Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  August 15, 2018 7:00pm-9:00pm EDT

7:00 pm
>> it is 7:00 a.m. here in hong kong, live from asian headquarters. top stories this thursday, asia-pacific markets decline after wall street's first -- worst session in seven weeks. on tech afterng shockingly poor earnings that suffered a first quarter drop in a decade -- indicates. i am ramy inocencio in new york. it was a bad day for commodities. copper fell to a bear market and west texas crude hit his lowest.
7:01 pm
the aussie dollar is reeling from the trade war, becoming the leading collateral damage in president trump's battle with china. good morning to our viewers across the asia-pacific, but not a good day in the united states. taking a look at equities, they fell coming back from the breather we had yesterday from the turkey turmoil. s&p 500 down .8%, its worst in seven weeks. energy, materials fell, as well as consumer discretionary. a knock on effect on the technology sector. happening where you are in your neck of the woods, that started with tencent. yvonne: let's take a look at how the offshore chinese market did.
7:02 pm
10%, thell as much as china etf's fell close to 4%. global tech concerns are in focus, added to a stronger dollar, e.m. currencies taking a strong hit. hit 6.95, we're at 6.94 right now. e.m. on the cusp of entering a bear market, given these headwinds. sydney futures not looking .8%, unchanged for it nikkei futures. comese are seeing when it to currencies, we see a bid for yen, dollar yen at 10.64.
7:03 pm
the lira, as we have been talking about this rebound, we are seeing weakness today, but this will not do much when it comes to sentiment overall on the e.m. front. ramy: you talk about the e.m. space in a bear market, copper is a bear market as well. the bloomberg commodities index down by 2%, its lowest in the past year. .rude down .2% copper futures catching a bid now, but that was its lowest in a year as well. taking it on the chin or where you are, especially through the lens of the stronger dollar. itsbloomberg dollar spot highest in the past 14 months. let's go to first word news with jenna. jenna: the lira jumped as qatar
7:04 pm
jumped to turkey's rescue. announcing a plan to invest $15 billion in that country. the lira was strengthening on a series of measures from the turkish banking regulator that made a harder for traders to bet against it. the white house says turkey's inaliatory tariffs ours step the wrong direction and penalties will remain in place regardless of whether a pastor is released. the president says the tariffs were imposed were national security reasons and will remain unchanged. raisedia unexpectedly .ts tea rate for the -- t rate
7:05 pm
only seven out of 28 economists in a bloomberg survey forecast of this jump so it was a surprise here. dollar has become the leading collateral damage from a trade war down 9% in the past six months, the dollar correlation with a tumbling off .ore -- offshore a clear sign of australia's vulnerability. tesla is said to have received a subpoena from the fcc regarding elon musk's go private plan. demand for more information comes as the commission investigates last week's speech about having to secure funding for the move. shares fell for more than 2% for thecond day, closing at
7:06 pm
lowest in months. the fcc and tesla both declined to comment. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna degen heart, this is bloomberg. tech lead stocks lower in a selloff triggered by tencent decline in earnings. we also sell commodity related shares tumble along with oil and copper. let's get to sue in new york. sue: not a lot of optimism for investors. let's go right to the snapshot, commodities down across the will get to. a big area of weakness with the s&p 500 down. let's go into the big movers is the size of the drop was significant. look at tesla with its subpoena
7:07 pm
news, stocks on the board. have costw, the concerns with the whole sector being beaten down badly. tencent off its flow, better eight significant weight on the tech stocks in the u.s.. this chart has to do with copper is where you can find these stocks. copper tumbling among trade woes and this is a significant downturn. let's go to one more chart which has to do with the etf's. when we talk about tencent weighing on the market, it is important to note that the etf's with exposure to faang stocks are more resilient than what we see with the effect of tencent and the trio of major
7:08 pm
tech stocks in china, when they have a whole spate of its stocks, we have seen the faangs here take a licking. it is one of seven etf's with major exposure. that is being noted by analysts here given the latest development. ramy: to gain a look at the markets, that is a great lead ceo joel -- jewel the financial ceo quint. where do you see what is happening with tencent? >> it is interesting because i believe the tech sector is giving us this false sense of security. it is a significant overweight in the s&p 500 and that recent basically unscathed.
7:09 pm
a lot of money is flowing in their, but the market is stocks and it is a market of sectors. position is ar matter of time until i weakness spreads. when it does, tech stocks will come down and it will bring the indices down as a whole. 1:00 and aear around look like we would fall into the abyss. we did not, we got some bailout news and ended better than we could have. if we start to see a cascade inditex, it will get ugly. ramy: hop into the terminal here . the white line is the qqq trust tech, china is u.s. tech in the blue. are you saying that in the future, you want to rotate out of this into something more defensive? nt: when i see this, one of these lines is incorrect.
7:10 pm
we don't yet know which one are in all honesty, anyone who tells you that they do is guessing. we don't know which one is correct but when i see such a diversion's as i am seeing right here, it tells me to take a step back. there is nothing to say i cannot go back in, but when i see the gence inns -- diver copper, that is an indicator of growth. when i see this, it says i need to take a step back in the think that is what our viewers need to do as well. uint, we talk about how you poke holes in the equity rally which we have seen is outperforming the rest of the world. his tech going to be what drives the market lower? quint: tech will drive the market higher and lower because it is a major component of the overall market. where tech goes, the market will
7:11 pm
go. specifically just a few names. ng stocks, apple or amazon, whichever represents the a at the time. those will move the market. my view is it is becoming a crowded hiding place if you look at the diversions among some of the broader stocks like a caterpillar that is trading at yearly lows. amazon is a fraction off of highs or apple is a fraction off highs. one of those is incorrect and it is my opinion that the leaders are going to revert to the mean. they have gotten ahead of themselves and will revert. the signals we are seeing in other sectors are an indication of what is to come. yvonne: you said you are actually remaining underweight in equities right now? you're saying this is market
7:12 pm
contrary and call. what do you think when it comes to earnings, everyone says that has the momentum to treasure along higher. are you saying that has been priced in? quint: i am, and you can see that in the price action of the stocks that are putting up good numbers. ran 100% of the number, but the numbers were decent. home depot, caterpillar, that is a great one to look at. the stock was up three dollars premarket and ended up down. it is not just earnings reports either, it is things like the gdp. thand 4.1% annualized gdp the market trades lower. it seems that the character of the market right now is a sell the news environment. we need a lot better news that is not priced in to take us hire from here. question for you, looking at this through the trade war lens and china tech, big in china 2025 is the
7:13 pm
focus here. to what degree are you making this central to her strategy or do you think you still can't stop a moving train? quint: that is a tough one. i think -- i am asked a lot if a legitimate trade war is priced in and i do not think it is. i think we have become complacent, assuming that everything will be ok and if that does not happen, we are going to see api. we have been contrarian, it is not fun. we have been holding excess cash because we have been out of a lot of positions. we don't see value enough to get us back in yet, so we are waiting patiently and being stubborn and it is frustrating, but in my experience, it is ok. ramy: so you are thinking like mark cuban? hold that thought, we will get back to you in a minute.
7:14 pm
continuing our chat with quint tatro when we discuss emerging-market stocks and currencies as they had record lows. later, tencent tanks but not everyone is fleeing. we ask why they remain optimistic about the future. this is bloomberg. ♪
7:15 pm
7:16 pm
ramy: welcome back. this is daybreak asia, i am ramy inocencio in new york. i am yvonne man in hong kong. stocks are on the verge of a bear market with the emerging market index tumbling 20% from its january peak but if there is a silver lining, take a look at this chart. you can see we are approaching a trough here today. tatro,nt us
7:17 pm
joule financial founder. is this the trade of the decade? quint: we own some e.m. and it has been difficult. we don't own a lot, thankfully, but i think it is a value trap until we really know what the future holds with all of our talks with china. a vast majority of any emerging market index exposure which is what most people are going to own, he's to be comprised of china. until that is result, i don't think we are out of the woods. it seems like every time we get nextnce in that space, the day it is a bloodbath. i do not think we are done. of that has to do with the stronger dollar. not so much the turkey situation. is this more of a catalyst when it comes to more float the u.s.? how do you see that playing out? stronger lot the
7:18 pm
dollar impacting e.m., but what about for developed markets? a positive, not because you have a strong dollar that will hurt multinationals here. this is something that could spread to further weakness in the united states. we are asked a lot about the turkey contagion, is it going to spark contagion? not turkey itself, but the strategy we have seen by this administration to hold strong with their sanctions and their tariffs and what that does is it is going to devalue or knocked and any competing currency we will see an increase in strength in our currency, which ultimately will create a negative impact on the united states large-cap stocks. ramy: i am glad you brought that up. i want to hop into the bloomberg turkeyl, this is called
7:19 pm
contained. one of our charts today. what do you make of this? ,e have to continue to ask everyone is nervous that it will get out of control. looking like this, it is not seen that way. quint: it has been slow. we have not seen a significant spike in volatility in emerging markets because we are not seen a significant one or today shock in the emerging market. if you look at the e.m. or any other index or majority of what an that represents individual country, that is part of the emerging market, you will see this continuous downslope that has been going on all year. you will see volatility spike once we have a significant drop and again, big drops come from bottoms.
7:20 pm
not necessarily from tops. -- they come from what i like to call a towel trade. people get sick of it and throw in the towel and that indicates a bottom. have not seen that yet. that is when you see a spike in volatility. ramy: let's focus on turkey being one of the top headlines. taking a look at the lira, is at 5.9% to the dollar. gaining strength from where it the president saying ok as long as you don't threaten me. you see a chance for positivity? quint: the question is, with a release the pastor? aree are two components we forgetting. one is the sanctions in the issues we were having, but it is my understanding that a majority of this is a result of this being in prison.
7:21 pm
i believe our president has said we will not negotiate until he is released in until we see that, i don't see any light at the end of the tunnel. that is what makes this unique. this is not a china scenario where we are dealing with intellectual or trade issues. we do not have those issues. this is an issue regarding something they have done that we are trying to right. it seems to me that the administration's eyes have opened and gone, my goodness, we can really damage a country with these sanctions, but through currency, and that is scary, because once you start seeing currency be used as ammunition, that could get out of hand. if someone he says what keeps you up at night, i would say that is. yvonne: you mentioned you own some e.m. it right now, where in particular you think it can weather the storm? ofnt: i missed a little bit
7:22 pm
the question and i apologize, but we have had a position in a diversified portfolio that we thankfully got stopped out of half. it is painful. we have a 5% position in the emerging market. i will believe is they are cheap and there is value there, but at some point very closely, we will have to throw in our proverbial towel and we might end up bottom kicking it. we can always buy it back. to pickstruggle bottoms, which i do not like to do. yvonne: which countries are you still in? quint: beyond the e.m., so we own and index. by default, that gives us our greatest exposure to china. from a value proposition, it is attractive, but it is value tracked right now. yvonne: we will live in there. thank you, quint tatro of scarlet fu joint--
7:23 pm
quint tatro of joule financial joining us. e.m., talking about turkey, tech, all across the board right now at two tv . this is bloomberg. ♪
7:24 pm
7:25 pm
yvonne: tesla turns another page as the company got good news from goldman sachs and bad news from the sec. elon musk pagenaud hired goldman sachs as his banker to take the company private. he had tweeted this out and it was unclear whether it was a done deal. it is not surprising because goldman has done a lot of work and took tests of public, now they may take them private. they also have loaned elon musk a lot of money secured by shares in the company and did secondary offerings and bond deals.
7:26 pm
probably a good move by musk, it will be difficult to get over the line and goldman is wall street's largest bank. they will have the connections to get people to buy shares or cash out some who don't want to go private. they may convince others to go along with musk. the bad news is that he may have gotten a subpoena from the sec on his tweets about going private in the first place. they have been looking into this to see whether or not musk had funding lined up. if he did not, he could be in hot water because he would be seen as manipulating the stock. fund bought $200 convertibleh of his debt in the first quarter, making a nice gamble and it looks like they will make out on the deal if this private move goes through because they would get cashed out sooner. ramy: that was our detroit
7:27 pm
bureau chief with the latest on tesla. quick check of the business flash headlines. uber is continuing to put growth ahead of profit. that is after a second-quarter loss of $891 million. that is 16% improvement from one year earlier, following a profit report in march. uber chooses to release some financial details in the second half of next year but it still does not have a chief financial officer. yvonne: macy's plunged the most in over one year after concerns over the cost of growth. retailers say comparable sales grew over .5% beating estimates. macy's raised its full-year forecast. investors focus on the less profitable expansion efforts including private -- bargain pricing. sales of cisco are
7:28 pm
expected to grow between 5%-7%, indicating a total of about $13 billion, ahead of analyst forecast. this is bloomberg. ♪
7:29 pm
7:30 pm
yvonne: we are expecting showers and scattered thunderstorms throughout the morning in hong kong. 30 minutes away from the major market opens. it could be a perfect storm when it comes to you, first it was turkey, now tencent shocking investors here on earnings and sending shockwaves across the tech sector. ramy: stormy for sure, depending on where you look it is in the metals commodities space, also in e.m. and here markets down .8%. this is the worst fall in the past seven weeks. laggardas the biggest with what is been happening in a stronger dollar.
7:31 pm
7:30 p.m. wednesday here, i am ramy inocencio in new york. yvonne: and i am yvonne man in hong kong. you are watching daybreak asia go to first word news. emerging market shares have their third worst day in a year after a tencent drop. is the largest component of the emerging markets index, which includes alibaba. china insists it can weather the trade war and it will achieve its target for the year. planning top economic bodies of the impact on production employment and inflation will be controllable. growth slowedic to 6.7% in the second quarter, but still remains above the official target.
7:32 pm
president has lost patience with former cia director, yanking his security clearance and accusing him of erratic conduct and behavior. he has been a critic of the current president. he tweeted that trump is trying to press freedom of speech and punishing critics who speak out. described by noble as a disgruntled former employee behind a series of reports, the anonymous group began attacking nobles accounting processes in 2015. links tomed his iceberg and said that companies must die. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. we are counting down to
7:33 pm
the major market opens in the asia-pacific. , asianring in sophie stocks falling to a 10 month low. more pain to come. tencentaiting reactions. sophie: tech will be a source of pain and we have the makings of a tough thursday. asia is pretty much its own in emergingnter markets. let's jump in the terminal check in on futures in the region. mostly nudging lower and we are welcoming korea back to the fray. they will have weaker earnings to digest from korean air and on the dollar-yen have a of japanese9 ahead trade data. not too far off from a all-time low.
7:34 pm
ramy: aussie futures have fallen the most in three weeks as we head into thursday. what are you watching? sophie: on the data front, we are waiting on jobs figures for july. when you check out the ego function only terminal, we are expecting stagnation in unemployment rates. the forecast is for 15,000 jobs to be added. a dim outlook to the economy after poor consumer confidence data for august and subdued wage growth for the second quarter. ahead of today's data, aussie 10 year yields fell as much as three basis points. the employment market is not looking buoyant according to the ceo of a strenuous biggest jobs australia'seo up biggest jobs website.
7:35 pm
checking in on stock performances for the year, the companies -- the countries biggest telco, competition has heated up and stocks have narrowed. are going to be keeping an eye on resource players. commodities are hurting, copper weekreate sinking to a 10 low, gold sinking fewer -- further. let's continue this conversation. if you name any commodity on the board or elsewhere, you can bet it has a bad day. copper fell into a bear market. asian mining and metals reporter david is here to make heads or tails. expected?osses
7:36 pm
as sophie was saying, across commodities it has been a dreadful 24 hours. everything from agricultural to metals, copper fell wednesday, it tumbled through $6,000, plunged 4% in london yesterday. we saw oil declining, hitting the lowest since june. ,ci crude holding this morning gold fell, industrial metals, nickel fell. the bloomberg commodities index gauging returns on 22 commodities everything from sugar and soybeans to gas and iron, it fell to the lowest in a year. broad losses across the complex. inequitiesying, the point to further losses today
7:37 pm
and there is every expectation that investors and commodities will continue to be cautious. certainly not looking like there is any bright spot on the horizon. break somewill earnings coming through from lenovo. the first quarter, beating estimates from the top line as well as the bottom line. atome from the first quarter $77 million. a beatillion, so quite there. revenue side, 11.9 billion dollars, the estimate was $11.2 billion. we see lenovo writing this modest rebound. the smartphone unit has slowed. and howe how things go the stock trades. let's bring it back to david now, talking about the commodities selloff. do you blame this on the turkey compounding commodity investor
7:38 pm
worries or is it about china and weaker global growth? it is probably a confluence. we are seeing a pileup of negative factors for global demand. there are worries about the china u.s. trade war, the real concern on whether that will have impact on demand in china and of course china is the top consumer of all commodities. add to that the crisis in turkey. i am worried about that means for global growth which is key for commodities. the risk of that contagion, the turkish flu spreading to other markets. if you take the case of oil, the international energy agency forecasted next year industrialized nations will of oil for 1/6 consumption, compared to one half previously.
7:39 pm
we are seeing a buildup of macro factors, investors, analysts pointing to those things driving the bearish bets. you can throw in specific things as i mentioned before. the world's biggest copper mine we saw the operator in the unions agree to wage negotiations that will avert a strike. that is removing the threat of supply. in oil, a price jump in u.s. stockpiles. macro factors are strong and we're seeing the specific things pushing things lower. yvonne: thank you, david stringer, our asian mylan -- mining reporter. commodities heading for a bear moret, australia becoming aware of the collateral damage from the trade war. the aussie dollar has weakened 9% in six months ended tensions between beijing and washington.
7:40 pm
let's bring in our australia economy reporter from sydney. tell us more about why the aussie is continuing to be in the firing line. it is slightly ironic because australia's exports will not be affected by the trade war. education, so obviously that is not in the firing line. chinaody understands if slows down, a stride will be hit. australia's interest rates are at an all-time low. housing is falling. there is not a lot of domestic drivers. it is all driven by offshore and china is the key factor. obviously we have a deep and liquid foreign-exchange market so if you want to bet on the trade war, the aussie dollar is waiting to be taken. yvonne: 19 month lows right now.
7:41 pm
we could actually see more pain ahead, possibly down to 60 u.s. sense. exactly how exposed are australian exports? saying, at it was the and of the day, they are not directly exposed, but the point is that china's economy expects to slow in the second half and if australia is going to continue to grow, it will be german by demand offshore. driven by demand offshore. on the flipside, if export is lower in china, you may end up with domestic demand being driven, which would benefit australia. i can minute, that this is put beside, the us trillion dollar is the proxy for things going wrong in china. ramy: what can also benefit
7:42 pm
, whoalia is a lower aussie goes to $.70 or $.60 to the dollar. could that turn out well for a rate hikes? it is an interesting question because on one hand, , there's notpolicy a lot they can do locally to get the economy going. the currency has been stubborn the last year or two which is understandable. the dollar falling would benefit the economy. the problem is the context in which that happens. if you have a cratering global economy because of a trade war, the dollar falling to $.60 is irrelevant is the central bank will not raise rates in such an environment. we slightly grind down just because of less interest in australia or believe in it, but
7:43 pm
the global economy remains strong and it does open up the option of potential rate hikes down the track. ramy: an open question looking in. bloomberg's us join sydney. up next, staying bullish, relax, why some investors remain optimistic on tencent despite all the problems piling up. this is bloomberg. ♪
7:44 pm
7:45 pm
ramy: now for a look at some of the stories trending across the bloomberg universe. profit drops, its first in at least a decade, over at, constellation brands betting 10 million dollars on cannabis, setting the stage for a global weed empire. the hopeful story of a refugee
7:46 pm
who could become the first somalia american ever elected to the u.s. congress. check out those stories trending online or on the terminal. yvonne. as you just saw, tencent earnings attracting attention and interest from terminal subscribers. take a look at my terminal here for a moment. we are seeing when it comes to protecting themselves, investors are looking ahead to the earning reaction when hong kong markets open. option traders are paying more to hedge against the tencent drop. the cost of bearish options now the highest since june 2016 compared to the bullish contrast. given what we have been seeing, there is -- it is pretty volatile here this morning. a further sign of trade being felt by lung tom superstars -- long time superstars.
7:47 pm
we have been tracking all that as well as listening to the call yesterday. didn't seem to give that much optimism. >> tencent is showing cracks in the armor a little bit because they are getting hit on multiple fronts. we knew there would be a downfall in mobile gaming revenue, but it went on sharply. 19% quarter over quarter from first to second. that is a sharp drop. some legacy titles they have banked on are getting fatigued and they need to go into newer games. they do have newer games in the pipeline but because of these new shakeups at the revelatory bodies in china, they are cracking down, coming up with new rules. they have put a freeze on new game titles. tencent has games in a pipeline that they are not able to monetize. monster, battlegrounds,
7:48 pm
pc games which days after its debut was pulled off the platform. they are having a problem there. notpresident of tencent mincing words saying mobile gaming is a weakness right now. >> the gaming sector is one key area of weakness and as we have said, a big part is because our biggest game is not monetize of ble.-- monetiza growth will return when it is. stephen: we saw how investors reacted overnight to shares dropping. they dropped as much as 10%, closing down 6.6% on top of a four-day fall in hong kong. interesting to see what will happen. it has lost $160 billion in market cap. income came in well below
7:49 pm
forecast, down 2%. ramy: people are asking where the bottom is on this. with pressure on the gaming business not going away anytime soon, what is next for tencent? we have a have invested billions of dollars in new businesses, but when will they pay off? stephen: they have the big wechat ecosystem that helps underpin mobile gaming as well as advertising. they are invested heavily in video such cushions, payments, those are paying off. payment volumes surging 40%, at revenue 40%. video substitution numbers doubled, but some of the investment returns have not been great. they got out of some other investments but the ipo's they are backed have not done well. china literature down 37%. ramy: stay with us, because we
7:50 pm
will bring in krane fund advisors managing partner mark schlarbaum. tencent, you heard revenues were diminishing. just a few years ago, they took down to 40%.e, now could be get back to the environment? mark: i believe we can. with a regulatory backdrop we're seeing now, it has pushed back revenue for some unknown. of time -- for some unknown period of time. ofy have a large pipeline mobile games, which they are switching over to from the legacy see games -- pc games and those will start to monetize soon once a regulatory environment works itself out. they also have or they will asng public tencent music
7:51 pm
well and that could be a pop in the stock. over not forget they have one billion monthly average users on wechat, so it is the largest worldwide captive audience. hold on one second, want to break the data coming from japan. july exports and imports coming through here. exports missing estimates quite largely. growth, economists were expecting 6.3%. we are still seeing a domestic demand of resilience here in the japanese economy, but trade on exports.ghing the trade balance swing back into a deficit at ¥45.6 billion. that is the adjusted numbers overall. billion in deficit.
7:52 pm
billion yen deficit. ramy: it is clear beijing still holds the video controller if you will. what cautioned you have for investors as they say is this a minor blip over the next week or months? mark: people are saying it is a situation.if, gaap group boko up with a solution that works and in the meantime, they have a green light way that people can get games online for the next month. unfortunately for tencent, their franchise which has been so popular has already come to
7:53 pm
market and had to many downloads and users that they are stuck waiting for regulatory approval before they can monetize. this is largely a second half of the year issue. it probably gets resolved in a think there is a lot of stored up growth and monetization that resolution of the this decision. let's not forget, 60% of revenues of tencent come from gaming and value-added services. it is not an insignificant part of their product offering. if i can jump in here, you would probably say this is a great time to buy this stock right now. on the bloomberg terminal, 50 out of 51 in most say it is a buy. mark: i believe this is a fantastic time to buy tencent, especially if you have a long-term outlook. i believe over a 12 month period, you will be making quite
7:54 pm
a bit of money. it is down 30% year-to-date, down another 10% today, lost a significant amount of market cap and i think you have to be buying one of the premier growth companies in the world when they go on sale like this. that is how we operate. we have stayed with them for 10 years and will continue to. growth stocks in china have rated for issues, sometimes they have other issues that cause delays, but where you have such a large user base and such a in, it isystem built hard to ignore these kinds of stocks. it also begs the question, is tencent losing focus from its core business as
7:55 pm
well. we talk about this obsession with beating alibaba. it seems like right now, competition is heating up. do think competition is getting too overwhelming? mark: i think the competition is very scarce. tencent is number two in global payments and they are number two to alibaba in some of their other initiatives. they are a competitor, have shown themselves to be a worthwhile adversary and i think they are worth having a decent sized bet on. as you say, cloud is another area they are competing in and we are in the phase where the fast growth has happened and now we are investing for the future and we will see who comes out of
7:56 pm
the investments with the best products. ramy: speaking of the competition, we are going to get alibaba results next week. i think the investment community is pretty down on pending results, but you like jd. jd held 35 for sometime in the past weeks, maybe to a month. it was off quite a bit as i am guessing from 30% or so. past couple days come other has been shortselling going into the numbers. i think it closed at 32.8 today. i think if tencent comes with a bad number, it is priced into the stock. they will have to have a horrible number for it to go down. there is a lot of short-term traders in the stock short and if they come with an in-line number, the risk reward entry is good for jd.
7:57 pm
they are not a complicated company, they have very good products, it sells to tier one cities. it is a stock that i like very much. ramy: we will have to leave it there. mark schlarbaum, krane fund advisors managing partner and stephen engle. trade, it wasnese a swing from surplus to negativity. yen was will be got, the estimate was 40 billion yen. swinging at the positive from the month prior. taking a look at exports and imports. coming in less than expected for 3.9% versusxports, 6.3% for the survey. imports coming in on par, 14%. yvonne: still looking strong,
7:58 pm
but u.s. protectionism will be asghing on exports for japan we continue to see these trade tensions escalate. not much when it comes to u.s. and china talks. to come when the record opens. this is bloomberg. ♪ this isn't just any moving day.
7:59 pm
this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today.
8:00 pm
yvonne: 8:00 a.m. here in hong kong. really i live from bloomberg's asian headquarters. i am yvonne man. welcome to "bloomberg daybreak: asia." asia-pacific markets look set for decline after wall street's worst session in seven weeks, the s&p 500 index falling for the fifth day in six. tencent, suffering the first profit drop in at least a decade. ramy: from bloomberg's global headquarters, i am ramy inocencio in new york. we are just passed 8:00 p.m. tariffs taking a toll on japan. trade deficit five times worse than expected. vaccine scandals, tighter
8:01 pm
scrutiny, and regulatory change. now is the time to invest in biofarma in china. ♪ yvonne: here we go. pretty ugly day here today. this time when it comes to asia, seems like it's a storm of our own making when it came to tencent. those earnings, pretty big mess. reaction is with the stock, but the reverberations we saw throughout the day in the u.s. action. ringing agoing to be lot harder and louder than the turkey situation. , or thes, the stock prophet, was the first fall in the past decade or more. that had to view and a little bit of a storm in terms of new regulations for tencent on new titles and aging titles. we did see a knock on effect in
8:02 pm
terms of u.s. technology here, but that was one storm of many with the s&p 500 falling to his lowest in the past seven weeks. there's also em equities as well as the commodities complex taking a beating. yvonne: tencent really becoming the leader here in this em weakness. let's look at how the market open is setting up. seems to be more pain to come. reporter: we came into the session with plenty of headwinds after the tumble in tech. commodities and copper entering a bear market in london. a chance the emerging markets could follow suit. watching that closely. on the ego friend, we had from japan that missed exports and why didn't the trade deficit by 3.9% compared to the estimate for 6.3% growth. fall. see exports we do see losses of over 1% in tokyo as well as in seoul. kospi down 1.5%.
8:03 pm
plenty of heard things -- earnings to expect from korea. watching korean rail and construction after the president's proposal setting up an east asian railway community. when it comes to australia, we are waiting on jobs data, 10 year yield slipping to an eight month low. in sydney, investors have a bunch of earnings to react to. minerals, lower costs in the second half. asx 200 losing half a percent of the starting session. ramy:3 sophie kamaruddin checking the markets. we move ahead to what could be a very choppy day. let's get to the disappointing trade numbers out of japan. we are joined by the deputy bureau chief in tokyo. give us a breakdown of the data we just got. reporter: obviously, the data that we saw was a little bit on the disappointing side. the good news obviously was export growth continues for
8:04 pm
japan, but the growth and exports was lower than we expected. it was lower than all but one of the economists that we surveyed, and the trade deficit was much higher, or wider than we expected. a lot of the deficit comes from rising cost in import prices. the surprising thing from the data for me is that we saw that exports to the u.s. dropped for a second consecutive month. they were down quite a bit more than they were last month. ramy: how big of an impact has the u.s.-china trade war had on japan, if we can figure that out? reporter: it is a good question. i haven't figured it out quite yet. of the until these figures, we would have said there hasn't been much of a direct impact so far. the big worry that is looming in the horizon for japan, but as of have now, steel tariffs
8:05 pm
not had much of a direct impact. we are seeingat, that exports to the u.s. have dropped. it is tempting to go and draw a direct line. i don't know this there is a direct line to be drawn. japan is not in a bad position to be in in terms of selling to all sides. not a bad position in theory, but they stayed quite a bit weaker than we expected. yvonne: especially when you still have u.s. and japan talks and potential summit between president and shinzo abe to handle these trade issues. what do you think the outlook going forward is? reporter: it all depends for japan on the issue of auto tariffs. talks are going on right now between japan's trade minister and his counterpart in the u.s. they have those talks earlier this month. i think they are having another
8:06 pm
session that will start next month. japan is desperate to avoid any impact from auto tariffs. that would be a devastating blow, far more significant than anything we've seen from steel or any other issues so far. the outlook is basically dominated by that issue. we will not know the result of that i think for another couple of months, if it happens at all or whether japan manages to get an exemption in the event they do have them. apart from that, the outlook looks relatively rosy, despite the looming specter of u.s. protectionism. we expect oil prices will right themselves. we will not see the deficits we saw today. it all depends on the u.s. right now. yvonne: and the auto tariffs. thank you. bloomberg's deputy bureau chief from tokyo. let's get to first word news now. reporter: thank you. the lira.
8:07 pm
the announcement of plans to invest $15 billion in the country as president erdogan reaped the rewards of standing by an ally in the diplomatic arabia. with saudi elyria was already strengthening on a series of measures from the turkish banking regulator to make it harder for traders to bet against it. indonesia unexpectedly raises key rates for a fourth time since may. the seven-day reverse rate jumped 25 basis points to 5.5%. this was forecast by only seven out of 28 economists in a bloomberg survey. the rupee was already reeling from the effect of higher u.s. interest rates and the stronger dollar. the aussie dollar has become the leading collateral damage from the trade war. down 9% in the past six months. the dollars correlation with -- has reached the strongest on record, as investors look at the
8:08 pm
fortunes. the slowdown in china being compounded by u.s. tariffs. emerging markets had their third worst day of the year after tencent reported a rare and unexpected drop in quarterly profits. tech stocks tumbled. tencent is the largest component of the msci emerging markets index. with that stock, including baidu and alley,, it is 1/10 of the benchmark gauge. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna dagenhart. this is bloomberg. yvonne: thank you. let's talk more about the text selloff. sean darby joining us, jefferies hong kong limited chief global equity strategist.
8:09 pm
>> i think for some of the most favorite stocks over the last six months, first of all in february you had this kind of bund yield rose, which were correlated to each other. more recently, the disappointment was for companies like facebook, which was more homegrown. some of it is down to the fact that the cycle has gotten quite mature, and secondly they are making investment write-offs that have started to work through. i think these are non-macro related issues for these companies. these are more specifically where they are in their own product cycle rather than what's happening in china, turkey, or elsewhere. yvonne: given how heavily weighted the stocks are, especially in the emerging-market complex and tencent in particular? >> it could not have come at a worse time. that is where everyone has been hiding. vstoxx have been producing stellar results over the last 18 months. you have been seeing the deterioration in em over the last excellence -- six months.
8:10 pm
unfortunately, everyone is clustered there. that's why you have sharp drops. i think it has been more the breadtht actually the in em has been deteriorating, forcing investors into very small groups of stocks. yvonne: do you think this is just a correction in an overly crowded trade, or that things are in a downward spiral? >> i think it is more of a really.on, i think a lot of these companies have a platform model which allows them to make very high which in ascale, disinflation environment we are in, actually still does well. unfortunately sometimes the cycle works against businesses. this is just their turn in that scheme of things. into the bloomberg terminal, i want to show you and the viewers the divergence happening with china tech here line, and the white
8:11 pm
line, the invesco qt chu trust series. this is the turn for china's tech my what does that say if anything about u.s. tech? we did see u.s. tech a little bit, but where are we headed later on? >> i think for the u.s. tech cycle, things are slightly more different. in that respect, a lot of the companies there are much more related to the overall industrial cycle. we have seen, for example, growth might significantly over the last nine months. se companies are some form of a lid that believes so they are keeping pricing strong for the cycle. there were a lot of companies internationally based so they are more focused on international markets. perhaps some of their peers in china. i'm not sure there's much to read into from what happened in
8:12 pm
china for the u.s. for some of the country -- companies, it has been a natural reflection of the production cycle rather than macro global trade. ramy: looking at the trade war through this lens, how has that changed your view of where things are going as well? i think that's a very good question, because when we started to see this sort of germinate, i thought that actually it would be quite short-lived. start -- certainly when steve mnuchin's position was pushed out of negotiations, my feeling is the trade dispute will run way through the november midterm elections, possibly right into the presidential elections, mainly because the trade war is wrapped up in so many other things they u.s. seeks from
8:13 pm
i don't think necessarily will find itself being resolved quickly. unfortunately with news headlines on the china trade were dispute, it can run for 18 or 24 months. but for a company like tencent, it's not just the external side but the regulatory side as well. they are freezing these licenses for a game, china cracking down on addiction and gambling and whatnot. how does that affect global supply chain? u.s. companies are interlinked as well. >> that is a much more long-term specific issue for companies. just necessarily chinese tech companies. we have seen the european find a lot of american companies for interest -- infringements on their oligarchs model. i think that's how these companies bidding with society and how governments try to regulate them.
8:14 pm
have actually been reasonably untouched by government fingers. i think it's much more a reflection of the product cycle that the companies meet the auspices of the government. part of the whole government cycle life that they can't necessarily keep growing, because there are natural barriers that the government has put in. yvonne: hang tight. we will have more with sean darby from jefferies little more, including the headway in facing emerging markets. hour, new etfis offers the chance to get into china, but investing in its biofarma sector. beijing aims to be a global leader in medicine. we will speak to the man behind that index. this is bloomberg. ♪
8:15 pm
8:16 pm
ramy: welcome back. this is "bloomberg daybreak: asia."
8:17 pm
i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. the past eight months have not been pretty for emerging markets stocks. the msci has been on a steady slide since the start of a year and is on the verge of a bear market. let's bring in garfield reynolds in sydney. getstors were hoping to some relief after the turkish bounced, but that did not happen. no, it didn't and it really indicates that turkey was just one of the worries that are heading emerging markets. in particular, the idiosyncratic move in the lira last friday, that came after people have been worried about the turkish economy and what was going on for quite some time. there's a lot of anxiety building and building about emerging markets. i think we've got a lot further to go down. newy week brings and catalyst or two for emerging-market stocks to come
8:18 pm
down from what was some eye watering lee strong valuations earlier this year. ramy: on the flipside, we have to look at the dollar. what is the outlook for that now? >> the outlook for the dollar is the inverse of the outlook for emerging markets. other. are driving each there has been a lot of talk that the stronger dollar hurts emerging markets. some of that talk has been coming from central bankers in asia, such as india's central banker. a higher dollar is bad for emerging markets and weaker emerging markets are good for the dollar. ok, we are going to take our money out of china, out of taiwan, out of malaysia and indonesia. to start off with, we will go to america where the stock market is doing nicely. that americants
8:19 pm
twin deficits can sustain the longer dollar -- the dollar in the long-term. the next little while, it's hard to see much change. ramy: the ultimate safe haven at least for now. bloomberg markets alive strategist garfield reynolds in sydney. you can follow more on this state -- city and all of the day's trading news on bloomberg. in can get a market run down one click and there is commentary and analysis from our expert editors so you can find out what is affecting your investments at this very minute. still with us is sean darby. he is jefferies chief global equity strategist. let's pick up on where garfield left off. talking about the stronger dollar and its impacts on em. there have been a few analysts coming on bloomberg tv and i've seen that people are starting to flip the call for dollar weakness.dollar
8:20 pm
where do you lie on this and where do you think it is going safe i the end of this year? >> i think the word idiosyncratic is a good one because we call it a nonlinear event. people who have covered em, the moves in the currency markets in the last 48 hours have been very unusual. they're in mind argentina raised rates to 45%, and still the currency was falling. i think part of it is there is a self reinforcing cycle as people want to liquidate out of em physicians. that is causing the dollar to which is causing further problems for the em complex. the way i would look at it is money market in the u.s. are suggesting that we sort of see a peak in rates in 2019. in some sense, there is a relief that may be the dollar strength itself will actually start to peter out toward the end of the year as the market begins to feel that the rate cycle is
8:21 pm
ending. i think that's where we would stand. this possibly is the last part of the whole sort of catharsis out of em as the dollar strengthens on the last rate cycle move. ramy: basically you are projecting something that could go as long as a year-and-a-half here for em. hop into the bloomberg terminal, that is the u.s. side. i want to bring in the china side, of course. this is the bloomberg terminal subscribers, interesting to see discontinuation, msdn -- msci bmx continuing on pace but falling with the data we have seen trickling out. retail, fai. gdp. it calls for 6.7% where do you see this going? >> that's a good question. we noted back in may that there of been some foreign -- form a credit crunch in china pretty
8:22 pm
much around the real estate sector. there was quite a series of defaults running into that. in june andthe data july was reasonably stable, but that only started to roll over. there has been a perfect storm. you had issues with the stocks in china like tencent that had come out with disappointing results are the general macro conditions in china have also begun to call. the good news is the authorities in china have already responded quite quickly with the cuts. there will be a lot more of that in the next 18 months. seven,n will go through if the authorities allow that to be part of the release valve. it will be very different from what we saw in 2015. the authorities did not cut rrr. they were hesitant about moving the exchange rate. i think that exacerbated a reasonably hard landing for the economy in 2016. at least the backdrop at the mormon -- moment, the shock
8:23 pm
absorbers are there in the market. yvonne: did he see china versus the rest of em, what we want to show is china and india, it's like they are going in different paths. look at the relative strength index. basis, indial looking overbought and china oversold. these usually work in tandem. a strong correlation. do you think this is sustainable? >> it has been a pain for me and i were recommendations. to the it comes back fact that a lot of investors have been hiding in india. we will have the same sort of followed that we've seen in some of these tech stocks. i think again it is a bit of a warning sign that maybe everyone is doing the same trade in hiding and eventually that there will be a, vince for the indian -- comeuppance for the indian stocks.
8:24 pm
that there't suggest is a best area to be adding to. pain treehas been a for me. i've been a leading for the last six months and it has not worked. yvonne: and the rupee at record lows as well, one to watch. sean darby, jeffrey's chief global equities strategist joining us. the stories you need to know to get your day going. for bloomberg subscribers, go to tv on your terminal. perfect way to watch and hear what's going on over night on your way to work. this is bloomberg. ♪ . ♪
8:25 pm
8:26 pm
yvonne: a quick check of the latest business flash headlines. plenty of other the earnings. tol year net income self 9% $2.6 billion u.s. beating the highest estimate. they will pay a dividend of 11.
8:27 pm
in june, telstra announced a make or break plan to cut 8000 jobs, sell assets, and potentially sign off on a new infrastructure business. ramy: asx will pay a final dividend of $1.09 australian on full-year net profit of $322 million u.s. they flag increase volunteers -- volatility in the year with growth of 9%. qb insurance boosted operating ratio targets following a jump in profit. first off the earnings of $358 million u.s., around 4% from a year earlier. ramy: treasury sees earnings growth for the fiscal year of around 25%. it says delays importing australian wine into china appear to have abated. full-year earnings come in at $387 million with asia growing
8:28 pm
37% on year. next, nearly half of all of china's unicorns have been backed by two of the country's biggest tech companies. we measure the real extent of tencent and alibaba's reach, next. this is bloomberg. ♪ xfinity mobile is a new wireless network
8:29 pm
designed to save you money. whether you use your phone to get fit. to find meaningful, thoughtful, slightly-weird gifts. or just to know which way you're facing right now. however you use it, your wireless bill is about to cost a whole lot less. ask how you get xfinity mobile included with your xfinity internet. so you just pay for data -- by the gig or unlimited. saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today.
8:30 pm
yvonne: it is 8:30 in singapore right now. half an hour away from the opening of trading there. i am yvonne mine -- yvonne man in hong kong. ramy: i am ramy inocencio in new york and you are watching "bloomberg daybreak: asia." first word news with jenna dagenhart. reporter: thank you. president trump's tariffs have taken a toll on japan. month, rose for a 20th but less than forecast, while rising oil pushed up the value of imports leaving a trade billion, five1 times worse than analysts were expecting. shipments to the u.s. more than 5% last month from a year ago. tesla is said to have received a the fcc
8:31 pm
elon musk's plans the demand for more information comes as the commission investigates last week's tweet about having secured funding. shares fell more than 2% for a second day, the lowest since musk first wrote the idea of taking tesla private. the sec and tesla both declined to private -- comment. president trump has lost patience with former cia director john brennan, yanking his security clearance and accusing him of erratic conduct and behavior. brennan led the agency under president obama and has been a vociferous critic of the current president. brendan tweeted that trump is trying to suppress freedom of speech and punish critics for speaking out, and that he will not relent. thea insists it can whether escalating trade war and will achieve targets for the year. beijing's top economics planning bodies as the impact on and inflation will be
8:32 pm
controllable through proactive fiscal policy and prudent monetary policy. tennis economic growth slowed from 6.7% in the second quarter, but remains above the official target. character behind the collapse of commodity trader noble group has finally come forward. he has been described by noble as a disgruntled former employee behind a series of reports by iceberg research as the anonymous group has begun noble's accounting practices and 2015, from a secret location in europe. he said "that companies must die." die."d companies must global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart, this is bloomberg. yvonne: thank you. taking a look at the markets right now, all focus has been on emerging markets. now the msci e.m. stock index
8:33 pm
falling into a bear market now. sophie: we have our eyes on the closed for the msci e.m. index closing in on a 20% fall from the january peak we saw. given the flood of worries and headwinds facing bdm -- the em, over tencent, seeing it is spilling over into the rest of the tech space. when you take a look at the movers that are dragging this index into the bear market territory, the heavyweight falling over 2% this morning in korea as that market comes back online. we also want to highlight biologics under pressure given theyeport in papers that will begin review on an accounting probe on that company. also highlighting some movers to the upside in korea.
8:34 pm
rail and construction stocks gaining ground after president moon announced plans for an east asian railway community with plans to ground break railroad projects within 2018. moving to other stock movers in japan, we want to highlight the drag in resource players. oil players as well as metals producers flagging. mitsui mining involved in copper production, losing over 3% this morning. we do also have japanese cosmetic firms under pressure. seidotayed of -- shi losing 11%. movers in sydney, giving the earnings season, ramping up. luke a filing nearly 6%, the most in six years after its first half results. origin energy also losing ground. lastly, a look at bellamy. the biggest advances in sydney
8:35 pm
this morning, this as it was braced at morgan's financial. ramy: quite a few movers and a lot of red. sophie kamaruddin checking the markets. meantime, china stocks did slide aztec losses spiraled into a , passing 6.9% for the first time in more than a year. what is the out look for the yuan, and for that matter, do you see any intense pboc intervention in the pipeline? >> of course. the yuan is under the spotlight right now. the currency is the latest victim of the selloff in emerging markets. that is because of the dollar's and all the factors driving the yuan's decline over the past few months such as the china-u.s. divergence in whatary policy and --
8:36 pm
traders are trying to do is trying to test the bottom line with the pboc. they want to see whether the pboc will support the currency at some point. as you just mentioned, the newest development is that the offshore yuan has inched very close to the record low. the last time it happened, the pboc intervened heavily with offshore liquidity to support the currency. the focus right now is whether the pboc will do this again. the views are actually very divergent. some are saying they will definitely do it before it hits 7%. becauseer analysts say the fundamentals are so bad, it does make sense for china to have a weaker currency. ramy: speaking on currencies and looking to greater china, the hong kong monetary authority also just did intervene for the first time in three months, to the dollar. is there more pressure in the near term for this currency? >> the hong kong dollar is
8:37 pm
another victim of the selloff in emerging markets. the hong kong dollar has its own problem, though. sincep has been widening may. that does make it very attractive for traders to bet against the hong kong dollar and that is the reason why the currency has been sliding since 2017. if you look at the future, this development, the aggregate dollar,of the hong kong has dropped below a level that is $100 billion hong kong. if it rises at, a quicker pace, that may -- we might see the currency becoming less attractive and the hong kong dollar becomes a little stronger. yvonne: hong kong markets, not only watching the dollar, but also tencent earnings that sent investors into shock overnight as well. trades how tencent stock
8:38 pm
is how the hong kong markets trade what are we in for today. >> the biggest news is tencent earnings. markets have been expecting we got earnings, but the results are still much worse than expected. the tencent related stocks like the other tech giants like alibaba and by do have been slumping in new york. baidu have been slumping in new york. we will see a drop in tencent shares. we only way to see how much. tencent is the third biggest stock hong kong has on the index. we will definitely see some declines. yvonne: the options market staying i think 5% either way. pretty big moves and wild swings. thank you, our china markets reporter tian chen. enormous influence of tencent and alibaba has huge implications for new companies in china as well. customers, and,
8:39 pm
support, but their health comes at a price as well. shelly banjo joins us. through two dozen ipo filings of companies back to buy tencent and alibaba. what did you find? therter: you wonder why all other tech stocks are down when they have nothing to do with the problems tencent has faced with gaming. that's because tencent has such an outside influence on the overall tech market. so we went through all these ipos and found that more than two dozen mentioned either alibaba or tencent in there risk factor saying if something happens to our relationship with whatever company has their backer, something bad could happen to us, too. yvonne: every time we interview one of the startups before the ipo's, they say the fact that they are back to buy tencent is attractive for investors as well. but what could go wrong? what if this dependence starts to wane?
8:40 pm
reporter: reporter: reporter: so far, we don't have too much evidence of what happens if it goes wrong, just the amount of risk factors that the newly public companies have warned about. but we have a few examples. of course, earlier this week we saw china literature, which was a spinoff of tencent, that recently went public. they went to a deal where they bought another company for $2.3 billion. the stock dropped. 17% ostensibly because investors are saying, you just bought another tencent company, which oranother best thing to do, are you just doing it because tencent is forcing you? and investors are saying that you paid too much for it. ofy: for the u.s. side things, for u.s. tech, a lot of investors are wondering, could what's happening in china happen in the u.s.? how is this different and how is it similar? reporter: it is really interesting, because you hear of things of big companies like google, facebook, and amazon being big giants, people calling for them to break up as well,
8:41 pm
but when you dig into it these companies actually don't take a lot of stake in publicly traded companies. google tends to be a little bit of an exception. they say they've made about three hundred investments through their google ventures and other venture capital arm's, but they don't tend to hold big stakes in other companies that have gone public. they tend to take them in and pull them into the bigger businesses. it doesn't tend to affect investors as much as investors in these other companies were tencent or alibaba holds a 20% or 30% stake. ramy: a bit more silent off. our asian tech reporter shelly banjo, thank you. coming up, a new eps seeks to draw investors to chinese biotech. we will discuss the potential with the man behind china biofarma, next. this is bloomberg. ♪
8:42 pm
8:43 pm
ramy: this is "bloomberg
8:44 pm
daybreak: asia." i am ramy inocencio in new york. yvonne: i'm yvonne man in hong kong. a real change in hong kong. incentives and investment in cutting edge innovation reshaping the biotech landscape in china and beyond. our next guest just launched a china biofarma etf. they launched and created this index. this etf now tracks 28 companies, including two reason listings. china's recent vaccine scandal and a host of reforms, is now the right time to invest? let's ask loncar investments' ceo brad loncar from kansas city. thank you for joining us. we talk about the regulatory changes. factors are favorable for the biotech space. development stage is a high risk and high reward type of situation. certainly not a lot of investors will be -- i guess we'll have the stomach to get into this space.
8:45 pm
who do you think will be interested in this kind of etf? >> i think biotech is the most volatile sector in the stock market. you were on the previous segment talking about the tech stocks, which are volatile. biotech can be even more so as we have seen over the previous weeks, as we've had this trade war issue and the vaccine scandal. also just in general, this is the most highly technical difficult sector for even experts to invest in. created this index is i want people to think about this sector holistically, from a broad, diversified standpoint. in the united states, our biotech sector has outperformed the general market over the long-term, but it goes through a lot of peaks and valleys. there's a lot of white knuckle moments. it's very difficult just to take two or three winners. that's usually fraught with disaster.
8:46 pm
to create something that highlights the excitement of all the changes that you have going on, especially with the rule change, the hong kong stock exchange, but allow people to not be overly focused on just one or two names, and think of it from an industry standpoint and where the industry may be going over the long-term. right. you mentioned about hong kong. the firsten watching companies to list in hong kong after the rule changes. that have gone below the offer price quite substantially. do you think this has more to do with the scandals in the market move fundamentally? do you think investors are still wary about embracing companies who can't turn a profit? >> i think a lot of it has to do with sentiment. there is a specific issue. --ead had their patent for which hurt the entire hepatitis that they are in right
8:47 pm
now. i think it's remarkable those companies are trading on the exchange. i think we should step back for a moment and think about that. those are world-class companies conducting world-class science. it is something to be proud of that they are trading their. you have to think of this over the long term. when the first ipo happened when over a fewing down days, i read media reports that said it was a disappointed, this is over before it started. the government of china has this made in china 2025 program. they are highlighting pharmaceuticals as an industry they want to grow and support and be globally competitive. you really need to think of this sector in long-term viewpoints. you can't think of it from day to day or week to week. you have to think, where is this
8:48 pm
?oing over the coming years you look at the hong kong stock exchange rule change, government support, reforms happening, the china national drug administration, and the entrepreneurs creating great companies. there are so many arrows pointed in the right direction. if you think about it holistically as an industry and over the long-term, there's a lot of reasons to be optimistic and enthusiastic about the sector. ramy: i think that's probably a good way to look at this, especially when you take in the trust factor here. biotech, most recently in the scandal, a vaccine when you talk about life-changing drugs, when are a drug that for says made in china, especially for a u.s. audience? >> i think they will be in the coming years because i think we are going through a transition. i think there's a new crop of
8:49 pm
globally recognized management first-class these are the companies you are mentioning. companiesworld-class that don't aim to be leaders just in china domestically, but leaders globally. i think as more of those companies spring up and lift on the exchange, there will be more of a comfort factor as we get to know them. one thing important in biotech investing is transparency. that's one piece of advice i would give to companies in this region becoming public for the first time. you have to be very transparent. you have to have goals you set out in advance and allow the market to follow you and gain trust in you and to see you are delivering on the things you would save. it is an industry where trust is and for that reason i
8:50 pm
think companies have to go the extra mile to be transparent said that investors and ultimately consumers and the public can get on board in the future. ramy: in terms of investment flows, a lot of the money has been going to the u.s. side of things. with the opening of this and the whatng of china biofarma, impact do you see happening in terms of money that was headed to the u.s. now possibly headed back to china? been $40y there has billion raised by life sciences venture capital over the last year and a half. astounding only about a quarter of it has been spent. i think there's already been a flood of investment in local companies. i think we are in the very beginning of that. when i speak to investors, i always hear stories about people who invested in the u.s. biotech
8:51 pm
sector in the 90's when biogen and all these companies were entrepreneurial, edgy startups. i feel like that is what's going on here. the growth potential, the runway you have in front of you is just so that -- vast that it's exciting. the money is already flowing. beijing raised $900 million for their secondary listing last week. that is an astounding number. that's incredible. it's a sign that if you are going about this right and you have good assets and good science, there for companies like that. even though we had a lot of volatility and stocks are down over the left couple of months -- last couple of months, i don't expect that to dent the ipo pipeline for those truly global facing, credible, state-of-the-art science companies. there's a lot of those lined up to go public. i think you are in for an exciting few years ahead of you. yvonne: really quickly, 30
8:52 pm
seconds to go, why only focus on hong kong and nasdaq listed companies? why exclude mainline listed companies? >> since our product formed here in the united states, nasdaq and hong kong i view as global exchanges. i think the companies that want to be not just domestic chinese leaders but global leaders in this industry will choose one of those exchanges, and volunteer for the scrutiny that comes with that. for now, we view that as kind of filter, although we will always consider adding mainland companies in the future. i think in the beginning, it is a good way to help you investors get comfort around this idea. it there, will leave brad loncar from loncar investments, the ceo joining us from kansas city. don't forget, our interactive tv function, tv .
8:53 pm
watch us live, catch up with past interviews, and look at the bloomberg functions we talk about. a question for our guests as well. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪ >. this is bloomberg. ♪
8:54 pm
ramy: let'sramy: do a quick check of the latest business flash headlines. lenovo profit topped estimates thanks to a recovery in the global pc market and an
8:55 pm
improvement in the smartphone units. that income in three months through june came in and 77 million u.s. dollars, $11 million ahead of forecast. revenue rose to a fraction under $12 billion. modestis writing a rebound as consumers replace aging hardware and competitive gaming takes off. yvonne: reports from tokyo say apple is being investigated over claims that pressured yahoo japan to drop a gaming platform that competes with the app store. the nikkei news says the fair trade commission thinks apple's actions may constitute interference in yahoo japan's business, and violate the anti-monopoly on. softbank is attempting to mediate the role as yahoo japan's top shareholder. cisco is offering a bullish forecast for the current quarter based on higher corporate spending on network upgrades. sales are expected to grow between 5% and 7% from one year ago, indicating a total of about
8:56 pm
$13 billion, which is ahead of analyst forecasts. of ceo is in the process remaking cisco into a provider of networking software and services p or be sure to two and thursday at 9:00 p.m. hong kong time for bloomberg's interview with the ceo. that's not :00 a.m. new york time. yvonne: now for a look at what's coming up in the next few hours. what are you watching? theaad: going through cost-cutting program. a bit later on, about an hour the chief, we had executive of oz minerals. copper tumbled into a bear market. it is seen as a l weather for the global economy. andll ask what he is seeing how trading is currently, should give us an idea if the wheels are coming off the economy with all this noise at the moment surrounding trade and tariffs and turkey, etc.
8:57 pm
there we have it. andrew cole coming up. ramy: looking forward to that. you, awe handed over to quick look at how markets are trading right now. we can see it is across active trading, the nikkei down more than 1%. exports coming less than expected, 3.9%. and kospi also in the red. yvonne: we are expecting moves of at least 5% in either direction. we are seeing across the board, futures also pointing negative when it comes to taiwan and malaysia. let's look at the chart about what we will focus on when it comes to en just entering into the bear market territory. something to watch here, next. ♪
8:58 pm
8:59 pm
9:00 pm
♪\ david: you also ride 120 miles a week on a bicycle. have you thought how much higher the stock price would be if you did not spend that time on 120 miles a week? dennis: i think i should start riding 200 a week. david: would i look like you and drink the diet mountain dew, ? dennis: sure. david: let's talk about the space program. dennis: this is the most exciting time in our country's space program in decades. david: you grew up in iowa. dennis: every morning i had to milk the cows. david: did you ever say to them, drink some mountain dew? the cows would produce more? [laughter] >> would you fix your tie, please?


info Stream Only

Uploaded by TV Archive on