tv Bloomberg Markets Asia Bloomberg March 18, 2020 10:00pm-12:00am EDT
, crude rebounds after following to its lowest price in 18 years, futures story in new york. >> what more can we say? >> we're crackling in the markets. >> we did get some good news out of wuhan, no new cases. were worried about more cases in china and worried about the dollar strength particularly in this part of the world. 3%we are down more than right now. currencies down 4%, we rgastill waiting for the
down 23%. about rakinglking below 60. mark, help us put sense into what is happening. things we were talking about is the process of exposure.n reducing the have been looking at some hard numbers and just in the last three days, bonds and equities are out. open interest has fallen to the equivalent of $150 billion in the futures market only gives
you a snapshot. withve derivative market $150 billion multiplied several times. that gives you an idea of how much had been going on just in the last few days. that is partly why we are seeing this incredible movement. these movements will add to that picture as well so you can see the move towards cash is really ever. as a silver lining here? when i look at crazy price action, almost illogical in most cases. is there a server lining that is
not actually reflective of what the market thinks? >> what we get past disruption, some people will be at a stronger position. exports will look favorable compared to many countries. they may have to go through a lot more pain in the short-term, cheapuity markets look so that people won't be able to ignore them any longer. >> that is something we will keep in mind when things normalize. cannotcheap, too bad you get on a plane. it is an economic solution. coming up, we will be speaking
with a lot of people on essentially every single aspect. .e have rates and currencies virus.s talk about the no new cases have been reported in will on after a lockdown of nearly two months. .et's get to stephen engle we mentioned things are slowing of a but there is a threat second wave of infections. >> the biggest threat is the imported cases. that is why places like hong kong they are talking about blocking all foreign entrances. others require a 14 day quarantine for all international arrivals. believe all of
them were imported cases that came in to hong kong. that is always the risk. right now, the epicenter has shifted to the european continent where a number of cases and deaths have surpassed china. we could bring this chart that shows we are still on the uptick of number of cases globally. europe is far different, a total of 85,000 infections, just under 4000 deaths. alone has nearly 3000 deaths, that pretty much being the epicenter. in germany, they are shutting down factories and businesses. latest tokel is the
folk four-time rhetoric. after a getting tougher laxative precautions, threatening to lockdown london. they are taking it serious and that is what we thought for the ecb. at the start of this week, we were at 140,000 confirmed cases globally. 210.e now the silver lining is if they are expanding testing, that number should be going up. the big news at the u.s., past the latest release bill and donald trump signed the release bill.
lockdown and on the number of cases doubling in new york to more than 2000. , instructing cuomo businesses they can have -- no longer have half of their businesses and offices. we are seeing bill gates cautioning this shutdown could last 10 weeks. that is if all things go well. industries,g airlines trying to see cap bailout in the auto industry, they are getting absolutely hammered. you can see some of the most hard-hit companies since the outbreak.
it is devastating to some of these large manufacturers. >> that is just one of the many industries reeling. they are calling these fx moves excessive. it is not normal what we are seeing right now. $1300 -- not 1300 per dollar. >> aussie dollar also the weakest and reaching record of 1282, so still ahead, china seems to be keeping dry. what beijing's next steps are.
a very distinct pattern, the two biggest economies in the world taking thedifferent paths for economic slump triggered by the coronavirus. >> let's talk first about the .timulus side of things we saw these aggressive moves from the fed and if you look at the pboc, china looking modest at best. why do you think that is? >> very different approaches when it comes to fighting economic fallout, you have the central bank ingesting money, but it has held off with these , loweringst rate cuts thes and nowhere close to
bazooka stimulus during the financial crisis and a stark basis points the by 150. the reason why you are seeing such a cautious approach from china is because of ongoing concerns about debt, given that china's debt load is almost three times the size of its economy. china could be holding fire second quarter when global demand really starts to hit china. the approach is being tested every day and now downgrading that, china will contract 6% earlier, so this does not load china now accounts for 30% of growth. >> thank you to our china
correspondent. >> chief economist joins us from stamford. thank you, hope you are staying healthy. just talking about the diversions between policymakers and china and the rest of the world. what are you think at least beijing is holding back? policy,we talk about there are two stages. first is the relief package fighting the virus. for the first stage, fiscal policy that is helping the region, companies and .ndividuals it will not help that much because in the end, it is really
spendhe willingness to rather than the ability to ,pend, so i think from china they have come up with liquidity i think the when theage is about virus is constrained and people are waiting to interact. -- iis where the stimulus see china starts announce structural investment that is going to lift up in the first
quarter. thehat is happening against backdrop, frankly a global economy that is now being called the recession even if we have not seen the negative data points, do we get to a point moves the same where we had back in 2009 when they saved the world by spending up to $4 trillion? >> i'm a little cautious about china in 2020. most of the people after the first quarter, they would , but instead of a v-shaped you see more of a u-shaped because they will be persistent so on one hand
lower-than-expected so far, over , the renewed shock from the global pandemic. decline.ready seen that is why we see the recovery after the first quarter because it is more gradual. i think what they're trying to sofor the economic slowdown, as long as you have stability and the second part is i would say china, i think they learned 2008.on from
[no audio] >> we may have lost her. we will see if we can reestablish a connection. we will see how things playoff. talking more about china can do, but also other agent economies. >> i was going to ask you about other central banks because what we have been seeing when it comes to the strength of the dollar is we are seeing record highs, but what does this mean for e.m. asia in particular? do they have the means to service that debt? >> i think that is the thing. we will see that asia central banks at this moment. to a certain extent, that opens the door for many of the
emerging-market central banks to cut, but on the other hand outside we have seen the credit spread. condition is not the right time for some of the central banks to cut at this moment, especially for some of the high-yield there's. i would say probably a more prudent approach until the financial conditions stabilize and at this moment, focus on liquidity in the financial system. is now the time to worry? >> in the u.s.? >> everywhere in the u.s..
do i have to worry about the debt it is creating? >> i think right now is not the right time. it is probably a more medium-term. we're talking about fighting against a liquidity crisis and into a solvency crisis. permanent damage on the economy, so i would say the central banks they would just try everything. veryully this will be short session, but if there is not enough policy response, then we are going to see a global recession. we can worry about that issue sometime later.
in the market. we are trying to throw logic out of the window. way that, everything is still going to drop. experience inave health care and i'm just going by what they are telling me. it is different from what we are starting several years ago. it is something we understood. and we knew the impact. was also different is the incident happened.
the thinking is it might get worse later on, so yes it is that stillhe way has, they are probably going to be telling us at this point. rationaleernment's behind this trading was they wanted to take a breather and it this like it only let out pent-up selling pressure so my question is was this basically a bad idea or did it exasperated all the headwinds we have been dealing with? i don't think it was either good or bad, especially at this point we have seen the trading
halt. you really have to understand or this point,estor at , we arehat is the case closer to 17%, 18%. more rational minds have itvailed at this point and is like a hot potato, they are trying to pass it. at this point, especially if you are u.s., you would rather go and not have this risk involved. >> very quickly, was this a bad idea to close the markets? point, it is this still too early to say because i think other markets have already
>> it's 10:29 a.m. in hong kong and shanghai. president trump assigned a second virus relief bill for paid sick leave, food assistance, and financial help for testing. this came as infection cases touched 215,000 worldwide with more than 8700.. president trump brushed off warnings of the virus could mean u.s. unemployment soaring to 20%, saying that would be "an absolute worst case scenario." the european central bank is wheeling out heavy artillery. it is launching a purchase program worth 750 billion euros.
europe has passed china and the number of infections for the first time. officials are weighing a bailout fund to help the weakened economy as the euro slides into recession. the u.k. is starting to adopt virus measures deployed elsewhere around the world, having been accused of inactive -- inadequate response so far. schools will be closed on friday minister boris johnson declined to lockdown london itself. is blamed for more than 100 deaths in the u.k. and the government has announced loans, grants, and tax cuts to help businesses. slas-- china's decision to h accreditations might also apply to hong kong. this would prevent them from working in hong kong despite the cities and many constitution that include press freedom and immigration and underpins the --ic law says they still
basic law. we have a look at equity markets right now. china has broken below its rage -- range. pushing 21,000 on the index. this is looking quite good though, compared to the next board. let's show it. have a look at the philippines. not so bad anymore. only down 17%. southeast asia is doing, as one would hope, in these the dollares, with surging. and it is a day when the dollars quite strong getting currency market. u.s. futures are all down as well. be helping for about two hours and then this is what we are looking at. the euro, 10912.
-- 109.12. what a time. nice to have you on the degrom. i guess i first weston to you, i'm guessing many viewers are wondering the same, the dollar, should i convert all my savings into the u.s. dollar? >> to the degree what we are seeing here is selling in liquidation and people are we coursing to dollars. i think the most important thing, depending on everyone's situation, liquidity has become an asset and i think that's what people are looking for in this time of uncertainty. whatever and or see you are denominated in, put it is the key. clearly in asia, when you are
looking at the cross currency basis, because so much of the financial system is nominated in dollars, we are seeing widening of basis. that will continue until we see more extension of fed swap lines. for instance, the mas or pboc. that we saw in the global financial. only then will we get. kind of alleviation. yvonne: we are hearing from the south korean government now are they are saying the government, the u.k., and thanks -- be ok, and banks will help provide liquidity to small meetings after an emergency meeting according to south korean president moon jae-in. we also saw about the moves in givenn, excessive fundamentals. and wondering, if we do see more of these line and intervention into the fx market and the dollar, is that will alleviate
the credit risks and what we are dealing with. markets? ok, yes in a secondary, but the primary thing is clearly the public health response and getting the numbers of cases to stay low. that is why we have the best efforts by the and the announcement -- the ecb and the announcement i the korean government. the bills, but what the market is focused on is the numbers and the need for cases to stabilize. wherehen can we project the bill payments will see limitation. that's quite right, we have the reaction to provide support to smes. there have been a number of policy statements around the region that a lot of central banks are looking at smes and looking to provide assistance, but the first order of response
is the health care get these cases to stabilize. that is the critical juncture. we see that clearly with china because china is faring better given the circumstances. david: the iteration of that, let's prioritize health crisis, in the u.k.'s case, boris johnson is shutting schools and is threatening to lock down london. what would that do if london closes? what would that do to the currency markets? clearly, that's where we see a concern about liquidity, how do we provide liquidity and so forth? there are business contingency plans. the central bank has always been the lender of the last resort and that is still very much there and it is evident for everybody to see. the issue that we have is well and the nature is the leads
lags. if we shut down everything today, we have to wait two weeks for the numbers to get better. the market and everyone will have to keep the faith it will take case. i think this is the issue that we have. this lag of two weeks after the best of efforts have been taken that we have to sit tight and get through. issue is theiggest differential in -- dysfunction in the bond market. they are no longer essentially safe haven assets. there's a lot of worry about the cost of fiscal stimulus now. to keepreally going yields pushing higher now? >> i think that's a critical question. what are we seeing in the bond markets? people needing to liquidate positions to pay bills and margins and so forth. is it the market trying to
discount how we can pay for this bill at the end of the day? that is hard to identify. i would say given the price action we have seen and other safe haven assets like gold and so forth, it seems like more for selling in liquidation and we haven't seen necessarily cash levels go to the historical high-level so the market is still weighing on the liquidation page -- phase at this juncture, and because they --'t see the liquid is liquidity so far. i think liquidation of position will stabilize and there have ofn some signs stabilization to how we can pay for this. either we go for policy redistribution and taxation later, either we have inflationary consequences, or further defaults. again. i think it's far too early in the cycle where we are currently to make that call as to how as a
society and economy we pay for this, but the most important thing at the moment is we deal with the matter at hand. that's why, quite justifiably, quite rightly, central banks and governments are acting this way, which is the right way. david: as you were just speaking, the indonesian stock market triggered a circuit breaker, 5% down. final question for you. mechanism of the rates of treasury market is not functioning properly as a safe haven, if and when the piping gets fixed, where do you think the 10 year yield should be? it is now at 1.2%. >> once we fix this, if we fix this, i would say we would go higher, but not substantively higher. what we will deal with is basically a lower growth for a period of time before we get back up. it is evident that ultimately we will have some higher yield,
yes. once we get through this. soon. and hopefully claudio, thank you for making time. of course, please be safe. be of a securities cohead of asia fx rates and strategy. thene: coming up, we get outlook of oil with energy consultant fereidun fesharaki. he says prices could fall to the single digits. more to come. this is bloomberg. ♪
levels we have seen in close to two decades. yvonne: and not even making up half of yesterday's losses when it comes to the big trouble. guest,ook at our next fte founder fereidun fesharaki. always a pleasure to have you on the program. tell us what's going on with massive price swings. we have broken, hit close to 20 bucks. what is the forecast now? it seems like this is a moving target. >> yes, indeed. tohink as it gets closer april 1, we must remember this is all the threat of future production doing this to the prices. moving see the big ships april 1. a lot of them are going to the u.s..
thexpect to see prices in teens, somewhere between 12 and $18 for a while. be blood on the floor. that means by june, i would expect it would get back together and make up. this kind of crisis is countries ofo the saudi and russia and the rest of the oil-producing countries. this is just something that needs to be rectified and it will be rectified. yvonne: before that, though, before june, for some time potentially, is there really the capacity to handle that kind of inventory built up? forhere really a chance now some calling for prices to go negative? buildupnk the inventory
is a very dramatic issue. if you have two or three months then it will be eight or nine months. to get rid of it. so when you want to get back together, the inventory buildup will be a big problem. there's a question over whether we have enough stationed inventory to keep all the soil. -- this oil. -- comeem needs to cam back together by the june meeting of opec. either opec of its own or together with russian needs to come to an agreement of production and getting prices to go up. is there a possibility we get to the point sooner of them coming back to the table? let's not forget, the price of oil is almost a proxy for the budgets of these oil-producing
countries. frankly, if we are entering a global recession, these governments need every cent they can get their hands on. will that forced people to come back to the table much sooner? >> it's possible, but given again all the approaches and pride and prejudice, you have to wait for the blood to be on the floor. everybody says i make my point, terribleit, i can do a thing to you, and the other says i can resist it. and then somebody like mexico, which is now trying to mediate, will go in between and bring them together and both declare victory. but i don't think it is possible to do it all within a month or two. should be at least enough time passed. there will be an official
meeting in june. that is the time for things to get back together. yvonne: what is the pain threshold for saudi and russia now? we already heard the russians say they prefer high oil prices. is there a level where someone eventually will blink? the russians have had a price of $41 a barrel as an official budget number. they have been very proud that they can go up to $41 a barrel. the saudi's, the budget requirement based on the published budget is about $80 a barrel. but the budget requirement from them at least is not very reliable because the more money you have, the more money you waste. if you have. less money, you don't do certain things. fundu don't have to functions in syria, you can
probably bring it down to $50 a barrel. but if you want to do everything as before, then you need $80 a barrel. these sums of money are very dramatic. if the saudi's compare what they make with additional production with what they have lost, probably $30 billion or $40 billion lower. iny do have billions preserves but i don't think they will deplete all the reserves and just one go. yvonne: final -- david: final question, probably a bit of a strange question. so far it has only been the threat of flooding the market with supplies. you are getting a lot -- lots of logistics points. parts of the global economy basically shutting down. is there a chance the saudi's won't actually be able to execute on the threat because ports are shutting down? >> no, i don't think there's any chance of that.
they are ready to produce. the ships are ready to go. i think the inventory that they have, they will use their own inventory. i think the threat of going to 12 million barrels is something credible. they will probably go to 11 first and then 12 if they want to see blood on the floor, but by that time the prices would be in the teens. yvonne: thank you so much for joining us, fereidun fesharaki, fge founder and chairman joining us from singapore. coming up, tencent deliver disappointing earnings and warned things will get worse in 2020. david: digging through the damage as well, let's get equity markets. shanghai comp back to 12 month lows. over 1000 stocks are now down across the msci asia pacific. taiwan down over 6%. as fereidun fesharaki was pointing out, blood is on the floor. this is bloomberg.
can i look at the market reaction and make a conclusion based on the results? at ther: if you look market rally earlier, it was very short-lived. now it is pretty much reversed all the gains. overnight, the proxy shares trading in netherlands fell as much as 6% overnight. i think right now what people are really looking at is any guidance that the company can give for the first quarter. while we got some of those details last night, i think there is still much more information investors are demanding, hence you are seeing volatility in the market. and it seems like when it came to the guidance, they were not optimistic about the 2020 outlook. what sort of forward guidance do they actually provide in terms of how vulnerable to the pandemic they are now on the gaming reporter: side, so rising lee -- reporter: on the gaming side,
surprisingly this they didn't that badly. of course people are still on third mobile and desktop playing games. what is surprising is the cloud, which is due well because of programs that require a lot of the service, they said the cloud business might suffer impact some of the emergence and that were trying to adopt that technology were delayed because of virus. also in terms of payments, you would think with everything going online, meant -- payments would benefit, but that sector to the short-term hit because people were not going out and merchants shuttered their doors. that operation is still only slowly recovering now. one of the questions that we started task last year, perhaps more relevant right now,
ist kind of a threat supposing to tencent? reporter: that was really the elephant in the room. even though the management mentioned their competition several times including some people asking, your competition is going into all the spaces you are traditionally an expert in gaming, office management, and music streaming, it seems like they are going on all fronts starting a battle with you. although tencent executives did not say their name, they did say and a lot of sick ears, -- sectors, like short video, tencent was late to the game, but they have always -- it is kind of their tradition in a sense that they are a latecomer sometimes but they always win the last battle. they are there to win the last fight. that was the experience they had with the gaming business and they think they can replicate
that success with short video as well. you,e: lulu chen, thank our asian senior owner with a wrap-up of tencent earnings. let's get a look of business flash headlines. arm jet starudget will suspend all international whites following a call people not to catch -- fly abroad. australia's other international carrier is also grounding international leap -- fleet for two and a half months and is cutting domestic capacity and half. the firm that was once apple's biggest full is turning bearish and warning of dark days ahead. they have slashed the price $335 saying00 to the coronavirus outbreak will have a major negative impact on apple the foreseeable future. facebook is putting a covid-19 information page at the top of user feeds saying it will include verified that he reels from rusted sources to
counteract the spread of fake news. it will include tips and best practices from the world health organization and the u.s. cdc. facebook says it is seeing a huge surge in user activity. david: another market check. close your eyes. shanghai comp 12 month lows, 1000 points dark. -- down. kospi triggers the sidecar. yvonne: this happens when we see moves of more than 5%. that will stop for a bit. just goes to show. we already saw circuit breakers and trading halts in indonesia as well. we will see how it plays out the rest of the day. david: we are almost there on u.s. futures. let me check.n -- down 100 points. down for percent. if it gets to 5%, it triggers the limit. i do a squat every time we hit a limit. i have quads of steel.
[laughter] philippines as low as 23% down at one point. we will talk oil. gold is doing this as well. the euro, a big drop overnight. now flirting with 109 on euro-dollar. yields up 1.22%. yvonne: brent, erasing earlier gains after a bit of a swing to the upside after the 20% drop yesterday. things eluding momentum on the oil side. gold futures, we saw them retreat, hovering 1/10 of 1% higher for gold futures at 1480. plenty more to come. this is bloomberg. ♪
>> it's almost 11:00 in the lion city. i'm haslinda amin. yvonne: and i am yvonne man. we are entering the last hour of the morning session in hong kong. here are the top stories. the u.s. and the ecb wheel out the big guns to tackle the coronavirus. europe's rate surpasses china's for the first time as beijing reports no new locally transmitted cases. >> the infection threatens
further pay for thailand, already one of asia's weakest economic outlooks. we hear from the head of the stock exchange in bangkok. yvonne: and travel demand plummets as people are warm -- warned not to go abroad. qantas shares diving. this is "bloomberg markets: asia." haslinda: markets looking for a floor and not finding it. carnage overnight in the u.s. wall street, spilling over into asia. investors not convinced all the stimulus we are seeing, including stimulus from the ecb announced today will be enough. taking a look, the china shanghai comp down 2.7%, extending losses, dragged down along with the economy. -- slowest rate of slip growth since 1976.
the pboc has kept powder dry. the boj also offering to buy bonds in an unscheduled operation. comp, down at the p 14%. biggest intraday loss in 33 years. taking a look at oil, that is the main focus. off by 5.9%, but this is on the back of oil being down 24% overnight. , all investors are looking for refuge in the u.s. dollar. gold futures down by 100%. yvonne: it is liquidation right now in the markets. you can see the bloomberg dollar index at record highs. take a look at the aussie as
well. we are just 30 minutes away from the rba decision after this emergency meeting we are learning of. we could be seeing anything in the form of qe, perhaps a rate cut here today. perhaps what we were expecting, but we are down 2% for the asx 200. the aussie as well. $.55. the lowest we have seen for the currency since 2002. we are down four right now for that currency. these intraday moves are remarkable. well. 10 year as 30 basis points higher for the aussie 10 year yield. talk about the dysfunction of the bond markets right now given the risk off session, we should not see moves like that. . india will have another tough session. down five percentage points when it comes to the nifty futures in singapore. the rupee, ending flat at 74.23. but it is once again dollar strength that will be the big enemy here today. that india 10 year yield at 630. haslinda: emerging markets
getting that whacking. thailand has stepped up assets to stabilize the plunging stock market by narrowing the permissible trading range for individual equities and revising circuit. stocks and other securities can fluctuate at a range of 15% higher or lower from the previous close, down from the current 30%. circuit breakers will kick in and drop 8%, 15%, and 20%. the new rules take effect today and will be imposed beyond the end of june. joining us exclusively on the line from bangkok, pakorn peetathawatchai. thank you so much. good to have you with us. we are looking at carnage. we are seeing circuit breaker after circuit breaker. how concerned are you about the stability of the time market right now? measuress why we see
already to make the market more stable. the result has been quite satisfactory. however, we are always monitoring their market movement and we certainly are open for measure if needed. what measures might that be? >> i would say that when you look at the market liquidity, the ratio, the market requirement, all those things can be used to make the markets more stable. at the moment, we are quite satisfied with what we have been doing. haslinda: but it could take a term -- turn for the worse. we saw how the philippines was the first marketer shot equity trading along with bond. under what circumstances would you do the same? in our opinion, the market
function is very important to provide the liquidity for anyone to buy and sell securities. market, thatthe has to be the last function that we have. talk a little more about the trading limits you revised recently. you talked about measures you are looking into, but how long do you think volatile conditions will last? >> i would say it depends on uncertainty in the world market. it's not about thailand anymore. i would say every market has been affected by these global issues. the coronavirus and the oil price, those are the main factors influencing the markets recently and certainly we will not know until all these issues have been cleared. yvonne: there's a lot of talk
about a stock market stabilization fund. it seems like you opted to not go ahead with this. can you tell us why and what was the thinking behind that? could this idea come back anytime soon? >> when you look at the size of i market, the depth and width has been quite big. market driven. to use the fund, so that's why we come up to use the idea to see what we need to do, when, and how. however, at the moment, we depend on other issues rather than the stabilization fund. haslinda: there is so much in the market. s&p 500 index futures dropping 5%. you said earlier shutting the markets would be the last resort.
under what circumstances would that be? what would push you to shut the markets? that the banking operable, thate is in my opinion the only reason why we would close the market. other than that, i would say we would keep it open. haslinda: thailand was among the hottest market for ipo spirit how is it -- ipo's. how is it impacting the ipo pipeline? >> at the moment, these uncertainties are certainly affecting the ipo economy, however we are confident these with this uncertainty
will become clear. haslinda: give us a sense of what that means. we have seen so far about six ipo's in excess of $1 billion. do you expect more in the second half of the year? >> i would say so. from the funding need, the pipeline, and the business strategy, they will come to the market. it's just a matter of when they will come to the market. look at: taking a measures adopted by policymakers, especially the bank of thailand, do you think be federal bank should cutting rates given where we are right now? at the moment, at the bottom of the benchmark rate, i would say at the moment liquidity is the most important thing.
investor over business entity cash be able to upend the payments.n pay for let's why we think interest rates are not as important as liquidity. at the moment, the market has to remain open. yvonne: you've already tightened up some shortselling rules. would you consider a ban on shortselling like in other countries? >> at the moment when we look at the activity of the sale in the markets, it is trusting specifically. we could monitor the level and we will see whether we need any further measures. so much fork you joining us, appreciate the time. stock exchange of thailand president, joining us with the latest on stock trading rules in thailand. we are still seeing some big
moves when it comes to the cost pi.-- kos it has halted trading after the index dropped more than 8%. we also saw that with the other circuitiggering breakers as well. u.s. futures also dropping 5%. we are getting close to triggering the circuit breaker as well but at least for now we know the cost be is halted for now. president trump has signed a second virus release -- relief bill for financial help the approval of came as cases touched 215 thousand worldwide with more than 8700 deaths. president trump brushed off warnings this could mean u.s. unemployment soaring to 20%, saying that would be "an absolute worst case scenario." the new york stock exchange will
shut trading floors temporarily next week and move to fully electronic working after a trader and another employee tested positive for the coronavirus. the equities and options floors will pause for monday as will the trading in san francisco. the stock exchange boss stacy cunningham says they believe the markets should remain open and accessible. the european central bank is wheeling out the heavy artillery after an emergency conference call on the coronavirus. they are launching a purchase program worth 700 50 billion euros with christine lagarde saying she's committed to the euro. the euro -- europe has passed china and the number of infections. weighing aals are bailout fund -- euro officials are weighing a bailout fund for europeans. schools will be closed through friday in the u.k. and prime minister boris johnson declined to rule out locking down london
itself. the infection is blamed for more than 100 deaths in the u.k. and the government has announced loans, grants, and tax cuts to help businesses. those are the first word headlines. to one ofwe speak asia's most successful alternative investors and get his views on the market. this is bloomberg. ♪
partner of dymon asia capital in singapore. 20% returns in february. i bet that's better than most of funds.t other so what do you do, stay invested or not? >> what a difference a month makes, right? it has been exactly a month. the 19th of february, we saw the snp at the all-time highs. -- s&p 500 index at all-time highs and today we are 30% lower. it will be tough. on one hand, we just talked about the bazooka that the ecb has. every month, the ecb will be ofing over 115 billion euros assets. that's the highest ever. at the peak of the crisis in europe, they were buying 80 billion a month. . now it's 115 billion euros.
markets of that, the are lower. i would say on the one hand, there will be a lot of liquidity in the system. money orhelicopter madeuts that need to be just to keep the lights on. the consumption demand instruction -- destruction, jobs will be lost. all across the world. helicopter money will kick in. at the same time, because this is a health crisis and there is a massive lack of confidence, spending will be lacking. people will be sitting on a lot until the virus situation settles down. haslinda: you talk about the bazookas. everything in the kitchen sink. yet, we see tumble after tumble.
how much risk has been priced and given the fact that we are facing a recession, and basically everybody has run out of ammunition? >> absolutely. the next way there could be more and more is if the central banks or the treasury start buying equities as well. it is not in the mandate at the moment for the fed, but it could be if it comes to a point of an emergency. but then there will be essentially over time nationalizing the entire market, which i don't think is good for the financial system either. while the kitchen sink is thrown method ofis more of a how does confidence come back? everyone is scared and worried about their lives and staying home. at the same time, i think it was
fortunate for us in asia, having lived through it and watched the virus in the first phases in china and singapore and other parts of asia. i think that playbook, life eventually chose -- does go back normal. there's a moment of peak fear where the transmissions grow exponentially, and then there will be the actions like home core entities -- quarantines, and working aggressively to contain the spread. after,n about 30 days basically the things start to calm down. i think that will start to happen in europe by the end of march or early april, and for the u.s., it should be around the middle of april 2 the end of april. i think we will get there. i think once people start to go back out, life needs to go on, everyone basically ghost are
goes stirin fever -- crazy, cabin fever. i think it is not so much a bazooka, i think it is just to keep hopes afloat for a couple months. then you need people to get back to work. and spend. yvonne: it is yvonne in hong kong. thank you for joining us. . what are your clients doing now? are you seeing withdrawals? >> not yet. i think it's fortunate that the fund tends to do well in volatile situations. when i was sitting at your offices in december of this year, we were calling for volatility. own we felt the markets were too complacent and that a big term event was overdrew. -- overdue. provideday we have a decent hedge for clients, but
at the same time it seems the longer term investors have not capitulated. i would say the alternative have capitulated as well as retail investors and high net worth. i would say the longer funds still are in the camp, and rightly so, that we should look through this crisis for the next six months, but it will be scary because we will see earnings fall off a cliff. it takes a leap of faith and confidence that you can ignore basically an earnings recession of 50% to 90% for some companies. ,ow investors are still longer-term investors, are still standing by. yvonne: so the longer term investors are still there, but in the next weeks and months, perhaps things will start to peak when it comes to infection cases. are we likely to see more disruption in the hedge fund industry when we will see more
having to liquidate? >> i think there will be some liquidation. reason, the next wave of selloffs coincided with the saudi-russia oil disagreement, leading to oil prices falling 30%. as a result, some sovereign wealth funds actually needed to shore up their reserves. by the same time, i think we have had this almost perfect period of 10 years where passive investment looked like it could do no wrong. investors felt like i could do 10 basis points and be fine. i think maybe this could be a reminder that there is still a place for active managers in the portfolio. every so often, we do have these massive crashes and they will recur in the years ahead. does yourhow
portfolio look right now and how are you hedging details? tales havethe already played out, but at the same time, i believe countries are very dependent on exports. twin deficit countries, countries that run a fiscal deficit as well as a trade continuedill face pressure on currency. countries like australia, new zealand, basically every country is rolling out massive stimulus. and itve to fund this basically puts them into a much more precarious situation from a fiscal front. the deficit countries go into deeper deficit and therefore flooding the market with liquidity, but at the same time putting the situation in a much worse situation. to me, i think the trend will
continue for weaker asian currencies in the next six months. korea,short aussie and thailand, indian rupee, to some extent the renminbi as well, but what is on the long side? at the moment the dollar has outperformed but i feel strongly the dollar will pause and gold should hit higher. back ando take a step i think we need to see this is massive qe, larger than the last 12 years, and in this situation when growth is -- the world is going through a recession, you need to be lower. yvonne:yvonne: danny yong of dymon asia capital joining us from singapore. stay safe and healthy. let's look at the markets. we continue to see a bit of capitulation. the kospi, trading halt.
haslinda: asian markets taking a cue from wall street overnight where we saw carnage. chinese stocks expanding losses down by more than 2% now. it is expanding losses to 2.6%. keptber that the pboc has it powder dry. the economy is set to grow at the slowest pace since 1976. there was some optimism that the movement of the ecb would help,
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[ whines ] can your internet do that? xfinity xfi can because it's... ...simple, easy, awesome. [ barking ] yvonne: you are watching "bloomberg markets: asia." a live look out of sydney. we are moments away out of the rba decision for what can actually deliver of we -- after we saw impressive moves by the ecb overnight. it is expected to be rate cuts or some kind of qe. it seems right now they are looking toward some type of yield curve control similar to what the boj is doing, more so than what we are seeing from the fed and ecb when it comes to buying up a quantity of bonds. that will be quite interesting. pretty tall order after what we saw with christine lagarde yesterday. alsonda: tall order, but
they say qe should come better than later, given all the indications of a weakening economy. qantas just earlier grounding 150 planes. 20,000 workers temporarily out of work. tohave employment surging 26,700. take a look at the reaction in the markets. sentussie far below the 60 weakest level since 2017. all indicators pointing to help being needed at this point. yvonne: all right. a lot of breaking news. first.o the rba . they have cut rates, 25 basis points. 0.25%. they will not go into negative territory. we are looking for more clues on qe, but also breaking news the fed. they will be launching money market mutual fund liquidity facilities, providing the
treasury -- the treasury will provide 10 billion dollars of credit protection as well as the mutual fund facility established under the 13 three authority. we are seeing more sign of the fed coming to the rescue. three-year-oldng -- three yield of 0.25%. they say they will not increase the cash rate until progress has been made when it comes to job as well as cpi. rba.a recap from the they are cutting the cash rate to 0.25%, 25 basis points, targeting the three year bond yield around 0.25%. haslinda: providing liquidity. the question is, will that be enough on the back of what the ecb did? markets were disappointed. let's get more with our asia editor garfield reynolds. will it be enough or not? reporter: i don't know if it
will be enough because part of the problem in australia and elsewhere is not just at the short end, but at the long end. they say they will do a target yield on three year government bond to be around, and they are willing to buy as much as needed to achieve that. what that will do for 10 year yields that are up around 1.5%, that remains to be seen. what we've seen in market aftermarket, even in treasury, the traders just don't want to trade because there's no liquidity for them to be sure they can get in and out of what they need to. yvonne: why are they taking more of the boj route with yield curve control? why not just do it the fed and ecb have done targeting a quantity? reporter: the rba has signaled they've got the chance to learn from everything that has gone on in other markets with
quantitative easing, and that this is the most prudent route for them to take. they are not saying that they won't end up buying a lot of bonds. that is possible. but the important thing for them is what is achieved by that, because at times when the fed was buying a lot of bonds, you still have wild yield swings, concerns about what was going on with bank profitability, volatility in the markets. calmare trying to everything down and focusing on the yields that will be out in theor borrowers economy rather than simply saying we will buy an enormous amount of funds every month -- bonds every month. haslinda: and the aussie trimming declines, australia's three year bond falling seven basis points. on the back of that move, garfield oil among the biggest
losers. how far down can it go? oil is one of the few assets at their -- out there at the moment. . i was mentioning 10 year yields. in australia, they shut up to 1.9%. you can see the volatility. back to oil. one thing that might be reassuring about what's going on more of as that it's classic fundamental situation. the market for the first time in many years is in fact more of a free market. you have oil being produced at the sort of rates that anybody can produce it at. you have the lack of demand. partly caused by the coronavirus outbreak, but also demand has been weak for many years. 30.is unlikely to get above there's every chance it could
dip below 20 at some stage. yvonne: thank you for your analysis, garfield reynolds, our asia editor on the latest news of the rba. they cut rates to zero point 25% and targeting a three-year yield. they say they will not raise rates until they reach their targets for jobs as well as inflation. let's get a late look at the coronavirus. no new cases reported in wuhan after a lockdown of almost two months. the chinese city is where the outbreak was first reported. let's get to our north asia correspondent stephen engle from hong kong. it. us through it seems like europe is still the big worry now that they have passed china in terms of new cases as well as deaths. reporter: europe seems to be the epicenter right now. hence, we had that bazooka coming out by christine lagarde of the ecb, 750 billion euros worth of bond buying purchases.
she says extraordinary times require extraordinary action and there's no limit to our commitment to the euro. perhaps at least for now, she has put some worries about a debt problem arising on the continent to rest. now it is up to the individual government to assuage the fears in the individual countries in the euro zone. of moreow has a total than 85,000 infections. that is more than china has reported of 80,900. also, the continent has more deaths than china. we are seeing just under 4000 deaths in europe. alone.3000 in italy . china has reported about 3200 deaths. the virus definitely still , the cases, on the continent. german chancellor merkel is the latest leader to basically evoke wartime rhetoric.
faces itsermany greatest challenge since world war ii. yvonne: thank you so much. we just want to check the moves in the aussie bond markets. . garfield just talked about it. we continue to see when it comes to the rba decision, steepening in terms of the curve. we take a look at the aussie 10 year yield. we are now back up to 1.79%. surging some 57 basis points right now for the aussie 10 year. what you are seeing with the three year as well, we saw that with three year yields coming a lower. massive steepening after the r.b.i. announced yield curve control. they cut rates to 0.25 percent and announcing they will not raise rates until they reach the banford jobs and inflation. haslinda: seems to be working, but for how long?
for first word news, president trump has invoked defense production act to boost output of virus masks and other protective equipment. he or's 2 -- he also ordered a navy hospital ship to new york. the president returned to his theme of blaming beijing for the infection, defending his use of the phrase "chinese virus," by saying it was first seen their and he wanted to be accurate. a chinese pharmaceutical company says they have gotten regulatory approval to start human trials of a coronavirus vaccine. the treatment has been developed alongside military scientists and will undergo testing on patients in rouhani -- wuhan. 215,000 people have been infected and more than 8700 have died. latestscrutiny of the leaked data from china suggesting the virus will reduce the economy to its slowest growth since 1976. in activity indicates
expansion of 3.4% this year. . that would be the lowest since the final year of the cultural revolution, and also the year mao zedong died. manufacturing and retail sales fell in january and february. those are your first word headlines. let's take a look at the aussie markets on the back of the rba move. we had the s&p 200 index down by 2%. what we are tracking are the 10 year bond yields after rba low cut benchmark rates to 0.25%. they won't be raising cash rates until the progress is seen on jobs and cti. 10 year yields surging, the most on record. three year, falling seven basis points. . rba targeting achieved by
haslinda: welcome back. we talk about how the fed is throwing everything and the kitchen sink. it is launching a program to support money market mutual funds as the virus continues to ripple through the financial system. the treasury department will provide $10 million of credit protection -- $10 billion of credit protection. . wednesday, the u.s. department decided to temporarily guard money market mutual funds as a coronavirus stimulus plan.
futures looking to a lower open down by about 3%. yvonne: and we've got euro, u.s. unleashing support measures, central bankers in indonesia, as well as the philippines amid growing pressure for similar moves. we have a preview from jennifer kusuma joining us from singapore. thank you so much. we have these unprecedented moves from central banks across the developed world. how can the bank of indonesia delivered today? to be a closeng call. we know stability is the mandate. recent market the volatility to weigh on today's decision. there's no question the economy needs all the accommodation provided. whether the rate cut will be and most effective option, that is what needs to be decided. we see scope for b.i. to lower
the coat of money. this could be important for refinancing needs. what is more pressing is for injection of liquidity and preventing financial conditions to tighten in the face of outflows, and making sure credit would flow to more parts of the economy. we are seeing this play out on the global stage and should expect the same in the local economy because many businesses would need short-term financing. what i would emphasize here is they have policy options. they have been slightly ahead of the curve, having injected at 150 trillion into the banking industry, but more needs to be done. a rate cut, if we do get it today, it would help to try all these measures together -- try all these measures together. tight.a: hang
we have india confirming its coronavirus cases rising to 166. that's according to the government. speaking of india, markets just opened. let's bring in our reporter in mumbai. how are things looking? we are seeing carnage in the rest of asia. here.er: it is tight . in fact, we are opening with a cut of 5%. the sensex not showing any recovery at all. even when we do start with gains, they are eventually being sold into. as we speak, the nifty has lost the 8000 mark. we are seeing further weakness in the index. the indian rupee continues to weaken against the u.s. dollar as well. it currently stands around 74, .nching towards 75
weakening in indian equities at this point. haslinda: thank you so much for that update. another breaking news here, softbank extending a drop to as much as 18%. that's the most since march 2000. let's bring in our guest again, we talkedonsumer -- about the bank of indonesia cutting rates. it poses a huge problem when it comes to the current deficit. how compelling suit -- should this cut be? for indonesia yield differential with the u.s., at the end of the day, indonesia they yield- differential needs to be maintained. that is the bottom line.
however, the fact that they are heading lower, that has opened policy room in indonesia. the key is the timing of the policy decision. you mentioned a bit about what needs to be done. we have a rupee right now that is basically back to a two-year low, 15,350. how does that change thinking for bank? indonesia is that enabling working cautiously this time? >> that would be a big consideration. like i mentioned, there is no question the economy needs as much accommodation as bank of indonesia and regulators can provide, but the pressure on the rupee could face timing of when the bank of indonesia embarks on this. i would highlight that there are other quality options that at this point could be more
effective than a policy rate cut. but let's put this decision into perspective and get the priorities right. this is really a health crisis first before economic and financial crisis. what we need to see in indonesia toa shift in policy focus prevent the spread of covid-19, reform and the health sector and supporting sectors. there is required immediate fund disbursement and pension. that is where policy focus should be directed to. i would only add that when the health policy is efficient can we expect economic financial policies to take effect. haslinda: having said that, b.i. has made sure, it has been clear it will continue to support the currency. when you take a look at the fx reserve, how sustainable is the support going forward? b.i. has, on a number of
occasions, reiterated their commitment to make sure the and iswill function intervening in the fx and bond markets. i think they will continue to provide such in for venture -- marketntion to smooth moves. in terms of their firepower, what's different this time around is they have been tool, so whather we have seen in february when the selloff intensified was the fall that did not much. what we expect to have happened is the bank has been supplying dollars to their clients and has been hedging the short dollar
cash exposure by being long dollar. this decision has been by the estimate of close to $10 billion now. much as a limit to how bank can accumulate such positions and if the outflows continue for much onwards and especially as we head into the season starting early may, we do a fall in the outflows to continue. haslinda: ivr at 16,100, among one of the worst performers this month. jennifer kusuma, anca share strategist, thank you. still to come, qantas set to ground scores of planes and suspend international flights. details i had. this is bloomberg. ♪
haslinda: policy makers coming to the rescue in the last few minutes. we reported the rba cut the interest rate benchmark rates to 0.25%. it won't raise its cash rate until it sees progress in jobs and cti. the fed launching a money market mutual fund to help regain confidence in the market. let's get some perspective and bring in bloomberg opinion columnist for more on the movement from the fed. what is your observation? with the rba, this is a timely, aggressive package, but as you ask for context, here it is.
one consequence of the virus here in australia may be the end of an island mentality that has gripped economic policymaking at both the monetary and especially the fiscal level. we are seeing the deployment of northern hemisphere style up monetary measures and fiscal stimulus to boot. the doctrine of austerity, the surplus fetish that the federal government is now out. australia looks more like the rest of the world. and when it comes to the fed, more measures when it comes assistance, money market mutual funds. how much will this go to help? reporter: every little bit helps. these comparisons with 2008, it is important to remember much of what we've seen from the fed is a reactivation of programs deployed during the depth of that crisis that were mothballed
during the recovery. but here is the thing. these measures are all being activated much, much, much faster than was the case during the 2007 2 2009 crisis. for all its flaws, you can't say yvonne: happening quickly. things are happening quite quickly given the dramatic moves we've seen, some action from central banks. dan moss, we appreciate your opinions, our bloomberg opinion columnist. joininglk about qantas, jet star suspending international flights until the end of the month. seen move after move from qantas here. . finally, we have gone to halting international flights altogether. tell us more. reporter: yes, the iconic australian airline has acted pretty quickly as the virus has basically shut down the global travel industry. as you said, it will no longer fly outside of australia.
fromof its 30,000 workers, pilots to check in staff, have been put on leave. the international grounding will last until the end of may at least and will include the budget carrier jet star and domestic services will be curved by about 60%. a huge cut here. haslinda: and qantas is not alone. what are the other airlines doing in response to the virus hit? reporter: the ceo of qantas airlines just revealed this in a memo this morning. he basically said demand has evaporated. there is just no work for people. it is similar for airlines around the world with travel ban's shutting down europe. key travel, a destination, also closed for business. this is paralyzing the aviation industry. delta in the u.s. grounding more airplanes overnight.
similar, but not the same as qantas. other u.s. airlines taking similar steps as well as europe. globala: emma o'brien, business managing editor. thank you for that. let's revisit those markets. take a look at where they are at this point. taking a look at where the nikkei is, negative territory. down about 1.8%. the boj offering to buy bonds in an unscheduled operation. several banks doing all they can to support the markets. the kospi -- slumping almost 9% right now, erasing earlier gains, slumping to 2009 lows, korea expressing concern in the won. of course, we have the rba decision.
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