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tv   Bloomberg Markets Asia  Bloomberg  December 16, 2019 9:00pm-11:00pm EST

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>> first, we got a deal, then we did not get any pushback. see what happens on wall street. good gains across boards, records and the u.k., stoxx 600 index in europe headed that way as well. how far do we go? >> they better sign it first. really been has supportive that they are headed in that direction, but we all know what could happen. >> you got to read the fine print of this once it goes canugh the translations and china deliver on buying that much imports. they got to dig into some of these key details. >> we are eking out some gains, .6% looking at what else is happening.
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an aussie market, had a lot of conviction yesterday. it look at some of the other and allrtainly sterling this, perhaps some doubts about brexit again, if there will be a hard brexit. there are reports boris johnson is planning to legally block the brexit transition from extending past january 2020. have at the moment unnamed sources, but there's always the risk of these losses being clawed back later in the day. , they havego, yields gone up to 1.88, we were just that one point 87. the hong kong dollar is something david will tell us about in just a little bit. we don't often see that, do we? >> it is the fed, but it does not mean you cannot make money.
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we are on the longest rally in five years. trade.ly incentivizing >> the head of asia-pacific microstrategy at state street markets, great to see you. we are climbing over walls of worry. what is the other wall ahead of us? >> we have a few. as we come into the latter part year, iear into next actually see we are in for another strong period, so all the worries we have may be further on down the track in terms of improvements, for example, in consumption, and that is a worry only to the extent it might bring back inflation, and not a lot of people are talking about that.
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spot are in a sweet implying low inflation. we see a strong economy and share, but it's a bit of a double edge sword. fixed income is less and less of a worry going forward, but it's a theme next year. the geopolitics we can never get rid of, and i guess one of the issues as there is so much optimism built in on trade that it may be setting itself up into a bit of a reversal. it might be a bit of pushback from the u.s., but that again depends on the u.s. election and how trump wants to play that u.s. election with respect to what he's going to tell china on the stump and what he can say about china off the stump as well. right now, we are bullish on risk. one of the things we track at state street which we think is important is to track how investors are position. investors are position still quite underweight risk. if we do see a little bit of
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optimism going into the new year -- we often do -- this is something that could have some momentum. >> i would imagine everything you mentioned blows the u.s. 10-year easily through 2%. at what level do you think the markets will cap that? >> that depends a lot on the outlook for growth. again, i think that picture is changing somewhat. >> for the better? >> for the better, yes. if we reverse factory or four months -- i'm not even sure if i was on this program through your performance ago. i'm absolutely certain we would have discussed is like the yield curve in the recession in the u.s. that was up-and-coming. no one is really talking about recession to the same extent anymore. no one is talking about the inversion of the yield curve to the same extent. one thing we know is that the consumer remains very strong. to that extent, if we see a continuation of the strong consumer sector, then to the point that the fed is happy to wait and see right now, actually the next move from the fed could
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easily be a hike, although i would not expect that to really get factored in and i would not expected to be an issue for the first six months of the year, but one thing again that we are tracking at state street is inflation metrics. they are all pretty much about 2% at this point. >> why is the fed more asymmetrical, meaning they are more biased toward hikes then cuts? >> i'm not sure they are. the rhetoric that has come from the head has become a lot more balanced, and this wait-and-see approach is something i think we will see more and more of across .lobal central banks there was nothing in the statements adjusting a cut was
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imminent, although the markets are pricing them in. i think it was 50 basis points or 40 basis points in for rba,ary or a cut from the so maybe markets just got ahead of themselves believing we were talking about recession a few months ago, let's keep on that particular narrative, but the data is not panning out, and again, the data that came out from new zealand earlier is not important in the scheme of things, but it's a number confidence number. if you look at all these numbers coming out over the last couple of weeks, they are not very strong, but they are not recession level members as well. there is some sort of stability bordering on a bit of recovery going on here, and to your point, going back to the original question of u.s. yields, 2%, yes, two and a half percent, no. the pressure could well be on the upside if we continue to see the strong side of the consumer. >> let's get to data out of .urope
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if you look at the overall manufacturing side of things, and quite deep contraction. 45.9.l i think it is >> europe is a bit of a concern for us because we do have the euro as a potentially good play, owing to the extent that rates have gone up so far that with the expectation where going to get -- this is very much looking way forward but the expectation lagarde is successful at pushing governments toward more fiscal spending. there's not much more you can do . if she is successful ensuring european governments push on fiscal policy, that will have a knock on effect growth. the problem with that is the lead lag is very, very long. is not something we should expect any time soon. the problem with these pmi's is that they tend to be 12 months looking forward.
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we did think that a stronger pickup in the euro zone, given how markets are priced in terms of rates in the euro zone, you to pare some negativity on rates. these numbers would suggest that probably is not the case. big winot think this for boris johnson -- it's not a turning point for the u.k. or the eu? do you get more clarity, i guess? >> it is not necessarily a turning point for the u.k. until we get some understanding on what the budget is going to be and what the government spending proposals are going to be. i presume the bank of england is going to say something like we are not doing anything because we do not a what the government spending plans are. once we got that budget, we will have a stronger idea and better idea of the potential for u.k. growth.
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majorities in the u.k. are the same from one election to the next, and it buys boris johnson a bit of time politically at least. it's questionable if he gets time on the european union because on the issues regarding , because i simply don't think brussels will have pushed this out further. boris johnson i think would be happy to transition the period from another couple of years, but the european union probably will not be. >> what is the plan rate? pound is at fair value. >> pound has been one of those undervalued currencies for some move has basically wiped out their whole undervaluation story. i guess if we continue to see pound at current levels, it pushes down potentially u.k. inflation because the consumer sector remains pretty weak, so inflation in the u.k. becomes less of an issue going forward
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and, obviously, there is that lead lag from the stronger currency to weaker inflation as well. that might keep the bank of england in play on perspective rate cuts, which i know the bank of england has been shying away from simply because of the uncertainty around brexit. if they can get more clarity around that, you start to see a slowdown in terms of inflation s, guilds could be interesting. >> hold that thought. on someoing to get more of the reasons why sterling had this dip today as we get over the first word news with su keenan in new york. >> thank you. we start with the u.k., the latest on brexit. prime minister boris johnson to change the law to guarantee no extension of the brexit transition phase will happen, setting up new fears about no deal divorce at the end of next year. he intends to deliver on his
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election promise to ratify free-trade deal with the eu before the bridging period runs out at the end of the year, december 31, 2020. however, brussels says it is highly unlikely negotiations will be finished in that timeframe. also on u.k.ising prime minister johnson with manufacturing suffering its worst month in seven years. thus increasing the chance the economy will contract this quarter. johnson's plan about increased government spending and keep control of the deficit at the same time, ihs market is a flash indicator for business activity dropping to the lowest since the 2016 referendum. meanwhile, electronic-based sports from singapore plunged more than 23% last month from a year earlier, a worse than expected result that also marks the 23rd contraction in the past 24 months. the reading calls into question
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if and when the crucial sector may see a revival limits the rollout of 5g and other new technologies. electronics account or about 1/3 based outbound shipments. theions remain high across country has put us continue against a controversial new citizenship law. days of sometimes violent protests across india. the new law bars undocumented muslims from bangladesh, pakistan, and afghanistan from seeking citizenship in india, but it allows undocumented migrants from many other religions to do so. increasemexico is to the minimum wage by 20% as part of plans to redistribute wealth even at the risk of spurring inflation and limiting room for rate cuts. the new wage will increase to
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the equivalent of $6.50 a day next year, an increase equal to seven times the current rate of inflation. the president also increase the minimum wage by 16% during his first year in office. global news 24 hours a day on air and on quick take by bloomberg, powered by more than 20 700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. >> boeing's halting production .n the 737 max we will be discussing the effect that will have on aviation. but next -- >> hong kong chief executive carrie lam may need bigger support into 2020. more on that next. ♪
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chinese president xi jinping saying hong kong is facing its grimmest and most complicated situation since returning to chinese rule. that is several months of antigovernment protests continue to challenge civility. >> hong kong leader carrie lam, he prays her response. have a look. >> the government of hong kong has responded to popular concerns in a series of measures to help business and relieve postal hardship and seriously considered resolving ways of deep-rooted social unrest. attempts toepeated boost the economy, hong kong is expected to see a contraction of more than 1% output this year with declines continuing well
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into the first two quarters of next year. is there a hidden message in all this is what some people are trying to grapple with? >> after six months, we are starting to see comprehensively the effects of not only the protests but also, of course, the u.s.-china trade war. that has also been a major headwind for hong kong this past year, but as you pointed out, in terms of secret messages, i guess the proof is really in the pudding. it's fairly straightforward what we are talking about. the major impacts for hong kong have been largely on the retail side, on services, those industries. thecan see on the chart output for hong kong. interestingly, economists are forecasting on a quarter on quarter basis next year we will see pulling out of a recession or expected to pull out of a recession after falling into
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recession for a third quarter for the first time in a decade. one aspect of hong kong's market that has held up very -- fairly well if you are looking for a silver lining, is the real estate market. property prices in hong kong have dropped 6% from the peak back in june. relative to everything else, it actually does fairly well if you think about only a 6% drop. glassking at the half-full, it's quite a low base we are going to be jumping up from into next year. is that going to be enough? is the worst over? about the goalk post, there's an interesting point because from our latest survey of bloomberg economists -- no, go ahead. i'm hoping we will still have electricity next year. >> you stop talking, no one will
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know you are there. >> when it comes to your on your results, we are actually expecting your on your results to continue to be negative based on the fact that the first six months of this year were before the protest, so we do a here on your comparison, you will see continued weakness, but quarter on quarter, and that's the trend we had earlier, the expectation is coming from that low base of what we saw as a very weak third quarter, expected also to be a very weak fourth quarter, we will see expectations of a bottoming first quarter, still negative the second quarter, but starting to pull out a little bit. >> yeah, just in light of unintended consequences, gloomy picture, gloomy mood is what we are expecting. we look at business surveys hiring, expansion, what have you. thank you so much, our cross assets reporter here. been posed ahave
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question on hong kong. what's the most common question you have gotten and what's the answer? >> the most common question is what eric spoke about, why have prices not fallen further, which tells you about considerations the whole episode will play itself out shortly. eric did not mention it directly, but there is potential for very large stimulus from at least the hong kong government that can bolster a lot of the economy. not private retailers, not the multinational retailers on the high street, but in terms of the this economy, there is package that hong kong could bring to bear next year, which should give us a bit of a rapid rise in terms of the economy. >> at the time of the handover in 19 represent -- in 1997, the hong kong economy represented
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15% of the total economy and now it is a mere 3%, but that belies the importance. >> it also has a legal system which, to put it mildly, is not seen as internationally rigorous. hong kong actually has a legal system, a financial system where you have these open borders in terms of capital flows, and it is effectively the back door through which china deals with the rest of the world. it is much less important than it was 20 years ago, but much more important in terms of china 's projection overseas and a terms of its dealings overseas. like you are putting your neck out there. is north asia going to benefit the most? from hong kong to taiwan? >> we think the worst is over as
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far as trade news is concerned. that's not to say there will not be speed bumps ahead -- roadblocks or whatever you want to call them, but with think the markets arer and actually doing well. electionously the u.s. coming up next year. trumka neither go on stump and play hardball or try to push the fact that he is getting successive wins out of the chinese, and of the markets hold up any day, we want to push that story, and he was getting -- if thes getting higher in opinion polls, why would he necessarily want to push the chinese? we do like the u.s. still. -- growthve grossed story is still in the u.s.' favor. we think there is the potential for a lot of equity capital to move into the u.s. it has not been the case this year. the outflows have been quite large, so there is a potential
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for equity flow to come back into the u.s. u.s., investors from the uncertainty around the trade war, maybe pursuing equity opportunities overseas and bringing it back home if they feel this outperformance can continue next year. if that happens, it is an important story for the dollar as well because get inflows back in the equity market, should be a boost for the dollar as well, so it's difficult to build a case for dollar weakness next year. i look at it from an asset class perspective. if you look at it from equities, bonds, and fx, the issues for next year, bonds are not price for higher inflation, so that has to be a risk for some of these bond markets. equities are still largely under owned and cash holdings are much higher than they were this time last year. cash has been basically taken out of markets, put into money markets, cap as cash because of
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the uncertainty. that comes back in, it's more likely to go into equities and bonds reasons i was just getting at, so that equity outperformance looks to be a theme next year. one thing that will be interesting that not many people have talked about, if the banks are on hold, where do you get the volatility? potentially currencies could be quite dull because there's not much volatility in the currency space. christmas.reat >> there's plenty more ahead. this is bloomberg. ♪
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>> let's take a look at the market action. the asia-pacific index, just taking a look at some of the returns, higher electronics, up by 12%. 5% off for the moment, cutting its full-year forecast on top of
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that here as well, digging into japan. 4% lower, that's just some of the companies moving as we head into that tokyo lunch break. ♪
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>> it is 10:29 in hong kong and shanghai. i am su keenan with the first word headlines the bank of england said it lacked concern about a hard split with the e.u. , despite several warnings over the past few years of a no deal brexit pushing the u.k. into recession. mark carney now downplaying any lingering threats to the economy. a the worst case scenario is no deal, disorderly brexit the probability of that scenario has gone down because of the election results and the
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intention of the new government. but the scenario itself and that , the risks we protect the system against, have not changed, they are just less likely. india,he reserve bank of there is still more easing, but much will protect -- much will depend on how any decision is timed. the r.b.i. is on a pause. policymakers are aware there is room and the timing is important. the hold rate will surprise markets when the growth has slowed to a six-year low. app gojek's maga looking to own a top taxi operator. will payeen told gojek $30 million at a price more than 20% above bloomberg's monday closing jakarta. it would consolidate local
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teamwork as they face competition from singapore-based grab holdings. to australia where brushfires continue to burn in new south wales. dozens of properties at risk in mountains north and south of sydney. almost 2has burned million hectares. they were stoked by hot, dry and windy conditions. severe heat conditions for most of new south wales throughout this week. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan, this is bloomberg. >> thank you. we will get you an update on what is happening so you have a benchmark. you are seeing, a third security down by the daily limit, 39 percent. 11 straight days shares of the
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parts at the capitol have seen since the president wants to revisit the contract from 2023. shares are halted. flip the boards, futures we are seeing upside in terms of nifty futures and what is happening. generally up across the region. on indiatalk and stay because tensions remain high across india as protests continue against a controversial new citizenship law. ankara has had five days of sometimes violent demonstrations from the eastern state of assam. our editor is watching all the developments in new delhi for this warning. could this escalate any further? do we see any signs of an offramp at this point?
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ruth: it does not seem so. fair bit of fire left in them. it is a big challenge we have seen to prime miniature -- minister narendra modi's rule. he has pushed disruptive policies like the monitor rising 68% of the country's currency. he was reelected with a massive majority in may of this year. push policiesan and still remain popular, yet anger suggests maybe he is pushing a hard-line the social agenda too far this time. david: has there already been an impact to the economy? should we expect an impact to the economy? ruth: this concerns the protests and will divert the government's attention to the economy, at a time india is lower in growth,
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high in inflation and unemployment at a 45 year high. modi pulled out all stops internationally to present india as a business friendly country open for investment, but these protests, burning buses in the police metros shut down, storming universities, that paints a different picture of india. thank you, ruth. mumbai, president of a think tank center for policy research. thank you for joining us. crisis,a constitutional or just a crisis in the constitution? quite a crisis of confidence in the constitution, more emanating from a citizenship law. for the first time, they are using religion as a marker of
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citizenship. shows ading moment universal conception of citizenship. specifying certain pathways to citizenship for specific religious communities. this is much more a crisis that has generated, or a protest that has generated against a piece of legislation, rather than a crisis of the constitution. it is a return to bring back the core values of the constitution, which have been critical to the foundation of india. curious, how much support does this have across india? have a different route across different parts of india. for your viewers, it is important to know india is a
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multiethnic country with many different identities. for the moment, the protests have been centered around northeastern india, which has a different set of rules which we are now witnessing in new delhi and other parts of north india. it is a student protest i think a important to recognize, as new form of mobilization protecting the fundamental, secular india constitution. tell us morenne: about the implications of this law. there are concerns india is heading into an anti-muslim state. some are worried about large scale migration. what dangers do you see? primary danger is using religion as a marker for citizenship. india was -- india adopted a
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constitution in 1950 based on equality and secularism. introducing religion into this fundamentally upends that. flow of migration into india. it is essentially anti-muslim. amendment against secularism more than bringing flows of migrants into india. sometimes the pace of getting anything done in the supreme court is glacial. is it likely to be glacial in this case, and what do you expect out of the supreme court? we saw what they did with article 370 of the constitution regarding kashmir. does this hold in how it will be rubberstamped?
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yamini: there are fundamental questions the supreme court will be confronted with. faith our courts are funded -- committed to the fundamental values of the constitution and they will stay true to that, but courts also operate in the context of , it willand ultimately determine actions going forward. david: some of the local governments across some indian states have explicitly voiced their opposition to this, and stopped short of saying, we are not going to implement this. how do you think that will play out? can they actually oppose the federal government? states have an important role in shaping implementation. in that state, for state governments [indiscernible]
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it could cause hindrance to the process. coreis fundamentally a issue of nationbuilding that rests within the hands of the union government. think of it as an impediment, but will not be able to prevent implementation. if it is not local governments, what is the solution to end this protest? does the international community need to step in? yamini: i think domestic politics will end this protest. there was violence on sunday. things have calmed down in new delhi monday. on tuesday i think india has a history of responsible, nonviolent protests.
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i have hope that is fundamentally what will cause the stalemate to end. and, for the government to revisit the decision they have made thus far. rishaad: a final question for you. the danger, we have seen what happened in assam, kashmir. the fear is that india is going toward being an illiberal place to -- that singles out muslims and lower caste hindus. amini: they are headed toward different type of democracy. viewedrotests need to be as a sign of protest against illiberal forman of authoritarian democracy.
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this mobilization is a symbol of this. you, at thenk center for policy research. david: coming up, boeing halting jet,ction of the 737 max grounded into the new year at least. what impact that will have on the aviation industry. this is bloomberg. ♪ this is bloomberg. ♪
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yvonne: boeing extended regular session losses and trade-off. agreed to suspend production of the 737 max in the new year. it will deepen the crises engulfing the country. it will ripple through the u.s. economy. almost 400 planes are in storage. churn out no longer
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the max at its current pace. for more analysis, bloomberg's columnist has written extensively around the issue surrounding boeing. is said boeing without 737 like coke without soda. how much does this suspension hurt the company? is interestingat about this that might not be the aerospaceuch industry operates on auto pilot bear in mind despite the fall in shares, the shares are marginally up on the year. it has barely affected them. positives.ome bear in mind the amount of money pouring out of boeing has been building aircrafts for nine months. has not been able to deliver and charge revenue. about $50 billion of aircrafts sitting on its lot.
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related tobe charges it, but that has lessened. the way boeing's accounting works is on a long program counter based on the price you sell them for and how much your costs are. if you think about the long-term impact, the total number of planes sold, i would not be surprised to see that going down. the supplyessure chain has been under, we would not be surprised to see that going up. program, we will not know the profitability until many years from now. it could be much more than we are expecting. david: that seems to be because cannot --rating, they
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those are things they cannot control, whether that is the price.r the future is the financial integrity of boeing something to start talking about at this point? bear in mind the scale of the company we are talking about. of buildings per year. is a big part737 of that, 70% of boeing's aircraft delivery. it is significant. that is why we are seeing this move to stop this bleeding. ng posted negative cash flow, $2.5 billion, and nearly. it still has the potential to ride this out. rishaad: is it an existential
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threat is what david was getting too, but what about the impact to this is having on aviation in this part of the world? do we see any material change? again, it is worth thinking in terms of autopilot. which of the airlines are big customers. 737.to avoid the 380 fleets. a big customer still. china southern, too. 737dubai is building a fleet. you might see that change. making noisebeen
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fleet. away from a 737 i would not be surprised to see fly dubai go on that path. will have a whole a320 fleet. you can imagine not turning up on adverts. you, bloomberg opinion columnist giving his perspective on all things boeing. we are looking at the opening of the session in india. let's get to our reporters standing by in mumbai. what are you watching today? we are still watching if we can take down the record highs. toward the end of the trading session [indiscernible] on the indices not much happened.
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we closed 100 points away from the record high. for the nifty bank, morning session started off 0.2%. banks did not do too much in terms of contribution. coming back to today, closely watching crucial levels. it is important to see what happens with technology stocks. yesterday was a more defensive place. we saw a lot of money going into these technologies. coming back into the forefront. for,tocks to watch out reliance industries were big on the index. bp signed a definitive agreement relating to joint interests, increasing retail touch points, sites.
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they are betting big on enterprise. margins sharper than expected, but they said they will be able to overcome it. david: thank you so much. we will be revisiting mumbai later on. in the meantime, a quick check of china plus hong kong. 4005 last time i checked. first time at that level since late april. going to levels last seen before these -- before the trade war was re-escalated by donald trump with an announcement back in may. coming up, we will get our reporter here. it is battle of the charts coming up. this is bloomberg. ♪
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rishaad: eight minutes until the top of the hour, which means it is top of the charts. pitting the best offerings against each other. david: on your bloomberg, the function at the bottom of your screen. let's check things out in singapore with melissa. go for it. hadssa: if you have not your cup of morning coffee, i can tell you about it. what you see on your screen is net futures and options of arava
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coffee. hedge funds net bullish holdings most in years. brazil is running low on reserves and investors are noticing. a drop in the reserves based on many factors like lower crop yields and increased global demand scooping up every available been in the country. brazil is increasing exports to southeast asia including vietnam and the u.s. government lowered coffee foror arabica the foreseeable future. hopefully from that we will see prices higher, but at the least we know investors can get a high off coffee in more way than one. rishaad: i like that, but i do not think it is price action. we could have worked out of contracts were bearish or bullish. and a general impact of what happened with the price itself.
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people could have been caught on the wrong side of the trade. let's see what you have for us. >> it is powerful, to keep the hong kong bears up at night. dollar for 27e days out of -- as of friday. that is the longest stretch since 2015. hong kong dollar against the greenback is falling apart. are makingellers their wagers quickly. you can see the hong kong dollar headed for the seventh straight day of gains, the longest stretch since 2011. my contacts say hong kong dollar's attract the strong end of the trading bend because they are not seeing a catalyst for sustained inflows into the market. the china-u.s. trade war has been easing, but we still have discussions for phase two.
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s is faltering. rishaad: again, there is no price. can you walk us through how that fits in? kong dollar isng it is notn hibor, profitable to sell it against other currencies. it will be more practical to borrow from the u.s. tot means they have [indiscernible] do the opposite trade. that will make the hong kong dollar much stronger than before. melissa, i'my, going with tian. i apologize. you both had your prices missing, but i think yours was more germane. david, would you have agreed
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with me on that one? like how, it is almost a sitting president does not criticize another president. no comment on the decision, but we are looking at markets, aren't we? yvonne: for the most part we are seeing green on the screen when it comes to asian equities today. philippines is the rare exception. decent sessions in hong kong. we are up close to 200 points. msci breaking 400 for the first time since april. this phase one deal close to being signed. more movement heading back into the chinese markets. more coming up. this is bloomberg. ♪ his is bloomberg. ♪
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>> it is almost 11:00 in singapore, i'm juliette saly. rishaad: rishaad salamat. we're in the morning session in hong kong and this is the top stories. trade optimism lifting asia to its highest mark since 2018. president trump says a deal should be finalized within two weeks. supports carrie lam but says it enters -- hong kong enters the biggest challenge yet. rishaad: citizenship anger spreading across india with protests from new delhi to the east.
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we are live in mumbai this hour. this is "bloomberg markets." juliette: records on wall street boosting optimism in asia. track forpacific on the highest close since june 2018. strengthened markets, the hong kong market up over 200 points. the 3 -- csi 300 above 4000. australia's market, underperforming but it is getting close. it had a solid session yesterday and watching available on the above 12,000 for the first time since february 1990. a lot of movement in fx. we've seen the pound dropped as boris johnson seeks to block to the brexit. we had the rba minutes coming through today, but also option
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offers stopping the aussie from gaining too much against the greenback. won is seeing strength today, at a four-weight high as we see the risk appetite recover. we are watching the hong kong dollar on its longest winning streak in five years, borrowing costs and boosting the hong kong dollar. rishaad: indian futures, looking at a little bit of an uptick in singapore. could raise the quarter-point drop back we saw monday. looking at the rupee, pretty much where it was before. a slight appreciation of the dollar taking place. we had wholesale prices out of india yesterday, which were growing at a weaker peso the economists had predicted. there was a feeling out there and some verbiage coming out that the reserve bank is ready-to-eat's policy once again, even though they sat on against alast time
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body that told us they would be cutting, pretty much unmoved, 6.8 percent. that is where we find ourselves in the run-up to the indian open sour. let's get to the first word news with su keenan in new york. su: we will start with the clashes erecting in beirut. this happened for a third straight night monday as talks with the new prime minister were postponed. the president cancel consultation with political groups after the only declared candidate failed to win the backing among a worsening crisis. weekend protests brought the toughest security crackdown in two months. exportspore now where plunged more than 23% last month from a year earlier. in a worse than expected result, it marks the 23rd contraction in the past 24 months.
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the reading calls into question when the sector may see a revival amid the rollout of 5g and other new technologies. electronics account for about one third of singapore's outbound shipments. bank of england meanwhile says it is less concerned now about the danger of a hard split with the european union. despite several warnings over the past few years about a hard brexit pushing the u.k. in a recession, governor carney is downplaying any lingering threats that the split make owes to the economy -- make owes to the economy. >> the worst case is a no deal .isorderly brexit the probability of that scenario has gone down because of the election results and intention of the new government, but the scenario itself and that which -- the risks we protect the system against has not changed. it has just become less likely. hasto japan, the country
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widened its lead over china of the largest owner of foreign held treasuries as it rebounded while china's stake was little changed. holdings of bills and bonds released to $1.17 trillion in october from $1.15 trillion a month earlier. japan overtook china as the largest non-us holder of treasuries in june. finally, mexico is to raise the minimum wage by 20% as part of plans to redistribute wealth, even at the risk of spurring inflation. the wage increase will rise to the equivalent of six dollars -- $6.50 a day next year. that is a raise equal to the seven times the rate of inflation. president had already hiked the minimum wage 16% during his first year in office. global news 24 hours a day, on-air and online on tictoc and twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
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keenan. this is bloomberg. equities heading to the highest level since mid-2018. the plans terrified on chinese goods and improving business environment. what are the prospects for next year? joining us, the chief global equity strategist at jefferies. we got rid of the uncertainty over this deal, then we had uncertainty removed from brexit, sending stocks on a tear. it is almost as if it was a fear of missing out. >> i think the problem has been at the moment, the global economy really still hasn't yet often doubt. global pmi few manufacturing numbers breaking through 50, but there has been a switch in risk aversion which has been the theme of 2019 as we
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have seen these two big deadlines dissolve. ironically, things have moved in favor of risk-taking. the msci has been breaking to new highs. this will mean first quarter of next year, i think we will see people clamoring to own equities over other asset classes. rishaad: but let's face it. the world is not back to what it was like before this. decoupling is taking place. we have decoupling between the united states and china. we even have tiny islands being trade deal being scattered. marketse irony is the had already priced in some of the worst case scenarios are most of 2019. see how much free cash yields were for developed
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markets like the u.k. and europe versus their local government bond markets. in places like the u.k., we had record cash flow spreads versus geltz. -- gilts. any good news at the margins means a lift off in equity market and i still think some of on thest case scenario trade dispute are behind us. and measures to control china's technology ambitions have largely been played out in the financial markets. rishaad: from an equity perspective, let's look at how the decoupling could affect supply change. we've had 150 taiwanese companies move production back home. on top of that, there was a survey of 525 german companies, the chamber of commerce found 23% had either decided to withdraw production base from china.
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it is an evolving world. how do you look at it as an equity strategist? sean: part of the exit from china has been one of the long going things because china's relative competitiveness to or polande vietnam has moved in favor of these other countries the china itself. rates in china are no longer competitive compared to some of the other developing economies, number one. number two is that countries -- companies are to some extent evolving insurance policies to ensure production plants are not necessarily affected by the wider implications of tariffs going forward and deglobalization. china isnot least, going for a far greater domestic supply of products for its own industries now through china 2025.
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you saw some of the issues last week of china forcing the public government companies to purchase more domestic i.t. solutions. there is less room for foreigners in some of these industries than they have had over the past decade. some of it is a natural evolution rather than a revolution because of tariffs and the trade disputes. aboutte: you are talking the old world -- all world index being at the record, but what exide -- upside are you looking at him em? we have seen the dollar move back a little, so if we see further weakness in the dollar, what specific markets are you looking at for further upside in 2020? sean: it is a really good question. having done to a half weeks of marketing through the middle east and europe, the two most under owned asset classes is emerging markets -- and i would probably say european small
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caps. we've got some areas of the equity markets which has been disowned over the last three years, either because of people's perceptions of too great a risk to be getting involved in these asset classes or people have just underestimated how good some of these underlying fundamentals have been. in emerging markets, we favor latin america. it has been really disowned. economies have been one where iey have been lacking and would own any em space countries like russia. we like the saudi arabian story, and equally, we feel china will continue to deliver positive returns next year. than one of breadth rather people revisiting an asset class. smaller em markets have just not
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been owned the last couple of years. part of the reason of this momentum as well as what we have seen in central-bank action. our question of the day, how key will central banks being 2020? sean: that's a really good question. what sparked this big change in equity markets has not really necessarily been the super friday paradox. people bought more equities into the deadline. what has really changed has been the pivot by mr. powell in terms of reopening the federal reserve's growling -- balance sheet. at the short end of the u.s. yield curve. fact he is buying 22% of the outstanding t-bills has done a number of cool when soon pull factors. it has weakened the dollar, take an interest rates negative and
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has steepened the yield curve. that is great news for emerging markets and for risk assets in general. that was the spark that lit the fuse for this sweeping change from risk aversion to risk taking. green chutes one of your reports -- >> one of your reports says everyone owns shares. you are looking at convertible bonds, i understand. --n: the irony is people this has been a grinding ball market and people prefer to own anti-macro trades or stocks or shares that have little interest that influence from interest rates or exchange rates so in effect through 2020, the story will be broadening out of risk-taking in equity asset markets. andonly does that mean em
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parts of the european contract should do well, but other parts of the market like financials, energy, material should rebound. the issue is going from the left-hand side where it was very risk-averse to the right-hand side where everyone becomes very risk-taking does generally mean a volatility switch, something we saw in february 2018 and i think we will probably see some form of drawdown during this period as people go from one side to the other, but generally we would have been positive toward equities in 2020. stays withean darby us but still had this hour on "bloomberg markets: asia," boeing shares under pressure after the company pulls production of the 737 max. more questions about when the plane will fly again and if passengers will want to be on board. carrie lam wins the backing of chinese leaders. we have the latest on her trip to beijing and the continuing economic fallout from the
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protests. this is bloomberg. ♪
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>> said this is unprecedented. what we are now facing is a situation that has never happened in hong kong after reunification, so given the andrity of the situation the difficulties we are facing, i can say the leaders are fully appreciative of the efforts needed in order to achieve the objective. that was hong kong chief executive carrie lam in beijing. despite attempts to boost the economy, hong kong expects a contraction of 1% in 2019 with the kleins continuing into the first two quarters of next year. let's bring our cross asset reporter eric lam. where does hong kong at -- stand
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after six months of protests? >> after six months, we are starting to see the impact of on hong kong's economy and an underlying figures we have been tracking over the last few months. when you break down the numbers, it is most apparent in some of the retail numbers we have seen. figures,s him arrival -- tourism arrival figures. that is not surprising given the anti-china theme to the protests. looking at the gdp numbers, things get interesting. we obviously saw hong kong drop into a recession in the third quarter. economists surveyed by bloomberg are forecasting the procession is -- supposed to come out of the recession in the first part of next year. the year-over-year breakdowns don't look -- still look very negative given the first six months of this year were before the protest so the year on year comparisons will still be weak,
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but the quarter on quarter expectations are forecasting positive quarter on quarter growth in the first part of next year. are looking at a little bottoming out in the fourth quarter and going into next year. rishaad: are we over the worst? what are people telling you about this? you can look at figures next year and go hang on a second, but that is based effect's. when you see forecasts, they are on the optimistic side and for many next year,ing into there is hope the worst is behind us and looking at the last few weeks, it feels there has been a little -- the edge has come off the protests but massivey we still saw a demonstration just two weekends ago, more than 800,000 people on the street. there is a little more confidence when you consider the trade war aspect of it. hong kong's status as a porch
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makes it one of the ground zero areas for the u.s.-china trade war. the preliminary deal also bodes well for hong kong expert prospect. good stuff. thank you. eric lam, cross assets reporter. sean darby, chief global equity strategist at jefferies is still with us. are you looking at hong kong stocks right now? our people looking at valuations? are they attractive? sean: interesting about the comments just made because the hospitality industry, the christmas and chinese new year period account for about 30 to 35% of their would probably say that first quarter will still be a negative quarter on quarter number and secondly, one of the issues we feel may happen next year is a lot of companies tend to have had a difficult operating period would keep the
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the chinese new year because that is one of the biggest part of the expenditure cycle but you could get a lot of bankruptcyoing into after that period if the sales numbers don't match anything expected. rishaad: we don't have much time, but what stocks do you like if anything and with regards to the trade deal phase one also dovetailing into this? would lookroups we at in hong kong, companies with a large exposure to the u.k., power assets, there is a lot of upside to the pound given it 6 atout of brexit on june $1.50. there is a basket of companies with exposure to global trade. v-tecan be anything from samsonite, theseh companies have, been down 30, 30 5% over
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the last year. attractive dividends and within the wider issues of the s and barriersriff to china, they are largely removed from that so the tariff removals and risk on global trade means the stoxx should recover quickly over the next six months. juliette: we see on and offshore yuan moving back below seven, giving upside to chinese airlines stocks. do you stick to that overall bullish call of a lot of these chinese stocks listed in hong kong? a benefit from a stronger currency? sean: yes we do. the delta for ongoing r&b strength may be stronger than people anticipate. year, aeginning of this bearish view on the chinese currency was one of the most outstanding macro trades or consensus trades within the market and that has actually
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unwound quite sharply. notwithstanding what happened in early oxygen -- august. it is not unthinkable to ccny trade on the strong side of next year given the phase one resolution and 12 months global pmi being negative going back into expansion again. juliette: thanks as always to sean darby of jeffries in hong kong. plenty more ahead. this is bloomberg. ♪
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juliette: a quick check of the latest headlines. jpmorgan says cocina stock -- willo stocks in macau receive a boost to mark the anniversary of the colony being handed back to china. xi is expected to announce policies to boost the region's economy. with optimism over the trade deal, that is prompting a raise
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in target price on casino stocks including wynn. of bluebird buy 5% according to people close to the deal. we are told it will pay about 30 million. -- $30 billion in price 20% above bloomberg's -- bluebirds monday close in jakarta. teamworkconsolidate from crown holdings. west bank has been hit by a new capital requirement as the banking regulator formally launched an inquiry into claims it led a breach of money laundering laws in australia. about $350 million u.s.. the regulator is looking at whether there is a breach of the banking act and will review its risk management, pay, and culture. it is time now for stock of the hour. you are looking at hiring
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laconic's. -- higher electronics. up 7% and allng, down to a division of this to take the company private. the stock is up 20%, the july 2018.ains since best performer on the msci china index as well as the best performer on the msci asia index as well as citibank saying the proposal for its haier electronics could be valued by its parent -- we have an analyst writing it could help to structure ander's usenet cash on hand. no buys twoonics, sells. air-conditioners,
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freezers and the like. to look at this and other stocks, go most go on your bloomberg terminal. electronics, shares changing hand.
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juliette: almost 11:30 in singapore and we are in the middle of the trading day and it is pretty gloomy. kind of cold for singapore, meaning you don't need the air-conditioning on all the time. november exports, non-oil to china down 2.8% year on year. electronic exports plunged more than 23% in november from a year earlier and marks the categories 23rd contraction in 24 months. let's get the first word headlines with su keenan in new york. su: chinese president xi jinping is reaffirmed his support for hong kong leader carrie lam,
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saying the city has faced what and mostits grimmest complicated situation since returning to chinese rule. he told hong kong society to work together to put its development back on the right to as lam made her annual visit to beijing. meanwhile, pressure is rising on u.k. prime minister boris johnson, with manufacturing suffering its worst month in seven years. this increases the chance of the economy contracting this quarter. to increasearm jobs government spending and keep control of spending at the same time. business activity in u.k. drop the lowest since the 2016 referendum. tonwhile, boris johnson is guarantee no extension to the occurs,ransition phase
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setting up new fears of no divorce by the end of the year. deliverhnson intends to on his election promise to ratify a free-trade deal with the eu before the bridging in 2020.ns out brussels has been saying it is unlikely the negotiations will be finished in that timeframe. two beirut, where clashes erected for a third straight night monday. this as talks of a new prime minister failed. candidateeclared failed to win the backing of christian groups among the worsening economic crisis. weekend protests brought the toughest security crackdown in two months. bushfires continued to burn in new south wales with fears dozens of properties are under threat of mountains north and west of sydney.
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fire has consumed almost 3 land across the season, stoked by hot, dry, and windy conditions. the bureau of meteorology has forecast severe heat wave conditions for most of new south wales, and that is throughout this week. finally, world football's governing body is suing its former president and the ex head of the european games over alleged in proper payment. acquire court papers to money handed over for services provided from 1998 to 2002. both men died wrongdoing -- denied wrongdoing but have been banned from football events until at least 2022. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg.
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let's look at what is going on market wise. a bit of an uplift at the moment. the japanese markets, just coming back. currently up. modest gains. what we do have in markets overall, they are heading for their highest level since the mid-part of last year. investors are also looking at prospect of further gains. tech stocks edging higher in tokyo. shanghai is on its lunch break. monday for great australia and all of this as we have the u.s.-china trade deal helping engender some improvement in the mood. what about the prospect of the trading day in india? we are 12 minutes from that and we have indications on the nifty contract in singapore that we
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did see a movie to the upside and that would raise the .25% loss we saw in the monday session. rupiah a test stronger against its u.s. counterpart. we digest the wholesale prices from yesterday that were less vigorously moving to the upside than economists had been thinking and that gives a little food for thought for the central bank of india. it decided not to do anything with rates last time but we could see a movement's time in terms of a cut, perhaps. anyway, let's look at asian exchanges because they are vying to attract big-name ipos and tap into this part of the world. previously many asian companies seeking to list in new york but after some false starts from well-known names, we got more regional business considering trading closer to home or having dual listings.
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we have the asia-pacific ipo leader. great to see you. give us a sense of what is happening. some really big deals in hong kong this year, but give us an idea of the regional trend. >> in hong kong, it has become number one in the world with alibaba and all of these big companies. we think the market for hong kong is very good for the ipo compared with other parts of the world like the u.s. or chinese companies, because you see the -- hong kongnies in general, the stock is reasonably well in hong kong. rishaad: what are the factors behind these ipos in your view? ringo: is there a theme? ringo: i think the theme is more
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or less on the high-tech and for the domestic asia. they are both -- more focused on 5g related factors. in this year for the worldwide, some companies being able to go public. ofre is one of the top 10 the pharmaceutical industry. rishaad: does the phase one trade deal -- i know it has not been signed yet, but does a deal make a difference? market,ba came to the there are arguments between the two sides. ringo: alibaba is very special and such a big, important company and if you cannot get the listing in hong kong, it would be unsafe. get the abs able to so they can trading, kong --
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trade in hong kong in case of a hiccup in the u.s. warthe overall, the trade has some concern but in general, you can see it is a continuous negotiation exercise. you will have ups and downs and affect the market, temporary good, so we look for -- need to get used to this environment and the ipo market will have ups and downs next year. juliette: it is juliette in singapore. what is the importance in singapore in these cross-border listings in hong kong and what you are seeing regionally in southeast asia? there are more than 10 singapore companies going public in hong kong this year. they love to go to singapore and different markets in asia seem to have their roles and their specialties, like in taiwan. for example, it is important for
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the singapore company to have more places to go public. juliette: what do singapore need to do about relaxing rules in order to become as attractive for companies to want to list here? i think right now, singapore is more aggressive compared to hong kong, because some companies related to the cryptocurrency, they will be able to have some part of the business that can be listed in singapore. the sovereign fund plays a role for singapore to help the company to pick up singapore as their market. there will be high -- candidates will look for high liquidity bond market for them to be listed. juliette: i'm looking at some of your charts in the notes you
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provided and it shows ey has had quite a big market share in a number of ipos over the course of the year in hong kong. what sort of market share are you looking for in 2020? as many as2020, possible. i think in general, the number of the ipo may continue to grow but it depends on the ipos. close will be higher if we managed to do one or several of the biggest ipos. any specific industries or perhaps companies you can tell us about that you are looking at in terms of what would be hot for 2020, as well? i think the fintech
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company would be very important for the upcoming 2020 and also the saudi aramco listing in the domestic market. i think they would like to go overseas and other markets, and these two are very important. theyin terms of numbers, would like funding to complete their research and development project. leadere: ey asia pacific -- ipo leader ringo choi, thank you. boeing extended losses after the board agreed to suspend production of the 737 max in the new year. it is a move that will deepen the crisis engulfing the company, complicate's recovery. storage and boeing accepts it can no longer churn out the max at its current pace.
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bloomberg has written extensively about the issues at boeing. david, how much will the suspension hurt the company? david: the interesting thing if you look at boeing share price -- shares,you would despite their 4.5% decline yesterday, for marginally up for the year. this is a lot to do with the fact that aerospace companies have very long-term valuations. in some ways, this is an advantage. mind their third-quarter operating cash outflow, 2.5 billion odd nearly was the biggest going back to at least 1990 for boeing, probably the biggest in their history because what they have been doing for making planes without delivering them and collecting revenue on them.
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400 of these planes are sitting on the lot, some $50 billion they are notes, actually able to collect revenue on. this should stop that a little bit. there will still be cash outflows related to it but not as much. there will be a wrightstown, as well and the real long-term problem will be around that program. profit or loss of the 737 program is based on a decade or more, how many they sell, the price they sell them at and the price they pay to their suppliers to manufacture them. those figures will be changing as a result of what is happening now and that will be the real issue and something we will not have a clear picture on for some time. rishaad: first of all, is this a next then shall threat to the company itself -- existential threat to the company? they've got all these planes on all these lots, god knows how many of them.
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they are running out of space. they probably need to extend the when they do get approval, it is going to take them a long time to clear this backlog, as well, isn't it? yes, and that is one of the reasons they've been continually making planes over this period. they have customers who have ordered 737 maxes and will want them delivered in 2020 whatever and the fact they are having these problems won't necessarily interrupt the company's plans. strange things in terms of a existential problem for boeing is boeing's customers that's -- desperately wanted to succeed. a good comparison would be with takata, the japanese air bag maker, which was supported by its customers through it significant problems. you remember the airbags were exploding and killing drivers
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and passengers. the car industry desperately wanted takata to succeed because it didn't want a monopoly industry in the airbag market and that is even more the case in an airline company. the 737 and a-320 ideally viable planes for short or medium travel. if there is just airbus making the 320 and 737 doesn't succeed, boeing has problems, that is a problem for the aviation industry because it means airbus has them over a barrel. rishaad: thank you very much. .loomberg's david fickling modi, concerns he has taken his agenda too far. we will take you live to new delhi. this is bloomberg. ♪
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juliette: india's markets have
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opened and let's get to mumbai and be taken through what can be expected. markets snapped three days of gains yesterday. things looking better today. what are you seeing? right, at higher levels, we are seeing profitability and there was some drop in booking rates. the drop in the opening session so far, we are seeing minor gains coming. nifty up about 20 points and for the broader markets, the breadth, which deteriorated in the last half hour, the nifty 500 index is up about 15 points but the markets are still looking weak. there are some stocks we are keeping an eye on and the amongeights in industry the nifty stocks, so a reliance
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in british petroleum and finally, a move forward with the indian partnership. they have signed a definite agreement. the stock has reacted positively. m isink there is --shrira on account of deteriorating asset quality and finally, motor's is up around 1%. recovering from the 52 week low we have seen since the month of september. reports indicating the company is already in talks with chinese companies and this would be in the form of direct investment or joint venture. the stock is up about 1%. back to you guys. rishaad: thank you for that.
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numberslooking at the on the sensex index. tata to the 1.3%, upside. all of this against the backdrop of tensions remaining very high across india. protests continue against a controversial new citizenship law. violents of sometimes protests from new delhi to mumbai. let's get to our reporter. give us a sense of the mood on the street and what the demonstrations are all about. the constitution, the secular constitution of india perhaps is challenged. this is perhaps the biggest challenge prime minister modi has faced so far in india. so far, people have stood by him. he has come out with a number of disruptive policies,
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demonetization of the indian currency overnight, the citizenship registry which is threatening to put almost 2 million people -- their citizenship at risk. there is a lot of people have put up with but this time, it looks like he may have crossed a line. this is the first time we are seeing interruptions across campuses, universities, across the country. it is happening in mumbai, new delhi, in the east, down south we arealore, so yes, seeing a different kind of protest than what we have seen before. we are seeing opposition leaders planning a nationwide agitation on december 19. tell us about this and the economic impact. >> the opposition leaders are agitation nationwide
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at the citizenship law on december 19 and so we will expect more disruptions. more protestst going forward. the effect is that it is threatening to take focus away from the reform work on the economy. it indian economy is growing at its slowest pace in six years, unemployment is at high levels so that is something that needs addressed immediately. it is also threatening prime minister modi's own hard work on policy because he has been trying to build up india as a counter to china, a stable economy, attracting investors. these kind of protests are one of the things that need to be watched out for because ongoing protests will put in danger all that hard work. ,uliette: archana chaudhary thank you so much, joining us from new delhi.
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coming up, we tell you why the stuff of manila water is drowning in trade today.
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rishaad: let's look at the latest business flash headlines. approval won antitrust for its takeover of sparked therapeutics. it has jumped the final regulatory hurdle. repeat its offer of sparked as the acquisition might have affected the market for treating the blood clotting disorder hemophilia. uber's co-founder continues to stock, unloading $350 million of shares and pocketing more than $2 billion since the lockout ended on november 6. his remaining stake constitutes
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about 1/5 of his $3 billion fortune, according to the 75% befores index, the lockup. juliette: let's check shares of manila water because trading has been suspended. the philippine water supplier slumped by a record in manila on a plan by regulators to cut guarantees and increase oversight in its new service contract, down 30%. our reporter joins us now from manila. what is happening here? as you seem, manila water shares have fallen as much as 39% this morning, its largest drop on record since the company listed on the philippine stock exchange in 2005. shares are headed to the lowest levels since about 2006. for manila water, we have seen a huge wipeout of the markets value of water companies and
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their parent companies of as much as 2.7 million -- 2.7 billion dollars and this started in early december when the president set his sights on water contracts which he said onerous provisions that were disadvantageous to the philippines and the public. all these wanted contracts reviewed and even threatened economic sabotage charges against these companies. so clair, quickly, this is -- in a few years time, this renegotiation for these? -- these contracts? ever since the speech, ae regulator has rescinded 2008 position which would have extended the water contract from 2022 to 2037. and is a 15 year extension they said they'll have to talk about what the new contract should entail and that includes they want less perks, less
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performance guarantees, more penalties if they fail the performance benchmarks and this is what the market is reacting to because for a lot of investors, they've agreed to a long-term contract 10 years ago and it is being reviewed and for foreign investors, this is a big -- what terms of long, long-term contract other companies are entering into with the government. the regulator has tried to sooth concerns by saying renegotiations has been opened and it is not necessarily that in a talks will end re-contract. this uncertainty is not helping water companies. juliette: claire jiao in minella and we should indicate shares are down 28 percent in manila. we have another big interview on bloomberg television. dallas fed president robert kaplan joining us at 11:00 p.m. hong kong time.
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from new york, that is 10:00 a.m. tuesday. ♪ rishaad: we will leave you with markets. there we go. the hang seng, over 1% up as we head into lunch. here, it all starts with a simple...
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