Galapagos after u. S. Drug maker gilead doubles its stake with a 5. 1 billion investment. And rallies after being awarded 5. 8 billion in damages relating to a joint venture in pakistan and as the race heats up for the next managing director of the imf, the fund hosts an event on central and Eastern Europe. Ill be speaking shortly to the the deputy managing director of the fund well good morning, and happy monday i want to take you to some of the price Market Action that weve had over the last couple of hours or so on friday we had wall street close at record highs, but the news of the last 24 hours has been dominated by the gdp number that came out of china 6. 2 is the figure while some people are pointing to the fact that the gdp trend is the weakest in seven years, one its in line with expectations and fixed Asset Investment stronger than expectations, even retail sales for the month of june in china came in at 9. 8 versus 8. 3 expectations some of the details were a little stronger, and well be discussing that later on in the show the picture for europe is a little more subdued. Stoc sto lets switch and talk about sectors. We do have multiple corporate stories were focused on today and were just talking about some of them i particularly want to flag that autos finally are bucking some of their downward trend that weve had over the last couple of days or so. You can see autos having a good day, up 1 , chemicals up 9 10 a percentage point basic resources up 8 10 of a percentage point that is a sector very much exposed to china and were seeing a bit of a lift in trading for some of the mining names. On the downside, food and beverages one name in particular were focused on there, that is ab inbev now, ab inbev has said it has canceled the Public Offering of its asiapacific subsidiary, Budweiser Brewing company for now. Valued at 9. 8 billion it would have been the worlds biggest ipo of the year, even bigger than uber. The company blamed Market Conditions for the decision. Lets take a quick look at how the share price is reacting today. You can see not a positive reaction in trading, and weve only been open for about an hour or so. You can see ab inbev stock is down about 1 and 3 4 of a percentage point some would have said you could have seen a sharper reaction given the news that has come out this morning but i have an expert with me on the subject. I want to bring in great to have you with us thank you. Just reading about the rationale of them pulling this ipo, they cite Market Conditions is it really about Market Conditions or a lack of appetite for the trades given the price offering that they had given to the markets . Its probably a bit of both it does come down to valuations so if you read in the press it says on reuters that effectively long only so the big anchor investors who support the book and are longterm holders of the shares couldnt come at the price that was offered on the table, so this was more expensive than sing tow and curen but less expensive compared to china resources, United Breweries basically what you had was a bit of a reflection of ab inbev. It was just a subsidiary, but you had some wonderful subsidiaries in here were going to see growth and per capita consumption and volume growth, but other markets that are slower but much more mature. Do you think were likely to see them take another shot at this ipo in the future theres a possibility what i was doing on friday was basically calculating and figuring out, reading the perspectives that actually the ipo it probably couldnt go if they didnt want to get the price, theyd have to relaunch and do the i p, o, offering all over again if you read on page 276 with per specttive they basically had a time frame they had to get this out. If the interest was below that, its better to pull it you can come back. It seems right now given the Market Conditions that wed probably have to be a bit more patient and maybe those Market Conditions will improve. And as you can see its a function of the pricing and also the Market Conditions. This isnt the only ipo that got pulled we recently had swiss ris in the u. K. , they sheltered plans or postponed them for the time being. What does this tell you about investors appetite to get exposure to the asian business ultimately this is an asian business they were looking to offload. Do you think the trade war is playing somehow into this . Dm its a b heineken has teamd up with china resources, which owns snow. The big question is on a fiveyear view what happens is heineken actually as they partner up and get the distribution, are they able to grow and steal some of the profit pool from ab inbev who dominate with budweiser in china. I think the uncertainty comes down to more of the stock specifics and whats going on on the ground in some of these key markets. That has a huge impact on valuations at the end of the day. This is the largest Brewery Company in the world people were saying this listing was crucial to help them fix or repair system of the Balance Sheet issues they have obviously its been shelved for the time being, but they also have targets of net debt to ebitda charges, what does shelving mean for some of those targets . They probably could have got below that four times by the end of this year had they got this out, but now its going to be pushed down the road i didnt have this ipo in my numbers because it goes through and at what price. I didnt have this on my numbers. What i have is getting to just below four times net ebitda 2020 already. Without the ipo we still get to those targets. Its not as if they need to update the markets and say all of a sudden were not going to reach our targets. Its more of the cadence and the pace of the delevering. What youd like is the company to reduce as fast as possible. Do you think how much they have on the Balance Sheet, they will look to perhaps lessen the pace of acquisitions theyve been going at over the last couple of years . Yeah, so this was seen to be a platform for m a so you could use the shares of budweiser to do a deal with tie bev for example. Im not sure how advanced those discussions were theres a theory if you are you know, if youre based in thailand and you want exposure to local markets and you feel like you understand asia a bit better youd probably rather do a deal with a locally listed subsidiary is that still out of play, could they still do a shared deal with the Parent Company they could is that the most attractive thing to do with this attractively priced share . Depends on the terms of course as always and devils in the detail so look, it doesnt a lot of people actually i saw some headlines over the weekend that seem to suggest its doom and gloom, this company is never going to deliver now its just not true its not the facts on the ground. If you look at the Stock Performance its been pretty decent yeartodate. People still fundamentally see a good story there and buy into what youre saying about the Balance Sheets otherwise it wouldnt be so much up and down. Theres a chart event, yeartodate the stock is actually up 34 irrespective of the movement weve had the last couple of trading sessions i want to ask you about one name in particular. A couple of years back, ab inbev acquired s and b miller. As part of that theyre in talks to deepen some of the relations they have with the french kas tell group yes. Do you think this news over the weekend is going to have any significance for those discussions in the future . Yes, it does. I was trying to think about how long does it delay this, maybe about a year at most the cadence in all of this does get pushed to the right a little bit by the timing of the apo they are still quite close and they have the right of first refus refusal. Its largely seen to be that ab inbev will eventually bid for the castel group theyre probably not in the position today to do it. What does castel do at the end of the day it probably wants heineken to be in as well its j a its just a matter of timing great, and just for sake of disclosure, what rating do you have on the stock . I have a buy on the share ab inbev sells one of every three globally it makes strong returns on capital, strong in margins i find the shares quite attractive. I love starting off a monday show talking about beer. Thank you for coming in. Hes the Equity Research analyst from liberum. Christine lagarde has triggered a leadership race at the imf. The bank of England Governor Mark carney is seen as a f favorite for the role. And former europe greu president are also in contention i have to say one of those names in particular is jumping out to me, karen. That is the Central Bank Governor of the u. K. , mark carney i found out over the weekend he also holds an irish passport who would have thought irishman up for the job at imf . He does have a number of passports and dont forget britain has never held the role at the imf the question is whether it does seem as though with the allocation of recent top jobs that there has been a mismatch youve got a german, french, spanish and also belgium position thats been handed out, but nothing in this region as well put onto your list of potential front runners, the lady from bulgaria having representation from this part of the world also quite sug ca significant. Basically its talking about structure reforms. At the time two years ago we spoke about the challenges in maintaining the strength of institutions very important to have steady growth this year were talking about a skill shortage which is a very different challenge to the rest of western europe where weve got a lot of high unemployment levels here youve got record low unemployment levels or pushing in that direction. As you say upward migration, not a enough female participation and Older Workers retiring early. Were talking about the channels of trying to tackle those issues, but also digitization. It remains to be seen who will take that top imf job and certainly a lot of chatter in the back channels about who will be in concontention. Many of the people here, central bankers and finance ministers have worked closely with Christine Lagarde on structural reform there is potential for her to take that debate much better than mario draghi who was critical about the pace of those changes. I spoke to the governor of the central bank here in croatia about how he perceives Christine Lagarde. Take a listen. We always thought the central bank actual reform as you know this is one thing that the politics has to do, and she is in a good role i think also to try to convince the politicians to maximum possible extent to do these kind of things a z they usually emphasize, policy can do a lot but it only has its own mandate and it cannot do more than it can its an interesting conversation given how political the ecb role may become having a politician in that job and not a typical central banker or an economist, but it is an important challenge. I think weve had this debate for many years about those structural forms that need to happen and its across many different layers in the economy. Just to highlight how challenging it is, female participation in this country still needs to be increased along with many other countries that are neighboring here, but one of the issues is when you spend money on initiatives like this and benefit games, for instance that take 20 years to materialize where you have workers coming into the work force, it can cost 0. 7 to 1 of gdp. There is an upfront cost attached to some of these structural challenges. If you think just across there to italy that are trying to embark on structural changes, there are upfront costs, but theres very tight fiscal room to navigate, and thats the challenge in many of these countries. Back to you in the studio. Excellent and looking forward to hearing more from your coverage at imf and obviously you will be speaking to the imf managing director in a little while tomorrow well be speaking to acting managing director david lipton that will be on street signs. For more on europes serge for lagardes replacement at the imf head online to cnbc. Com. Youve got covering all this story at all angles as well as on our live tv coverage. Also coming up in the show, Economic Growth in china slows to its worst race in almost 30 years, but some areas of the worlds second largest economy still show signs of life well have more after the break. Its how we care for our patients like job. His team at ctca treated his cancer and side effects. So job can stay strong for his family. Cancer Treatment Centers of america. Appointments available now. Cancer Treatment Centers of america. Applebees all you can eat is back. Now thats eatin good in the neighborhood. Did you know you can save money by using dish soap to clean grease on more than dishes . Using multiple cleaners on grease can be expensive, and sometimes ineffective. For better value, tackle grease with dawn ultra. Dawn is for more than just dishes. It provides 3x more grease cleaning power per drop, which cuts through tough kitchen messes, pretreats laundry stains, and even tackles grease buildup on car rims. Tackle tough greasy messes around your home, and save money with dawn ultra. Brand power. Helping you better. Welcome back to street signs. Our top story today, chinese Economic Growth has slowed to its worst rate in 27 years in the Second Quarter as u. S. Trade tensions drag on the 6. 2 reading was the weakest since quarterly reporting began in the early 090s but other ke activity data beat expectations with Industrial Production and retail sales rebounding from the month before and joining us live from hong kong is tommy wu senior asia economist from oxford economics. Thanks for taking the time to chat with us can i squjust ask you what your take away is of todays numbers . 6. 2 , are we still on track to see chinas gdp growth north of 6 for the full year here . Yes, so chinas gdp came in at 6. 2 for the Second Quarter today. Which is slower than the 6. 4 in q1, but then the slowing is basically coming from a slowing demand coming from domestic and also external demand however, we think that the macro policy easing driven bit the chinese authorities will help stabilize growth in the second half of this year, so our forecast is that in the second half growth will still slow more to 6. 1 year on year, but then it will bring the whole year to 6. 2 , so its still within the growth target of 6 to 6. 5 this year. There were some surprising bright spots, i just want to talk about them. I just want to talk about some of the particular bright spots that came out. Right. Including fixed Asset Investment for the first half of the year came up at 5. 8 versus 5. 5 forecast, even retail sales for june came in at 9. 8 versus 8. 3 what does tell that you about the strength of domestic demand here right, so todays monthly data for june actually are quite encouraging in the sense that, well, even though for a whole quarter the momentum is slowing, but then the june data is showing that maybe the impact from the policy easing that by the government is finally filtering through to the domestic economy especially if we look at the retail sales figure, its jumped quite a bit, and possibly its reflecting the impact coming from the previous valueadded tax cuts, and if you well, it seems to be the case that a lot of the chinese citizens are now staying at home to consume, and while this is also affecting tourism, but then we see that more people are actually staying home to spend rather than going abroad, so this is probably reflecting that as well. And its interesting that you say that and also in terms of Infrastructure Investment yeah. Yeah, i just want to point out that its interesting you mentioned how Consumption Patterns have actually changed i wonder how much of that is on back of the trade and if you look at the most recent trade data, it clearly shows that imports from the rest of the world have dropped quite a lot would you say that is largely a factor between what is happening in the u. S. And china on the trade front . Well, i think the drop in import has to do with yeah, its kind of a conflicting sign with what we see today in terms of the domestic numbers because today the numbers are pretty good for june, whereas the imports were down probably quite a bit, 6. 3 , 7. 3 , normal growth in june. So yeah, so its affected by both domestic and also the supply chain effect. Now, i would say that its not just the u. S. china trade war impact thats weighing on the import growth but also global trade has been pretty tepid, so this together with probably a slowing domestic demand is actually weighing on imports however, maybe with the rebound or stable ieilizing of domestic economy in the second half, we do see that maybe imports can find some support. Now, however, because of the ongoing trade war and also its still yet to be seen that global trade will be recovering, so, you know, import growth will probably be still quite weak for a while. Now theres a caveat in terms of interpreting the import growth, though, because if you look at last years data between april and october import growth has a very high growth this year because of the base effect, import growth will be well, pretty much in favorable if you look on year on year growth its important to look at sequential momentum for imports as a useful indicator of how the domestic economy is doing. Tommy, thank you very much for taking the time to chat with us, tommy wu from oxford economics. As we were discussing earlier, Christine Lagardes nomination as president has triggered a leadership race at the imf karen joins us live where the imf and central bank this time youve got a special guest with you i do a surprise guest whos just wrapped up an opening speech here at the imf navigating the future conference it is the