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tv   Bloomberg Markets Asia  Bloomberg  July 2, 2020 10:00pm-12:00am EDT

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tom: the hong kong exchanges among the winners, including thursday's 6% gain. a flood of ipos made june its best month since january 2018. yvonne: that hong kong exchange stock on a record run as we saw yesterday. we are seeing plenty of optimism at the wrapup of the trading week after we saw the blowout on the u.s. jobs report yesterday. that was overshadowed a little bit by the rising cases of the coronavirus. u.s. futures still in the red. asia-pacific up 0.4%. jakarta coming online with some green. a solid open in mumbai. the markets have opened in the last half hour, it is the story about the shanghai composite and the csi 300.
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gains in the region today. the csi 300 has been up 6% in the past five days, the biggest months.n four margin traders have returned and the stock rally is kicking off. the hang seng up 133 points. we are seeing the dollar slightly weaker, but marginal. we are watching the aussie, in t he red here now. they are all over the place. aussie, j.p. morgan saying expect low 60's. it is difficult to model the recovery we are seeing. number more positive. we are watching oil, coming off of a four month high and likely to end the month in the green. gold with four weeks of gains. tom: the u.s. senate has given
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final approval to legislation that would impose sanctions on chinese officials, cracking down on dissent in hong kong. page in his warning a strong countermeasures if the u.k. act in response to the national security law. warning a strong countermeasure if the u.k., australia and the u.s. active response to the national security law. in the measures appropriate the senate at this point? people wake up one morning and hong kong has completely changed to where you cannot hold a banner or get arrested. a morale boost for the hong kong people, but congress
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-- the ball is in the administration's court. it is up to the administration to turn this into concrete measures. week they said they would ban technology used to hong kong. that can have a significant impact. we have to wait and see if the administration will put sanctions on individuals and institutions violating hong kong's people's human rights. tom: the risk for the u.s. is that it has a trade surplus with hong kong, over $30 billion according to 2018 numbers. this impacts not just u.s. companies but the people of hong kong as well. behavior will not change.
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what are the concrete measures you would like to see beyond this put in place? victoria: beijing all this time has been gearing that the u.s. will not take these measures. [indiscernible] on technology would be more important because a lot of involved.anies are impactal sanctions could ordinary citizens. point same time, at this it does not make sense to give hong kong privileges.
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the one thing people are more alarmed about is the ability this law has for china to arrest foreign nationals if they spread malicious rumors, if they work or collude with foreign nations in sanctioning beijing. is it for china to enforce this on anyone? right,a: you are quite ,nd also for the same reason [indiscernible] sanctions on chinese leaders abusing human rights. china says if these people come
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they will get into trouble. a lot of these people do not want to go to china or hong kong than it does not mean anything at all. dot china seems to want to that they will get into trouble. and then people like me from hong kong who live abroad cannot go home. it has a chilling impact on many people. it also means friends that i know want to fight even harder. any way anyhere international body or court can challenge this? everyone except china believes -- [indiscernible] when it comes to international
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, only if beijing agrees to an international court of jurists, then there really is no jurisdiction over china. , we talk aboutnd , itu.s. imposing sanctions is not just the u.s. but european banks, korean banks, japanese banks. all of these working together can have an impact. potentiallyinesses overlooking the political risks and ramifications of the security law? victoria: i think you are right because for so long they have maybe things are not
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going well in hong kong. or increasing cases of corruption in hong kong. hong kong used to have a clean record when it came to but the railway construction has problems with safety risks. everyone wants to say it does not matter, we are making money. they want profit margins to report to the shareholders. this law will affect making not , but if you have any
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business deals with china or plan to go to china if you are an american or european working in hong kong, it can get to you. playing devil's advocate, given hong kong's importance in the financial world, given the amount of mainland money in hong kong now, can you give some benefit of the doubt that beijing will tread lightly with this bill and exercise pragmatism? we were speaking to lawmakers on the pro-china side who said, lifeout of politics and for hong kong people will relatively remain the same. victoria: there is some truth to that in a way, but it is a
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function of how people will react to it. i think the rest of the world could look the other way. people issue condemnations about the education camps, repressive policies, yet they will not continue to look away, then the implementation will be hard. the worlder hand, will take some actions on hong kong, then beijing will think before it sends people to life imprisonment. the person i am most worried testified person who at the house foreign affairs committee's yesterday. would he be charged with colluding with foreign forces?
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he would be subjected to life imprisonment and taken to beijing for torture. what is left for other people? thank you for joining us, victoria hui, associate professor, university of notre dame. we will be speaking to voices from all sides of the story and a basic law committee member onut china's tightening grip hong kong, and if he thinks it is a threat to the city's traditional freedom. tom: a new report from washington says the u.s. economy will contract more steeply this year, but will rebound more than previously seen in 2021. shrinking 6% in the coming months, then expanding by nearly 5% next year. the cbo expects job markets will
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improve, albeit weaker than before the virus hit the economy. president trump's top economic advisers says they administration -- the administration is increasingly displeased with china. larry kudlow is concerned about high tech transfers with companies linked to the chinese military. he expects one trade deal is making progress, but washington will take action. jeffreyer girlfriend of epstein has been arrested on sex charges in new hampshire. she is accused of assisting him to abuse minors and groom victims known to be underage. maxwell previously denied all involvement. eckstein was found dead -- epstein was found dead in jail, it was ruled a suicide. ahead, hong kong exchange is
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rushing off the political upheaval, the stock is at a record driven by a flood of ipos. we will talk about the outlook for listings. this is bloomberg. ♪
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yvonne: taking a look at asian stocks, we will get more on the markets. the u.s. jobs report was the catalyst of all of this, it was a pretty stunning blowout figure. will this trend continue? what do you see from the data for asian economies? the economists reaction was some jobsic because
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are lost forever due to the virus. a full recovery of the labor positive --a [indiscernible] it is consistent with the other u.s. data. index surginging to a 14 month high, and new , thes of employment economy recovery is well underway. the retail sales as well. this has given a shot of adrenaline to the markets for a v-shaped recovery. imports will we have seen a rise in virus cases in the u.s., and that is concerning, but the openings are
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underway. we have seen some whole back -- pull back. to see aikely continue recovery in the economy in the labor market even if it is slow and gradual. tom: markets staged a strong balance from the lows of march 23. which markets in asia are set to outperform in the second half? china is outstanding. we see a research -- resurgence in the trading. highestading at its since late february. the retail investors returning , and the highest
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margin balance since 2016. there is a strong vote of confidence in china with its impressive handling of the virus outbreak. [indiscernible] industrials are coming out. surgingservices are back to multiyear highs now. manufacturing services pmi data is improving. growth areand profit in favor of china. could risehe csi back to its 2015 highs. yvonne: that services pmi number
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that came out, 58 .4, is impressive. there is a lot of debate about bubbles forming now. we have unprecedented monetary stimulus that is affecting the price of credit. the tech sector with the nasdaq and valuations at its highest since the early 2000. what is driving this rally, and is it sustainable? >> that is a good question. has led toandemic the outperformance in the tech sector. and the hardware makers record rally [indiscernible] this is a bubble concern. i think this time it is different, the rally is led by now,nies in the here and
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and the surprises to the upside the other day. the revenue and profit guidance was so strong. the earnings season could underpin the strength in the tech sector. wasinitial enthusiasm hopefully triggered by the as wellreserve message as the lack of opportunity to make money in a low growth environment. what is really important [indiscernible] it will take a long time to see that happen. this pandemic changed it. i see the tech sector will continue. it will remain as a major market leader. tom: thank you.
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, ourother programming note annual broadcast of the boston ,ops fireworks spectacular boston pops salute to our heroes, carrying on the orchestra's for the july tradition, from the comfort of your own home this year. that starts july 5, 8:00 a.m. hong kong time. this is bloomberg. ♪
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yvonne: here are the latest business flash headlines. six years after landing in japan, uber is hitting the road in tokyo, partnering with three operators to have 600 cars available in the business
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district. uber is focusing on food deliveries but it's ride-hailing citiesavailable in 12 including hiroshima. asked ton's nfl team change its name, fedex says the redskins is a pejorative term for native americans. the call comes as investment firms and shareholders worth a combined $600 billion including fedex, nike, and others are asked to cut relations unless the name is dropped. washington place their home games at fedex field. an indonesian carrier is betting social distancing will trigger a revival in travel demand. traffic has risen to 60% of capacity after authorities lifted a ban on non-essential travel last month. demand should improve further tourist destinations are
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reopened. tesla sales the expectations, sending shares soaring. the electric carmaker delivered over 90,000 cars in a three-month period leading up to june, beating estimates. shares rose as much as 10% in the biggest one-day jump in 10 years on the day tesla became the world's most valuable car company. tom: let's check in on the markets. risk on again today, a positive session in the u.s. yesterday. andimproving jobs picture jobs claims beating expectations. the data continues to improve in the virusven as levels continue to rise in some states. , pushing off0.5% security concerns and ipos have
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bolstered hong kong trading despite political concerns. up, and the services for the month of june, well above may. improvementinuing of the economic picture. around the 1200 level, flat. it is likely to end the week in the green. this is what the gold price is looking like, down 1.25%. with a look at individual stocks, a strong number in auto sales domestically rising 11%. that is three straight months of gains. the consumer is looking more healthy in china.
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it is a good day for trading. plenty more ahead. this is bloomberg. ♪
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this a.m. in hong kong and shanghai. china is warning western countries that stronger appraisals -- strong reprisals are coming. offer is ready to citizenship for hong kong residents and washington is preparing sanctions. beijing says it will respond and its critics will have to accept the consequences. meanwhile, brexit talks have broken up early over warnings that major differences still exist and there is little immediate chance of agreement. negotiations boiled over last
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week. the eu has admitted officials are working under the assumption that the no deal brexit is becoming likely, and has urged the u.k. to become more engaged. german parliament has ended a legal standoff over bond buying, backing a program seen as a key component of the euro area's rescue plan. chancellor micro's broader line asked chancellor merkel's clearr line is seen as a signal that berlin intends to keep the single market in one piece. top court had ruled that it could be illegal. arguably the most famous plane in history is reaching the end of the line. sources tell us boeing is pulling the plug on the jumbo jet after five decades. butf has not been informed, the last 747 will roll out in about two years, signaling the . of the plane the jumbo will follow the a's bus
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-- the jumbo jet will follow the airbus's a380. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. yvonne: let's do a quick check of the markets right now. we are following the wall street section, higher for asian stocks. it looks like it is focused on the data we got, the u.s. jobs report, the pmi number and services we got from china. at the highest level since april 22 in. phuket -- since 2010. the msci 300 at 28 month highs. the market shrugging off some of the rise in infection cases seen all over the world >> the u.s. has had one of the biggest daily records in the country. u.s. futures still under pressure. the nifty futures as well slightly positive today. we are watching the dollar, on track for a weekly gain. we are watching the spread
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between the u.s. ten-year with the china 10 year. we continue to see the spread wide, 288 for the china tenure year where yields continue to pick up. there is a lot of disappointment on the pboc. brent crude, we are off those four month highs, but still what a quarter it was. we could be extending that into the third for now as we speak. movers, tomk at the had mentioned the chinese automakers. we are also watching the likes of geely auto. byse two were upgraded citigroup on the price targets on the prospects of stronger global demand for electric vehicles, expected recovery and passenger vehicle sales. we are seeing stocks up on a tear today. another big story in china is the brokerages as well. the country is inching closer to merging its top two brokerages. we are talking --
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this could be a pretty big deal for the financial industry. csc financial up close to 14%. the hong kong exchange relic to another high this week, despite the greatest political upheaval in the city since the handover more than 20 years ago. kong exchange experiencing high volumes and a flood of ipo's on the mainland with more to follow. this week alone, 14 companies have launched listings, making it the biggest week for ipo's this year. in the first half, capital rate jumped 22% year on year with those mega tech share sales. the city a top three ipo market globally and is poised to raise as much as $34 billion this year. that coming up from p to bc. let's bring in one of the authors.
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always great to have you. we have been focused on this national security law. can this momentum continue, even with this lot now in effect? guest: we remain confident about the hong kong ipo markets in the second half of this year. fewif you look back a months ago, covid-19 closed down the ipo activities from february to april, but activities are coming back since may. the market is expected to continue to improve. we expect strong demand for the ipo to continue. 170f today, we have companies which have started ipo applications. 170 ipo applications represent a
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4% increase in our pipeline compared to the previous quarter this year. there is aiously, lot of interest on these china tech shares like alibaba. i spoke with charles lee a couple weeks ago, and he said it is not a matter of if an or when they will have to expand the scope to include some of these companies so mainland investors can tap in. how will that change the dynamics of the market, and will that turn hong kong more like the asian markets? it will don't think turn into the asian markets, but i want to comment on what charles mentioned. hong kong continues to play an important role in accessing the
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china multilevel capital markets. they have their own objectives and goals and try to attract different companies. mention about the u.s. companies coming back to hong kong, in fact for the first six large scalead very u.s. listed chinese companies $17 a raising of billion. we expect there will be an expansion of four to six u.s.-based chinese companies coming in the second half of this year. this is mainly due to the fact that the hong kong stock exchange went through reform two years ago. a lot of these companies, they and the pricetor
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is the only listing price they have. with the reform and successful for those who came for a secondary listing. the exchange in hong kong has been successful in attracting tech companies, especially focused on the e-commerce space. are they able to broaden the appeal going forward to attract a wider range of sectors and companies? guest: yes. we believe they will be able to do that. thee take a look so far in first six months, they are two
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sectors which basically dominate the sector that we just mentioned. the other is biotech, and also what we call the companies including tnt. will continue to be active, and we estiamate there will be more successful listings on the exchange this year. on top of the sectors, which we have never seen in the past few we have seen medium sized ipos from the traditional sectors. for example, the financial institutions ipo coming in the next few months as well. tom: we should focus to the mainland. how compelling has the proposition been in terms of the
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star markets, all those small private companies, those tech companies,, that want to raise funds? should we expect to see more activity pickup? i think the asian market since it has not been affected by covid-19 metal, we have seen very -- by covid-19 at all, we have seen that increase this year. launch last year, as well as the reform of th ee board related to the restoration system. believe the launch of the new hasd and the reform provided an alternative listing choice for the technology.
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we have amended our forecast for the asian markets as compared to our forecast at the beginning of this year. we expect to continue growing in a totalets with fundraising of over 300 billion renminbi for this year. yvonne: if we see more reforms in the star board, will that put it in direct competition with hong kong? if i am a high-growth company, what will be the swing factor in choosing shanghai over hong kong now to list? it will be ak healthy competition. they are trying to attract different kinds of companies. for the hong kong markets, what we are focusing on is for those companies on international fundraising.
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they would like to have more international investors to become their shareholders, or the companies are their focus coming to hong kong. the companies for the star board , they are trying to attract the chinese technology and innovation companies, which are of a smaller scale compared to those coming to hong kong. tom: thank you very much indeed. coming up, america's development bank is spending big. chinese companies like huawei and bte. why.ll ask the ceo
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welcome back. america's development bank has invested roughly $20 billion so far to advance foreign policy, including helping the u.s. take on chinese companies like huawei and cte. -- and cte.
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zte.d >> israel said less than a week ago they were not going to go forward with huawei and 5g. that is a very specific example. i will tell you something about israel. some people like israel, some people don't like israel. are a clear leader. the u.k. has indicated that they are seriously rethinking. initially, they were just using it at the outer edge where they felt comfortable, but now they are rethinking it. and the the israelis americans telling you this is a real security problem. we don't all say that all the time. it is not just because we are envious of huawei and big companies. that is all good and fine. that is commerce. but we have three countries that are known for their security intelligence services saying do
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not do those. -- do not do this. in the country, there are certain places where i say it is not worth any amount of money. that is what you are hearing these countries say. region, huaweiis has long had a foothold in this region, particularly qatar. andis that pitch going here in saudi arabia, uae? >> i am not in qatar to talk about that particularly. every country has the right to make their own decision as they will. what i will say is the same thing i am saying on the news today. they have to decide whether that makes sense. it is something every country has got to think about seriously. there are other places to cut corners and save money. there are other places where you are not putting the entire security of your country at risk. cut corners there.
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there are a lot of things that come cheap from china that you can buy. do you want your entire backbone's infrastructure to come from that country? it is a real question. >> how is dfc putting its money where its mouth is? >> in the particular area of 5g? >> yes. >> we have been looking a lot internationally at when 5g spectrum becomes available as people are buying equipment. we are out there financing that. we have been looking at a number of different countries at both purchasing spectrum and buildout in financing. another area you mentioned, belt and road. where is china substantially subsidized? with genetic testing, telecommunications. they are not substantially subsidizing in those areas because they are generous humanitarian gestures. i think everyone needs to know that.
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our job sometimes is to help counter that, where it makes sense to say we can be out there too. sometimes when i go to countries, they say -- this is the most common thing. when i go to a country and meet with the head of state, the number one most common thing they will say is, i did not want to take money from that country. i knew what i was getting into, but i had no other alternative. where is the alternative? that is what dfc is. we are the alternative and we are out here, which is why i travel so much, to make sure the messages out there and build a personable relationship so people know there is an alternative here. and it is an alternative that will respect your sovereignty. i am not going to bring in thousands of americans to work. i am not going to threaten your environment. i am not going to build shoddy infrastructure that may collapse later. i am not going to set up a deal where i am going to reclaim a
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port that you own and say, i'm sorry, that is an american port now. we tried that a few hundred years ago. that was called colonialism. this is a form of colonialism. that is not our approach now. dfc ceo adamwas boehler. some lines crossing from taiwan, it will be reestablishing a representative office in guam, a u.s. territory. this goes to show the escalating diplomatic relationship using with taipei and beijing, with pressure when tair taiwan reaches out. this follows what we heard from taiwan yesterday, reestablishing its relationship with some mulling land in africa -- somaliland in africa as well. coming up, traders attempt to start a conversation on race as china's biggest brokerage highlights a lack of diversity
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at chinese companies. we have details next. this is bloomberg. ♪
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black traders attempt to start a conversation on race company expands
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overseas. let's go to our reporter for more on this. the started with a credit trader in the london office. tell us what happened next? what happened on this email exchange? reporter: the only black employee at the london office attempted to start a dialogue about race and black lives matter. he sent out in email chain to more than 100 employees at the firm. what ensued was a reply all email exchange between him and the head of the osa human resource, while the head of hr told him the company had no tolerance for racism and assured him they were promoting and encouraging him to have an open dialogue. workr also said that emails were not a platform for nonwork related matters, and that stirred a reaction from the staff and also the trader himself. the trader said he was
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disappointed that the company was saying it was not a work-related issue. this was starting debates within the firm internally about how the company could have handled this better. tom: what are the broader implications of this case for other chinese companies looking to expand abroad? showser: i think what it is not only firms in china trying to expand abroad, but all firms globally are trying to grapple with the issue about race and diversity, and we are already seeing how some firms, including follmann, jp morgan, are some -- goldman, j.p. morgan, are very vocal about it. chinese firms based on the conversations we have had with recruiters and management consultants, it seems when they go abroad diversity has traditionally been a less
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priority for chinese firms. but because their global peers are trying to tackle this toter, it does prompt them take a higher level of prioritization for the issue of diversity as well. yvonne: have we heard from them on this story? how have they responded? reporter: in their response to our query, they said they do not tolerate racism and they are encouraging conversation at the firm. the firm has assured they have a wheree employee mixup, they employ more than 34 nations of employees at the firm right now. i think the firm is trying to address this matter better. tom: thank you very much. that is bloomberg finance
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reporter lulu chen with that scoop on race relations. now a check on the headlines. deutsche bank may buy all parts of the german platform, throwing the company a lifeline after one of the biggest corporate scandals in recent years. the lender is in talks with the regulator, wirecard management, and it's a ministry at her. wirecard filed for insolvency after missing more than $2 billion previously reported as cash. bid fork exchange's offended is facing another hurdle after singapore ruled the deal could reduce competition in the fx market. bloomberg lp, the parent company competes with
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refinitiv to provide information. yvonne: just marking some virus lines from japan. withe learning that tokyo at least 120 new cases of the virus. that is according to the nneka here. it looks like -- at is according to the nikkei here. to contact you have seen more two daysnew virus -- where we have seen more than 100 new viruses. overall, you take a look at markets. it is a pretty happy friday. services pmi from china certainly helped catapult things, along with the u.s. job support and a shortened holiday weekend in the u.s.. we are seeing overall better data overshadowing some of these virus concerns and what we have been hearing of these flareups across the world. that certainly is helping. you are watching the kospi up.
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we are also watching the dollar, slightly weaker today to end the week. we have plenty more to come. this is bloomberg. ♪
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♪ anchor: it is almost 11:00 a.m. in singapore and hong kong. welcome to bloomberg markets: asia. athaad bank here's a look the top stories. president trump expects to sign a bill sanctioning china for its crackdown. beijing warns of a strong response, saying foreign pressure will not work. haslinda: asian markets look to follow a strong week on the rise. stocks continuing to climb from march's low, gold on track for a
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fourth week of gains. haslinda: the end of the line, boeing pulling the plug on the jumbo jet after five decades. it is retirement time for a plane that shrink the world. -- that shrink the world. haslinda: it is risk on here in asia. we have encouraging employment and ism data out of the u.s. china's pmi at the highest level since april 2010. asia index up by some say that is a general positive sentiment over how quickly we are seeing a recovery. i want to like at vicks futures. interesting to notice how much vix has dropped from 82 in march, but has remained above 85 in all but one session since late february. the average for the year still elevated at about 40. the css 300 up 0.4%.
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it had solid run. ats key resistance level now 43.55. csa posting its highest volume, 25 billion shares changing hands. the hans saying up 0 -- the hang seng up 0.5%. shares jumping as much as 5%. for a week it has been cotton, 8% gains yesterday. 16% tuesday. this is china's largest car rental company. take a look in the southeast asian markets. it is flat right now, 654 the benchmark. risk is growing. benchmark up 0.4%.
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we are also tracking the rupiah, currently the leading trade in asia. it is expected to be expanded for the rest of 2020 with volatility dropping 15%. 14.545.y, the rupiah at news get the first word with karina mitchell in new york. karina: good morning. rising virus numbers hit stocks as investors fear a second wave could hurt recovery. u.s. reported infections rose the most since may 9, with florida hitting another high mark and imposing a curfew in miami-dade county. texas has ordered the wearing of face masks as houston reports a 4% jump in intensive care patients. nationwide cases rose almost almost 57,000. the girlfriend of jeffrey epstein has been arrested in
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new hampshire. she is accused of assisting epstein end abusing minors by helping to recruit victims known to be underaged. maxwell had previously denied all involvement. epstein was found dead in prison last year while awaiting trial for sex trafficking. his death was ruled a suicide. brexit talks have broken up early amid warnings that major differences still exist and there is no immediate chance of agreement. brussels and london say negotiations will restart next week. however, the eu has admitted that officials are working on the assumption that a no deal brexit is becoming more likely and has urged u.k. to be more engaged. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. those are the headlines. rishaad: take a look at some of these stories that are breaking on the bloomberg. to be talks on a
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500 million plus round. that is one line coming through. the u.s. senate has given final approval to legislation that would impose sanctions on china's officials, cracking down on dissent in hong kong. it heads to president trump for his signature or veto with china promising a strong response. our next guest says that while the new security law may benefit hong kong, a balance has to be struck between public order and civil liberties. let's bring in albert chen. welcome to the show. the first question is about that balance it south. what do we have to balance? given that we do not know whether -- where the demarcations are. what are the limits to freedom of information, freedom of speech? terrorism as well.
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could d facing a bus be seen as a terrorist act? it could be seen in some interpretations. guest: national security law creates four types of offenses. the first relates to secession, such as promoting hong kong independence. the second relates to subversion against the regime, such as trying to overthrow the political system in china. thirdly, the terrorist offenses. and finally, there is what is known as collusion with foreign political forces to endanger national security. you mentioned terrorism. the definition of terrorism in this law is consistent with terrorist laws in other -- idictions, including think terrorism is an internationally recognized
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concept. so this definition of terrorism in the law is not out of line inh other laws on terrorism most other jurisdictions. not terrorism. terrorism is usually referred to acts aimed at a political objective which falls within a list of circumstances such as violence. but they may also include systems some electronic is the basis of some public infrastructure.
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you just mentioned what they all covered. you went into terrorism in a little bit of detail, but the others, where are the demarcations? [crosstalking] think the others are quite clearly defined. we can discuss any particular offense you are interested in. in my view, the definitions are quite clear. it is perfect possible for hong kong people to avoid committing the acts specified in the law. i don't think it is unreasonable to require them not to commit these particular acts, which most of them, 98% of these acts are also outlawed in other jurisdictions, other countries.
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of course, there are particular acts such as promoting hong kong may not have which a counterpart in countries like the u.k. or canada because, as you know in the u.k., you can promote scottish independence. provisions which do not have counterparts in other jurisdictions, but most other provisions like overthrowing the government, terrorism, and so on are actually in the national security laws of other countries as well. thing is we have the u.k. saying they could convert some of these overseas passports into permanent british citizenship. that is something china says goes against the declaration.
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that is what they are saying. but two years ago, the ministry said that declaration itself was a historical document that had no longer any realistic meaning. that permeates across the board with regard to this bit of law as well. it is notthis, directly covered in the joint declaration. at the time it was entered into in 1984, china and hong kong entered into a memorandum of understanding regarding the nationality of hong kong people. because under colonial law, hong kong people, or many of them, were british nationals overseas or british citizens. the newr 1997, under
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regime, if hong kong people became chinese citizens, if there is a need for an arrangement about what would be the nationality status of these people under chinese and hong kong and british law. holders of passports would still be regarded as chinese citizens under hong kong law and chinese .aw in britain, they regard them as a form of citizens. time -- yes? haslinda: going back to the freedom of speech, how can there be freedom of speech when the chinese government keeps expanding what constitutes a violation? already it is saying the main chant of protesters would violate the law. what is your take on that? speech isedom of
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indeed limited, but it is mainly the freedom to advocate hong kong independence or the freedom to advocate overthrowing the chinese communist party. is somedmit there limitation of freedom of speech in relation to secession and subversion. haslinda: under what circumstances can the people criticize the government without getting into trouble? guest: criticism of the arernment or its policies lawful. organizedly prohibits attempts of movements to, for example, change the chinese political system so it is no longer a communist society, or try to achieve
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hong kong independence. or activitiess for these purposes are indeed prohibited under the law. chen, hong kong basic law committee member. still ahead this hour, the outlook for fx and asia. here why bloomberg intelligence says regional currencies may benefit in the post virus world. onhaad: next, we have more the markets as asian stocks and the week in a positive way. this is bloomberg. ♪
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>> the united states economy added almost 5 million jobs in the month of june, shattering
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all expectations. >> that is a spectacular number. it helps the overall situation enormous lake. >> on a standalone basis, this is a very strong employment report. >> we lead 24% of the jobs coming back is a reasonable exponent -- we believe 24% of the jobs coming back is a reasonable expectation. underscores how rapid things change in the covid painted economy, even though we did get a really important surprise today. it is way too early to declare a victory. we could get into some of those u.s. numbers for employment in june. haslinda: let's look at the market impact. the data beat estimates, but this was before new virus cases
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surged and reopening's were pulled back. could the markets continue to bank on this economy? goodter: i think that is a point. aboutk they have concerns renewed virus cases. it is really shocking to see how ill-prepared america is with the virus cases. but it is very different from march. in march, we had no idea what covid-19 was and no idea what the economy impact would be and no idea how long it would be. didn't know what monetary policies were coming out of these. these areas of uncertainty now have some visibility. support it.o but we new virus cases, will not likely have a broader thedown again because
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closures are unpalatable. and also, we are close to having covid vaccines and cures. above all, the primary market rally will be made. , it is costing $7 trillion and is heading for $10 trillion. the recovery could be bumpy and slower than expected. i think there is no return to where we were in march in the markets . the markets will keep looking at the positive side of policies. as we are seeing this
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big bounce from lowes in march -- as we are seeing this big bounce from the lows in march. i think china stocks are looking very attractive. that ire several points could highlight about the markets. thursday 's trading -- thursday's trading volume, we saw the highest trade volume. what it means is retail investors on the mainland are returning to the market. consistent. it symbolizes that investors are returning, that they have conviction.
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the chinese government has impressively well handled the outbreak. they smoothly processed the reopenings. gains now not just in the tech or consumer sectors, they are in financials and materials. the victims of this outbreak are rebounding. i look at all the valuation and growth in data, and they are all in favor of china. csi could reach
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2016 highs. rishaad: thanks very much for that. more on theow markets live blog. coming up, boeing quietly ending the era of jumbo jets. have the details next. this is bloomberg. ♪ r
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let's do a quick check of the latest business flash headlines. six years after landing in japan, uber is finally hitting the road. locals partnering with operators to make about 600 cars available in the central business district, as well as
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others. indonesian flight carrier garuda gets ready, easing social distancing. the coronavirus pushed it to seek government aid to stay afloat. traffic has now risen to 16% of capacity after authorities lifted a ban on non-essential travel last month. garuda says demand should improve further as tourist destinations such as bali are reopened. aviation.taying with it is arguably the world's most famous aircraft, and it could be heading to retirement. boeing is said to be quietly pulling the plug on the jumbo jet after a 50 year run. our reporter is in singapore. rival a380 airbus seem to have lost favor with the airlines. there were five iterations of the 747. the a380 only came to be about
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seven years ago. it is all seemingly going wrong for them with the big plane. reporter: yes. by the time these big planes like airbus came out with the a380 and boeing revamped the 747, the airline industry was changing. costly, they were in a cutting mode. four engines meant they would be using more fuel. that started to fall out of favor. of these big aircrafts, how they supported moving a lot of passengers in one go, fell out of favor as well because more passengers bre flying from a to point rather than gathering in hubs and going to other destinations thereafter. in a way, a change in pattern in travel as well as cost have made
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these aircrafts fall out of favor. haslinda: how has the coronavirus affected the deployment of these aircrafts? reporter: there have been airlines like lufthansa who came out to say that they are probably getting the a380 back in air in three years, meaning the coronavirus travel demand has fallen. unless we find a vaccine, travel demand not come back to where it was before the pandemic. airlines will have problems filling those planes up, which means they will be grounded longer -- thener plane as well other planes as well. rishaad: the end of an era, the end of the 747. quickly checking in on chinese markets as we head toward the
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lunch break. shanghai up. we had better than expected pmi numbers for june. looking at the composite, the -- 55.7.ndex, 50 57 taking a look at the other markets as well, we are seeing the j, out for a fourth day. that could prompt a downgrade. that is putting a lot of pressure on the idr. the indonesian rupee at 14.512, weakening today, prompting the bank of indonesia to say the currency is undervalued. plenty more to come. this is bloomberg. ♪
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haslinda: it is almost 11:30 a.m. in singapore. the adp i up by 0.6%. equities have recovered more than a third of their losses due to the pandemic. marchins from lowe's in -- 18% gains from lows in march. there are expected steps in the proper direction to prop up the economy. analysts are predicting a 12% gain from here in the next 12
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months. the sti up by 0.6%. macroould see an early recovery that the rest of the could say. let's get more analysis on what to expect in the third quarter who our guest, joins us from hong kong. what does all this mean for asian currencies in q3? expectr: as you said, we earlier recoveries, like the earlier outbreak. we think that currencies will appreciate against the dollar. it will be a bumpy ride, given the amount of uncertainty, meaning u.s.-china tensions. but in general compared to the first half, we are expecting more windows.
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assetsould favor risk and asian currencies as well. in asia, we like the korean won for evaluation in equity inflows. also like the currencies like the peso and the rupiah. for the rupiah, there might be some softening. we think the hong kong dollar may be an under performer ofause there is a lot intervention. whichd: there is so much could go wrong as you hit that outlook. reporter: yes.
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caveatsrtainly are some . is the pandemic could turn out to be uncontrollable than expected. more supportto get from central banks, given there will be more money. ultimately, the capital will return to asia when things get better. thise other hand, we have u.s.-china tensions. weo heading to november, have the u.s. elections. risks do what sort of we see to assets, if the u.s. and china start reapplying tariffs?
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we think they will stay on sanctions. think it is something the current administration wants to take. if that happens, it will put the dollar against the rupiah and it will drop quite sharply. given the marginal impact, we will not see a substantial drop like over the last two years. want fell bygh you oh -- the yuan fell by over 4%. speaking, --y to higheret closer levels. thank you very much for
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that. let's move things along and have a look at what is going on first new word news was. first word newswise. karina: the u.s. economy will rebound more than people expected. congressional budgetv office is expanding nearly 5% next year. the cbo also expecting the job market to improve, albeit remaining weaker than before the virus it economy. meanwhile, the german parliament has ended a legal standoff over ecb bond buying, backing a program seen as a key component of the euro area's rescue plan. alliance prompting to purchases, seen as a
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clear signal that berlin has to keep the single market in one piece. the top court had ruled that the plan could be illegal. in the u.s., president trump's top economic adviser says the administration is increasingly unhappy with china and trade restrictions could be on the way. larry kudlow says the u.s. is concerned about high-tech transfers by a chinese company linked to the military. he expects the phase i trade deal is making progress, but under.s. security is national threat and they will take proper action. >> china is a huge problem. we are engaging with them on trade. but what they are doing in hong kong as well as other problems he comes a larger difficulty in our relations, as secretary pompeo and national security advisor brian has said. reporter: china is warning western comfrey -- countries of reprisals.
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the u.k., u.s., and australia have attacked beijing's growing control over hong kong, and want to offer a route to citizenship, with washington preparing sanctions. beijing says it will respond in the critics will have to accept the consequent says. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. we are getting tie inflation numbers. -- we are looking at thai inflation numbers. consumer prices falling less than expected in june. you can see the prices falling 1.5 7%. yesterday, it was a 3% drop according to the commerce ministry. fraction,s down a 0.05%.
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overall, it is a situation where we are seeing the bank of thailand looking at this and that they are not going into deflationary status as much as they were fearing. haslinda: against the backdrop of expectations, a contraction of 8%. still to come, the funding options available without having to dilute ownership. we will discuss that with janu'' cofounder next. this is bloomberg. ♪
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know a bed venture capital when investors receive equity in exchange for investing in a company. taking offe debt is in southeast asia. in involves lending money to early stage funds, which deals with dilution. genesis is one such lender to early companies. let's bring in jeremy loh. we have heard from some saying that equity finding is challenging among the pandemic. is this the reason why there is
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so much interest in venture debt? haslinda. that is a pleasure, and thank you for having me on the show. with the covid situation, it has pushed venture debt into the limelight, and it is becoming a mainstream source of funding. andook back on the u.s. where venture debt is known. venture debt in southeast asia is gaining prominence now. important role in funding the growth of any company, big and small. venture debt has claimed the role for funding startups, and cash is very well needed now. up are looking for that much-needed capital growth. haslinda: is demand coming ornly from new startups
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startups capping venture debt? guest: i think that is a distinction there. venture debt can fund companies in the growth stage. venture debt does not fund early companies in the stage where the entrepreneurs are turning an idea into a business. business becomes commercially viable, that is where the lenders come in. venture debt will play a role in helping fund the growth of the company. youinda: how cautious are when lending out money? we know from our research that interest charges go anywhere from 14% to 36%. that is very high. guest: if you look at the cost of capital between equity and debt, equity definitely is much more expensive. of course, they are funding a higher risk company when the
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company is very young. the business idea is still in the experimental stage. ofn you look at the effect lending, it can go anywhere from the high single digits and more. more importantly, lending is not available for companies that are equity sponsored. they do not have a track record. they are still trying to find their footing in the industry, and they are disrupting very big giants. we are talking about the likes of uber. a risk right, there is element there. we are cautious, but we bring about a specialty part of our experience. we have both the venture side of the equation, most of us, and the team has been either venture capital or privite equity
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investors. we bring in the credit experience. we have given venture debt as well. rishaad: why would you go down that route as opposed to taking a loan, for instance? the loan is not available for these companies. if you look at the u.s. and india, where venture debt is very well understood for its merits by both the entrepreneurs and others in that part of the world, venture debt in southeast asia has only taken off since 2015, but is growing very rapidly. there has to be a fine balance between debt and equity. that is why we are seeing more traction, and over the last two or three months when covid hit we have gotten more inquiries. we have signed on more as well.
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we are hoping to grow our portfolio size. tell us a bit about where you have been investing. genesis is southeast asia's first private venture debt firm. we only invest in companies that are in this region, mainly singapore, indonesia, vietnam, thailand, malaysia, and the philippines as well. we have been investing in companies between the stages of series b, and these companies are looking for more capital that comes in the form of the traditional working capital. growth asia is to fund ad the account receivables in
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company. when they approach a traditional financial institution, they are not able to get a much-needed loan approved, and that is why they turned to a specialty company like genesis. rishaad: thank you so much for joining us today. mumbaitting the open in as markets are getting open. let's take a look how they are performing. we have the nifty moving to the positive side of the column, alongside what we are seeing in the rest of the region with gains on wall street. all of them are essentially up 0.6% to the upside. haslinda: highs in four months for indian stocks. ray dalio says the recent actions means capital markets are no longer free. we spoke earlier with the bridgewater cochairmen and
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founder of the world largest financial company. today, the economy and the markets are driven by the central banks. coordination with the central government. what i mean by that is the purchases right now of financial assets by the federal reserve or the purchases by the federal reserve of government securities are the drivers of that market. the production of the money, if you look at money and you look at who is in the markets. the federal reserve for example thatset an interest rate for different types of creditors based on the exact amount of objective. in the old days, when we had the 2008 financial crisis, we needed to protect banks because they
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were systemically important, thenon he market funds -- money make market funds. if they did not go out and make lending to companies, including what we call fallen angels, those that were just above investment grade and fell into investment-grade, we would lose large parts of our economy. so we are in a situation now where they are the market makers. take the market out, take the central banks out, and we have a different story. including the value of money. think about it in europe for example. the central bank will lend to banks at a minor 1%. that means you do not have the interest payments. in fact, you have interest payments. and the central banks will take
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that debt on. and they have a political agenda, not an economic agenda, in which they will determine whether they will be paid back or when they want to be paid back based on how the economy is doing and what will happen. in that case, like the example in europe and similar situations in the united states and japan in varying degrees, they will make loans that have interest credits almost, or let's say zero. you don't have to pay interest back. and you may not have to pay principal back .it depends on what the conditions are at the time. those are markets which are driven by central banks, not only their actions, but their desire to be an owner of those assets and their priorities about that ownership, when they buy and when they sell, are not the same as a classic free market allocations.
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as a result, the capital markets are not free markets allocating resources in the traditional ways. one of the questions investors are wrestling with is how far central banks are willing to go in their effort to reflate financial assets to begin with, and of course they hope transmit some stuff through to the real economy that results in growth and jobs? how far are central banks willing to go with this power they have discovered they have? central banks are willing far asnd need to go as it takes in order to keep the system afloat because to hash keep the system afloat. because we are in the late systems, we see a lot of that. you will see balance sheets explode. the choiceo because
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is the sinking ship. bridgewater cochairmen ray dalio. thailand is starting to reopen its borders to tourists, but only if they come by private jet. next.n this strategy is the bostont pops fireworks spectacular. a boston pops salute to our heroes, carrying on the fourth of july tradition. that is july the fifth at 8:00 a.m. hong kong time. ♪
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rishaad: you are back with bloomberg markets. thailand kickstarting its tourism industry by opening up its borders to a very specific kind of tourist. the high spenders arriving on private aircraft. let's get the details from our reporter in bangkok. i guess this is a lucky few. who are these lucky few going into thailand now? reporter: it is not just only jet setting tourists who will be allowed to thailand right now. the thai government this week approved for select groups of foreigners to enter into thailand, which will include
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those who have thai ties or investments, families in the country, as well as a business travel bubble, which will allow passport holders from countries in asia to into the country, as long as they can provide economic benefit or investments. in addition to that, the civil aviation authority added a clause to allow those who had "special arrangements" with the government. an aviation had told me in interview this clause was written into allow high spenders, or what he calls quality tourists, to enter thailand and start the economy as part of the plan. when does it come into effect, and do we have a sense of how many would be interested? reporter: the announcement came
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1 after theon july cabinet and the thai prime minister endorsed it earlier this week. they say this is part of their plan to restart the thai tourism industry. the aviation head says he has spoken with private aircraft operators who say they have plenty of potential customers looking to charter a plane for a family of six or less here. haslinda: thank you for that. let's take you through some of the business flash headlines. from the campaign trail, let me just get you that story. big business is joining the campaign to make washington's nfl team change its name. they say the redskins is a pejorative term for native americans.
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the call comes as shareholders worth a combined $600 billion, are, pepsico, and others called on to cut ties. bank of america is planning a wider return after labor day on september 7 with a limited sales, making their way back based on roles and locations. workers will be given 30 day cautiousong with the -- exchange'sdon stock planned bid for refinitiv is facing another hurdle after singapore rules the deal could produce competition in the forex market. the competition and consumer commission expressed concern over whether rivals will retain access.
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the lessee deal is facing an antitrust abuse in europe. bloomberg lp is the parent of bloomberg news and competes with refinitiv to provide financial news, data, and information. beatesla sales expectations, seeing shares soaring toward a bullish price target. the carmaker delivered just in june,000 cars gaining on the first quarter and beating estimates. thees rose as much as 10%, biggest one-day jump in 10 years, one day after tesla became the world's most valuable company. let's take a look at what is going on throughout the markets. this is it for the moment. we have a tie in the big ga -- the big gainers. don't forget that we did have
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the better than expected u.s. jobs report, which did help the street of dreams move up. that is helping things in this part of the world is way. bloomberg daybreak: middle east is next. i got an oriole here.
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