tv Bloomberg Markets Asia Bloomberg April 27, 2020 10:00pm-12:00am EDT
re-open. >> and the race is on to provide testing kits to screen for covid-19. and the group has orders from 80 countries worldwide. and markets here today, we are heading back to the session lows. things have lost a little bit of steam here on the tuesday morning and we continue to watch this collapse in oil prices for a second day but we are seeing when it comes to futures are still positive. asia yeah is half a percent lower. and so things have turned in the past hour or so. dollar-yen and unlimited announcing we heard. watch some of the other markets that are opening up like jakarta. oil is the main scene here
today. we are seeing crude fall 13% when it comes to w.t. e! and the phillipines, that is one of the weaker side. but when it comes to the june ontracts, down 4% to 19 bucks. look at what it comes to w.g. e!. we are hovering around the $11 mark when it comes to new york crude, down 13.6%. we mentioned about the united states oil fund, the largest oil fund in the world selling off e! and ingsings in w.g. unexpected move. let's get more analysis with jp morgan asia yeah strategist. is this starting to hurt the equity market? >> i think the moves that we are seeing in the oil complex is
very, very specific. and looking across massive impacts doesn't i think the easiest thing to see the forward looking long data futures on oil prices remains rather stable and it is not assuring. and the weakness we are seeing the new york futures is specific to the supply and storage they are seeing. i wouldn't put too much into that will market at this point. >> interesting you say that, there is a divergence and the commodity space and the index which is at 50-year lows and equities are not pricing in as far as the economic damming we may see here?
>> the commodity index is driven by oil futures. and other commodities, copper, for instance, it is a slightly different picture. and they are pricing in a weaker outcome and what you see. i think for equity markets, we tend to focus on three aspects and that involves the risk aversion and flow and macro conditions remain negative but flows to our mine is a positive factor for equity prices. risk aversion which was the biggest driver through march peaked in late march and we had a bullish price and risk aversion and now that is going someto means while we have
consolidation in the equity markets, we think the medium term opportunities skews to the upside as these economies normalize and similar impact comes through. >> asia has underperformed the u.s. in the past decade or so, but now we are emerging into this post-covid world where the world will look less globalized, how does asia come out of this and is it time for a structural change? >> one of the biggest performer has been the slow process of trade globalization and if you think what is going on in the post-covid world this isn't going to improve. that takes away the performances of the u.s. we don't think relevant growth is going to be a positive factor.
but there is some silver lining in terms of relative performance in terms of margin trends and valuations. valuations is 10% lower in terms of relative valuations versus where you think it should be given where the relative growth expectations and some of which influence same sector margins and which is moving towards what we are seeing in the u.s. and off act that there are run and you combine these factors and there is room for upside perform appears especially when you consider the fact that positioning in asia is exceptionally large. >> how do you position now? how do you get ready and prepare
for this structural change, then? > i think the key thing this post-covid world, the most modern thing is going to be a preference within markets and people in society for resilience over efficiency. this will be true of supply chains and markets and this is going to be a structural positive for quality stocks we think. if you look at our current recommendations, we have three -pronged approach. hold it in growth stocks and some consumer and health care exposure and high quality stocks that are trading at discounts or below average prices which is attractive and near-term opportunities, deep value stocks. depending on where it is, you
turning point perhaps in may and june and the macro data will start to look better and large part of the earnings are declining is going to be one off. about 3% above our fair value estimate. there is some extra valuation. in the near term, we could see ome consolidation. >> this is something that we have been thinking about since last year that there is going to be a sustained move towards unconstrained stimulus for demand management largely because the demand constrained global economy and this is something that will happen as
the time line of this is very unclear still but it will happen in the next few years or so. it is unlikely we will get a sustained move next year where marginalization of debt and pushes inflation here. you will see low levels of beyond yield in terms of the oil prices as well and food production has not been disrupted through the course of this entire crisis. in my mind you will see longer term, this process getting larger and larger. bond yields will start to rise again but inflation expectations are rising, but this is not something that will happen this ear.
>> coronavirus cases pushed through three million and the rates of infections and fatalities continue to slow. china has reported no new deaths in 13 straight days and italy reported the lowest level in seven weeks. >> this virus will not be defeated if we are not united. if we are not united, the virus will exploit the cracks between us and continue to create havoc. >> the virus death rates continue to follow in new york as governor cuomo offeredal hased plan to reopen the
economy in upstaret. state deaths have reached 17,000 but new infections are falling. in asia, the independent yap government may guarantee 40 billion of loans to small businesses. meanwhile, indonesia is to allocate to help people. and the phillipines may use virus restrictions that have been in place since the middle of march. global news 24 hours a day powered by 2700 journalists in more than 127 countries. this is bloomberg. >> calls for more covid testing grow louder as countries and we will speak to a company at the testing of wow hahn. and global infections top 3
rate. the tragedy is there are 55,000 500 deaths in the united states. we move to europe, italy the lowest levels in seven weeks which was the epicenter. the government will allow people to allow them to leave their homes and will be joining other ountries to relax countries. and word on spain and france, the two countries hardest hit nd will ease lockdowns a later down. reat britain, boris johnson is ask people to go with the lockdown rules and made a claim that the united kingdom is close to having the virus under
control. >> what about asian countries, any measures that could start to be relaxed here, too? reviewing housing options for migrant workers and the government looking for lodging options and long-term and having arrangements. japan extending the state of emergency and balancing that with the number of cases and new daily cases in tokyo falling to the early part of this month. the president said there was a two-month lock youp and will be modified the total listing and may cause more infections. that's the deal there at the moment. >> and what is the good news in
new zealand? >> this is a country emerging from one of the most strictest lockdowns around the world and offering to half a million people and families' hopes of a pickup in economic activity. and not people social lives. three aligning workers and construction sites and take away food outlets and gradal process that it will be elsewhere one would think as well. guys. a 51% fall in profits setting up a dire earning season. we will talk to the c.e.o. ♪
>> big week for earnings especially in china with the biggest banks reporting first quarter earnings on tuesday following reports from other global losses. our correspond ept is joining us from beijing. more data coming out of the big banks and what do we know about the pressures that the big banks are facing? >> there is mounting pressure amid the kifes and very important outlook in china with exports. there will be more problematic loans for these big banks. at the same time, the chinese central bank policies can continue the asset yields and big lenders' margins.
the industries nonperforming loan ratio is 6%. in the first quarter the virus made a small dent on these banks' asset quality because of loan payments but investors are seeing a willing second increase. on a blanching note, the big banks did announce record earnings from last year so that does increase the capacity so there are a potential few bright spots. >> what are investors going to be looking at when they sift through these results? >> they know these banks are bracing for aun unprecedented loss in profits. chinese leapeders face credit trillionen and
bail g to how much this out are going to see how much that is going to come up to the cost. our bloomberg intelligence the loss to drop an average of 26% compared to the 3%. and they expect profits at the chinese banks to slide 8% compared to the consensus that would be flat growth. all of the big banks face these issues, but they could be especially pronounced for the country's biggest leapeder and that is they are making cheap loans to companies impacting. we expect their profits to drop this year and they see the drop . the crime rates
>> what to expect from the chinese bank earnings. headlines now. iphone pushing back models. dow jones sources say the new handsets will be delayed. and new device were scheduled to be launched later this year. apple is scaling back the number of iphones it will make by 20%. china's listed residential home builder says first quarter earnings rose 12% as it riled sector. sector. income for the three months through march and revenue remained steady. china's lockdown may affect arnings up to two years. there is a lawsuit to complete a
$5.8 billion hotel buyout. they are renegging and unfavorable financing caused by the coronavirus pap. the deal was due to close on april 18. and they have asked for more time. china's starbucks has been raided by investigators as part of a wide arranging probe. the regulator moved in at the request of the s. e! c. which oversees the nasdaq. the company that some may have fabricated sales numbers. it is cooperating. ecommerce chief over a influencer. took away financial incentives and removed 38 people.
he was demoted to vice president. he was once regarded as a front runner. >> let's check in with the markets, a question of oil. some of the optimism happening around some of these moves to ease restrictions whether that is europe or the u.s. oil story is overshadowing. the world's largest when it comes to oil. and looking at w.t. e! which has fallen 15% which is around $11 bill. that is where the drag is, china in the mainland is down two cents of 1%. we got the p.m. e! out of china. and other markets in the red.
>> the chief executive here in hong kong, the government is yet to decide whether to extend the social distancing steps this as she announced earlier about civil servants can return to office starting from may . we are seeing some signs of relaxation but not so sure when it comes to social distancing
we start in japan adding 14 more countries to its list of coronavirus cases and affected nations include russia and saudi arabia and any people will not be allowed in. the government banned countries. japan has more than 13,000 virus cases and 364 deaths. scientists in china say progress on a vaccine is at a clinical trial stage and a treatment
won't be available. market regulateors trying to ease funding restrictions on kine's new economy firms. it could cut the listing to months to years. and new zealand reporting five new coronavirus cases as it lifts the most stringent cases. there is no community transmissions and the worst scenario have been avoided. the government warns social distancing will stay for the foreseeable future. >> it is not and cannot be to treat covid. it will come. to get here, our population needs to have zero of toll rapses to eliminate the virus. >> global news 24 hours a day, powered by 2700 journalists and
analysts in 120 countries. this is bloomberg. >> it is turning into a little more risk on this tuesday morning. the class of oil is unnerving and adding jitters and watching asia-pacific. u.s. futures are headed in that same direction and the w.t. e! story and stepped those declines by 14 or so percent after falling 25% just yesterday and on the news of this e! t.f. that has been elling it off. so a lot of questions what wps to that june contract.
were we have 700 companies that are reporting earnings and the chinese bank, slightly higher by 29 points and as you mentioned, still weighing on whether to relax those social distancing measures and in that lunch break lower by 6 tenths of 1%. australia is imagining on they will be lifting restrictions. we are watching dollar strength and that is another reason why we are seeing currencies weaker in asia. and we are watching from these oil producers reacting to the oil noise as well. >> thank you for that market roundup. come understanding up in the how, n.a.b. posted a 51 a dire
and how much of a challenge and what does it mean in adapting some of the products you have in the pipeline to address some of those concerns? -- i think indiscernible] >> it's available in the market expensiveare costs -- -- [indiscernible] more information with testing. and it is complex infections and the sequencing solutions for that kind of complex -- [indiscernible] >> the stock is up about 55%
over the last 25 or so -- 12 months i should say but still below. what do you see are the key drivers for growth over the next 12-24 months for the company? >> a lot of people see this our nce as a chance as responsibility and looking back to it -- indiscernible] we can do a lot of things. we are trying to use -- indiscernible]
>> how would the world look like after this pandemic? is there going to be a lot of changes and what could change especially in your world in the world of health care? >> it shows that the health fund lifetime is very important -- indiscernible] >> public health and health signs. -- [indiscernible] >> investment in our health
-- ms [indiscernible] >> will you be looking for nyack what significances in the near to medium term? > we haven't at this moment. indiscernible] >> thank you so much for your time tonight. the c.e.o. joining us. ause trail yap bank investors had a first taste of what a orrid earning season and the n capital racing 3.5 billion
australian dollars. we heard from melbourne. >> what we have seen is quite pragmatic about the fact that this is damaging businesses here in the u.k. and new deal and where our primary operations are. great support from the government but we are not too sure and we have taken decisive action to take on more capital and reduce the dividend which are our retail share holders and take a large economic adjustment of 907 million. and very uncertain times. there is no table. we just knead to make sure the banks are in a secure position to look after customers. >> the dividend, you said it is a balance act you said this was done in part to fund the
dividend. is that the first part of many and what conversations are you having with regard to the issue of dividend? >> with the dividend, it is a balancing act. and the retail share holders are not happy that their dividend came down. they felt they could have kept it and probably the right point and strange sort of a way. but we should raise capital. we would like to invite our share holders into that capital race, which we have done. we want to make sure they stay on the register knowing this was a dividend-paying stock and we struck the correct balance yesterday with the 0 cents ap the dividend to three billion capital raise but the opportunity for retail and come in with 500 billion or more if they wish to.
it was a balancing act. we spent time with the regulateors going through what we saw were the economic scenarios and why this was the right thing to do and afford to pay the dividend out at this point in time. >> how much have you factored in future bill impairments? >> we saw additional remediation costs for the work we are doing to put some of the things that were wrong on the mediation for customers. those increases were taken about 10 days ago. it wasn't a major increase but showing we had work to do there and trying to get through the remediation as quickly as we can and some of it is quite detailed. most of it is in our wealth business but there are a number of remediation but much smaller
in the actual dollar size. so we are working our way through those and would like to get them finished as quickly as possible. >> how much underperformance are are you seeing in the loan group and is there a popings that these banks going into a bad bank and are these conversations being held with the government? >> there are conversations with the regulator attacking those sorts of actions and took an adjustment of 807 million as part of the results. we won't really see the losses coming through as i suspect another five or six months and we have given tens of thousands of customers and business customers to take an pe preliminary and interest holiday and they would have income
and/or reduced income and when we get back to having the conversation about how do you start, see if they are in good shape or not. the work that has done around the job keeper will be helpful for those customers to keep income in their pockets ap the employers keep them employed, i think you will see another five or six months before we ups the true impact. >> that was our chief executive speaking to us. the economic hold that some of these restrictions and coronavirus measures are having on independent yeah. we have fixed ratings revising economic growth from 5.6% prior 0.8% ending ak march 2021.
the impact of the coronavirus pandemic and the official impact for india and 8% they expect growth to rebound in the full year of 2022. but there is a risk that the crisis could strain and hurt the country's growth prospects and something we will be digging into the break as well. and central banks offer loans to help calm the debt market. we will get the details on that story for you. stay with us. this is bloomberg. ♪
and see the covered line is going to be underutilized and do not lend against future funds when liquidity is an issue. some see the intervention by the government as the only way to help the industry. >> what are we seeing in terms of the market reaction today? >> the benchmark liquidity index rose after they opened the
funding line and assured investors of support. an unds will not have effect. stock market investors are awaiting the government stimulus and waiting for industry economic indexes to be announced by the government and the outbreak -- [indiscernible] >> the government may also come to the rescue as it looks into a multi bill yop support package for small businesses now. what can you tell us? >> sources from bloomberg are going to guarantee as three 3 trillion to small businesses to help the economy which has an impact after the lockdown. under the proposal, small firms
orrowing 20% and the extract will be guaranteed by the prime minister's administration. the government will pick up a special fund to pay for any default. that is necessary because banks in india have become risk aversed and leapeding to small business and these are the worst . thank you. now we will dig deeper into deeper into independent yeah and u.p.i. the president. that is just ahead in the next hour of market asia. a quick check. cafe pacific will further reduce passenger flights down to what
calls a skeleton service of 3% and suspend flights as the coronavirus hampers travel. capacity.ases to 5% ap boeing is going to start dreamliner production. workers will rurp may 3 with malingment to make operations. operations were halted april 8 because of the coronavirus outbake. reports say boeing wants toll cut it from 15% to 30%. that could mean as many as 24,000 jobs lost. >> and look at the markets. we are still seeing a mixed situation when it comes to equities. the dollar is stronger and very much the oil story with w.t.i.
♪ >> it is almost 11:00 in hong kong. here are the top stories. crude slumps again with w.t.i. below $11 a bhullar. south korea is running out of storage space, setting up a global scramble for tankers. global virus sufrpbled past 3 million. some economies are preparing to reopen. and the reserve bank of india prepares to offer billions of
dollars in loans to help calm the debt market after the exit of franklin templeton. this is bloomberg markets: asia. >> a quick check of the markets here now. we are risk off, and oil remains the dominant theme here today. we are extending that plunge of 25% yesterday, now on w.t.i., and we are seeing here c.f.i. 300 turning positive. things looking better on the mainland. but the hang seng up 120 points as well. a lot of companies reporting out of china, more than 700 or so. then we are watching new zealand as well. that seemed to be the out performer here on news they could be lifting some of those restrictions pretty soon. let's look at some of the things we are watching right now. it seems like asian stocks still set for the first monthly gain this year. we are looking at some of the southeast asia markets as well.
manila stands out more, although this has been the market that foreign investors seeing the most outflow of light. gentleman cart is also there. india is going to be the key focus. w.t.i. we are seeing 16% lower here when it comes to that june contract. keep in mind this goes to show we are going to see a little more volatility becauseing that contract is it expire on may 19th. we are not dealing with a couple more weeks of this potentially. we are seeing futures that are positive, pointing higher 1% right now. the franck ribery coming to the rescue here amount after we heard from franklin templeton, that soothed the market the out there. we will delve deeper on whether this will be the type of credit facility utilized by the banks out there. 76.24 for the currency, and the
india bond market is tempering a bit. yield is down to two basis points at 6:15. joe and walks us through the prices we are seeing in markets. it still seems to be oil, the main source of the volatility. >> right. as you said, that is likely to continue for weeks. we are hearing so much about floating s that are around near los angeles and singapore. there is so much spry right now. we will see what happens as we get closer to expiration. then stocks are kind of mixed right now. that is a little bit less exciting i guess you want to say, but it is still a lot going on under the surface with tocks as well. >> tell us more about the volatility metrics.
what are they telling you about where stocks are going to go from here? >> well, this is interesting. we did have some signs that the market is calming even more. of course things have been calming down since the mid march peak of volatility, but his d the vix closed above second future for the first time since february 21 overnight. that meets markets are pricing more volatility in the future, which you would expect because the future is more uncertain. when we have had so much coronavirus induced uncertainty, things have been really uncertain in the vix itself. but now things are calming down. so we are getting back to normal with the structure of the volatility markets. >> ok. so some normalcy when it comes to vix, but is there anything that might give you cause for concern now? >> well, this is interesting overnight. the s&p 500 itself was up
pretty solidly about 1.5%. but some of the big tech stocks that have really been the drivers of the market did not do as well. you had amazon finishing lower. you had microsoft and others finishing lower. so it could be a sign that those are approaching exhaustion even though the index itself did well. the performance of the tech companies is definitely something to watch. editor, thank you so much. here is the news. we have corina in newark. >> global coronavirus case have passed three million with deaths above 200,000. the rates of infections and fatalities continue to slow. china has now reported no new deaths in 13 straight dates. italy reported the louest levels of new infections in seven weeks. u.s. cases rose at their slowos pace since the beginning of the
mopt, but the total is approaching one million. virus death rates continue to fall here in new york, recording the lowest number in almost a month. governor cuomo offered a fazed plan reopening for the economy. construction may be able to resume by may 15 in upstate. total deaths in the state have reached 17,000, although new infections are falling. in other virus developments, the indian government may guarantee almost $40 billion of loans to small businesses. and indonesia has allocate birthday $1.5 billion to help people left without a job by the virus. the philippines say it may soon ease virus restricts. good news for new zealand. it is entering the post hockey-down world, reporting five new coronavirus cases as it lifts some of the world's
most stringent restrictions. the worst-case scenario seems to to have been avoided. some businesses are being allowed to reopen, but the government does warn social distancing will stay for the foreseeable future. >> it is not and can't be returned to precovid-19 life. that day will come, but it is not here yet. to get there, our team of five million needs to have zero tolerance for cases to complete our goal of eliminating the virus. >> 0 global news 24 hours a day by ir on bloomberg houred 2400 journalists in more than 120 countries. this is bloomberg. >> plenty more to come. who has to a guest held roles in the u.s. treasury and the economic council. he makes a case for reopening he american economy.
>> the asian deadlock could be the reshape of the coronavirus response as the region as banks creep close tore direct buying of government bonds. bind of indonesia is already buying debt in the primary market, and global bonds funds things from for other central banks. monica hsiao joins us. more and more central bammings are buying more and more of the government debt, basically
monetizing the fiscal debt. what do you make of this? how risky is this? we are seeing it not only in indonesia and independent arkansas but in the fed and the b.o.j. as well? >> werblings i mean i think -- well, i mean i think all central banks have the goal of maintaining liquidity in credit markets for it to continue to function so investors can step back and look at relative value rather than facing a real credit crisis that could happen if all confidence falls away. i think they are doing their job, and it is needed right now. the question then really becomes how do we assess the value across the regions? what is the relative value of that? i think that is where we see a lot of crawl today in asia credit markets compared to the rest of the world. >> the question really is what impact that would have on other assets as well like currin says
, offense, before we get to the choices of where the opportunities are right now. what impact could that have on the currin says? ould it leap to a weakening of currin says or perhaps well?ionary pressure as >> we are really a credit shop. we are not really focused on he macro aspects of e.m. currencies. to date we have not seen that that risk of the missed sentiment come through from the e.m. currency markets to negatively impact our credit markets since march. i think things have really settled down. for us, as long as the u.s. dollar isn't strengthening too much, i think that still maintains a relatively positive back drop from e.m. markets. >> and monica, the bank of
japan, though, they are starting to buy corporate binds. we heard from the franck ribery. they are expectly doing so. they are allowing the banks to use the money to buy corporate debt. do you expect more central banks here in the region to follow suit? >> i think that the buying of corporate zet clearly a trend around the world. the e.c.b. is doing it. the fed has expanded corporate buying. i think that buying corporate debt is one thing, but what goes in and what goes out and what is on that list, i don't think that can you expect that buying corporate debt is going to avoid defaults. it again is to maintain a functioning market for corporations to be able to fundraise. that being said, relying on it
alone isn't requesting to do more than keeping liquidity flowing, and we have to still assess region by region. for example, if you look at the default te that, the rate in the u.s. still is expected by the street to increase to double digits, up to a 13% default rate. but that isn't going to necessarily avoid the corporate defaults. and so i think it is about looking at the sectors that are involved. in the u.s. you have energy, retail, gaming, and those guys will still be hard-hit. if you look in asia, i think looking at our markets, the default rate is still expected remain quite low and single digits, below 5%. i think it is really about still doing the bottom-up work and understanding that the central banks are there to kind of lift general sentiment.
>> why are the default rates in asia, relatively speaking, lower than what you see in the u.s.? why are you saying it could stay in the single digits right now. what are you seeing there that gives a bit more stability in this part of the world? >> well, i think -- like what i was point out earlier with the u.s. markets, when you have a big part of the u.s. high yield market being in energy, retail gaming, the areas are hard hit right now with oil prices crashing, and covid and the u.s. just starting to talk about reopening, whereas asia has reopened earlier. but the other part of it, in our market, in asia high yield, the bulk of it is in china, and the bulk of that is in china high yield property space. when you playbook at that segment, most of the companies
have started to come back online. i was liking at as of last week, the week on week growth in sales on some of the companies we are tracking is plus 35% to plus 70% on a week on week basis already. overall we saw that march sales recovered already 70% of the same month on month period as of last year. so we are coming back to some normalization right now, and the fact that the sector exposure is different and is from t more protected the consumer demand side and not as exposed to energy certainly helps. and yet we look at our bonds, and our asia bonds are paying at such a high premium above the u.s. high yield. for example, right now, single b rated bonds, asia high yield bonds single b is paying over
5.3% above similarly rated u.s. bonds. so i think all this should be put into that context on a risk adjusted basis. >> moipping, when you talk about chinese bonds, will chinese bonds continue to see low volatility and better liquidity, do you think? >> you know, we certainly have -- well, we went through extreme volatility in march as well. our markets today are much more interesting because it has all been reprised and reset after the leverage wash-out, as happened with the rest of the world, too. we do have a relatively -- it is all relative -- lower volatility balls of the local demand base, and that local market came back, buying our asia bonds fairly quickly. that definitely helps, and we have i think a recognition that
is starting to happen where we see money coming back. there is a real recognition that asia bonds really are very cheap. as far as the corporate bond markets for this year, we can see investor appetites will continue to be there. the market year to date has expanded on pace with over $100 billion of issuance so far. mid march was the worst point in our markets. over $20 billion has come to market, and we continue to see deals subscribe by multiples. so i think that the appetite will still be robust, especially when this year, a lot of the asian bonds will be for redemption. so that money will have to be re-invested as well. that lends a certain base of stability. but at the end of the day, the demand comes at a presume yum,
and we certainly have very cheap markets right now. >> you talk about liking china high yield, but you are under weight india high yields. i am wondering how concerned you about franklin templeton pretty much wininged up its credit risk funds. what are the risks of a contagion there? >> that has been broadcasted sips last week, and that definitely caused volatility and sentiment across the u.s. dollar and indian bonds, too. mostly their exposure is really about the local markets. but yes, there is defendantly an impact across because indian high yield bonds, a lot of them traded down as much as six or seven points since that came to light. so there is an impact from a technical perspective. so i think we have done well by
being undercueto in both india and indonesia high yield this year. that said, we will always be there to re-assess risk slash reward if india sells off enough. to date you said something about under weight on that site and more over weight on the china region. >> thank you, monica hsiao, joining us on the phone. we still have some lines crossing through in south korea. the foreign minister is van aswegen right now and talking president ping's scheduled visit. hawaii has said that visit has become unlikely because of the coronavirus coyote break. they said president ping would visit with the year. this was a scheduled summit between south korea and china. kim ey are talking about
>> the point is the coronavirus has hit our industry hike a meteroid impact. it is a really systemic effect on the economy. >> well, the number of people around the world known to have contracted covid-19 has gone beyond three million now. but the u.s. and europe are seeing signs the worst could be behind them. our co-anchor with the latest. parts of the u.s. and some european countries are planning a grad wal easing of the lock-downs now? >> it certainly seems to be the case. we have the u.s. states like florida and ohio taking steps
towards gradually ending the lock-downs that we have seen. u.s. cases actually 2.3% from the day before. that is the slowest rate of increase since the first of april. the tragedy is now that deaths in the united states are at 55,000 500 or there abouts. we have international travel restrictions in the united states. donald trump, the president at the white house briefing says it depends on how long it takes for europe to heal from the impact of the virus before he considers lifting those restrictions. europe as well is easing as well. italy, sch is the epicenter of continent's outbreak, the government saying it will permit people to leave their homes for the first time in weeks. they would join countries like germany and austria easing lock downs.
in the u.k., prime minister boris johnson urging the public to keep obeying lock-down rules and avoid a disastrous second wave of the outbreak. w.h.s. saying this is far, far from over. >> we heard -- >> any sense that measures will be relaxed? >> let's have a look. singapore, housing options for migrant workers. the forsett looking into shared spaces for short and medium term lodging options. the lock-down is very, very restrictive, and it continues. it is marked contrast to what is going on here in hong kong. the employees will start to return to work on may 4. the philippines, another one saying that they may well be looking at an end to this
two-month lock down. it is scheduled to end in the middle of may, but it will only be modified. the government will only allow construction and other sectors to restart with social distancing remaining in effect. >> there is some good news. talk to us about new zealand? >> the prm is saying that they are making a move to open the economy. but she hayesened to add not people's social lives. the country emerging from almost five weeks of strict nationwide lock down on tuesday. offering the return to work for as many as 500,000 people. it brings up hopes there will be a pick up in economic activity and what we have is workers allowing to return to construction sides and take-away food outlets to reopen as well. this country has been in a strict self isolation lock-down, one the strictest in the world since march 26. >> thank you.
our markets company anchor with the latest. let's check on markets in china, getting closer to the lunch break. we are steegmans things we are in the asian region. we have bounced back from the session lows. the stocks turning positive. .8% higher for the c.s.i. 100. he shenn dozen erasing earlier losses. a lot of losses ahead. we are watching oil. after this oil e.t.f. sell-off, we are going to have volatility when it comes to the june contract. brent is down 4%, but not as bad as we are seeing at w.t.i. some of the boards, you are seeing we are inching closer to around $11 for w.t.i. we will see if it gets any further from that. this is extending the 25% we saw yesterday already. when it comes to palm oil, that is the one to watch here as
>> it is 11:9:00 a.m. in hong kong and singapore. 11:9:00 p.m. here in new york. here is the headlines. japan is adding 14 more countries to its entry bound list as coronavirus cases rise. the affected cases up collusion russia and saudi arabian people who have been in any of them for two before heading to japan will not be allowed in. the government had already banned 70 countries from entry as tokyo tries to stem the fall out. japan has more than 13,virus cases and 354 deaths. scientists in china say progress on a coronavirus
vaccine is at the clinical trial stage. the work is complicated and a treatment won't be available soon. they want to ease funding firms. s on china's new could cust cut the listing period from months to years. >> the dollar returned to the strong end of its trading ban. the monetary authority sold 13 billion hong kong dollars, around $1.7 billion u.s. following sales last year of 1 billion u.s. that was the first intervention since 2017. they ficials in seoul say young y un-- where young is? there has been speck lakes he may be critically ill. he missed birthday celebrations for his grand four.
the president said he knows where un is but can't talk about it. news 24 hours a day. crime this is bloomberg. >> let's take a look at where the markets are. asia reversing earlier gains. looking for clear direction, not quite getting there even as some economies talk about reopening. oil plunged 25% overnight in the u.s., w.t.i. down to $10. the nicole briscoe is down .2%. dragged bounty. the hang seng up by .6%. they have yet to decide if social distancing measures will be extended. are keeping an eye on hsbc, due out with earnings in 30
minutes. they have scrapped dividends, shocking investors. if hsbc is no longer a dividend play, it won't be so popular among retail investors. hsbc shares have lagged behind in five of the past six years. flip the page. take a look at where we are in terms of the indian market. we are waiting for the open. the news out there is revising down its economic growth forecast to-on-08% for the year, down from 5.% earlier. they opened higher by .9%. >> we have seen stocks on wall street going higher here on he hopes that lock-downs to eventually be relaxed in the u.s. and europe. what we have continued to see is a continuing rise in virus
cases, weak economic data. judging that perhaps this recent rally could have gone too far too fast. let's bring in christopher bearings head of institute. christopher, always great to have you. thanks for staying with us. looking at equities right now, we have seen rebounds and almost the entering back into bull markets from the march lows we have seen. do you think the recent rally is really justified given the fact we see bad georgia tech out there and there is now a second tweaf of infection? >> i think what is so difficult about the current situation is that so much of the data that we are getting right now, whether from governments or companies is lagging. it is always lagging, but in this case in particular we just have a very, very extreme reading on the blow we have
just suffered, and markets are still bouncing around trying to get a reading on where we will be in the third and fourth quarter. that is just very hard right now without knowing where the disease will be and how quickly people will feel comfortable going back to work, going back when es between now and there might be a vaccine. >> the collapse in oil prices, we are seeing that for a second day this week when it comes to the june contracts for w.t.i. it seems like the oil markets for now are willing to price in some of the harsh realities as you mentioned. are we likely to see other asset classes follow suit? >> the oil markets almost have to price in the current realities because of the storage issue that we are all so familiar with lately. there is just no place for the oil to go, and if you get it delivered and have nowhere to sell it, nowhere to store it, it has, as we just learned,
less than steer value. i think what is probably more relevant in terms of a reading on the pace of recovery it looking out at some of the futures contracts. you could see a moment where once the storage capacity in ld or consumed, very quickly command will come back and you could see the price compaq. probably not to where it was at the end of last year or beginning of this year, but certainly we will say goodbye to negative oil prices once the economy is back on track. >> in the long-term, christopher, it is about demand and supply still. do you expect oil to stay below $40 a barrel even after this pandemic is overcome? >> that is the hard part to judge right now. i think our team clearly sees that the long-term structural
case for oil will wring it back towards the high 30 et cetera and low 40's. i think the question is how much how much extra capacity is taken offline in this crisis. clearly we are going to see a lot of producers not coming back. where that all settles out, it will certainly be above current levels but below the high 40's or low 50's that we have seen recently. >> you know, we are awaiting the meeting where the fed is concerned. it has a big decision to make about giving more guidance on rates. what is your sense? should it or shouldn't it? >> i think market guidance is always helpful. think the fed has tried to be increasingly transparent about
the massive interventions it has made in the economy. it has tried to be more transparent about who it is supporting, why it is supporting them, where it is the initial forays to stabilize the commercial paper markses, whether it is the investment grade or high yield marks, the very important work it has done in swap lines with foreign central banks, international central banks and with repo markets with other emerging market economies. so i think the more transparency the fed is able to give to its own decision-making process, the better, and that goes to its rate forecasts as well. >> and christopher, there seems to be this emerging theme right now which we have been exploring with guests about central banks directsly or indirectly monetizing debt. we have seen massive fiscal
stimulus in world economies, and it doesn't seem like there are much plans to pay it back. do you think there are dangers ahead from this phenom, or do -- enefits outwhat he outweigh the risks. >> i think they would prefer we stop talking about it debt and that it will go away. now it is not going to go away. i think it is one of those issues where right now we just want the fire department to come and pour water on the fire and tomorrow we will wake up and complain about how the carpet has been ruined, and they broke down the door to get in. there is clearly going to be a long debate going forward about he debt that is now out there, about how and whether we start paying those tets down. i think the i.m.f. had a nice turn of phrase at its meeting a couple of weeks ago that governments should be spending, but they should also be keeping
receipts so that it will be clear once the crisis is past how we return to a more normal level. but i think we have to expect we are going to be living with a lot more government debt outstanding for a long time to come. that will create some new distortions to financial markets and new challenges to investors. >> right. that is basically our question of the day on how this whole theme is going to impact assets in general. how does the market absorb the supply now? you mentioned about some distortions. is it going to be in premiums? are global investors going to start getting crowded out? >> well, my hunch is that we are going to be moving from a low growth, slow return world for the next few years to an even lower growth and lower return world, at least in
public markets. i think that will put an even greater premium and greater each for yield as investment flows search out a lot more rivate markets, a lot more other opportunities they have been looking for over the last two years. now there will just be a lot more money behind it. fairry easy k is to see for the next can youle of years. how that plays out over the next five or 10 years is it anybody's guess, i think. >> christopher, it is earnings season, and the earnings so far have not been as bad as some would have expected. but quite a number of companies are ditching their guidance. what data points are you looking out for now with those guidance out of the way? >> well, to my mind, as i said before, the earnings reports
themselves are still very much a damage assessment rather than anything that will give awe sense of where things will land by the end of this year, which i think mainly is what is driving markets right now. i think what investors are looking for is a sense from the companies of whether they have a plan in mind to weather this storm, whether they have got a strong enough balance sheet to withstand the current shock, and whether they have got a plan in place to emerge in whatever they believe to be the new normal. some clearly, if it is a retail, or a service or an entertainment business, a lot of questions about how they do business in a world of continued social distancing. so i think there will be a lot of attention paid to the micro story that each individual company will be able to tell. maybe because there will be so little guidance going forward, we won't get much of a sense of how that plays out in terms of
a macro story by the time we get to the third and fourth quarters. having said, that you are absolutely right. it has been so far only about a quarter or a third of the s&p has recorded, a much better than expected set of earnings. >> christopher smart, we thank you for your insight today. plenty more to come. u.t.i. international c.e.o. joins us to look at the fall-out after franklin templeton's indian fund freeze. this is bloomberg. ♪
♪ >> a quick check of the latest headlines. cathay pacific says it will further reduce pacific flights down to what it calls a skeleton service, 3% can capacity. they have suspended flights. they will continue the level of service in the first three weeks of june and then increase flights slightly to 5% capacity from the 21st. a unit of china's on bond group is suing a group to force a screen company to complete a $5.8 billion luxury hotel buy-out. they claim they are reneging on deal because of forced hotel
closures because of the coronavirus pandemic. the deal was due to close on april 17th. and they have asked for more team. alibaba is said to have demoted the finance chief. it took away a year's financial incentives and removed him from a partnership of 38 people who influence the board's makeup. he was also noted to vice president from senior vice president. >> the bank of india has announced a special liquidity facility for mutual funds worth $7 billion. franklin templeton chosed six debt mutual funds due to a cash crunch. they think the r.b.i.'s boost is a quick fiction. let's bring in praveen jagwani of u.t.i. manage. food to have you with us.
it is ease the panic, but it won't end the problem? >> would you repeat the question please? >> so what the r.b.i. did is just easing the panic, but not solving the problem? >> well, that is absolutely right. right now the country looks in panic. as you know, the market swings between fear and freed, and the here is liquidity in the system is getting r.b.i. to come out and get the banks to lend so the asset management industry. which is somewhat questionable, i would say, because in less portfolios in india expect. that translates to about 40 million individuals. in a country of 1.4 billion people, tries to ease the problems of 40 million i would say should not be r.b.i.'s prime trend.
>> do you see contagion in the banking sector? >> not really. in fact, for the first time in many years now, the banking system is flush with liquidity. the reserve bank of india reversed the reverse ryan to 3.75. that suggests the banks are flush with liquidity. what is not happening and hasn't been happening for the past year and a half or two years is improving credit. as of now of course the country is in lock-down. it is a very hard lock-down compared to most other countries. but when the lock-down does eventually get lifted, the country will need massive amounts of liquidity for businesses, mostly small businesses, to go out and hire, buy and sell again, all the good stuff that gets the economic engine going.
>> as you mentioned, banks do have the a. liquidity. the question is, is there a willingness among them to consider lending to corporate bonds that are rated junk? that remains the most liquid part of the market. >> i hold the opinion that market forces should take the natural course. junk rated bonds should not be able to survive, coming general us events like this. they tend to be inversely related. if a central bank comes out to protect the holders of junk bonds at this stage, which is in a market gripped with fear, the question remains with the central banks always act with the market is full of excessive greed. you can't have the central bank come out on one side of market excesses and not on the other side. as of now, it seems to be
protecting the hold up of junk munts, which are in the mutual fund industry and some of them in the banking sectors, which to me are market risks, and the holder of the market risks knew exactly what they were getting into. so it is only fair that they also take the risks that come with it. >> so is it too optimistic so think that refinancing should come from the banks, and maybe this is a role of the r.b.i. to take action more directly, to offer some type of back stop? >> so i would say yes. of fiscal side of gains by the government to help the needy, the bottom of the pyramid to restore livelihoods, put money in their pockets so they can get shelter and food. but helping the banks to manage their bad loans to a junk
category, i think that is a bit of he an out-reach at this point. we have seen from the great financial crisis of 2008 that trying to give a lot of liquidity and low interest rates, it doesn't really revive an economy. we have seen it in japan for 25 years. india seems to be falling into the same trap as the rest of the world, where they have very little ammunition left for the central bank. we have seen it with the e.c.b., the b.o.j. and the fed. it has ammunition now, but i think it is spending it too fast. >> we are going to leave it there. thank you, praveen jagwani. the restructures plan will be in focus as first quarter results are due in 20 minutes from noufment we will will have a preview next. this is bloomberg.
>> hsbc is in focus today as it reports first quarter results that are sure to put the u.k. agent focus learned under increasing pressure because of the coronavirus led economic downturn. our lead correspondent joining us now for a preview of the results due midday today here in hong kong. steve, they have already halted
a dividend. what more can we expect? >> hopefully some guidance on the extent of the damage globally to trade flows, to mortgages to corporate clients, the loan loss exposure amid the coronavirus outbreak. that is what we are going to be looking at. you talked about that dividend that has been halted. that did not pleases investors. this stock is down 35% year to date and scrapping that atract is not going to people to the stock. it is above $40r million. it has dipped below $40r for the first time since 2009. but still there is a lot of pressure on noel quinn. he is the now permanent c.e.o. he had that interim title taken off a month ago, and it is his first set of quarterly results as the permanent c.e.o. he will be looking at revenue, whether it foes lower amid the lower interest rate environment
globally. that dividend halt, any guidance on whether it resumes later is very much watched for. and also the transformation plan and job cuts. they are pausing plans right now during this coronavirus outbreak to cut 35,000 jobs as part of a cost cutting move. we are going to be looking for those loan loss provisions. bloomberg intelligence believes it is going to be quite stiesable. >> we are also looking for quinn's transformation plan, steve. are we likely to get much clarity on that? >> investors are hoping to get more clarity and what amendments are needed not fazed approach to that $4.5 billion cost saving problem that is tasked to quinn. that will indelude about $100 billion gross of risk asset reduction. it also plans for about a 10% to 12% return on capital. and bloomberg intelligence is expecting a phasing of that cost cutting program, maybe $1 billion this year in savings,
then another up to $3 billion in 2021, and then really the rest, up to $4.3 billion back end loaded as the bank defer that is head count reduction. any guidance on those 35,000 job cuts and how that will be fazed will be very much watched for by investors. also keep in mind confer going to be looking at what the extend of hsbc's exposure to that singapore oil trader, that trading house subject to a police investigation on all those oil trading losses. >> hsbc earnings out in just minutes. that sour asia correspondent steve engel in hong kong. don't miss other interview with the hsbc c.e.o. on bloomberg day break europe. that is at 1:50 p.m. hong kong time. a quick check of the latest headlines. west bank is taking a loss of the equivalent of $1.4 billion
u.s. that may raise further. it takes the title down to more than $2.3 billion with the bank had flged other provisions earlier this month. aside to de setting help a breach in moneyy laundering. >> we are told the regulator moved in at the request of the sec, which over sees the nasdaq. the stock has plunged since the company admitted some executives may have fabricated numbers. they say it is cooperating, and operations are not halted. >> taking a look a lot markets, mumbai just opened in the last couple of minutes. we are seeing some positivity there. it is up .8%. it seems like that r.b.i. aid for the mutual funds is helping sentiment out there. .76. holding around
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♪ yousef: this is "bloomberg daybreak: middle east." etf seese biggest oil june futures holding. asian stocks are mixed after a positive session on wall street. yousef: hsbc reports first-quarter results anytime now and will likely point to a loss due to coronavirus. manus: dubai has eased some strict