tv Bloomberg Daybreak Asia Bloomberg November 5, 2019 6:00pm-8:00pm EST
haidi: very good morning. i'm haidi stroud-watts. we are under oh hour away from the markets open in japan and south korea. shery: good evening from new york. i'm shery ahn. sophie: i'm sophie in hong kong. welcome to daybreak asia. ♪ this: the top stories wednesday. talking tough on trade. china wants tariffs lifted before any deal can be agreed. transpacific trade has slumped in recent weeks. nonetheless, optimism about a
deal keeps stocks near all-time highs. treasury yields rising. gold falling below $1500. shery: huawei still see sales growth despite the long-running ban on u.s. tech. we hear from the fcc. first, let's get you breaking news out of south korea. we are seeing a balance of payment. $7.4urplus widening to trillion -- billion in the month of september. this is coming from the previous month when the surplus was at $5.2 billion in the month of august. that was also two consecutive months of the surplus widening. we have five months of surplus now after the country posted its first deficit in seven years back in april. it has been under a lot of pressure. we have september exports falling 12%. now we are seeing 11 months of contraction for those exports and south korea. , alsood balance number
seeing the surplus widening to from $4.7on, up billion in the previous month. numbers out of south korea when it comes to those payments current account balance. let's turn to the australian market that has come online. sophie has a check. sophie: set for a muted start for the session in sydney. aussie shares adding 1/10 of 1%. the wellington opening fairly flat. heads up on the central bank's fund, thailand expected to cut rates. earnings of note include softbank, mitsubishi motors, the hong kong exchange and wynn macau. quick check of the u.s. dollar which is extending its advanced after the strong u.s. data we got overnight. that has seen pricing for a fed rate cut not christ in until 2021.
checking in on the offshore yuan, steady. the yen is holding a three-day decline. jp morgan has raised the dollar-yen on increase japanese demand for overseas investment. a check on the kiwi dollar that has recovered after poor data extended. new zealand unemployment rate rose more than estimated to 4.2% in the fourth quarter from 3.9%. haidi: sophie kamaruddin in hong kong. the first word news now. ritika: a senior trump administration envoy testified the white house did press ukraine to investigate joe biden in exchange for an oveal office meeting for the country's new president. the u.s. ambassador to the eu contradicted president trump's assertion that there was no quid pro quo. sonland believes the investigation would have to happen before volodymyr zelensky
could meet president trump. a veteran of the shale oil industry says the relentless boon in u.s. reduction is coming to an end. pioneer natural resources ceo says calls for producers to shutter igs and stop earning cash or being heated. his comments come as opec says the outlook for oil in 2020 is brightening, as the global economy holds up. dallas fed boss robert kaplan has told bloomberg he is comfortable with the recent steepening of the yield curve, saying it is a sign overall fed policy is in the right place. he has voiced concerns in the past that having the fed benchmark policy rate above the entire treasury yield curve was a morning that it set rates too high. he says now rates appear to be appropriate. former u.k. counselor is quitting parliament after being expelled from the conservative party, proposing boris johnson's
brexit tragic. hammond says he made the decision with great sadness and that in the past, the tories always had a wide room for opinion. he was one of 21 lawmakers thrown out for backing legislation to stop a no deal brexit. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. china is setting the price for any interim trade deal with the u.s. -- drop the tariffs. beijing has reportedly asked the white house to rollback duties imposed in september and to withdraw the threat of any future tariffs. the question now is whether president trump would agree. tom mackenzie joins us now the international import expo in shanghai. what exactly is china pushing for? it seems like they are evermore conditioned to this many deal being signed -- mini deal being
signed. tom: it does seem that way. we've got some transparency in terms of china tariff demands. one of them, to remove the threat of the additional tariffs. the white house is still hung over these negotiations. december 15, they are potentially penciled in. china wants those removed. it also wants the tariffs that were imposed on $110 billion of chinese good be taken away. also, we are hearing a conversation between u.s. and chinese officials about potentially reducing the tariffs on $250 billion worth of chinese goods imposed in 2018. this is part of china's attempt to get some equivalents because for them, sending president xi to the u.s. to sign off is a political risk for xi. we know that is a consideration now underway in china. of course, they can bring up leverage if they agree to these purchases. this is what we are hearing in terms of the tariffs. the question is whether or not
trump is going to agree. he would bedering looking at potentially losing face, there are political risks for him doing a given we are a year out from the election. tom: absolutely. we know the democrats and republicans both want to see a strong, enforceable deal agreed with china. it also is tied to the tariff regime. both sides of the political spectrum want to see it in place to make sure the deal can be enforced. on the business side and white house aides are concerned about the economic impact. we see that impacted in the trade impact. falling 10% in september. that tension playing out in the white house. the agreement they come to is going to be whether or not we get this phase i deal. shery: president from has been focused on fentanyl smuggling from china. what do we know about any
progress being made here? tom: we know first of all that china is the largest producer of illicit fentanyl and exporter to countries like the u.s. the white house says about 35,000 people in the u.s. died as a result of fentanyl and other opioids just in 2018 alone. they have been pressuring the chinese to act on this issue. you have had u.s. drug enforcement officials and chinese drug enforcement officials working together to tackle this issue. we are expecting on thursday, there is going to be a court case that is live-streamed and a presser. the public display of what china is doing to crackdown. trump may be able to take and show to his supporters, his base in the u.s., that he really has an impact in changing the behavior of china. that may make possibly the prospect of selling this deal slightly easy back in the u.s. shery: tom mackenzie joining us from shanghai. thank you. hear more from interviews in the city throughout the day, including bloomberg's exclusive
haidi: this is daybreak: asia. i am haidi stroud-watts. shery: i am shery ahn. regulators ramping up the pressure on huawei with the fcc set to vote this month on a proposal to ban u.s. government subsidies being spent from the chinese supplier. the fcc is considering forcing u.s. companies to remove already installed equipment. chairman ajit pai told me why he is determined to push the proposal through.
mr. pai: we have seen a great variety of evidence with respect to chinese vendors behaving in ways that are not consistent with the rule of law with free markets and the like. earlier this year, the department of justice announced an indictment against huawei in which case the indictment specifically states that huawei officials offered bonuses to individuals who successfully stole confidential information from certain businesses. more generally speaking, this part of the overall chinese government effort we fear to leverage their influence. shery: no wonder the fcc has a vote coming up to prohibit companies from receiving federal subsidies buying agreement from huawei and zte. will this banning of firms of selling to huawei or carriers not being allowed to use cheaper chinese equipment have an impact on the u.s. firms and jobs? mr. pai: i start from a bedrock principle. when it comes to the security of america's communications
networks, we cannot take a risk and hope for the best. we have to get it right especially with something as transformative as 5g. we made very clear that we don't want federal funds coming from the fcc to be spent on on trusted vendors, wherever they might be located, whoever they might be. in this particular case, we have serious concerns that china's national intelligence law requires companies like huawei to comply with requests from intelligence services and not disclose that to any customers. shery: beijing argues the law you were alluding to is actually defensive. it is not authorized preemptive spying. why are you not convinced? mr. pai: partially because the chinese government has made clear they want to leverage their influence in any particular area, especially when it comes to telecom networks. that is a risk we cannot take. secondly, we have seen evidence -- i mentioned the indictment from t-mobile earlier this year. that vendor in particular has engaged in certain practices we find problematic. we want to make sure the equipment and services going to america's communication networks
are secure. that is the baseline excitation from every regulator consumer. shery: the small and rural carriers have bought huawei equipment because they are cheaper. if you tell them they have to remove them and replace them, what would be the financial cost for them and would you help them out? mr. pai: the only problem with cheap is sometimes it could cost too much, especially when we are talking about national security. that is a risk we don't want to take. later this month, the fcc will be voting on my plan to evaluate what equipment from chinese vendors are in our networks and figure out ways to find replacements. that is a conversation we will be kick starting in a couple of weeks because we recognize the concern. shery: where would the money come from? would it come from the universal service fund? mr. pai: congress is considering legislation. shery: would that happen before they go through the process, because some of the small carriers do not have the credit to go ahead and do it and then get a refund? mr. pai: one of the things we will be exploring in the
conversation of how to make that transition from the current state of the network to a more trusted vendor framework we would like to operate under. shery: that is fcc chairman ajit pai. joining us now is the director of the national security and policy program at george mason university. thank you for joining us today. is the security threat posed by chinese equipment such as huawei and zte worth the financial they, the financial costs would have to bear, the u.s. would have to bear in trying to ban this equipment and trying to rip and replace them at the same time? guest: there is no doubt this will be costly but that is the point. national security cannot be put at risk as a matter of cost. we recognize there are a number of these rural phone companies that ended up buying huawei or cde gear because it is cheaper. it is cheaper because it is subsidized by the chinese government through low-interest
or no interest loans. intellectual property that was handed over by foreign companies to generate profit. there is the actual the quitman itself. that is why we are having these carriers charge lower prices. we have to help the net on the back end to get this equipment out. shery: you have secretary ross hinting the temporary licenses to sell to huawei could be coming very shortly. are you seeing any consistency in the trump administration's approach towards chinese tech? jamil: i think there is a challenge with the trumpet administration's approach because one of the things they are trying to do is get the trade deal figured out. they have the national security concerns of huawei and zte. it appears huawei and zte may get caught up in the trade deal and may not be treated as a national security issue which it should be paid it to be very limited. they have to be in order to allow american companies to do business but they should restrict the purchase and sale
of huawei goods. haidi: even with the kind of positive wave of sentiment regarding a possible trade deal, you are hearing from president xi jinping that technology and exclusion of chinese companies, and his thinking at the moment, they spoke about having a more open approach to technology. at the end of the day, should technology and security remain nonnegotiable regardless of how far along we get? jamil: i think it should be nonnegotiable. i think national security and the risks huawei poses to the infrastructure are absolute and should be treated as such. i worry because the president made it clear, an issue for the chinese president, the u.s. president will feel the same way and have no choice but to make it a trade issue. it may be the thing that gets the deal done. if it is, it is unfortunate for u.s. national security. haidi: what is interesting is huawei's forecast in terms of their growth numbers are
actually pretty good despite the u.s. and other countries putting in to effectively ban. does that suggest the u.s. campaign, chose to get other allies to do this is not that effective? jamil: i think you are exactly right. tv, the chief on security officer of huawei, noting that profits remain high. part of the issue goes to the subsidy issue. the way huawei makes its money, the way it is funded by the chinese government. it has been able to have these lower prices and sell it to broader markets. they are building a lot of product that goes beyond the international -- intellectual-property threat and that causes a challenge because there are people out there that want to buy the equipment. it is ultimately cheaper and does the job. the ability to do the job and do it well is also questionable given quality issues. that is another issue that will play out over time. shery: not only the strategy by
the u.s. has been effective, but perhaps it could backfire because you will now have the chinese government trying to support huawei, trying to build national sentiment in order to push their vision of made in china 2025. jamil: there is no question they will do that and they will make it a national issue. at the same time, the u.s. has the same concern. if huawei wants to be more transparent and zte can talk about their connection to the thenese government, t chinese government were to take back the national intelligence law, there could be a lot of things to make the situation better. huawei is a black box. they do want to talk about the capabilities, what they do. it is not enough. there needs to be more. ultimately, the national security threat is just too high to give up on this point in the game. jamil, thank you for
joining us. jamil jaffer from george mason university. on wednesday, we will be hearing live from the huawei founder and ceo. he will be joining special guests on a panel discussion on the topic of digital sovereignty, moderated by our very own stephen engle. you can check that out online and on the bloomberg terminal. coming up next, valuations at a 10 year high. trading at a popping 21 times this year's estimated earnings. is this sustainable? we've got analysis coming up. this is bloomberg. ♪
haidi: this is daybreak: asia. i'm haidi stroud-watts. shery: i'm shery ahn. microchip technology hit a new 52 week high and plunged in a setting trading after it missed estimates. that is fronted more concerns about volatility sparked by excessive valuations especially in the tech sector. su keenan joins us with more. the question is how tolerant can investors be of these valuations? su: we are seeing a sign of the times. stocks brought more in line versus the actual earnings. it is after hours falling significantly after they missed profits and guided lower on sales as we go to the after hours chart. we are seeing the nasdaq 100 making new highs. this is really the prism we are watching this as we see tech stocks making new highs. it is causing the focus on
valuation. microchip after hours. it hit a high in the regular session. fell dramatically after hours. the conference call is going on, but it missed profit, outlook and reining in the capital expenditures. if you look at the chart year-to-date, it was a momentum play and up more than 40% and only felt after hitting a brand-new high for the year. let's take a look at the s&p 500. the valuations continue to move higher. chart watchers are saying this is really noteworthy because we have a lot of these industry groups that are trading above 20 times earnings. the tech index in particular within the s&p 500 is trading at 21 times this year's estimate in earnings. highestthese are the since 2007 so that is the highest we have seen in almost 12 years. what it tells us is the investors are pricing in an
awful lot of optimism for what appears to be a very uncertain end of 2019 and 2020. haidi: it charts are supportinge are seeing in terms of momentum. a big unwinding by hedge funds and other strategist. su: the momentum portfolio, a basket of stocks, hedge funds is very telling. if we go into this index, it hit one of its worst days of the year on monday. we continue to see followthrough. we go into the bloomberg which shows us the winners are turning to losers. there is another rotation. rotation was a big word you were using back in september when we saw a lot of hedge funds move out of these momentum stocks. we saw it again on monday . it strips up any extra effects from sector competition. it fell the most in september 10 when the strategy was in the midst of the worst unwinding in a decade.
we are continuing to see an unwind now. what the strategists tell us is this is a healthy rotation as we see major benchmarks hit the highs, because what it also tells us is they are reallocating money at of these stocks. it is certainly a cautionary flag for those who are wondering how much higher the indexes can run. haidi: su keenan with us in new york. a quick check of the latest business flash headlines. dennissays ceo muilenburg will decline equity grants until the grounded 737 max plane is flying again. the chairman says he retains the confidence of the board and still seen as the right person to guide the jet back to service. it has been banned from the skies since march following two fatal crashes that killed 346 people. the union for flight attendants at united airlines says there
must be a global consensus on the safety of the 737 max before its members will agree to work again on the plane. boeing hopes for clearance by the end of the year, but eu regulators are looking at january at the earliest. flight attendants say if it is not confident the plane agree to work. qatar cochair agreement with indigo to funnel more traffic from the network from india. an announcement is expected on thursday with the ceo saying the move is not about buying a stake in indigo, but merely a commercial arrangement. it is looking to expand in the fast-growing indian market. opecg up next, secretary-general says things are looking brighter for oil next year. we will take a look at the range of pressures that are weighing on the market and whether this recent optimism in part fueled by expectations of a trade deal
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>> china is asking for a tariff rollback. >> a removal of tariffs. >> announcing tariffs in december. >> off the table. >> if they managed to secure a rollback from the u.s., global investors will find that stimulative. >> it could shore up confidence. >> it is favorable. some kindes onwant of trade truce. >> the skinny deal could be better than a lot of people are exciting. >> the more likely we wind up getting something. >> we want to be hopeful that will be a compromise but we are skeptical. >> people have to haircut the optimism until we seeng in writing.
>> some of our earlier guests with a note of caution. amid this caution, we are seeing diversions happening for aussie and offshore volatilities. moving higher across the curve after the u.n. reached. aussie supplies falling after the rba and the pboc delivered a symbolic rate cut. thes take a look how aussie shares are faring with cash trading. aussie shares adding 2/10 of 1%, extending gains for a fourth straight session and october 29 hi with resources are the biggest boost. sliding the most on record after the health insurer registered an unexpected increase in claims with the rise to continue through fiscal 2020. australia climbing after entering an agreement to import their products from mainland
china but an update on building products is dragging on the stock, falling the most since august 26. here we are with aussie bonds this morning. yields are steepening with the tenure adding about four basis points. we actually don't have that right now but i want to highlight what is going on with yields. as you can see, we have been the wake of the decision, the downside for aussie bonds. steepening happening across the curve. bill evans said there was nothing to prompt a revisionist forecast for a hold in december with the final rate occurring in february peter looking ahead, the rba hinted at a forecast with a statement on monetary policy which is released on friday. shery: let's say on bonds and look at the global selloff that started amid growing optimism for a trade deal. kathleen hays is here with more. asia and theff in
u.s. especially with those strong services numbers. kathleen: even the french bond market, i think they are back up to the highest yields since july but think about it. if there is a trade deal come all the big forces buying the world together, the damage the trade war has done on manufacturing, exports. start moving away from that, that could mean big changes. you at this chart showing that since 2018, huge rally in bonds. they have popped back up again, came down but now you can see the last few days starting with the fed pause last week on rate cuts. now with more optimism on the trade deal, that was also starting last week. you can see that maybe this bond rally is not over or at the very least people are taking another look. today, adding more fuel to the fire, once it got to the u.s., by 10:00 in the morning, services pmi. that is a turquoise line. it had been down around 52.
manufacturing is still below 50 so in contraction but of services is going up, maybe that gets better too. this is why we are seeing this selloff, haidi, and why i think people figure, well, hard to say how far it goes because when you have a big run like that, it is not surprising you have a pop-up on yields, but maybe it is a turning point. for now, a lot of people are selling bonds. haidi: in the meantime, we are hearing for the minneapolis fed president, speaking at a q&a. kathleen: very interesting with these fireside chats. if you have been listening to it, as i have, very in-depth, interesting interview from someone who is an expert in bonds, all of these things but they got to a point where neel kashkari said something i was waiting to hear and a lot of other people. he was talking about the neutral
rate and how the fed looks at it. he said given the rate cut last week, the fed is now around neutral. he said the fed policy is now modestly accommodative, not overly accommodative. why is this important? neel kashkari has probably been the most bullish person on the federal reserve, pushing for more rate cuts. if he is looking at the lay of the land in the u.s. economy, the global economy, he is saying, ok, put it altogether, maybe the fed is where it needs to be. this is very significant. it is also significant in terms of factors suggesting that maybe yields have bottomed. theier today, rob kaplan, president of the dallas fed, said given the fed's latest cuts, he thinks policy is at an appropriate level. you think the fed needs to be patient. clearly, entering into an era of wait and see. the fed is giving more signals
that at least three rate cuts, early last year. now it is time to sit back and watch. i still say we don't know exactly what is going to happen in the trade deal. uncertainty and investment that has not been done. is everybody going to rush back and pick up to with the way they were a year-and-a-half ago? maybe not. maybe it will take the fed and other central banks longer to be decisive. they will probably start talking about hiking them. hays. kathleen let's get to the first word news. ritika: thanks. a senior trump administration envoy has testified that the white house did pressured ukraine to investigate joe biden in exchange for an oval office meeting with the country's new president. the u.s. ambassador to the eu contradicted president trump's repeated assertion that there
was no quid pro quo. sondland said he believed the investigation would have to happen before volodymyr zelensky could meet president trump. a veteran of the shale oil industry says the relentless boon in u.s. production is coming to an end. the the pioneer natural resources ceo said calls for producers to shutter rigs and stop burning cash are being heeded. his comments come as opec says the outlook for oil in 2020 is brightening, as the global economy holds up. police used water cannons tuesday night to break up crowds of mass antigovernment protesters in hong kong who had gathered in the busy shopping district. traffic and vandalized shops they considered to be pro china. to protesters marched mark one month since the government banned face
coverings. the south african rugby team has received a hero's welcome at the airport in johannesburg after returning home from winning the world cup in japan. thousands of fans cheered as the team captain walked through the airport, brandishing the trophy. the team went out take the cup on a five day nationwide tour, starting on thursday. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. world of rising u.s. shale production, opec has more of a role in global oil markets. it has slashed estimates for the amount of oil we need to pump in coming years, projecting its share of world markets will shrink until the middle of next decade. joins us now from singapore.
great to see you. i want to start off by taking a look at the drivers when it comes to the dynamic we see in the oil market at the moment. i want to bring up this graphic that shows we do have the brent we have seen, logic driven by the momentum in the trade war, right? we have u.s. shale as being a positive, but you can see the impact that comes from the first round of china-u.s. tariffs, the second round, and the attack on saudi aramco. we are still awaiting to see the sustainable impasse of any trade deal would be. do you think if beijing and washington were to come to some sort of agreement that this would be the sustainable driver for an uptick in oil prices? guest: good morning. excellent question. i think that is uppermost in the minds of oil market participants right now. i think if in that question of years is really important if the
u.s. and china strike a deal, because the slip between the cup and the live and we have seen plenty of twists and turns and last-minute twists in the tsonga. the other thing i am looking at particularly and pointing out to my clients in the oil industry is that to go a little bit beyond the headlines. the headliners, lots of feel-good things that u.s. and china both want to sign now, a partial deal. but look beyond that. what exactly are they saying about the removal of tariffs? because i think that will be key, especially for the commodities and oil markets. these hundreds of billions of tariffs that have been imposed on the country since the middle of last year, if these are removed, a substantial part of these are not canceled, then i don't believe we have reason to change the outlook of economic
headwinds and decelerating global oil demand growth. some of the optimism i feel that is being pasted to oil prices and part of the deal might be a bit premature. it might be a bit overstated. haidi: it is interesting, we have seen bloomberg commodity index basically do nothing since meetinghad that trump where we started to see progress in the trade talks. a lot of throw up a chart on the bloomberg terminal, because we did hear from pioneer natural resources ceo saying opec does not need to worry about the impact of u.s. shale. does he have a point? because this year, we have seen u.s. rigs start to fall. vandana: i have especially tracked very closely what he has been saying over the years. warningistent voice that things are far from -- he's been doing that pretty much
since the start of this year. -- take his words very seriously and i am not surprised because that is what they have been saying. since the start of this year, shale is under huge pressure. don't get me wrong, it is growing and possibly more than one million barrels a day annual growth this year. the growth itself is definitely slowing down. as far as opec is concerned, a couple of things in the outlook report jumped out to me and one of those is without a doubt, the next few years, i think the pressure on opec is growing. a double whammy for them. the outlook for demand. that is something that was out of their report at this time last year. the other is on opec growth. of thevised up the peak not opec output. they expect a peak of around
2026, towards the end of next decade, led by a peak in non-opec and a peak in u.s. crude production. but both of them substantially upwards. what that tells me, nearly 2 million barrels a day, the tight crude peak they are seeing for the u.s. 6 million barrels from non-opec. that tells me opec will have to be very careful the next five or six years if it wants to maintain prices. it will have to curb production. shery: if you are saying the pie will get smaller for opec, does that mean they have to compete more against each other and they will be more reluctant to actually follow the opec framework? vandana: without a doubt. when we talk about compete with each other, something else you need to keep an ion is what happens -- an eye is what happens to -- there are countries that perhaps for good reasons have been left out.
iran, libya and venezuela are not part of it. perhaps for good reasons, they may remain out of it. their peers will start paying attention to that as well. the other one, the important one is that there are constant quarter busters for nigeria and iraq amongst them. i think this competition will probably drive more attention onto the quarter busters. saudi arabia has been slashing its output more than it needs to be the in a way, it is compensating for this quarter and all these dynamics going forward will be very interesting especially going into the december meeting. shery: always great having you with us, founder of vanda insights. coming up next, goldman sachs ceo david solomon ways his firm's investment in wework. his message -- profit matters. our exclusive conversation is next.
shery: this is daybreak: asia. i'm shery ahn. haidi: i'm haidi stroud-watts. wework's failed ipo weighing on softbank. joining us to break down what we are exciting for those numbers is ed ludlow in san francisco. we already know it took a hit as a result of some of these investments, wework and uber among them. what are analysts expecting from the overall results? ed: essentially, a big loss for the quarter. the estimate of a net loss of ¥300 billion. you compare that with the same quarter a year ago, softbank registered a profit of more than ¥500 billion or roughly $4.5 billion. the focus has been on write-downs to deal with some of softbank's biggest investments
including wework. all the money softbank put into wework to take the company public did not work. some of the publicly traded companies in the vision fund portfolio performed very badly in the fiscal second quarter. uberchart shows shares of technology, slack. in the case of uber and slack, those declines were more than 30% in the quarter ending september 30. 13%he math, softbank earned of uber shares. some estimates would be around $3.5 billion. that is where analysts will be focusing when the numbers come out. the publicly traded companies and wework, that is the story that has dominated the quarter. money they pumped into save it and now they will be wanted to hear from masayoshi son on where that account levels out of the end of the quarter. shery: softbank is a majority stakeholder in sprint. we have seen the merger deal between sprint and t-mobile in
the works for almost two years. are we expected to hear anything about that? ed: green from the federal communications commission. they are not out of the woods yet though because u.s. states have essentially tried to block the deal in court. that goes to trial in early december. the state arguing it is an issue of antitrust in the telecom market. sharesk owns 3.5 billion of sprint. they are desperate for that deal to go through. not just for the investment reasons, but as you know, a big part of the narrative around softbank has been the transition from essentially a telecoms conglomerate towards a larger mega investor, focused largely on venture capital and also investing in startups. we will want to hear from masayoshi son on what they feel how that deal is going. it has the green light from the fcc, but beyond that, we are waiting on this court decision which the states are still trying to block the deal with
t-mobile. shery: ed ludlow, thank you so much for the latest on softbank. you can also turn to your bloomberg for more on the earnings results later today. get commentary and analysis from bloomberg expert editors. dealing with is unexpected losses and startup including wework and uber technologies. speaking exclusively with bloomberg, ceo david solomon spoke about goldman's involvement in another major leasing -- listing. david: we are involved in the aramco ipo, but i will not comment on an active transaction. we have been in the ipo business for a long time. we have a leading role broadly all over the world for the last 30, 40 years. so generally speaking, when there are significant transactions, we are fortunate to be in a position to help our clients. >> it seems difficult to value this one. it seems difficult to value ipo's in general. there was a time people were
talking about wework as a $65 billion company and it is clearly not. why is it so hard to put a value on companies this close to going private? david: at the end of the day, what are investors willing to pay for a company when they have the transparency of the real financial information that has been vetted and presented in an appropriate way? when you have that, the market will speak. using wework as an example, a lot of hype around that, but when investors were able to have a discussion with real financial information and provide feedback and work with an underwriting group, there's a pretty clear view as when the company could go public. >> can i ask you about -- this group of companies, the unicorns that have had ipo problems or have not performed well post ipo like uber, are you concerned we are seeing reflections of the dot-com era where it is about
turning higher revenues and focused on making any money? david: these are real companies. we can debate the valuation, but these are certainly real companies. i think that is very different and that narrow slice of time during the bubble are a lot of companies that were really at a different state. i think what is happening is the monetary policy that has been rampant around the world has basically force people out on the risk curve, it has forced people to look for other ways to drive returns. one of the things they have been chasing his growth and to some degree growth at all costs. there has been a sentiment if you can hook your wagon to a company that has a lot of growth and focused on growth, that something good will come to that. that has incentivized a lot of companies to take the capital they are raising from investors and spend it very aggressively to drive topline growth without really understanding the consequence of how that can translate to profitability.
i think the market is kind of speaking and telling people, you know what, let's rein that in a little bit. it is important for people to grow but there has to be a clear and articulated task to profitability, to earnings. i'm a big believer that over time, a company can only be worth as a discounted future value of its earnings. it is important you have a business model that can generate profitability and i think there is more market discipline coming into play. haidi: that was goldman sachs ceo david solomon speaking exquisitely with matt miller. don't forget, if you are away, you can find in-depth analysis and the days big newsmakers on bloomberg radio. we are broadcasting live from her brand-new studio in hong kong. you can listen on the app, bloomberg radio plus, or bloombergradio.com. this is bloomberg. ♪
haidi: we president neel kashkari, speaking in a modera q&a taking place in minneapolis. he said that wage growth in the u.s. suggest the economy is not at full employment, saying it is actually below inflation, wage growth. saying rates now around mutual and slightly accommodative. neel kashkari, one of the super doves at the fed, has been a long-term supporter of low growing costs and says the fed should pledge no hikes until the inflation target is reached. a month ago, he was saying he didn't know how many more rate cuts the economy was going to be meeting, but more recently, he is saying he is comfortable with where the fomc is in terms of the rate cut. saying the committee should pledge no tightening until the inflation target is reached. we believe that there for now.
bloomberg's subscribers can go and wash on the terminal. r this weeko -- late as well as some of the events you might have missed earlier on. shery: markets open in tokyo at the top of the hour. let's turn to sophie with what to watch. sophie: looking like a subdued start in tokyo and seoul. holding steady at 109 and futures are holding lower, which comes after a sharp jump on tuesday. softbank in the spotlight with the groups earnings nightly defeat feature write-downs for wework and uber. note.ther stocks of this after we saw the telco increase its payout and a stock split. keeping an eye on shares which may come under pressure after the profit forecast. keeping an eye on takeda effort agreed to sell some assets.
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>> very good morning. i am haidi stroud-watts in sydney. shery: good evening from bloomberg's global headquarters in new york. sophie: i am shery ahn. sophie:i am sophie kamaruddin. welcome to "daybreak asia." haidi: tough on trade, china repeats it wants paris listed before -- tariffs lifted. remain optimistic of an agreement. oil is holding gains near the
highest in six weeks. opec says the outlook is brighter. solomon speaks exclusively to bloomberg about recession, the global economy, and ties to china. korea comingth back online. let's get straight to the market action with sophie. sophie: we are seeing upside for the nikkei and the topix, adding .3%. continuing to rise above 23,000 points. demand for japanese stocks seems to be weighing on the yen outlook when it comes to strength. prompted jphat morgan to raise rates dollar-yen. checking in on what's happening with korean shares, the kospi just marginally higher this morning. aussie shares extending again, .1% higher. rising for a fourth session.
a quick check on bonds this morning, onto yields -- brazil yields -- aussie yields steepening. treasuries opening higher, holding steady around 185 basis points after we saw a drop in treasuries on firmer u.s. eco-data. is this the start of a sustained move higher in yields stalling today? antral banks are signaling pause in easing. a quick check and the offshore u.n. -- yuan. we are keeping an eye on the key onshore level. sophie kamaruddin in hong kong. first word news now with ritika gupta. ritika: dallas fed boss robert kaplan told bloomberg he is comfortable with the recent steepening of the yield curve. saying it is a sign that the overall fed policy is in the right place. he has had concern in the past that having the rate above the
entire treasury yield curve was a warning that it would set rates too high. he now says rates appear to be "appropriate." a senior trump administration envoy testified that the white house did pressured ukraine to investigate joe biden in exchange for an oval office meeting for the country's new president. the u.s. ambassador to the e.u. contradicted president trump's thatated assertion there was no quid pro quo. he said he believed the investigation would have to could before vladimir meet trump. philip hammond is quitting parliament after being expelled from the conservative party for opposing boris johnson's brexit strategy. hammond said he made the decision with great sadness and that in the past, the tories "always had room for a wide variety of opinions." hammond was one of 21 lawmakers thrown out for backing
legislation. police used water cannons tuesday night to break up antigovernment protesters in hong kong. he gathered in a busy shopping district. blocking traffic and vandalized the shops they considered to be pro-china. wore v forers vendetta masks. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am sophie kamaruddin. -- i am ritika gupta. this is bloomberg. sharon. shery: thank -- shery. shery: thank you. china is setting its price -- drop the tariffs. beijing is asking the white house to withdraw the threat of any new tariffs. the question now is whether president trump will agree. fromackenzie joins us now
the international import expo in shanghai. really not surprising. beijing has not budged much since negotiations started months ago. certainly not surprising that the tariffs are a core issue. they made that point repeatedly over the last few months but we have clarity on what that exactly means for the chinese side. three key points. they want those threatened tariffs canceled into the calendar taken off the table and they also want $110 billion worth of tariffs cut as well completely. and then we know the u.s. and chinese signs are also discussing whether or not to reduce the level of tariffs on $250 billion worth of chinese goods that were imposed back in 2018. from the chinese perspective, it is a question of equivalence because if they are going to send their president over to the u.s. to sign a deal, which we reported on as a possibility and
if they are going to give away some of the leverage, then they want to get some of this tariffs relief from the u.s. in return. the key question is whether or not trump will take this seriously. whether he will agree to cutting tariffs at this stage. shery: what are the political risks for him? tom: the political risks are not insignificant. you have got the democrats and the republicans with a bipartisan push to get a solid, concrete, and enforceable deal against china, and part of that for many of those lawmakers is keeping the tariffs in place to ensure china does live up to its side of the deal. you have the economic impact and you have concern from the business and corporate lobby in the u.s. about to what extent the tariffs are driving down growth. you see that reflected in the latest trade numbers where imports of goods to the u.s. job 5% from china and exports from the u.s. to china dropped 10% in
the month of september, so it is a push and the play out and a struggle, it tug-of-war, between the economic concerns and those political concerns for president trump. how does the u.s. opioid crisis feature into all of this? has there been much progress on cracking down on exports to the u.s.? the context is not president trump has tied fentanyl -- the export of fentanyl, an opioid linked to the death of 35,000 people in the u.s. back in 2018 -- fentanyl and other opiates -- healing to back to the trade discussion. there is an opportunity for beijing to show off its crack down the fentanyl production, the illegal production of fentanyl in china, along with u.s. counterparts. expecting to see a court case livestreamed and then a press
conference with officials showing off this drugs bust. that could potentially go some way to helping trump sell this deal back in the u.s. to show that the pressure he has put on china around this issue is really paying dividends. the chinese are very cognizant of the option for trump on that front as well. more details on that crackdown tomorrow, beijing time. haidi: tom mackenzie, our correspondent in shanghai today. more interviews in shanghai throughout the day including bloomberg's conversation with astrazeneca is ceo and the former italian under secretary of state. let's get the focus on trade in china with our next guest. of joins us this morning out singapore. great to see you again. great to have you with us. it seems like there are evermore conditions being laid upon the possibility of even getting an interim phase one deal. our the markets going to be
disappointed and are they already priced in? >> good morning. i think it is nice to talk to you again. we talked about it at the start of trading. there is a lot of optimism surrounding u.s.-china trade. we are really looking to pricing in the optimism. really what the markets are expecting in the price. there's new developments. you pointed out this recently in terms of rolling back of the tariffs. it really comes through. i think you will see the market higher. question as sort of to what will come next. to some extent, the market is sentiment driven at this point in time on the back of this u.s.-china trade issue. it is arguably the biggest issue. i think this is a risk that
markets are cognizant about. what are the biggest opportunities that you see? pretty seen dollar yuan muted. it feels like fx traders are a little bit more circumspect about the possibility of progress in the trade deal. in terms of chinese equities, and the great opportunities there, we have seen a steady rally this year. my view in terms of how to go wast the market, it expanding into the asian market. short-term optimism. we have seen the market pricing in at this point of time. is expected trade deal signing between donald trump and xi jinping. are moretalks that likely to be sustained. caution, i a lot of would not be surprised if we find the market gets a little
bit contentious. in terms of what exactly is going to be the next step. whether there's going to be any changes coming through. the market is still a little bit cautious. there is the economic impact as well and terms of what the tariffs mean. we have seen stabilization in terms of the economic data so far. that being said, there's a little bit of concern that we may have frontloading. we already don't have too much clarity in terms of debt altogether mishmash into the market. we could see volatility towards the end of the year. yuan: when it comes to the , we have seen a bit more positive correlation with 10 year yields. this gtv chart on the bloomberg showing that correlation has strengthened in the past couple of months. what is this telling us about where the bonds selloff we have seen in the u.s. and globally is headed? jingyi: good morning.
certainly with regards to the other movements, really expanding around some of the risk assets, i think there's quite a bit of movement back towards many of the risk assets. sentiment light as well. it changes. if we look at the 10 year yields, trading at a 180 level or thereabouts, compared to what you have seen in july. we have had cuts coming through from the federal reserve. we still have a bit of distance to go at 2%. in terms of the movements, i would not be surprised that we continue to find a little bit of this. it is rising to optimism in the market over the u.s.-china trade deal. we do really get that rollback
in terms of the tariffs. how much further we could go thereafter, i think really is the question. there is a good sign we have seen dollar yuan itself. lies the risk if we do see this not reflecting the outcome eventually. after the pbocly reduced the midterm funding costs for the first time since 2016, is it sending a message that perhaps they do not want to see such a stronger chinese yuan? shery, with regards to the pboc, to some extent, the fact that they have actually brought about this kind of support may have propelled a little bit of that kind of movement. at the same time, in terms of how the effects are likely to easing down, in terms of
-- spreading to the rest of the economy, there's a little bit of limitation given how the outreach is a little bit limited. really to some of the bigger players. they show a little bit of this targeted movement, which is in line with different policies. and also in terms of the reach to the market. i think we are going to see the impact of bit later. haidi: thank you so much as always. jingyi pan. let's get a check of stock movers in asia trading. sophie. as 5.8%falling as much in tokyo, the biggest drop in a year. i second-quarter operating income. that is the second time since 2015. they raised dividend payouts to lure in investors. most sincewing the july, as much as 5.7% after a disappointing set of results at
a surprise cut to its dividend. . unable to --.j with the overseas business likely to be the near term driver, that means vulnerability to headwinds. sophie kamaruddin in hong kong. australian trade minister -- discusses how canberra is balancing its relationship with beijing. the interview is next. this is bloomberg. ♪
shery: this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. i spoke with the australian trade, tourism, an investment minister, who is on his second visit to china in three months. we discuss what lies ahead for the agreement and australia after india's decision to back out. simon: it is disappointing that
india is choosing this time not to proceed without. the door remains firmly open to india and i hope and trust that dialogue and negotiations will continue over the months or indeed years to come depending upon their circumstance. still remained very commercially viable and beneficial to the parties that are there. haidi: does the absence of india create an awkward political disconnect for canberra? the political goal was to bring allies more within the orbit to act as counterweights to the influence of china in the region. does that make that task more difficult now? simon: not just economic level. the prime minister's visit in january we'll be focusing on well on a range of strategic issues and keynote speech he will be giving at the invitation of the indian government, but more generally in terms of us, the strategic benefit is that the asean nations sit at the
heart of that. those 10 sovereign asean nations, many of them rapidly growing, they have driven us from concept stage two execution . they are the leaders in terms of chairing the negotiations, so strategically, it really does, in our region, cement the centrality of asean, and that is very important. haidi: i am wondering what kind of delicate balance canberra has to strike. -- that is highlighted by its role. how do you maintain that relationship on a trade and economic basis when there are other can earns about its actions in the south china sea, the chinese treatment -- the government treatment of muslims? is that a difficult balance for canberra to be able to create? simon: it is a balance we are
well accustomed to. australian's human rights dialogue with china stretches back decades. having those discussions are not new things for australia. they are things we have dealt with in china, in partnership for a long period of time, and yet throughout all of that, we have managed to deepen other aspects of the partnership in which we are firm agreement and we are confident that the partnership is strong enough to be able to continue to grow into the future. haidi: simon birmingham, australian trade minister. it's get an update of the latest business flash headlines. the biggest gold miner fell the most since january as it lowered its full-year production forecast. 6.3output is now seen as million ounces against last months projection. they are tackling issues at assets acquired in a merger with gold adding to the pressure as
prices head for the biggest loss in a month. shery: tesla has completed construction of its new factory in shanghai and it aims to win a manufacturing license before the end of the year. model three cars are already being put together as part of a trial phase. time that arst foreign controlled automaker has made a car in china. shery: huawei says it expects shipments to grow 20% next year even if it is lost from the latest google software. the strategy had says the company can rely on demands from its enormous domestic market and it is improving in-house software. huawei is six months into a u.s. ban on buying key components from american companies such as google, synopsis, and skywards. later wednesday, we will hear from huawei's founder and ceo. he will be joining special
bonds last night, and the deal has attracted more than 20 billion euros from investors services like -- that has led to pricing for the not, and the demand past only emerging-market investors but also insurance companies. shery: why did china choose to borrow in euros? annie: this is actually perfect timing china to choose to borrow in euro. it is a very rare time for china to come. it was the first time since 2004. but it is now a very good time --ause the costs for europe the yields are very low. and given the funding cost has
been lower, it will also lead from more chinese companies and issuers to come going forward after china set the euro benchmark. haidi: when are we expecting china to market this? annie: after this euro jumbo bond sale, china is expected to price a dollar bond later this month. we are expecting that, given the foret mood is more up now the eurobond, -- the investor base for the eurobond has been stronger and stronger. we are expecting there will be strong demand given the trade tension has been using now as well. >> thank you so much. annie lee, our asia credit reporter in hong kong area coming up next, a quick look at how markets are faring in terms of the trading we are seeing so far. overnight, we had a pretty robust handover from the session
that saw u.s. stocks maintaining pretty close to those record highs. market withe bond the morality in yields. the nikkei 225 at the moment trading up .2% and kospi seeing moderate gains, .3% higher. in australia, a flat session after the rba stayed on hold, as expected this week. new zealand, point 7%. we have seen a great deal of technical difficulties at the moment affecting trading in new zealand this morning. at currencieslook right now. the japanese yen slightly stronger. this of course after three sessions of weakness with the u.s. dollar. we are seeing that past 109 level. when it comes to the offshore yuan, unchanged at the moment, but this of course after earlier strengthening against the u.s. dollar, the most since early trade, as the china-u.s.
>> we are just getting some lines dropping on the japan pmi readings. the composite number for october staying in contracting territory. 49.1. that picture worsening from 49.8 in september. that was the first time that both manufacturing and services slipped into contraction since september 2016. we are also looking at the services number for the month of october coming in at 49.7, also falling into contraction territory. it was just holding above that 50 level, demarcating contraction from expansion at 50.3.
the composite number as well as the services pmi falling into contraction territory. really just showing the class that are starting to form from the extended trade war and the diminishing of business confidence. let's get a market check with sophie in hong kong. sophie: we are seeing little reaction in the yen to the reading. the nikkei 225 adding .1% so broadly, asian shares are mixed while bonds are mostly lower. 10 year treasury yields are stalling at 1.84% after the curve steepened overnight. jgb's are falling as bond bulls are nervous ahead of a 10 year auction. demand has been falling since april. the purchases has led to market nerves around holding longer dated bonds. the yield has risen to a two in high and japan ahead of that sale. i want to check in on the kiwi dollar on the back foot once again. after the bigger than expected pickup in the unemployment rate
during the third quarter. plus, wage inflation may have peaked. more signs of a sluggish economy in new zealand which could prompt the rv and said to -- rbnz to cut interest rates. there is a cut to a fresh record low. traders are -- shery: goldman sachs says the chances of a recession before the u.s. election are small. speaking exclusively with bloomberg, ceo david solomon talked about the prospect of a so-called phase i trade deal. david: if you are watching what is coming out of the administration, washington, what's coming out of china, i think it does like those are a set of eyes to have some sort of a phase one deal. there is some progress in movement forward. i think the issues are complicated and there will be a lot more to talk about what i am relatively optimistic. based on the data points, it feels like we are going to have
something constructive happen. sophie: how much damage do you think has been done and cannot be reversed? -- can that be reversed? david: it is chugging along. the trajectory of growth has slowed over the course of the past 12 months. but what the trade tension has done is the trade tension has acted as a headwind to growth. if you remove that headwind, that should be a positive for the momentum of growth in the economy in the short-term area matt: that is not the only uncertainty facing investors. in the u.s., i think it is more and more the political situation that has been uncertain. the democrats are moving towards an impeachment. you have very progressive candidates on the democrats side for 2020. how much of a concern is impeachment for you? or businesses in the u.s.? david: i think that that process, the process of impeachment, and how it plays
out, to a degree that there was an impeachment hearing on the president of the united states, was removed from office. that would obviously be a very significant event. i do not see that as something that is likely. at the moment, we are in a political process where there is a lot of discussion about this. the big thing markets are focused on is not the impeachment process in the u.s., but more what is happening in the election. i think it is very early to really predict the call but we are watching the election like everybody else and it will be an interesting process in the next month nine months as the candidate take shape and we will see what i think will be a pretty interesting election in the united states. matt: a lot of uncertainty when you came into the job, you were looking at may be a 15% chance of recession. recently, you said it's getting closer to 25%. what do you think of the possibility of a recession? david: you are making a science of something i am trying to give a sense of. you're quoting me correctly.
when asked recently, i said i think the chance of a u.s. recession between now and the election is small and it is a smaller outcome. i said roughly 25%. if we had talked about it nine months ago, i probably would have told you it was very small, 15%. i think the uncertainty has increased a little bit some of the risk, but i think when you look at the economic data, the earnings momentum, we have seen her percent to 5% earnings growth in the u.s. as we are watching the earnings reports. consumers are healthy. i don't see anything that indicates the consumer is weakening. when you look at the whole package, the chance of a recession in the near term is not significant. goldman sachs ceo david solomon speaking exclusively with matt miller. let's get to rick caputo now with the first word headlines. ritika: dallas fed boss robert kaplan as told bloomberg he is comfortable with the recent steepening of the yield curve,
saying it is a sign that said policy is in the right place. having the fed benchmark policy rate above the entire treasury yield curve was a warning that it set rates too high. however, he now says rates appear to be "appropriate." a veteran of the shale oil industry says the relentless boom in the u.s. production is coming to an end. the pioneer natural resources ceo says calls for producers to cash-- and stop burning are being heated. -- heeded. opec says the output for oil in 2020 as bartending as the global economy holds out. police used water cannons tuesday night to break up clouds of masked antigovernment protesters in -- crowds of masked antigovernment protesters in hong kong. they said barricades blocking traffic and vandalized shops they considered to be per china.
the protesters were masked as the anarchist comic book character v for vendetta after the government span on -- government's ban on face coverings. -- after returning home from winning the world cup in japan. thousands of fans cheered as the team captain walked through the airport, brandishing the trophy. the team will now take the cup on a five day nationwide tour starting on global news, 24 thursday. hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. shery. shery: thank you so much for that. worsening academic of african swine fever in china means the world's most populous country needs more meat, a lot more, and it's boosting imports of pork and beef from canada and brazil and it could even lift a ban on u.s. poultry. that's cross to our bloomberg
editor. pork prices have risen 23 times as fast as cpi. you can see this huge rise in prices of pork. how bad is the situation in china now because of this african swine fever? pork has hearing that it down 50%. to put that in context, china is the biggest producer of pork. on a typical year, they have 400 million homes. -- hogs. you are talking about 200 led or killedcul because of the disease. arele -- restaurants cutting back on using pork. pork is a stable protein in china. meatajority of consumed in china is pork as well and there's a lot of fear about how high prices are rising. people are not able to afford it anymore.
strategies caner they used to try to combat this? it is a very politically sensitive issue. >> exactly. like you mentioned, politically about a month ago, we had the 70th anniversary for the founding of communist china, and at that time, the government -- beijing was being very vocal about the need to keep prices down. to recoverying production domestically as much as possible. china has a long-term strategy to become more self-sufficient with its food. they are having to import. most recently, we are seeing that they are increasing imports from every country that they can but they have lifted a ban on canadian meat they had in place, they are including more brazilian meat as well and we are probably going to see some more u.s. pork in china in the coming months. >> thank you so much for that. anna kitanaka on the pork price
people's republic. to invest in a variety of ventures. some might be the traditional biopharmaceutical company. some of them would be artificial intelligence and digital. some would be diagnostics. in howge of investments you deliver care to patients. this slew of initiatives in china -- how does it divert resources away from other regions? divert it does not resources massively, but we have to invest more in china. if you look at the momentum we have experienced in the last few quarters, we have to continue fueling our growth in china. the needs are enormously at 1.4 billion people who until recently did not have access to care, or at least, not to modern
care, modern medicine. >> you announced partnerships with local biotech's in china. what are those companies doing and how do you hope this will contribute to astrazeneca? pascal: we have identified a number of pro-dex in our pipeline -- products in our pipeline that we felt would help with local partners. we are also investing in this innovation fund that we invest in startup and biotech companies that are coming up with new medicines. and so, we are doing all sorts of things, really focused on improving the number of products we bring to patients. we looked at importing products from all the countries -- on the companies. we have such a large base in china. we need to bring new products to continue fueling outgrows. >> astrazeneca is creating an import platform to bring them into the china market. what are those partner companies
and what kind of drugs do you want to bring into china? pascal: we are really trying to policy of the chinese government. we are really trying to be a company that is in china for the world. what that means is we are bringing innovations to patients. we are exporting to 100 countries today. it also means that we are supporting the policy of importing. china is opening up. are looking at companies around the world. there may be others later that have products that complement our portfolio. we can bring those products to the chinese market and help patients but also support this policy or -- of increasing them. >> western competitors potentially? pascal: potentially. we are in a unique position as a company. a full coverage of china
almost. we have expanded our presence across the whole of china. we continue expanding beyond the so-called tier one cities, and so, you have infrastructure that can support more products. and clearly, the chinese market, as you know, is very competitive. any company that has good products but does not have infrastructure to market them in china, we can offer them our infrastructure to market those products. soria -- pascal soriot with selina wang. we will have another big interview from the expo in shanghai. statermer italian head of joins us exclusively in the next hour. later today, we will hear from the huawei founder and ceo. he will be joining special guests on coffee with ren. moderated by stephen
plane is flying again. the chairman says mullen bird retains the confidence of the board and is seen as the right person to guide the jet back to service. max is boeing's best-selling jet but has been banned from the sky since march following fatal crashes that killed 346 people. shery: the union for flight attendants at united airlines says there must be a global consensus on the safety of the 737 max before its members will agree to work again on the plane. boeing hopes for clearance. e.u. regulators are looking at january for the earliest. the association of flight attendants says that if it is is confident the 737 max safe, the members will not agree to work. is planning airways a cochair agreement with indigo to follow more traffic to its networks from india. an official announcement is expected on thursday with the qatar ceo saying the move is not
about buying a stake in indigo but merely a commercial arrangement. qatar airways is keen to expand in the indian market. plans for a new carrier have been frustrated over foreign ownership rules. shery: hong kong's simtech week is kicking off today. our next guest runs one of korea's biggest p2p lending platforms. joining us now from hong kong is ey kim.fund ceo jo what is driving growth in your business? >> people fund is a marketplace lending company. we are the largest and the fastest growing in korea. that the market is really interesting at the moment. with the new regulation coming into the market, we have the first and one of the only marketplace lending laws in the industry, andn the government is excited about
this change, and we are hoping that this will really boost up growth of marketplace lending. shery: are you planning a new funding round? when are you expecting to become a unicorn? it last year,d the equivalent of wechat and whatsapp of korea. it is an important partnership. we are focusing on growth. we are targeting it next year and hoping to get a good valuation on that. shery: we have the p2p lending market in china. how is that different from the simtech land stake in south korea -- landscape and south korea? joey: korea is focused on not following the missteps of china. basically, we worked with the government from the very early stages to come up with a regulation that could really protect the customers at the
same time as growing the industry in a very healthy way, so we made this regulation which passed last week. so it is very fresh. they could make a change compared to china. haidi: it has been two years of drafting before that was passed at the end of october. do you think that regulation has been beneficial for your business? joey: of course. mainly we have the new law impacting our business in three ways. number one is that it is going to bring market consolidation because it is going to give us a very high bar for compliance. it is going to let the performing then compete in the market. the second point is that it allows larger institutions like investment banks and retail and commercial banks to invest in this p2p loans on a platform. oft will bring a huge inflow capital into the market.
and lastly, also, because of the compliance law -- the compliance regulation bar is very high, we are going to see a lot of small companies collapsed, and then that is going to be something that we have to, as an industry and as i government as well, watch out or going forward. -- watch out for going forward. haidi: there are over 50 startups dedicated to market players and peer-to-peer lending in korea alone. is that too many players? do you see consolidation, which is what i think you are sort of alluding to? joey: yes. we are one of the largest players in the consumer finance sector. we are the fastest growing. we matched loans. the top five players in the market have been focusing on growth and it's taking over 60% of the market share already. we have seen small companies in china collapsing already. you know, two years ago, one year ago, and we see competition taking place and consolidation
is the biggest trend in p2p lending space in paris at at the moment. -- in korea at the moment. haidi: -- would be your closest competitor. can you see that gap closing? main sectors two in peer-to-peer lending in korea. as you mentioned, they are leading. the ticket size is a lot bigger than consumer finance loans. i think it is quite difficult to apple comparison. we are focusing on the consumer unsecuredctor, doing loans and mortgage loans. our focus is more on the actual borrowers and the lenders that we meet every day, so that is why we partnered up with kakao to have nationwide coverage.
shery:shery: south korea is famous for having high levels of household debt. will p2p lending and exacerbate those lists? joey: that is a huge issue in korea. the government has been focusing on solving the social problem for a long time. we are not regenerating -- we are not having a new loan. that is making the household debt problem larger. we are focusing on the refinancing of the prime 10-year prime customers that are not served well by the bank. these customers are actually very healthy, but the banks are too conservative and not focusing on refinancing these customers, so we are coming into the market and then refinancing this loan. it has been very successful and disruptive in the market at the moment. shery: that is a really interesting angle. we have seen macro pressures on the south korean economy. exports just plunging. of course, the bok running out of options at this moment. are you seeing any of that reflected in your business? our targetght now,
customers are actually very healthy customers. we are talking about recessions, economic crisis. you know, happening sometime soon, but we are seeing the korean economy is actually quite stable in the healthy prime 10 year prime customer sector, so that is the focus at the moment. right now, our rate is around 11% on average, so it is not very high, but it is not low either. we are actually tackling the niche market. that until now, our growth and our business has been very stable. we think it is going to be stable going forward, but you with we will be competing the incumbent going forward, so we have to get ready for that as well. haidi: thank you so much for joining us. joey kim joining us. let's get over to sophie for a quick check of the markets. sophie. sophie: japanese stocks
fluctuating as the yen remains weaker. the topix flirting with the 1700 level, crossing it briefly for the first time since september 2018. we are a few minutes away from the release of philippine trade data which comes ahead of thursday's third quarter gdp report. we are looking out for chinese inflation -- taiwanese inflation. iscut is expected as the dot attempting to curbing a stronger thai baht. keeping an eye on the yuan, which should strengthen beyond seven for the first time since august. analysts warning the strength will not last. commerce bank points at the daily fixing. more coming up. this is bloomberg. ♪
>> it is meant :00 a.m. in beijing. the china international import is on a second day. welcome to bloomberg markets: china. >> here are your top stories. china wants terrace lifted before any deal can be -- tariffs lifted before any deal can be agreed to. investors are watching the people's bank of china for close to its next move. there is a high probability of a rate cut later this month. the medicines of tomorrow, permitted to growing in china.
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