tv Bloomberg Markets Asia Bloomberg April 29, 2020 10:00pm-12:00am EDT
it takes to develop a vaccine. . despite orders from the top we'll get to earnings in just a bit here. we are dealing with optimism in these markets. as you mentioned, all signs of progress when it comes to a drug treatment in the coronavirus fight with gilead. it looks like now things looking pretty good to and shortened week for us. keep in mind a lot of markets will be closed today, hong kong, macaw, vietnam tomorrow as well. futures pretty much flat. largely brushing apart the contraction we saw in u.s. g.d.p., china p.m.i. numbers is a side show as well despite the fact that we saw that continued expansion. there was a slight moderation in
the p.m.i. we'll dive deep into this in a bit. look at the boards. the dollar still holds on to the retreat. that is helping some asian currencies out there. e're holding on 706. we were near the 100-day moving average. we're siegristance now that the dollar seems to be hovering around the two-week lows despite the fact but we're seeing the dollar-yen pretty much at 168 but seeing at least six days of gains so far for the japanese currency. watching oil price. we see it climbs once again. you are seeing w.t.i. futures. 4% higher for brent crude. gold snapped out of four dives
declines. it is largely unchanged. hovering around 62 basis points now. >> we have the first official gauge for china's economy in april. weakened again. investors are waiting to see what steps the pboc may take to bolster the economy. our guest from citigroup joins us this morning. what is your assessment of the p.m.i. data that we got. nonmanufacturing. manufacturing below the forecast. still in expansion territory. are we going to get the sustained strength in may? is that external demand picture going to drag? >> it will certainly be a drag but my readings of the latest p.m.i. reading, on the manufacturing side, i don't think that is really a big surprise. where there is a little bit of optimism there is manufacturing activity. there is always a question to
what extent the services sector and consumer choice and behavioral shifts will change as people feel more confident about the virus. we see a little bit of improverment there. much more beyond what was expected. china seems to have contained the second wave. if they can build on that, that will positive. lingering pressure among the small businesses. one of the key things i think they will look at is exterm demand is very challenging. in the u.s. things are going to get worse in the second quarter. china has a meeting scheduled may 22. we hope for more policy support coming into the market, coming into china's economy from the government. > that is key, isn't it? they have made a strong point saying we're not going to get
aggressive with the stimulus. are we setting ourselves up for disappointment if we don't get additional steps? >> there is always going to have to be a little bit of a management in expectation. when you compare china now to where we were prior to the global financial crisis, i think the build-up of leverage, the concerns of fiscal policy, i think that will continue to be a constraining factor in terms of the size of the stimulus. having said that, i still think they can do a lot more than what they have so far and layerity on that in runup will be very positive. plus the fact that i think globally, earlier there was a bit of concern about inflation in china but pretty much now i think inflation concern has dissipated and gone into the back burner and the bigger source is the worry about the demand and the lasting impact that has. i still think we'll see something. g.d.p. t is about 5% of
not as huge as it was post the global financial crisis but it is bigger than what we had in the previous years and that hope fully can enable some confidence to be bolstered. >> we have been seeing globally when it comes to stimulus, it is mostly targeted towards keeping jobs and keeping businesses afloat. what can governments actually do to stoke that kind of consumer ending as you have been saying. how do you get people to espn again? >> you have to contain the virus. that is number one. don't contain the virus, then really you can't expect people to go out and socially engage. i think governments have to do all they can to do whatever health expenditure mitigation they can use and at the same time not only provide the kind of support, social safety nets, social insurance. en get out of this pandemic,
the lasting damage can be mitigated and we can have recovery. when you look across asia and the rest of the whole world, really we find in some more developed markets, the richer economies to begin with that have more fiscal space and financial and policy tools at their disposal are announcing a broader sweep. job support. unemployment insurance. cash handouts. also some amount of fiscal or bridge financing. when you come to the lower income developing economies, what we find are the fiscal constraints are much more acute. they can really only spend on health or cash handouts. quasi fiscalfiscal -- rt on individualal
ndividual house holds. that chris other problems that will outlast that pandemic crisis. >> what you're seeing now is central banks, at least some are -- by bonds. yaze is a prime example of that. does this open a whole layer of risk here where these economies have fragile currencies and could stoke some inflation now and capital flight as well? >> where we are at the moment is we're providing avs for new mechanisms for tools from one pos policy. some of these are a mandate of maintaining financial stability. you have to intervene. central banks have policies constrained. you're right. it raises some concerns about the relationship in the government and the central bank. some of the objectives is
indistinguishable from ob jectives related to government debt management. these are things we need to watch. having said that, they are opening up the tools and how it is actually used in operation is something we still need to see. i guess the longer this crisis drass out, the worries that the burden on the fiscal side will grow and grow and in order to contain and manage the implications, more and more central sblanks go down,000 route. the question is will it have unintended impact on capital flow? yes, certainly that is one of he things that distinguishes developed countries and undeveloped countries. korea and thailand, i don't think it is as big of an issue but may be more con training for
developed countries. the demand is so large. that is not a big concern at the oment. how do you exit from unconventional monetary policy is something we haven't tested yet. but again, maybe at the moment it is a bit early to worry about that. >> too early to talk about exit strategies at this point. have great weekend. joining us on the phone from honk congress. >> good morning to you. president trump says he sees light at the end of the tunnel in the fight against coronavirus with the fourth quarter of the year to be really, really good. he said the come months will be a transition period echoing predictions from his economic advisors. the white house has been urging states to consider reopening their economies as the number of new cases starts to slow.
meanwhile the president says he thinks china wants him to lose the election because of his response the the virus outbreak. he declined in offer any evidence for his claim but said he is considering how the punish beijing for allowing the infection to spread across the globe. washington and beijing have been firing barbs at one another over the pandemic for weeks. germany says the pandemic is pushing economy to its worst ecession since world war ii as households collapse across europe. the low point is expected sometime in second quarter. the government hopes its trillion dollar rescue package will help limit the damage. japan's 47 -- are expected to ask the government to extend the state of emergency as coronavirus numbers continue to rise. the situation remains severe. unemployment claims are surging
in southeast asia with almost 9 million people asking for aid in indonesia. hong kong says the economy will contract by as much as 7% this year as the virus fallout adds to pressure for months of anti- china protests. the g.d.p. reading is due out monday and may be worse than was seen during the financial crisis. hong kong has been in recession since the second half of last year with tourism, retail and entertainment fall under severe pressure. global news 24 hours a day on ir by bloomberg. this is bloomberg. tom, back to you. >> thank you. now still ahead on bloomberg markets asia. apple could be facing an spinch phone double whammy. weakened demand and supply chain
yvonne: the u.s. government's top infectious disease expert says a clinical trial of a coronavirus treatment shows promising results. that accepted send u.s. markets soaring despite bad news on the economy. the data shows that remdesivir has a significant effect on diminishing the time to recover. onne: it seems like even investors are trying to be especially deemologists at the moment. i'm not sure how we're going to
interpret that involvement. >> the jury very much is still out on how well it works. the main reasons are this. first of all even though anthony fauci said it met the overall target, full details have not been published. the only large study that has public data is the chinese study that showed it did not help. these are only preliminary findings. only about half of the 1,000 patience in the trial were included in this review and the final results can be different. the results will not be clear until it is closely examined by outside scientists. we know it helped patients who recovered get better faster than those who took placebo. it showed a trend toward survival. it is not clear if it is due chance. results of ed the
the chinese study. involved 100 patients and showed remdesivir didn't help them get better and didn't have an effect on deaths. side effects included heart failure. tom: you have to wonder fauci is under pressure from trump to talk this thing up. they are calling this operation warp speed. what do we know about this? >> the trump administration is trying to put together private pharmaceutical companies and government agencies to cut the time for a mack seen by as much as eight months. de operation warp speed, officials told us the goal was to have 300 million doses available by january.
there is no precedence of having a vaccine this quickly. anthony fauci said it won't be available for 12-18 months and that is the very best optimistic from jex. the sources we talked with said the government first tested the vaccine on animals and then clinical trials to narrow down the candidate and then those candidates would go into a wider trial at the same time mass production ramped up. i want to point out the financing here. they said it will cost billions of dollars and tax payers would shoulder most of the risk instead of drug companies. it is unclear how much of operation warp speed is new and how much will involve ongoing projects. tom: thank you very much. now facebook surged in extended
tom: welcome back. facebook jumped in late trade after an 18% increase in first quarter revenue showing strong advertising demand before the covid-19 pandemic hit. which sectors were under the most strain? >> i would say we're seeing weakness in some of the logical categories like travel, auto. we're seeing strength in places like gaming, people are driving app installs. ecommerce. that is giving you some of the flavor.
it is pretty broad based. i would not say it is concentrated. yvonne: how about geographically? are you seeing registrations performing better than others? >> if you look at our top countries by user, every one had some sort of lockdown measure in effect right now. it is pretty broad across countries. in terms of advertising regions, you know, we do have an advertising business in china y it is an export-driven business. we don't have users in china. we have advertisers in china trying to reach users outside of china. we saw that come out more quickly early in q 1. we're seeing a bit of a recovery in china. some of that with the verticals. a lot of the advertisers are in place. they are doing better. but we did see that more quick droffoff in china.
yvonne: what is your timeline for bringing people back to work, especially given that there will be some government guidance but you could choose to be more cautious than government. >> yeah, i think we will be more cautious. we are blessed with being able to work from home and being able to operate relatively effectively. i don't think we're operating at tarp to but we have 95% of our people working from home. we're able to ship new code. we're able to moderate content and keep connected with our business commerce. we're able to do a lot of the essential functions without coming into the office. we have a handful of employee who is do have to go in. safety is the focus there. we have people in our data centers. we focus on safety for those folks. we can do our jobs from home. we want to make sure the
infrastructure is there. we don't want to overload public transport by going back too quickly. yvonne: you recently did a $5.7 billion deal in india. are we going to see more investments like that? will they be more like investments or partnerships? >> this is a very special -- india is a very special market. this is a very special company who has done great things to bring hundreds of millions of people into the digital world. so geo is really an exceptional effort. india is an important country for us. it has been a driver of growth for facebook for many years now. india is kind of a critical market for us in the long-term. we were really fortunate to have the balance sheet to be able to make an investment like in this a toubled economic environment. so you know, we're pleased with that. we look forward to partnering
with geo platforms to help small businesses connect with our whatsapp and drive commerce and payment through that. >> it sounded like they indicated yes, you would be doing more of this. can you shed more light on regions or economies in particular that might pique facebook's interests? mark talked about generally hatsapp and the payment front. across the global. there are global opportunities to do that. this was clearly a special opportunity and something that warranted the best investment. yvonne: that was facebook c.f.o. david wehner speaking with emily chang. southeast asia's largest lender
posted its first profit decline since 2017. net income fell 29%. equivalent of 829 million u.s. dollars through march. more than a billion a year earlier. they announced a quarter profit decline in the september period of 2017. australian banks report a flung profit with earnings down 50% in the first half as the coronavirus sent bad debt provisions soaring. it fell in the six months through march. the melbourne lender says it will defer dividends until the economic climate is more clear and the coming months will be difficult. india has dismissed an appeal by vodafone's local unit seeking a tax refund from the government. the panel agreed to return of only 96 million before closing the case.
it is another stepback from odafone. vodafone owns about $7 billion of that. tom: you have nikkei leading the pack. that is up 2%. you have the commentary from the b.o.j. saying they are going to be looking at 75% e.t.f. purchases. china seems to be brushing off concern about p.m.i. data. 1%.are the c.s.i. 300 above in indonesia as well currently trading at 1%. the general sentiment is positive on the back of the moves around, developing a vaccine and treatments for the coronavirus and continuing to hear that some countries are eegs restrictions around the this virus. we're leading into a holiday in mainland china. a four or five-day national holiday. that will be in focus as well.
tom: we had earnings out from one of the biggest tech companies. softbank has widened its net loss forecast for the fiscal year through march by 20% to ¥900 billion. u.s.is around 8.5 billion dollars. masayoshi has been struggling with his portfolio. microsoft quarterly sales and forit rose for demand internet-based and cloud services to accommodate a shift to remote working. share,came in at $1.40 a topping analyst forecasts.
tesla sword after boarding -- after reporting it totally profit, but it backed away from guidance as to how the rest of 2020 might look. investors welcomed the news, but muskall was featuring elon ranting about how virus restrictions kept workers at home. >> to say that they cannot leave their house and will be arrested if they do -- this is fascist. this is not democratic.
this is not freedom. their freedom.k yvonne: turned out to be a pretty exciting earnings call. let's head to minneapolis for more on tesla and what to expect out of apple later on. gene, let's start with tesla. posting surprise profit in the first quarter. we saw the stock surge. it has been on a tear despite the massive cash burn and uncertainty of when they will resume production in the u.s. why do you think that is? >> we should look at the quarter not just in the financial results tonight, but what they reported on deliveries three weeks ago. the reason why the stock continues to move higher is they are the best positioned automotive maker for the next decade. evidenced by their growth and u.s..ries plus 40% in the not a perfect comp, but the u.s. auto industry was down 29%. we are talking a 70% gap between those two. that is one thing, that people simply want their cars. fast forwarding to tonight, what was impactful was the margin on those cars was
better-than-expected. they improved their gross margin shows8.9% to 20%, which some efficiencies in the model three production and model y being as profitable in its first quarter production. and a half a year ago was the the tesla story, extreme pain in building the model 3 in a profitable way. what they are showing is, one, a greater mastery of production, and separately, a product line that consumers want. that should justify a company that is worth more than its current $160 billion. nearly that cash burn of $900 million though. it is largely due to the production constraints in the u.s. and their fremont plant, but they have a huge chunk of inventory they can't sell because of the pandemic.
is this going to be a concern or will investors overlook this? gene: thank you for reminding me. that was the substantive question, that cash burn. you are right. they have 14,000 vehicles that, normally at the end of the quarter, they will surge in deliveries. they deliver vehicles the majority of the last few days of the quarter. in this case they got shut down
10 days before the end of the quarter, so they weren't able to deliver that. they spent the money on these cars, but hadn't taken the revenue. this was an anomaly. they will start to deliver some of those cars in the april quarter, which helps cash. sur takeaway is that 2020 i still going to be a wildcard year for tesla. this company should grow in valuation over the years to come, but ultimately there is still a lot of unknowns outside control about what the june quarter looks like and what will happen with the cash burn in the june quarter. the good news is they have over $800 billion at the end of last quarter, so they should be able sustain this level uncertainty for about a year and a half. they've got plenty of cash. very different story than a year and a half ago. tom: one of those uncertainties is the supply chain issues tesla faced, along with other companies of course. did we get any transparency on progress they are making on that issue? gene: it sounds like -- there are many parts that go into a car, many suppliers -- it sounds like the majority of those are back up and running, but you need all the components to manufacture a car. there are changes in some of those suppliers to tesla, even today. it is a week by week basis. the simple answer is that in the june quarter there will be
headwinds that could potentially be messy for tesla, as well as most companies, on things like production. it is to be determined. the way we think about that is when mobility has not changed in 100 years, tesla is changing that with autonomy. a few quarters of a lot of messiness is a small piece of what is a massive shift in the years to come. tom: gene, we want to get your thoughts on apple, but before that, what is your price target for tesla at the end of the year? decide whatnvestors the exact price -- i can say the company is leading in electric autonomy. it should be worth more than $160 billion, meaningfully more. this should, over time, be a
$200 billion to $300 billion worth company. yvonne: switching to apple now, this will be the next big one. in february they said they would miss their revenue target. how bad is it going to be? how do you think apple held up during these extreme times? gene: they are going to get a pretty good headwind in march and june. if you look at the google results -- they have a small hardware business -- but they said that business was more acutely impacted than their search business, which held up well at the end of the quarter. it was flat in the last three weeks of the quarter. to answer your question, how do we think this plays out for the march quarter? apple, the iphone revenue could be down 20% year-over-year. it could be down a similar amount in the june quarter.
we are bracing for some bad news, but i don't want that to that,strued as -- despite i think the stock can move higher on the bad news. we have heard comments from facebook talking about improvement, stabilization were the words the ceo used. you heard google two nights ago talking about some signs of returning to normal. any indication about life fractionally returning to normal will be a positive. the benefit apple has is they are one of the few u.s. tech companies that does a lot of business in china. they can use some of the in how things are recovering. it could be encouraging for apple investors that the wave of recovery will come in the months ahead. yvonne: how do you think services are going to fare
during these lockdowns? people are stuck at home for much of the quarter. do you think it is enough of an offset in the slump in iphone sales we could see? gene: it will not offset all of it. iphone revenue will be down 20% in the quarter. the good news is the services segment should be up 17%. that is compared to 15% growth in the previous quarter. about then unknown google contract as a measurable part of the services business. then there is wearables. it is about 8% of apple's overall revenue. we have tracked it based on periodic comments they have made. we are confident these numbers are within a small amount of the actual reported wearables numbers. we think the wearables segment will be up 24%. bad news is iphone gets hit, good news is services and
wearables continue to do well. i think the company is doing a brilliant job of weaving together hardware and software services unlike any other company. i fast-forward to what they are doing in health care and 5g and wearables and one of the fundamental reasons i think why apple will be one of the best performing stocks this year. about $100ey've got billion cash pile. do you expect them putting that cash pile to use? will the change their -- they change their buyback policy? gene: i think they will leave it as is. some expectations they will raise it materially. there is a precedent for that. abnormal.s are i think they will maintain that. they do have a goal of reducing
their cash balance. they want to be what is called net cash neutral, which means essentially they have almost $100 billion they want to return to investors. they have not given a timetable on that. i think they will maintain their dividend and revisit the quarters ahead if things do stabilize. tom: thank you very much for your insight. tesla has more ways to run. apple the best-performing stock in 2020. the big three state run chinese airlines lost $2 billion as the coronavirus upended travel demand in the country. more on that topic next. this is bloomberg. ♪
tom: china's oil majors are slashing spending plans this year as they try to whether the crash in crude demand. let's get more from markets, anger rishaad salamat -- c oancher rishaad salamat. this is political pressure for them, but they are not doing it now. rishaad: let me get to what happened with these profits. no surprise about them turning to dust. operating in the face of this global pandemic and overall demand destruction
unprecedented. net losses due to the collapse in crude prices. both companies pointing to further losses on the value of inventory. there figures don't reflect the even bigger fall in the oil price we have seen this month. it means they are slashing capital spending. the nation's three biggest slashing expenditures by a combined $19 billion. petro china seeing a 32% chop. they are leading the way. cut amonge fattest the global majors. let's get to the political dimension. politics and oil, who knew the two go variably hand in hand? the country's leadership does not like that. the increase in spending to reduce the amount they buy abroad refers to decline in
chinese indigenous oil output. cuts in spending mean that hope is dashed for a while. to make matters worse, these cup needs are unusually sensitive to loyal -- these companies are unusually sensitive to low oil prices. $41 a barrel is just to break even. compare that with $13 of saudi arabia and $11 for iraq. that is what they are looking at for the time being, at least. how are airlines in china doing? normally low energy costs are a boon for them, but they are dealing with marginal increases in the domestic demand in terms of travel. having: it is no good fuel prices at record lows if you are not flying. chinese airlines having a slump in earnings. travel demand falling off the cliff.
-- thens may be signs of the worst may be over for them. china had a loss of 700 million. these hairlines operated at half -- airlines operated at half the capacity of pre-pandemic days. the domestic side picking up at the moment. a slow return to her normality. -- to normality. there is no tourism either. let's look at hong kong. international travel is all that cathay pacific does. bloomberg intelligence saying it will have its first quarter losses close to 6 million u.s. dollars. it is an extrapolation. they say if travel demand remains where it is, those losses may benefit should competitive sales have difficulty scaling back up when demand recovers. the airline is gearing up to increase capacity to the end of
june. there is an old saying in the aviation industry. it is that the easiest way to become a millionaire is to be a billionaire and set up an airline. back to you guys. yvonne: a wrap up of these earnings from china. coming up, we will talk about india's largest company with its first rights issue in 30 years as it steps up efforts to pay down debt. this is bloomberg. ♪
covid-19 response in china in mid-january. we are now in week 15 in china. we have learned important things from that experience. the first is there are phases that every market around the world goes through. the first phase, we refer to that at the mitigate and contain phase. that lasted for three weeks in china where people were asked to shelter at home, businesses were shut down, social distancing -- all on the focus on how to flatten the curve and slow the spread of the virus. coming out of the mitigate and contain phase, we transition into what we call monitor and adapt. that means we begin to reopen stores, but we reopen them with different protocols, amplifying safety. often times it is mobile order or pickup only. we did that in china while at the same time we monitored the
number of covid cases that might pop up in cities around china. in the u.s., we are now coming out of the mitigate and contain phase. we have been through that in to reopen-- we plan over 90% of our starbucks stores by early june. in fact, next week, the majority of those stores in the u.s. will reopen. we will reopen using safety protocols we developed in china and adapted for the west. we will reopen in a way that provides customers a safe, familiar experience. it is referred to as homecoming week. we have been sheltering at home and are ready to get out and do something, but something that is safe and responsible. that is the balance we would like to strike in the monitor and adapt phase. >> you have the vast majority of your stores in china back up and
running. you modified your hours, how many people can be there. the same-store sales are down somewhat. can you tell how much of that is from reluctant consumers coming back out or having shorter hours? kevin: it is a combination of all of those things. i do know that in our store protocols, for example, in china most stores are open for customers to take away in china. some stores have limited seating so we can enforce social distancing. one of the differences between china and the u.s. -- in the u.s. pre-covid, many customers were for takeaway or to-go. the u.s. consumer was much more on the go. we think, opening in the u.s., we will get a significant result.
the positive news is every week we see progress in china. we open limited seating. in the u.s., we are optimistic that by the end of may or early june we will have a much better perspective on how quickly this is going to recover. david: do you have any projections on how the overall state of the economy and employment situation might affect consumers coming back to starbucks stores? in the u.s., we are in a recession. could this put downward pressure on your volume? starbucks --nly, we have gone through recessions in the past. if the past is an indicator of how customers behave, we think we will be in a strong position. we work to have a premium experience and build long-term, loyal customers. what we offer is an affordable luxury. even in times of a recession customers are looking for
something to uplift the every day. if it is there daily starbucks or -- their daily starbucks or maybe they cut back a little bit, there is an affinity customers have for starbucks. we work hard to earn that trust. that carried us through recessions in the past. yvonne: that was the starbucks ceo kevin johnson. india's largest company by market value is planning to sell shares to its investors for the first time in 30 years. a stepped up effort to pay down debt. this is the third fundraising reliance industries proposed in recent weeks. let's get more with our india conglomerates reporter. what do you make of this rights issue? >> very interesting. this is happening for the first time in the last 30 years. showing some confidence in the company. time thehe third
company is seeing capital raising in weeks. they announced in a vicious saudi aramco deal -- an ambitious saudi aramco deal that was delayed because of covid issues. the other was a facebook deal. this is the third one. -- it is expected this will help the company bring down its net debt level 20 by next year. -- level to zero by next year. lost theink we just line. a technical gremlin. these things happen on tv. the latest on reliance. in terms of what investors will be looking at when it comes to these reliance earnings, what
else will they be focused on? p.r.: they will be looking on the potential of the saudi aramco deal, which is very critical for their ambitious program of making a net debt level to zero. they will be looking for additional commentary on the facebook deal. they will be looking at the ratio for the proposed big rights issue announced why the company. company. yvonne: our india conglomerates reporter in mumbai with what to expect with reliance. taking a look at the next hour, we will dig into more earnings and uncertainty and speak exclusively with elizabeth gains. we have the copresident for asia-pacific mastercard joining us in the next hour. you don't want to miss those
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>> it is almost 11:00 in singapore. i'm haslinda amin. yvonne: we are entering the last hour of the morning session in hong kong, although we are closed today. asia-pacific markets rise on hopes of a treatment for the coronavirus. oil futures rebound. and the dollar recoups some of this week's losses. president trump sees light at the end of the virus tunnel. he says he may punish china for
the pandemic and says beijing wants him to lose the election. fortescue sees robust iron ore demand. we are joined exclusively this hour by group ceo elizabeth gaines. this is bloomberg markets: asia. haslinda: asia strongly in the money after that strong rally overnight in the u.s. there is optimism after we saw gains in earnings from facebook, tesla, microsoft. progress inm making the hunt for a vaccine. the fed says no rush to end stimulus. the nfci is trading up by more than 1%. -- msci is trading up by more than 1%. the nikkei 225 trading higher by 2.5%. japan back from a holiday, playing a little catch-up. auto companies leading gains, hyundai and toyota among them. up for a fourth
day, higher by 1%. investors pretty much brushing pmi,ina april factory which missed estimates by a little. taking a look at where we are in terms of the dollar index, up by 1/10 of 1%. yvonne: taking a look at other assets, oil remains the big focus this week. we have seen a decent rebound in the last 48 hours. 12% gains for wti. brent also higher by 9%. we are extending those increases during the asian session. u.s. ten-year has not moved much in the past few days. but we saw big moves after the fed meeting on the two-year yield hitting the lowest in nine years. u.s. futures positive now, up by
1/5 of 1%. this is the set up for the session in mumbai. a lot of markets will be closed today as well as tomorrow. pretty short in trading this week. nifty futures up to percent higher today. rupee last closed at 75.67. your indian 10 year yield not moving much at 612. first word news, we are watching the latest when it comes to president trump, saying he sees light at the end of the tunnel in the fight against coronavirus with the fourth quarter to be "really really good." u.s. business leaders say the coming months will be a transition period. the white house has been urging states to reconsider or consider reopening their economies as the number of new cases slow. japan's 47 prefectures are set to ask the government to extend the state of emergency as coronavirus numbers rise. a tokyo official says the situation remains severe.
on climate claims are surging in southeast asia with almost 9 million people registering for aid in indonesia. the labor market is slumping as well in singapore amid its sharpest contraction since sars in 2003. haslinda: germany sees the pandemic pushing the economy to its worst recession since world war ii as business and household confidence across europe. gdp is forecasted to fall by more than 6%. expected sometime in the second quarter. the government hopes its trillion dollar rescue package will help limit the damage. industrial production fell for the second month in a row in japan as the coronavirus increasingly disrupts global supply chains and demand. factory output dropped 3.7% in march, following a slower decline in february. the fall was slower than economist expected. a ship at report -- a separate
report shows retail sales slumped from the previous month. yvonne: policymakers are fighting back against the coronavirus. fed chair jay powell say more needs to be done in a u.s. pumping money into exporters during the slowdown. kathleen hays is here with the key gauge of china pmi numbers. would you say china is winning the war against the virus? kathleen: the problem for china wonhina does seem to have the war in terms of getting people back to work. we saw a couple months ago in china's manufacturing pmi, but china can fight the rest of the world's wars. as the pandemic spreads, we are seeing this hit china. andfacturing pmi to 50.8
april from 52. services pmi is going up to 53.2. it is pretty clear when you work , the pmifacturing pmi that brings in the small and medium-size companies, you can see there are export headwinds on the rise because the pandemic spread, i the reports of new orders -- either the ne reports -- the reports of new orders getting canceled. look at this bloomberg chart. overall, new orders are pretty steady around 50.2. that is the white line. the greenline, new export orders down to 28.5 in february. they came back to the mid-40's. new export orders in april looking pretty bad. this is because we see the u.s.
having this dramatic slowdown. we have europe in a dramatic slowdown. war,may have won their own but they have to see what happens to everyone else. it was interesting when jay powell was answering reporters' questions. key rates still near zero. he had three big medium-sized risks. one of them was the risk that this global slowdown is something where everybody gets hurt. we all hurt together, we potentially go down together. it was prescient to see china make that remark. ofries for a lot policymakers. haslinda: the fed will keep rates where they are and use all the tools, and still more needs to be done. kathleen: some people thought maybe he will signal something down the road, we will have a stronger rebound, discussing this issue about when he might raise rates. far from it.
he says the economy needs forceful measures. this heart breaking situation for so many workers. he says the current rate stands is appropriate and will stay in place until a solid recovery is underway. he was pressed further about more steps from the fed and treasury. let's listen to what jay powell said earlier. chair powell: congress has reacted quite strongly with the cares act and other laws, several other laws. that is appropriate with enhanced unemployment insurance and the paycheck protection program. we have seen a historically large reaction. i would say it may will be the case that -- well be the case that the economy needs support from all of us if the economy is to be a robust one. kathleen: what underscored this? u.s. gdp in the first quarter shrinking at a 4.8% annualized
pace. the recession has begun. the worst decline in the economy since 2008 when the great recession was just getting underway. consumer spending down 8% year-over-year. jay powell talked about an unprecedented contraction in second-quarter gdp. bloomberg is looking for a 37% drop in gdp in the second quarter. the biggest one in the survey, 65%. we get those payroll numbers a week from friday, gdp trending by 22 million. jay powell is looking down the road and at this point, it is not over. the battle continues. haslinda: the markets brushing that off. still to come, we unpack mastercard's latest results and find out how payments are being affected by the pandemic. our exclusive interview with its
yvonne: fortescue metals reported a 10% rise in third-quarter iron ore shipments. it also raised its annual shipment forecast despite the pandemic. it sees strong and ongoing demand from its product from the top metals consumer. let's bring in fortescue metals group ceo elizabeth gaines from perth. thank you for your time today. we got the china pmi numbers. it shows an uneven recovery
there. what is fortescue's read on the recovery? is it safe to say in terms of steel input, it could top last year's volumes? seeingth: we are already good calendar your performance in chinese crude steel production. chinese crude steel production was rent 234 million pounds. that was up year on year. throughout this period, we have seen strong underlying demand for iron ore. we have been shipping in accordance with our usual schedule and are seeing iron ore stocks in china drawn down significantly by 11 million tons since the end of 2019. we are seeing economic activity resume. we are seeing steel inventories start to increase. we are seeing strong demand for iron ore. that is from the strong record third-quarter. we shipped a record for
fortescue. at 30.9e months we are million tons. yvonne: the steel industry in china set up a warning as well in terms of the nationwide stockpiles. we just showed a chart of that when it comes to steel rebar. that swelled to a record in march. does that dampen the expectations of chinese imports? elizabeth: it did reach a record in march. we are watching that closely. it is an indicator of economic activities. we have seen those stockpiles start to reduce in april. that coincided with the easing's of restrictions -- easing of restrictions on finished steel products. we are seeing those inventories come down. at the end of march there was still only a tiny proportion last year of one billion tons of crude steel. as we see economic activity
recover, we start to see those stockpiles drawdown. we are not seeing any impact on demand for iron ore. we have seen supply disruption from other producers. in brazil, for example, there was exceptionally wet weather at the start of the calendar year. other producers where we operate were impacted by wet weather as well. a combination of supply disruptions coupled with what we are now seeing the reduction -- in the reduction of activity underpinning the demand for iron ore. haslinda: we are seeing miners cut their forecast for kpac. are you intending to perhaps cut down spending? elizabeth: we are continuing with our major projects. we have two major projects under construction. one is a real project, a one .275 billion dollar
project. our other major project is the iron bridge magnetite project, a $2.6 billion investment. that concentrate on ships will be in the calendar year of 2022. we are not slowing down on any of our investment. we are committed to these major projects. they are creating over 5000 jobs during distraction and 800 jobs once -- construction and 800 jobs once operational. the mining sector is underpinning that growth. haslinda: are you also committed to your dividend payouts? can you maintain the level of dividend payouts given expectations of an economic slowdown? [indiscernible]
on fuel consumption and surplus hedges will be market to market. singair says it has paused its hedging strategy as the virus plays out. china's top airlines slumped in the first quarter and are warning there is worse to come as coronavirus hammers demand for travel. they lost a combined $2 billion through march and are operating at less than half capacity. domestic flights have picked up as the country eases restrictions, but international demand remains weak at best. china back swung to a loss as a collapse in oil demand hit refining. asia's biggest refiner reported a net loss of $2.7 billion compared to a profit of over $2 billion the year before.
asian refiners were the first to shut facilities in early february because of the coronavirus as demand from aviation fuel to gasoline took a massive hit. haslinda: fortescue metals reported earnings. let's get to our guest today, fortescue metals ceo elizabeth gaines. she joins us exclusively from perth. good to have you with us again. before the technical difficulties, we were talking about your commitment to dividend payouts. can you maintained the dividend payout ratio given the uncertainties we are expecting in the global economy? elizabeth: we recently reiterated our dividend policy is the payout ratio of 50% to 80% of net profit after tax. the final dividend will be a matter for the board. we did end of march with $4.2 billion of cash on hand. for the first time since the company started shipping iron ore, we ended in a net cash position of $100 million. the balance sheet has never been in better shape.
record shipments for the first nine months. we upgraded our shipments for the full year. our costs have remained low. we are generating strong margins and we have got a strategy for growth. we are in a strong position as we move forward. is front the pandemic and center. we know australia is trying to push to deal with the coronavirus. the chinese investors say if australia pushes, chinese consumers will stop buying australia wine. are you concerned that chinese feel makers may -- fuel maker may decide not to buy iron ore from australia? elizabeth: our relationship with china is built on decades of a strong and lateral trade relationship. australia is the supplier of iron ore to china.
we have been dealing with our chinese customers for 17 years now. we have a strong and multifaceted relationship with our customers in china. we are certainly committed to the strength of that trading relationship. my expectation is the chinese see we have strong relationships. we have a team based in china. we are working closely with them through this pandemic. they have assisted in procuring medical supplies for our australian health care sector as well. our relationship is deep and multifaceted. i am confident in the ongoing strength of that relationship. yvonne: good relationship with china. we were talking about the stockpiles. the profitability of these steel mills in china has been hit by this virus. does this change your strategy in terms of shipping to higher cost or higher quality iron ore?
elizabeth: we have multiple products we sell to our customers. we have been a supplier of iron ore to china for some time. with steel mill margins under pressure, we are seeing high demand for the products we sell to the market. we have seen ongoing strong demand. we have seen spreads narrow between the pricing of various products. certainly the impact we have seen on the sector in margins more broadly has resulted in that strong demand for those 50 to 60 grade of iron ore content. yvonne: major mining companies like fortescue, you have the balance sheets right now to buy fulsome of your competitors. are you seeing any m&a opportunities right now, given how distressed the rest of the industry is? elizabeth: you are right, we are
in good shape. projects wewo major are in the process of constructing. they are significant investments in their own right, close to 4 billion u.s. dollars. we have a strategy for growth. we have an active business development team. they look at opportunities. we are focused more on exclamation. we have been putting money into the ground to explore for other commodities, including copper in ecuador and argentina. that has been our focus in terms of growth and diversification. we are actively looking at other opportunities that may arise. lawsuit: s&p filed a accusing your company of suppressing information on global iron ore prices. what is your response to that? well, this is an ongoing matter. there our commercial
sensitivities. pecos to the heart of what is confidential -- it goes to the heart of what is confidential. that is all i have to say on the matter. yvonne: elizabeth gaines, fortescue metals ceo joining us from perth. let's take a look at markets right now when it comes to china as they head to the lunch break. we have been watching the asian stocks, in particular after we entered the bull market. chinese stocks have underperformed their asian peers the most in two years. decent gains. 1% moves from the csi 300. change in as well having a good day. shenzen as well having a good day. beijing lowering the emergency level from the coronavirus to the second-highest from the highest level. that is helping. digesting some of the earnings we have. the likes of china southern
airlines up close to 4%. air china close to 5%. we have seen the victory chinese airlines losing $2 billion as this virus kills travel. let's look at the broader moves as we wrap up the shortest trading week with most markets closed tomorrow as well. has, what are you watching? haslinda: the markets getting a lift from the strong earnings from the likes of facebook, tesla, giving a lot of confidence. nikkei back from holiday trading, playing catch-up. umc mediatech, all getting a lift from the great technology earnings we saw earlier. if you take a look at how gold is doing, gold heading for the biggest monthly gain since 2016. it has been boosted by unlimited
haslinda: we are looking at live pictures of the lion city. we are in the middle of the trading day. never mind those clouds. 6.29. joining in the rally we have seen across all of asia. word.ore, 5g is the in singapore's communications minister saying carriers awarded with the 15 year license offering fast data transmission will have enough time to recover their investment.
questions whether they can make 5g.y on investments in let's get the first word headlines with karina mitchell. karina: fed chair jerome powell says the coronavirus brought the economy to an abrupt halt as he held interest rates near zero and pledged to keep them there until the u.s. is back on track. powell talked about the harm a pandemic caused and says activity will likely fall at an unprecedented rate in the coming months. he says there may be a need for more fed action to support the economy. the first official reading of the chinese economy this month shows manufacturing moderating, indicating a recovery from the first quarter slump may be prolonged. slumped from 53 in march. the result shows an impact from the virus on-demand.
hong kong says the economy will contract by as much as 7% this year as the virus fallout adds to pressure from months of anti-china protests. vietnam's first quarter gdp reading is due monday and maybe worse than what we have seen during the financial crisis. hong kong has been in recession since last year with tourism, retail, and entertainment under severe pressure. in the state, president trump says he thinks china wants him to lose the election because of his response to the coronavirus outbreak. he declined to offer any evidence for his claim, but told reuters he is considering how to punish beijing for allowing the infection to spread globally. washington and beijing have been firing barb's at each other over the pandemic -- barbs at each other over the pandemic for weeks. global news 24 hours a day on air and on quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. haslinda: the coronavirus
pandemic is changing the way people pay for purchases in the age of social distancing and lockdowns. more on switching to contactless payments, and in that regard asia pac leads the world. joining us is copresident of asia pac, which by the way released third-quarter earnings overnight. q1 earnings beat estimates. give us a sense of how much asia contribute it to that -- contributed to that. how strong is asia looking? >> we came out of 2019 with strong momentum. the month of january, we sustained that momentum. as you well know, pretty much across the world we have seen the whole lockdown thing happen. asia is no exception. we have seen a significant slowdown in consumer spending behavior just with the nature of the lockdowns. on the backdrop of that, we
delivered a strong first quarter. is more thanhat is -- what we are focused on in the asia pac region is investing heavily and creating more diversification in the revenue pools of analytics, cyber intelligence. i think that is the story for us in our first quarter results. islinda: the story ahead about an economic slowdown. how concerned are you about payment defaults among your customers given unemployment is rising and growth is easing in a big way? ari: from a mastercard standpoint, this is for our banks who are focused on risk management, making sure credit portfolios are performing well.
they are making sure recoveries and collections -- that is a big priority. mastercard, we don't take any of that balance sheet risk. we are in the transaction business. we are moving money from point a to b. if you look at that, our view is , yes, at the current time, we feel that in the last few months we have seen almost hit the bottom. you have seen it through march, through april. now when we look at our numbers, at least volume numbers, we feel we are probably getting to a level of stabilization. we are looking at it from containment, as governments scrambled to prevent the spread of the virus. now i believe we are in the stabilization phase. how long the stabilization phase will take the forgetting to what we call malaise asian, where we
will -- call normalization, where we will see sectors rebound. and then growth. it is early days. we have to play this over the next weeks and months and hopefully we get there sooner from stabilization to normalization. we have been investing heavily. what we have seen is, in the course of march, a rapid shift toward contactless. quarter one itself we have seen over 40% growth on contactless transactions. we think that will shift in the coming weeks and months. yvonne: i want to get to your study in a bit. from 1% inlumes fall cross volumes payments. are we likely going to see continued pressure amid the lockdowns we are seeing in the region, as well as people still
not traveling? will it only get better once these travel restrictions get lifted? ari: you are absolutely right. the cross-border side involves critical movement of people, whether it is airlines -- that has completely been hit really hard. i am sure you are talking to these sectors as well to get a sense of this. my sense is it will take longer on cross borders, however we have seen e-commerce is coming in. e-commerce from cross-border has been quite resilient. if you look at our weekly printing data, e-commerce clearly is one of the bright spots. wether that is sustained -- watch this closely. of a is a bit of a bed --
hedge. withre getting a lift e-commerce growth. yvonne: you mentioned contactless payment. we are seeing jobs of 40% in the pandemic. certainly there is a lot of competition, though, not just contactless payment, but mobile payments. you have ali pay, they have strongholds. asia banks are taking part in this space as well. how willing are you to continue on this trend and invest to not just get more users, but retain them? ari: when you think of it is not using a physical card. contactless is also going into devices. whether you talk about wallets, apple pay or samsung pay. a lot of that is powered by mastercard.
when you do your confidentials in any of these bullets, the technology is called tokenization. we are storing the token in those devices which enables secure payments through those devices. our view is irrespective of the form, we will be relevant. whether it is physical plastic or devices, we see the role for mastercard. it is precisely what we are driving with our contactless communication strategy, stabilizing payments through devices as well. ari, mastercard says it wants to pare down costs. will that impact your strategy in asia? could that perhaps impact hiring? a very clearmade commitment that, through this
difficult period, which is causing enough suffering on a human level, the commitment we still stand by is we are not looking to have any kind of headcount reduction or will have cost that an impact on people. that is a big statement for us. --s is with a point of view whether that will change, i can't comment, but that is the effort we are making. in terms of the overall priority, we are looking at investment priorities in a much stricter way. we have to make obligations in managing cost. having said that, we remain completely committed to the big investments, things like our entry into china. we posted our license approval
in february. there is a whole execution of enabling our technology platform in china. we remain fully committed to that. we are working as we speak in the asia-pacific, real-time help for fast payments. there will be philippines at the end of the year. those commitments, we remain strongly with them. shifts in strategy, but it is optimization in making sure we are prudent in how we allocate our resources. yvonne: ari, earlier this year we heard from china, the pboc approving mastercard to create a bank card clearing business. game,ms to be late in the but how soon can you start operating? ari: the approval came through in february.
right now we are in the execution mode. within 12 months we hope to be on the ground in china. that is where we are. it is a commitment. it is a long journey for us to enter china. ari sarker, asia-pacific copresident of mastercard. breaking news. rupee climbing more than 2%, in fact 2.2%, the most in three weeks. it is the first time since february that the rupiah has been trading on the stronger side of the movie day average. -- moving day average. investors have been dumping indonesian stocks for 12 straight days, the longest selling streak since august. uncertainty over when a partial coronavirus lockdown will end in several cities. the extension did take place earlier.
a lack of earnings guidance also adding to those concerns. indonesia seen as among the countries late in responding to the coronavirus. the rupiah climbing 2.2%, the ,955 in three weeks, to 14 versus the dollar. india's biggest company by market value says it could be debt-free by early next year. we ask what to expect from reliance industries results, next. this is bluebird. -- is bloomberg. ♪
yvonne: india's largest company by market value is planning to sell shares to its investors for the first time in 30 years. it steps up efforts to pay down debt. this is the third fundraising reliant industries has proposed -- reliance industries has proposed in recent weeks. tell us more about this. what do you make of this proposed rights issue? out, he rightly pointed this is the first time in history of 30 years, which also means promoters are happy with the company. seeinge whole world is
pessimism, reliance is using its cash to get more capital. this will also help them to bring down the net debt level to zero by next year. this was a promise made by mukesh ambani, the chairman of reliance industry last year, that he will bring the net debt level to zero. this is the third recent step for capital raising. one was the potential ambitious saudi aramco deal. the second was the facebook deal. this is the third one. we are awaiting more details regarding the ratio in other areas. haslinda: let's take a look quickly at how the markets are looking in india. it just opened. nifty futures are pointing to a higher open. seeconcern still, investors
stress in the system. india guaranteeing as much as 30 billion of loans to small businesses as part of a plan to restart the economy. perhaps that is giving investors confidence. nifty currently up by 1.9%. sensex higher by almost 2%. india joining a broad rally in asia, lifted by sentiment in the u.s. we have strong earnings. taking a look at reliance stocks, it is out with earnings earlier. tech mahindra reliance up by about 1% in the lead up to those numbers. talk to us. what are investors looking for when reliance announces its earnings today? look investors are keen to for various commentaries. there was the facebook deal. investorsndustries
will clearly be watching out for the new business, which includes consumer and telco. any kind of decline in markets from the oil and mining business would be offset by these new numbers. that includes numbers from reliance jio and retail users would be keenly watched by investors. investors will also be looking for various divestment plans, including saudi aramco. any update on saudi aramco will excite investors. anything that will help reliance industries to make net debt zero will be keenly watched by investors. haslinda: we await those numbers. our indian conglomerates reporter, thank you for that. plenty more to come. this is bloomberg. ♪
first two to three years. it is about taking a long view and establishing the value proposition. the key reference from what --urred around the world there will be hundreds of millions and probably billions of dollars on an accumulated basis. -- 50% of the way coverage by 2022. 2025 for nationwide coverage. it allows development for the asset and info structure. -- and infrastructure. in terms of the investment, it is long enough to take a long view to recoup not just investors, but retain significant returns. haslinda: how much is the government collecting from the allotment of the spectrum?
>> we had 75. i think they clearly priced for spectrum. 55.01parties will pay $ million. if you do an international benchmark, if you normalize for population or duration of the license plus the spectrum you are awarding, it is somewhere in the medium of international benchmarks. the key point i want to emphasize is from the very outset, our focus has been not just about getting a return in terms of what we pay for the spectrum, it is the result of the overall investment that the telcos undertake in order to maximize the benefit to our economy. the price that they pay is only 15% of the overall valuation. what was weighted more heavily
is what value they can bring, the value solutions to businesses in terms of solutions to consumers. this was an important part of the overall valuation. telcosa: are any of the planning to use huawei equipment in their 5g implementation? our approach has always been to emphasize a, at the fiscal level, our requirement of security. penny tel -- any telco providing a network will have to beat requirements -- meet requirements on that scope. we want a certain level of resilience in the system. on the second part, on telcosty, based on what have been made available, we
will have better diversity in our business. haslinda: can 5g networks come including that of singapore, provide a high level of service or performance without huawei? >> i think that is a technical question. telcos.st put to the in the process, there will be technical evaluations. the telcos will have to evaluate the solutions. not justoint out that huawei, but nokia and others are pushing 5g systems around the world. in the end, it is good to come down to the valuation from a commercial perspective on these telcos. on the other hand, they must meet the regulatory requirements in terms of security.
was singapore's minister for comedic asian's and information. news just causing the bloomberg when it comes to australia. the sale kicked off of the airline. they are seeking to have the deal completed by june. partiesntinue with 12 when it comes to virgin australia. morgan stanley will be running that sale process. they plan to have those binding offers due in june. they are thinking to complete a deal by june 30. they held their first meeting with virgin australia creditors as well. the proceeds from this sale would have to pay back those creditors, of course. haslinda: let's do a quick check of the latest business headlines. india's top court dismissed an appeal by vodafone seeking a refund of $630 million from the
government. the panel agreed the return of only $96 million before closing the case, ruling another setback for vodafone after indian mobile operators were ordered to pay a combined $19 billion in back dues. vodafone owes about $7 billion of that. facebook recorded an 18% increase in fiscal quarter revenues, showing advertising demand was strong for the pandemic hit. business was steady in the first few weeks of april, sending shocks to stocks. facebook sales came in at $17.5 billion for march. the results covered a few weeks in march when lockdowns began to hammer the global economy. microsoft quarterly sales and profit rose by demand for cloud services to accommodate the shift to remote working. to $35 billion.
profit came in at $1.40 a share. shares rose in late trading. softbank has widened its net loss forecast for the fiscal year through march by 20% to ¥900 billion. that is about $8.5 billion. masayoshi son has been struggling with startups from wework to uber. shares of softbank rose in tokyo trade. yvonne: taking a look at markets before we go, it will be a labor day holiday tomorrow, so a shortened trading week for many markets. hong kong already closed with south korea. plenty of green on the screen. 225 coming back from the lunch break. asian stocks the best on track in four years. bull marketer that
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