devaluation of the yuan or anything like that. What i think we can expect is once the u. S. Is out of the way, we will see them use the fixing a little bit more to slow down the pace. They dont want to get out of hand, be a oneway bet, but they will probably realize the yuan will grind stronger because fundamentals are so much better. Tom you touched on the situation in europe, can we draw on recent history to get a sense of how lockdowns in europe will affect corporate earnings and stocks, or is it just too much difference and change . It looks like they are trying to do a lockdown light version, rather than the one we saw in the spring. Afford athey cannot national lockdown, it was just too expensive. They are trying to do it in a more selective way. The u. K. Is doing it city by city. They are aiming for much shorter lockdowns. People have adjusted well to having the virus and getting on with daytoday lives. Sector, it has been reasonably good. Expected, they will be very weary of doing hard skill lockdowns to bring the economy back to a halt. Fiscal stimulus is big, and they dont want to add much more. At the same time, they have to protect people. One of the key things to watch is how overwhelmed hospitals become in various cities. If too many people go to hospitals, they may have to get more severe. If they can avoid that, life can go on and it will not be so damaging for economies, and stocks can probably take heart from that. Cranfield, and to our clients, i invite you to chime in what you think the virus situation in europe might do to the european equities. Breaking news out of japan, entering its last couple minutes in the morning session. Up about 2 for a fourth straight day. The news out of the company, quick and simple. Filing for an application in japan for a covid19 treatment. Shares are up slightly, just over 2 . Lets tell you its coming up. The election is over in new zealand on the weekend, with the Prime Ministers handling of the virus situation having to set off a resounding win. We discuss it with kerkhove. Kerkhove. Tom thai protesters continue to defy bangkoks state of emergency amid demands for greater democracy, control risk aipac partner dave joe tomorrow joins us with that and other geoPolitical Risks investors need to watch. This is bloomberg. Welcome back to the program. We are closely tracking these events over in bangkok and thailand, in case you missed it and in case you dont know. Protestsrnment have been gaining momentum. A rally in the city of bangkok to find a state of emergency to quell the escalating demonstrations in support of a couple of things, like monarchy reform and greater democracy. We will have the risks involved and what to watch. E are joined by daine chamorro as always, a pleasure to have you on the show. Its a regular feature to see protests in bangkok. Is there anything different about what we are seeing this week that perhaps merits more attention . You are right. In the last 10, 15 years, its been a regular feature of life in thailand. Was different about this round is the monarchy and the role of the monarchy in thailand has become a focal point of demonstrations. Thats always a redline in history and in high society, but the demonstrators, many of whom are high school age, college age, have made this central to their demands. Thats kind of an unresolvable issue. It is one of those red lines. How the of wonder government and opposition will work themselves out of that one. Its a very sensitive issue in thailand. David david at the end of the day, i hate to put this in black and white, you look at the set of demands, and you alluded to this, these are very hard asks to begin with. For investors, they look at this, sometimes it matters, sometimes it doesnt. Do we get to a point where Foreign Investors need to worry about this situation escalating . I think over the last 10 years, because we have had a series of political services, particularly in bangkok, people have become more resilient and learn how to work around disruption in cities like that. If it continues on the level it has been, probably not so much. Yout goes beyond that, if get the services across the country, as opposed to in the capital, that becomes a different issue. Of now, most of the businesses are operating there and have adapted to this. But it becomes significantly worse. Thats a different situation. Lets switch focus to the u. S. Election. Competing town halls happening right now, or will shortly wrap up, with the Vice President and president. President trump has repeatedly refused to commit to accepting the results of the election on november 3rd. That is a key challenge. How should business leaders, investors, how should we be thinking about a potential stand off after the election . I think peoples memories are short. If we go back to 2000, it will be the seated election, in which the popular vote went oneway, and electoral vote went another way. It took him out o it took a matter of weeks counting votes in florida to actually decide who was the winner in the end. History, it isnt not a unique occurrence. I suspect the procedures we have in place for verifying the vote and who is the actual winner will kick in, if necessary, as they had in the past. Tom when it comes to u. S. China relations, carryon. But to your point, it does add to the disruption in thailand, the overall air of unpredictability. No one likes predictability. U. S. Chinat comes to relations, there seems to be a consensus that whoevers in the white house, the longerterm strategy, the longer term bipartisan sense in washington is china is a challenge that has to be confronted, and thats just how you do that. What happens in the first 100 days of President Trump happening having a second term, or President Biden . What is the priority in the first 100 days . I dont think its china. There are plenty of domestic problems they will need to focus on, economy, debt, pandemic. I think if you have President Biden, you also have a new team of people at the executive level in the cabinet enabling you to coalesce around what their strategy will be to deal with china. If its President Trump, he may add new members to the team, but one would suspect many of those numbers will stay the same. I dont think in the first 90 days you will see dramatic change. I think if you have President Biden, what you will have is less emotion in the relationship. You will have less tweeting, one would hope, no tweeting. Probably a more multilateral approach to deal with china. But the fundamental issues between china and the u. S. Do not go away. Its between china and most of the western liberal economies and democracies of the world. Things like human rights and territorial issues. So thiiseally aenerational shift. Its a generational shift in a relationship. It doesnt matter if its in the white house, that relationship doesnt reset to what it was before. The atmospherics may change, hopefully they improve. The fundamental difference is it is a domestic conflicts conflict between china and the western liberal economic model. That doet go away. David it looks like this is going to be he well beyond our lifetimes. This, theedbout established versus the emerging superpower, thailand. Is there anything else that you are busy with with your clients . Is there a common item you think we should be paying attention to . Thingsof the interesting is despite the negativity you hear about in Economic Forecasts and things like that, we see a record amount of investment coming to asia, including china, including investments from the u. S. To china. That has not dropped off, despite what people may suspect on atmospherics and relationships. Record amounts of theres a reason for that. The reason is asia is 50 of gdp growth. China is two thirds of that figure. If you are a business looking for growth opportunities, its impossible to ignore this part of the world. Some countries are more challenging than others in this region. You cant avoid doing business here, finding partners, selling into this region. I would say that is sometimes counterintuitive, given what we read about every day, and what the Economic Forecast are. Asia will probably bounce back more quickly than europe or north america. We see a lot of new investment coming to the region. We see some countries trying to take advantage of that, like indonesia with a recent passage of the omnibus jobs bill they just did. China has been aggressive about taking advantage of that. I think thats the most interesting thing. We see a lot of interest in a lot of demand and investment clubs. David i always love ending these conversations with a positive note. Thank you for that. Great painting, i should also note. Daine chamorro, have a great weekend. Carlyle group has invested about 1. 5 billion in asia alone. We hear from the ceo, which sector is in the region they are focused on. Thats next. This is bloomberg. The pandemic has posed multiple challenges for the world, also opportunities for investors. Carlyle groups ceo, kewsong lee , spoke to bloomberg about how the firm will invest in a post pandemic world, and why asia is a key focus. Of thisifficult part whole equation is you have significantly pretty that has an ability for these valuations to stay high, and in some cases, even push higher. The issues i think we all have to be aware of these in my mind, liquidity does not equate solvency. And we have to think about the fact that after the last great financial crisis, we had situations where companies were illiquid. Ut in fact, but this time around, it may be companies that are insolvent, but remain liquid. If you go back to the spring of this year, i was worried about what would happen in 2020 with the onset of the crisis. As we look back, 2020 may have exceeded our expectations from earlier on in the year as to exactly what happened. We havelem may be that kicked a lot of issues into the future. We deferred a lot of issues. Thats when the square will be when the circle will be squared up. Next year, some of those issues may come home to roost. Less versus have is expectations, a less positive year. So we think there is a separation between markets and the real economy. It is supported by liquidity. It will be an interesting environment Going Forward as we go through it to see where the opportunities will be, and how to take advantage of it. The good news is at least at carlisle, we have a longterm perspective, a Global Platform with industry expertise, and we are perfectly prepared and positions for these types of environments as we navigate through. David what are the conversations you are having with your deal tease . What are they bringing you that feels interesting, in terms of sectors, that maybe you invested in traditionally, or that you have stayed away from . Across the spectrum, i think about something to get specific, like retail. , retail i feel has an acceleration to the downside in many ways that was already underway. How do you invest in a space like that . You put your finger on it. Theres a wide dispersion of outcomes. Certain industries, we see the portfolios accelerating in growth, be it the zoom info or telemedicine. Other sectors, they could face existential issues, to the point you just raised. Is independent on having industry expertise and a Global Platform to sort through where you think the winners will be, and where we should be more circumspect, in terms of our investing approach. In general, there are a couple of buckets to be thinking about. Asia, in particular, is growing faster. We see a lot of opportunity, we have invested close to 1. 5 billion in health care companies, tech companies, we do see huge opportunities in credit, because Asset Classes are reacting differently. In credit, we see more opportunities because of the volatility and dislocation occurring. Finally, you have to be able to pivot and follow the large buyouts that are delayed at the moment. We do see a huge opportunity in Growth Private equity. Particularly in Industries Like technology and health care. That was carlyle groups ceo, kewsong lee, speaking exclusively to bloomberg. Quick latest business flash headlines. Still has a roadmap for the future if a proposed high up with gm unravels. They will revert to what they techthe base plan to share and manufacturing collapses. Relations with gm have been under pressure since nicola and its founder were accused of deception. He later stepped down. Twitter says all function should be back in a couple of hours after an outage that affected users around the world. The companys website reported and the regularity with its platform, but says internal problems are being identified and fixed. Internet outage tracker, down detector, it is 10 29 a. M. In hong kong and beijing. 10 29 p. M. In new york. Here are the first word headlines. China is set to pass a new law that would restrict sensitive export on National Security grounds, raising the stakes for the u. S. Over technology that will drive the modern economy. The export control law would regulate sensitive items and supply all companies in china including those with Foreign Investors. It would also put china on a path with the u. S. Which uses export curbs against adversity. Judge says she is unlikely to rule in favor of the white house. She says she is not inclined to grant the governments request pendingay of pending the appeal. She has the latest evidence on National Security concerns and has not changed her opinion that the curbs would violate free speech rights for chineseamericans. Vice president ial nominee, Kamala Harris is suspending all travel after some of her staff tested positive for covid19. Her Campaign Says she and her husband are both negative and the latest tests. But she is taking extra precautions. Joe biden was negative in his latest test. Neither of the steppers was in cotton close contact with him. His schedule not be affected. Inigovernment protesters thailand have defied Police Orders and the staged under rally in bangkok despite the state of emergency in the capital. Demonstrators gathered in the citys main shopping district. Scores of people were killed in protests 10 years ago. They are demanding democratic and constitutional reform and curbs on the traditional power of the monarchy. Those were your first word headlines. Justintime. Japan going into the lunch break. Well get to the benchmarks in just a moment. A couple of movers to tell you about. You about thisto over in malaysia. Is up this developer substantially. That is the last when you see on your screens there. Grabbing opportunities is an apt headline. They are looking to enter the glove business. They got 12 new glove production lines. They are talking about diversification. Property that leads to gloves. Futures, we are looking at the opening here. Is doing this, u. S. Futures we are right between a here. 5 higher. Have a look at new zealand, hong kong, oil prices and your twoyear yields. Some of these tech names are helping lift of the overall tide here. The u. S. Two year yield is flat. Tom . On the barringd plans in india. This is going to be an unprecedented one trillion repeat. That is 177 billion. Theyre going to have a stress bond market. More on this from bloombergs economy and policy reporter in mumbai. Thank you for joining. Why has the government raised its borrowing requirements . This has led to such a situation. We will have to keep in mind that the economy is headed for its deepest Economic Contraction in history and the fiscal deficits for the federal soarnment is expected to the on 30 or 40 of gdp. Adoptedars ago, india big bang reform. Promised to compensate states. The collapse of revenues means new delhi can get that money. They dont have this money to pass onto the state. The states have been in the forefront of the were on the pandemic and are financially hamstrung by the loss of compensation. On their own, they cant raise money at company rates. What new delhi is doing is being then and sovereign, they can raise rates at far more competent rates. Confident rates. David under normal circumstances, you tell me this headline, borrowing costs still up, is this no problem, what is the Central Banks role in making sure this goes through totally . The bulk of the extra Borrowing Program will go to 35 years. This is very significant. Just last week we had the that thisaintaining was via open market bond. The extra borrowing is hitting investors so soon after that pledge and inflation could still be high. Investors will ask for extra premiums to buy the debt. It is not a desirable situation. There is very little choice here. Premuch same boat that many countries find themselves in. Boatetty much the same that many countries find themselves in. A great segue into this next story that we will see. This is the best time to invest in the country with the fallout of the pandemic. We had the founder of this bank speaking to our correspondent. Have a look. The important lessons from the indian part of you is significant increase in health care spending. That is something we need into the future. We have different challenges about how different states of active versus how the center has responded. This will certainly improve the situation in terms of effectiveness. My own firm has been a big investor in the private equity space. If i asked you now what are some good areas investors might invest in, what would you say are the attractive areas right now . My first recommendation to you is follow what they are doing. When youre making investments to ensureyou need that you are investing in , that is obvious in the post pandemic world. One of the sectors that will make sense, it it is digital, the entire ecommerce segment, the technology segment, the pharmaceutical consumers. Even some of the segments which may be out of fashion today. We will see some winners in the days to come. Believed that when you invest in india, when things look more challenging, that is the best angle to put your money to work. China and india have been competitors for several thousand years. In more recent times, they have been competitors and becoming major global economies. Do you think that china has done things that has enabled it to become the leading manufacturer in the world . Are there things that india could do to also become a leading manufacturer . Do you think indy is best suited to do other kinds of things like Information Services . Technology things . Not compete as a Manufacturing Center with china . I think first of all, with they are view is that significantly ahead of india. India has a lot of catching up to do. I am not really sure about what kind of pricing practices china may have had that made it so competitive. India has a significant trade deficit with china. I think the world is changing. The road is moving away from high concentration and dependence on one country for spreadturing to a more the opportunity on manufacturing as well as greater resilience. It is here that i see a very significant opportunity for india with fair pricing and a competitive Business Model to take shares into manufacturing. At the same time, i do believe that the covid world is giving us to opportunities from an indian point of view. Number one, making us the potential competitor to being the factory of the world after china because china has. The other place that china has a huge opportunity if there is one change, which has happened as far astcovid era, businesses are concerned, geography is history. This this change has a profound impact of an indian point of view. I could be sitting anywhere in india and helping a customer in any other part of the world. From a Technology Point of view. Within india, from urban to workingdia, i could be in a small village and as long as i have connectivity, connectivity has become much better in india, to be able to connect anywhere else in the world while the physical and Technology Platforms are available, india has an opportunity to not only compete in the space of the factory of the world but a very big opportunity to compete in the office of the world. Was uday kotak speaking to david rubenstein. Coming up, new zealand heads for the post tomorrow. Ask what theto Business Community would like to see. This is bloomberg. Welcome back. New zealand votes tomorrow in an election that pulls she just tol deliver a second term the Prime Minister. They look set to reward the Prime Ministers handling of tragedies including the christchurch mosque massacre and the coronavirus. For the second time in new zealands history, women lead both major parties going into an election. And theyr party here have one of most popular Prime Ministers ever known. One of the most successful containments of the coronavirus occurred on her watch. Collins. Pponent is she has a reputation for toughness. She earned the nickname of crusher when she crushed the cars of illegal street racers as a policewoman. There are general policy differences. Labor raises taxes for top earners and increases the minimum wage. National promises tax cuts for middle income earners, saying no country ever taxed its way out of a recession. Kiwis have two votes, one for their candidate and one for the party of choice. 120 seats in the parliament. 60 our local candidates and the other 60 are directly proportional to the party vote. The labour party could make history becoming the first party to govern alone since the system was introduced in 1996. She does need a Coalition Greens will want to return to parliament as well. Shock results can happen. As her victory in 2016 joes. All right. There we have it. Lets bring in our correspondent. Represent 14,000 private sector companies. A pleasure to have you on the show. Good morning from hong kong. I would imagine talk to us, is there a specific preference here . Get someeference is to policy changes in the next few years of businesses can grow the economy out of covid. I think by and large, there are couple of policy differences between the two major parties. Labor is pretty light to be honest. By and large, they are both taking very centrist approaches. Toy are both committed giving significant amount of money to rebuilding of a structure in new zealand. Ofhas a long history infrastructure deficit. Both main parties are committed to rebuilding the economy out of covid alongside business. With an infrastructure program. The will help whoever governor is, that will help address some longstanding issues in new zealand, potentially around productivity. It will be horizontal infrastructure. Between those two parties, if ,hey can whoever gets in whoever can execute the program, that will help drive Business Activity and growth in new zealand. Talk to us about the other side of the economic equation. Mostly what has happened so far, it is clear, there will be government spending. It depends on how they raise that money, where they spend it, how it affects parts of the 14,000 businesses you represent. Talk to us about consumer demand. We know what the Unemployment Rate is like. We know the headline number but what is it like on the ground. It is weird. It is predicted to go up. It has not been as bad as initially forecasted by the new zealand treasury. Had better ratios of subsidy supporting, up to 1. 7 million new zealanders. Happenstion is what when this is fully wound out. There are still about 2000 new zealand ploys that are being sub supported. The question is probably slightly different. Or we manage bok downs whether we can manage without having lockdowns. Those are the things that were outlined. Where the economy contracted some 12 in the Second Quarter when we were in the heart of a lockdown. We cant really sustain too many more of those. We had a regional lockdown in new zealand. That has had a pretty significant impact. Managing the border and managing covid within new zealand is going to be key to keeping the do master demand up. That will help produce the impact of unemployment. Reduce the impact of unappointed. This will help drive that domestic demand. What is the state of new zealands important Tourism Sector . Tot are the candidates doing help the pressure that sector is under . Kirk it was the Fastest Growing of our economy. It has been decimated. The key thing has been to keep enough of an industry there and support of an industry so that in the future, when tourism comes back, we do have some infrastructure and some capability. It is safe to say that as long as the border is shut, or the longer the board is shut, that is looking like the foreseeable future. It is very hard to regrow. It is going to be really challenging. It is going to be challenging for that sector. Some sectors that have been doing very strongly are our export sectors. Our commodity sectors have held up really strongly. Kiwifruit. Bout that is an example of what has done really well. The world is still demanding a lot of debt from new zealand. That has been the backbone of our economy for some time. We have to leave it there. Appreciate your time and we wish you a wonderful weekend. Thank you for those insights. What is being looked for for whoever becomes the Prime Minister on saturday. Aming up, from been rivals to possible merger with southeast asias super apps, grab and go jet may combined with a little help from softbank. We will get the details. This is bloomberg. David some breaking news. A slight move to the upside here. We are up by 1. 7 . Releasing this plan on a leisure vehicle traffic. We are watching this closely. You can see shares at session highs. Lets pivot and have a look at southeast asia, this merger is going to be big. Super apps. We are talking grab and gojek. We have a potential transaction here. They could be pursuing and pressuring grab cofounder, to work out a truce here. Lets bring in arotech editor to talk about where the study goes. He is in tokyo. This would be a big deal, both for the two companies as well, grab and gojek as softbank. Softbank is the big outside investor in grab. For softbank, this is a company they have been supportive for a long time. They have had a bunch of Rideshare Companies including uber in the u. S. Beyonds gone ridehailing into Digital Payment and a bunch of other areas. It is a business that has been losing money as they expanded into some of these new areas. Especially with the pandemic. It has been difficult to keep profitability. What sources are telling us is pushing thee cofounder, anthony to work out some sort of truce with gojek. It has been a very effective rival in ridehailing, they are based in indonesia. That is their strongest base. They want to combine those two operations. The companies fit together and what are the regulatory hurdles . Peter to start with the regulatory hurdles, it would be very substantial. Youre talking about combining the number one or number two of these. A bunch a lot of regulators wont work look to veritably on this. Wont look favorably on this. For the company, it is an opportunity to save a lot of money. They had to subsidize these businesses. They expanded because they were competing with each other. If they can combine operations, they could save a little money and cut some of their costs. They could improve their profitability pretty substantially. Flint tom plenty more coming up. Lets check on the markets before we let you go. The markets in hong kong are trading just a higher now. Led by the likes of the chinese banks. Here on the mainland, it is a bit of a mixed picture in terms of the chinext and the shenzhen. Ome visit the nikkei is essentially flat. Plenty more ahead. Stay with us. Bluebird us, this is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. We made it. Inis almost 11 00 p. M. Singapore and hong kong. I am haslinda amin. Welcome to Bloomberg Markets asia. David it is friday, a day closer to monday. I am david ingles, lets get to your top story. Is pushing amp bigger relief package but the Top Republican in congress is not so keen. Antigovernment protesters in thailand vowed to rally again on friday. Pushingaval is already Foreign Investors away. Confidence forthcoming, the ipo is so high that ordinary investors are being offered 20 into whatrage to buy could be the biggest share sales in history. Haslinda in the markets, no cheer despite that. Lackluster, no firm direction. Investors mulling over elusive stimulus talks. Fresh virus restrictions in the u. K. , paris and other cities in europe. That may weigh on sentiment. The dollar fled after rising yesterday. Ty stocks are totally frat stocks are thai totally flat right now. Protesters are still in action in bangkok. That is a great starting point. Look at these markets, certainly where we have come from. You look at what happened in india. It is looking like we will recover some of that. By no means are we going to recoup all of that. Storyis also a very big on the virus front. Who would have thought . We are talking about these things. Your firstt over to word headlines. Lets start things off in china. Passountry is set to that would raise the stakes with the u. S. Over technology, the u. S. Will drive the modern economy. Allcontroller will regulate companies in china including those with Foreign Investors. That would put china on par with the u. S. The u. K. And france as we alluded to a couple of seconds ago are facing tougher new virus restrictions. Globally moving toward 40 million. People in london will be banned from mixing with other households indoors. Paris is reeling from a new wave of covid19. Daily spain reported the most new cases since april. President trump is ramping up Senior Republicans after saying he esteem this then hasa bigger one yet been offered. He said he would go further than the 1. 8 trillion deal. Mitch mcconnell rejected it. Mcconnell said there is little immediate prospect for any agreement. Keep this in mind, tomorrow, new zealand entering the final day of campaigning. Saturday, general election polls indicating a comfortable win for jacinda ardern. All things to the handling of her coronavirus her handling of the coronavirus outbreak. Critics say that she is likely deliver on some promises from the last election. Bank is onestment pace for the first 100 billion trading year in more than a decade which has already generated about 84 billion u. S. Dollars. Trading is from the start of the pandemic have managed to offset weakness. Beenloss provisions have on the way up. Those were your first word headlines. Theinda lets get back to markets and asian stocks. Of the Economic Impact virus pandemic. The u. S. Election is also front and center with President Trump and joe biden clashing over the coronavirus in rival town hall events. The election is the biggest Political Risk in several decades. Joining us is this global macro strategist. Always good to have you with us. This is the biggest risk for the markets in decades . That means whoever wins will get more stimulus. Absolutely. As much focus as we are putting on this election, it is basically a speedbump and a backup the of the greater macro regime we are in. A lot more stimulus from the fiscal and monetary side. We are not going to shake that out anytime soon. Haslinda powell says fiscal stimulus is the way forward. The truth of the matter is the fed has to come in with much easing as well. That means the dollar weaker for longer. Where two for the dollar and to for the where dollar and the dollar yen . We have seen the whole phenomenon. That is what we will be getting in the u. S. Whether you want to call it trumpenomics. It will be the reserve currency of the world that will be saying the same thing we saw in japan. We havelaryen seen that. That is massively lower by next year. We could see it in the 8595 range. Massive dollar devaluation to the tune of 30 over the next few years. That is how low the dollar will be going. Haslinda i want to touch a very interesting point you made. We had to headline saying that fracking is trumps hail mary against biden. You said that is pretty good news for oil. This is the paradox. Despite biden doubling down on Green Infrastructure and ,enewables and Nexgen Energy and the paradoxical way, i think it is going to be the best thing that ever happened to oil. Biden and harris said there isnt going to be anymore new fracking. That is only going to end up improving the oil supply dynamic. It is ashley going to be paradoxically better on the Biden Administration and the trump administration. This is not something that is fully appreciated by the market. Another thing i love about the whole oil and Energy Sector is it is very hated. When you look at an etf like xle, it is still lagging the rest of the market. A very high dividend yield. Even if you discount that by a third or 50 , it is a pretty juicy dividend. That is the perfect reflation protection had. All over in regards to energy. In regards to energy. David i want to pivot, still with the elections. Maybe not just the elections but sideear a lot on the sell on this value versus growth sort of argument. I am wondering where you said on that. We heard calls and we know that values change but if i listen to that call, i would have listened to that call, i would have lost a lot of money. A there a case to be made for sustainable rally in value versus growth over the next 12 months . I am not really a big proponent of either value or growth or gross versus growth versus value. The thing about Value Investors is they are happy once a decade and they spend the rest of the nine years complaining about how valuations are too high and fundamentals are not working the way they used to. From my perspective of a global macro lens, i thicket as liquidity drives as it prices at the end of the day. That is what i focus on rather than trying to get too caught up theegards to being low on growth argument. That is my stance on it. David i think everyone who has bought into that there is brexit, there is the virus toward those coming back in a certain way. Is one bigger than the other for us . Do both matter at this point in time . Everyone is just tired. I think the combination of covid, the year we have had, people working from home, places opening up, things closing down, police when it comes to the market, it is just taking all of the oxygen out of the room. When i look at europe, there are two things i think. Sive structural benefit beneficiary of the dollar. Or so then european strength. Brexit, i dont think anyone seems to care. People are not positioned forward. That makes it more interesting for me. I think there could be quite a bit of upside with regards to the u. K. And sterling assets. If you talk about another area that is under loved and under owned, it is sterling assets. Which u. K. Assets would you be buying if you took a longer perspective . Ay the best ways to get leverage on the ground. Also with a sterling bias. It is not going to get the headwind that you would want as we get sterling strengthening over the next few years. I think that is the way to play it. From my perspective, i think u. S. Sterling could get to 85 or 80 very quickly. We could see anywhere upward of a 15 strength in sterling for the next two years. David what is your gut reaction over the first 24 or 48 hours that we have a vaccine for covid , what you think will happen . Massive flying up in pharmas. Then people will come back to reality and say how do we get this to people from a distribution perspective . How can we make people take it in the first place . David have a great weekend. Kvp. Was avp askingar, we will be this fashion mogul whether the chipmakers right to bet on a big 5g boost. Haslinda next, protesters say they will be back on the streets of bangkok later today, continuing to define defy the state of emergency that is up next, this is bloomberg. Haslinda antigovernment protesters in thailand are vowing to rally again on friday policeivine defying orders for a second day. They are to many the release of their protest leaders. Lets bring in randy. He has the details. That start with last nights event. It looks like political chaos and it is not easing. Randy tens of thousands of antigovernment resistors gathered at the intersection in bangkoks main shopping district last night. This was the site of 2010 demonstration that ended with clearing in which scores of people were killed. Last night, is protesters ignored the state of emergency and staged a rally in the thai capital for a second straight day. Roadslock to the main needing to it. They were chanting and shouting demands to authorities to release dozens of protesters who have been arrested. They are calling for the and rewriting of the constitution with more power for democracy and less power for the monarchy. The question over how the power should respond, it is a function of how large the crowd gets, we get to the point where maybe those options change, overnight, given the situation you mentioned, how did the government respond to that specific timeframe . Were no violent clashes last night, there were Security Forces around the perimeter. They called off that gathering around 10 00 p. M. And the police started dispersing crowds. If we remember yesterday morning, the Prime Minister declared a state of emergency, the emergency rules prohibit the gathering of five people or more. Police have said the protesters on thursday broke the emergency rules and legal actions will be taken against them. Because there are so many people out last night, it is unclear what would be their next course of action. The government has often talked about opening public forms. What are we expecting . Forums, what are we expecting . Randy the government said they are open to listening to the protesters demands. So far, there have not been any changes in the constitution like the protesters have asked for. The protesters vowed to continue that movement. They plan together again for a Third Straight day and plan to pull morales across thailand in the coming days. Have of youalysts that this movement will likely escalate because the protesters are angry at the government that has so far not listened to their demands and try to suppress that movement. The gathering on friday and this weekend if it happens will be something to watch out for. It could draw more demonstrators. Haslinda keeping up with development in the city. Up next, time for our morning call, a look at some of the top recommendations across the asian market. Plenty more ahead, this is bloomberg. Welcome back, lets talk about investment. There will be a delayed recovery from this pandemic in the downturn despite the actions taken by several if not multiple Central Banks here. He spoke about his concerns about the economy. Have a look. The response to the fed has been extraordinary. From the monetary policies around the globe, it has been strong. When you look at the real economy and you see what is going on in terms of the amount of companies, listed Public Companies that have problems if yout service look at the percentage of the employment numbers that are Legacy Industries in terms of , lodging,ertainment they will have delayed recovery. I think so Many Companies are focused on the quiddity. You will find some that will have situations where they have real solvency issues in 21 and beyond. Well the consumers are in healthy state a shape from a aretate and homeowner in healthy shape from a real homeowner homer perspective, the credit is tightening as of the last couple of quarters. That is getting well documented. There is a variety of issues with regard to industries that have yet to recover as well as some legacy concerns about the u. S. Consumer that did by two concern inrise to 2021. Haslinda what is your expectation of Companies Filing for bankruptcy over the next 612 months. Later will see a lot more into 21. I think the numbers shut up quickly in terms of expected defaults in the u. S. And the loan and the highyield market in march, april and may. They came back down. 15 in credit3 or default. Inuspect Many Companies were a rush for the quiddity. They added on a lot of debt to make sure they got through the troubled time. Orn they turn around in 21 22, they will find themselves having way too much debt considering the revenue and earnings of that countrys capabilities. I suspect you would see higher defaults not in 20 but as we are getting into second, third and Fourth Quarter 21. In 2008, the problems were clearly in the banks and residential real estate. Raised their head very quickly. If you have a view on what the problems are today or the challenges, we have legacy unemployment, legacy impact with the consumer as well as challenges around commercial real estate. Those just dont raise their head quite as early in the party. Jim is elder jim zelter. Time for our morning call. Lets bring in sophie kamaruddin. Sophie over the course of this year, we heard the spotlight should be back on value. Kay said he is not getting caught up in this argument. Banks getting some love. Gains onanks extending better earnings prospects. They have outperformed other funds in that space. Speaking of getting some love, tech not getting sidelined anytime soon. Sophie the tech sector is a winner, helped along by that structural shift triggered by the pandemic. Given the u. S. Antitrust risks, looming large over mega caps, they are recommending diversifying against u. S. Mega caps into asia. There is more affordable growth valuations. They are not looking too expensive. Earning momentum is very much at play. Alibaba, asianng tech, what is the word on the company . Sophie plenty of upgrades for alibaba. They are raising their prices. Given that Revenue Growth is seen improving and the Cloud Business for alibaba finally seemed to enter profitability going into next year. Flipping the page, the icc agreeing that clouds will be a longterm driver. The company also pointing to future growth potential. They are raising their price , 331. 351. Lets get a check of the latest business flash headlines. Reports say that avoid a trying to crunch. The securities times says that whilest obligations failing to cite evidence or sources. The company is trying to raise money to meet its debt where the top investor wants full repayment. Niklaus still says it has a roadmap for the future. Ae company will revert to base plan as a tentative plan to share tech. Underons to gm have been las head wase nikok accused of deception. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. If youre just getting up over in india, lets look, it is not quite early. Maybe in the future you can wake up a little bit earlier. That is up to you. Here is the scene over in india as we approach the open. Maybe we will see a higher open today. The futures have not all the way we traced the losses we had yesterday. We will get to the open a little bit later on. Haslinda lets get the first word headlines. Antigovernment protesters in thailand have defied Police Orders and staged a new rally in bangkok despite the state of emergency in the capital. Demonstrators gathered in the main shopping district in front of the Central World where scores of people were killed in protests 10 years ago. They are demanding them aquatic and constitutional reform and a curve of the traditional power of the monarchy. Of the traditional power of the monarchy. The eu is weighing many products including aircrafts, food and coal. Pricing negotiations are emerging after European Union leaders told Boris Johnson he must make concessions only hours before the Prime Minister is due to decide whether to walk away. He says he is surprised and disappointed at the warning. It came during a summit of eu leaders. Ohnson is due to respond twitter says its core system is back after an outage that affected users around the globe. Reported antter irregularity with its platform. The internal problems have been identified and fixed. Received down detector 50,000 reports of problems with twitter. Those were the first word headlines. Lets take a look at the markets, no clear direction here. In asia, this friday, as we wrap up the trading day, lets look at where we are in terms of the index down 2 10 of 1 . Also, a potential impact of fresh virus restrictions in some parts of the world. This is after concern that the economic recovery may derail futures pointing to a flat open right now. Indias market dollar pretty steady after gains on thursday. The yuan has fully recovered. Investors are probably convinced the pboc is probably not trying to reconvene the yuan. The yuan is intentionally or 6. 73. Weaker at 6. 71 were looking at movers right now. Cathay extending yesterdays gain. Optimism after singapore and hong kong agreed to open for the first time in almost seven months. By as much as 1. 5 today. Currently up by 9 10 of 1 . David one of the other names we here king we can talk about this later on. Tsmc. Raising his 2020 Sales Forecast early percent. The second adjustment this year. Expecting a Strong Demand for these devices. There is accelerated digitalization among the pandemic. We have the chipmakers raising his 2020 revenue guidance. For more analysis on those specific companies, on the industry in general, the regional head of Tech Research joining us today to talk us through this. Sebastian, pleasure to have you on the show. Stock. Eavily weighted how good was the result in your view . Thank you. Becausemazing numbers the margin surprised to the upside. Currencyome foreign hecklings. The company beat the estimates by more than 10 . Theh a big Company Numbers are good. Revenue continued to grow. Also, the margin guidance is surprisingly to the upside by two or three percentage points. Thatshowcases profitability, structurally is Getting Better and better. Was the second time the company did this. The reason that i bring it up, the Drivers Behind what has been happening with the company have been fairly obvious. I am looking at the stock. Do you think the stock is expensive at this point in time . What is your price target . Our target price is 600 np dollars. 30 plustill more than upside from here. In our view, over the next six months, the stock may already price in some of the good news. That is why you see the crowd reaction today. Some of those are being pressed in. Hink the on target price these are decent upside earnings. We think it is not cheap. We dont think it is expensive. There is more room to go. Optimism isthe driven by 5g. How well supported is this optimism . How will 5g impact demand for tsmc . It is a very specific boat. I can give you two examples. To do withhe modem the communication processing, that is the most important upgrade. The content has more than doubled. That means that every chip is making twice the money that it did before. Is that theg peripheral chips, the content has increased by two tons. 5g comes with more power. An example to give you an idea of how the content increased. In general, they engineered the content for a 5g smartphone, you can go up by at least 50 . A 4gn go up 200 versus smartphone. What is also significant is price to aaised the record 9 higher than a year ago. 23 higher from three years ago. What does it say about demand and supply . What is the potential for an upside in prices . Is not likely that sp will increase. Are making more five nanometers. Five nanometers because they are e transitive and transistors more tran sistive and or complex. It is a 50 higher price. Tsmc has continued to own this uptrend of the pricing because of the continuous technological migration. This will continue. I think the growth of the company will be driven by the price increase and also the yearly growth of the shipment. I wanted to ask you but it is fine if you dont cover s stock, do you cover hung cover precision . Members covered. David no worries. Maybe we can talk your teammates at some point. I want to change the subject then, on of your report is entitled multiple signs of a peak tech strategy. What does this mean . Sebastian we have been checking tracking the indicators, semiconductors over the past five decades. We have also tech to the earnings, the momentum of global tech companies. We also tech some of the late cycle indicators. They all come to a similar conclusion. That we are not far from the mental peak of the cycle. Maybe that will come in the first half next year. The shares usually peak wanted to quarters ahead of the fundamental peak. Investors are usually ahead. That is why we are making this right now, to caution the space. The fundamental peak may not be far away. The Fourth Quarter this year will be further along, we may see the sector outperform. Ared it looks like we about and that story. We will get you on once we have more information. I dont know if i like the sound of that. Just counting down, less than five minute away from the open. Indian features futures are up 32 points. The open is coming up next. This is bloomberg. Close we are about to wrap up another weekend. We will be talking about ant financial again. Thisrs are still confident upcoming listing, this upcoming ipo they are offering mom and pop investors. Ons is seen as a reflection finance and trading fees, allocations not withstanding. This could be the biggest ipo in history. For more on this, lets bring in our Chinese Markets team. Leverage. Times that sounds risky. Sophia that does sound risky. That measures the highest ever ratio ever offered by brokerages in hong kong. It is worth mentioning that and will not have cornerstone investors in hong kong. Ipo,etail portion of its we dont quite know yet but it will probably be quite large. 50 times leverage to illustrate the risk of pure Retail Investors. This is mom and pop investors, not institutional investors. Stockop trucks 5 drops 5 , you have lost your protection. There is no protection on the downside either. If it drops more than that, i only have you lost your entire investment but you also need to repay. For bookers, the risky part of this is they are so confident that the ipo will go well in hong kong, you actually as an investor only need to set aside by percent cash deposit to take on this 20 times leverage. It is the broker that is lending the money to you. 5 is not a huge amount of collateral. For the brokers, it is actually a pretty risky strategy as well. If there is no protection on the downside. There is more than 700 brokers. 14 big ones that generate half of the citys daily stock turnover. These guys are borrowing from banks. It just sounds like a lot of confidence writing on this ipo. What does it all mean for the Financial Markets in hong kong . Around large ipos, we tend to see the quiddity get tight. Leverage weunt of are likely to see and the met of capital that gets tied up around the shares, this the amount of capital that gets tied up around the shares, this is the time when the ipo starts trading. The amount of capital is so much. Especially if we are getting 20 times leverage. We are likely to see a large amount of subscription from retail traders. That squeezes liquidity, that sends the Interest Rates higher in the interim market. That tends to make the hong kong dollar itself kind of wild. We know there has been a huge amount of intervention from the central bank this year to defend the hong kong dollar on the strong side. The amount of cash in the Financial System is a lot larger orn at the start of the year in march before the intervention started. It wont be as volatile as it ago when the quiddity was a lot tighter but just the amount of capital that gets tied up has a big impact on the Financial System, generally. Exciting times, we will see what kind of subscription results we will see for the retail. Haslinda we will see indeed. Horta e costa. Tendayapped its winning streak. Also higher. Investors are still weighing the earnings season. In particular, in focus, bonds. The Modi Government expanded its borrowing plan for the second time this year. Hcl beating estimates. Rupeesin at 31. 5 billion estimated. Lets stay with india. One of the countrys largest truck makers says the Company Needs to ramp up its coronavirus testing. In an inclusive interview, i was told that india cannot afford another lockdown. What we need to do is to make sure that we actually aggressively test and aggressively contain. We need to scale down. Scale it up. I dont think india can backtrack and get back into a locked down. It is too late. Down, it is too late. I think they should do a little bit more than the restrictions. I think they ought to look at time to pick models of containment and testing and tracing. Do you have a sense of where india is in this fight against the pandemic . Has india turned a corner . Are you confident of that . We still cant say that. That youimple reason can stop tracking the numbers infected on a daily basis based on the few days that the numbers are declining and you think your getting to see a flattening of the curve. Unfortunately, a few days later, you will again see a surge. I dont think we are in a safe place yet. For me, personally, the way i look at it, a large number of people are getting infected but fatalities are reducing. That gives me some hope that we are treating better, we are learning to manage the disease better. These can bring down tooth near zero, we are in a much safer place than today. I think that at the moment, people get infected, they are not sure how many of them will succumb. That is the scary thing. To that how do we get structured approach . How do you view the role of the government and ensuring that . That is the milliondollar question. Get a very have to , at theroup of people epidimoligists, scientists. We use technology very intelligently to see how you do some of this. It is never easy to get governments to adopt any of these practices. We keep adopting it in the workplace and it works very well. That was the founder speaking exclusively to haslinda. Coming up, a question we have asked time again. Can the u. K. And the eu make 11th hour brexit deal . Will Boris Johnson really walk away from the talks . The full details are coming up next. This is bloomberg. Today is Boris Johnson s selfimposed brexit negotiation deadline. He is still threatening to walk away after talks of a two days today summit in brussels. They are demanding more concessions while the eu says it wont let his members lose out. With the talks collapse . We had a guest today that said we dont care anymore. But what is expected to happen . Boris johnson said he would assess if a deal was reachable after this years summit of eu leaders. He has at that point now. Brexit negotiator, david frost took to twitter to express his disappointment that the summits official communicate did not contain what they hoped would be a pledge to inject fresh impetus into the negotiations. At this point, the compromise on the u. S. Side the eu side was missing from that communique. That was published before the main part of the discussion on brexit. That appears to mean they are lead leave these talks and do the crash out, walk away from these talks. We will find out later but it is not looking good. They are not getting what they want. David the other side to this, again, this is a moving target. It has been for the last 1500 days. Will the eu hold its line on concessions . Yes, european officials look like theyre brushing off david frost complaints. They are insisting they want persuade the black to shift their stance. They saw several of the members seem pretty irritated that the u. K. Is trying to demand these things. We also see in the eu they want the u. K. To make concessions on state aid. It does not look like they are backing off of that. France is sticking to its top line on fisheries. There does not really appear to be Much Movement on that side. Threatened foras 1500 days to crash out of these negotiations. This time, that might actually happen. What happens if the u. K. Crashes out of the eu at the end of december . Basically, we dont know exactly. There has been all kinds of estimates of the Economic Impact but it would definitely mean oflers millions businesses and consumers would face additional cost and disruption if britain were to leave that single market. Coming amid a pandemic, cases are rising in the u. K. At this point, it could be very difficult for the economy there. Yet another blow to an economy that has already whether quite a few storms. Weathered quite a few storms. It will come down to a deadline and whether Boris Johnson things he can get Something Else out of these negotiations with the eu leaders. David all right. Schneider. Dy jodi check across your markets, Cathay Pacific senior continuing to move up. Are you willing to pay that . Maybe. At some point, maybe we will get to see has in the flesh. Haslinda i will think twice about it. It is quite a happy increase. That is it for this edition of Bloomberg Markets asia. Next up, daybreak middle east. This is bloomberg. This is bloomberg. The following is an important paid program about humana Medicare Advantage Prescription Drug plans, sponsored by humana. Announcer life keeps changing, and so do you. But as your lifestyle evolves, is your medicare plan keeping up . Does your Health Care Company treat you as an individual or a number . A humana Medicare Advantage plan may save you money. Many combined medical and Prescription Drug coverage, all in one plan, for as low as a zero dollar