tv Bloomberg Markets Asia Bloomberg July 26, 2020 10:00pm-12:00am EDT
to the equities that have beaten the hang seng. tom: billing for gold. futures are trading at a record high as concerns of the global economy boost demand. let's check in on the markets. it is risk-on in mainland chinese with japan opening after a holiday. the regional benchmark is up .6%. in terms of japan, down about .5%, over 110 points lower after a two day holiday. in terms of what is happening in shanghai, not much gains as what we are seeing in china, which is up more strongly. nonetheless, shanghai up .3%. futures in the u.s. up .4%. looking ahead to meals conversations between white house, republicans and democrats. in the fed meeting as well. will we get anything from jay powell as the coronavirus remains a major issue in the
u.s.? moving on to some currencies, dollar weakness is still a trend at play. we are seeing that play out for the offshore cnh strengthening at around seven. in terms of the yen, 106 is the crucial level for that. higher option volatility. in terms of hong kong, we are focused on the newtek tech index as part of the conversation. aussie dollar currently up .3%. dollar weakness very much part of the play there. let's look at what is happening with gold. it has been on a tear, and we are getting close if not touching now record highs. gold futures above those record 1944, close to 1% gfain -- gain in terms of futures. i believe the record was around 1923. looks like we are about $1 or so away from that record price. it's 1923 or 1921.
anyway, we are edging close to that record price. weakness.lar silver gaining close to 2%. the 10 year in the u.s. yield is a little below 0.6%. rish. rishaad: we're going to bring in banny lam. welcome to the program. we just outlined, at least tom did, outlined reasons why gold has been on such a tear. the virus, and naturally here, the the dollar story too. but how much of it is down to people thinking these equity markets in particular are looking a little bit top-heavy. they do not want to be in equities, bonds, and we are looking at other asset classes? banny: i think the key drivers
of the equity market right now is marginal improvement of economic conditions. i think the market right now is pricing the view that global economic activities will not be restored to pre-pandemic levels. but they are very sensitive to the momentum of recovery. so i think investors will see which market has robust momentum of recovery in the economy and they will outperform. . rishaad: absolutely. so that brings me to whether the rally is sustainable. one has to ask what is being priced in? seems like a v-shaped recovery in many parts of the country. banny: i would not say it is v-shaped. because you see in the u.s. and europe you see new rounds of the pandemic.
also in the asian economies you see that. i think in most countries right now, it is cautious. like a maybe. organizing new containment measures. and that will delay recovery. so i think the market has to be very cautious about the new pandemic. but the market is like looking to be affected by the pandemic. second is you have to look at which market will be back faster. there are things that will outperform. what do you make of this new index in hong kong that will be tech heavy? banny: i think the new index will help to maybe reshape hong kong equity market.
new economy stocks in their listing. in you see lots of stocks hong kong are second listings that will be helpful. will be testing the market right now because there's is so much activity in the market that can be used as a benchmark. morel see more and listings in the second half this year in hong kong. you make of the selloff on friday in the mainland? did you use that as an opportunity to add? banny: yeah. i think the market right now, the u.s. china tensions, that is a good point to make. because there are corrections in the agreement. at the same time, in the economic fundamentals, they are
positive in china. what you should do in the market right now is i think increase in china the equity market. that will be very positive for any investors in the world. part of your strategy is focused on mainland stocks but you also like area sectors like infrastructure on cement. on the back of policy support, what is the timeframe for that support? when does that start to fade? stnny: i think in the fir quarter of this year actually, because of the noc in late may. and the delay. i think most of the delay for investments will be possible in the second half this year. i think it is good to buy infrastructure stocks.
also you see demand of construction material in the market is increasing. for will be possible investments to go back up to positive growth in the third quarter in this year, and the fourth quarter higher. i am quite positive on chinese infrastructure. i have to wonder about the dislocation between the fundamental economics and the market. when it comes to earnings, what are you looking for specifically? banny: i think in the market right now, i would say is embracing value rather than earnings growth. because there is enormous shock to the economy because of the pandemic. our second thing is if you use earnings growth to see how good the sector is, it is quite misleading right now. so what you should do actually is looking at the factors from of after theview
pandemic, and reshaping of the sector development. because isla -- because i saw a lot of sectors are reshaping their business model right now. who can use a win? can use reshaping to increase earnings in the future? to what extent some of that cost-cutting and that money-saving plays out for a stronger future for some of these companies. ray is talking about concerns about the u.s. china capital war. he is warning about that. how seriously are investors like you taking this, or should you be taking this seriously? noty: yeah, i think i would take very seriously. even in thember, old days -- remember right now the markets are so globalized.
capital,if i cut off it would hurt u.s. markets. so that would be triggering a financial crisis. so that is not going to happen. it would hurt yourself and also hurt others. i think theree are lots of tensions that we are seeing in countries around the world. but at the same time i think we are not seeing a capital war for the moment, but temporary sentiment i would say is yes, we will see that in the market. can take a medium and long-term view on the longer equity market and then you will get return. an immediate concern at the moment. banny lam, always great to get your insights. let's get the first word news
now with karina mitchell in new york. karina: global coronavirus cases have not top 60 million with the -- have now topped 16 million. the u.s. continues to lead with more than 4 million cases and 146,000 but audis. florida has -- fatalities. florida now has overtaken new york. both cases and deaths fell in all three states over the weekend. spain is scrabbling to stay ahead of new outbreaks. only weeks after including spain on a list of safe countries, the u.k. now requires people from summer holidays to undertake 14 days of quarantine. the move came after cases spiked in the catalonia region around barcelona. norway and france have also issued travel warnings for spain. north korea ordered a city near the south korean border to lock down after state media reported a person may infected with the
virus. kim jong-un made a decision at an emergency meeting of the workers party, isolating the city and what he called a preemptive measure. the north has yet to confirm a single case and says the suspected infection is from a defector returning to south korea. hong kong reported another 128 new cases sunday, making it the fifth day in a row where new infection stopped 100. most were transmitted in the community with 35 of unknown origin. indonesia is now close to having 100,000 cases, and singapore has passed 50,000. scientists in the city are not due to start -- scientists in the city are set to start vaccine trials this week. 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. a big weekill ahead, for economic data.
close the chinese consulate in houston. and of course that is something you are discussing. tom: right. the trump administration's the size -- surprise decision they sayyears of what were criminal and covert activities directed by beijing to steal trade secrets and carry out influence operations across the u.s. it comes as a u.s. is forced to closed its consulate in the southwestern city. our senior international editor jodi schneider joins us. what is the u.s. discovering? 're getting this through a call was some administration officials come a briefing held on friday. basically they are saying this was a much larger-scale operation. they claim the sum total of the activity represented the tip of
the iceberg when it came to things the u.s. confirmed about china. for many this went on years. signal isto send a separate to other concerns the u.s. has about china. the situation in hong kong, for instance, the coronavirus pandemic. they say this is a separate broader committing a signal about the u.s. being less patient. of course china is rejecting these accusations that the consulate was a central hub of espionage, calling this a serious breach in international law, rejecting the whole notion that there was spying going on at their consulate. i, what about the
closure of the u.s. consulate? what do we know about that? was: so obviously this retaliation for the closing of the consulate in houston. they went ahead and did this within 72 hours. is a key chengdu outpost. it was a repercussion for the u.s. people wholmost -- were spectators were coming by, sort of almost an event. obviously anti-american sentiment has grown in china as the trump administration has taken this increasingly combative approach towards beijing. the consulates are becoming symbols of that as well. rishaad: all right.
market ise hong kong perceived as a play for investors to look at hong kong opportunities are china opportunities. the hang seng index represents the hong kong market. and we have the enterprises index. we have a lot of great investors using the hong kong market to invest into the fast-growing china sectors. now the hong kong market is being seen by investors as a venue that they can invest into tech stocks. >> the tech index is expected to be a bit more volatile than the flagship indices we already have. so how much will that affect investor appetite when it comes to this index? vincent: i believe global investors whether it be america,
europe, or hong kong investing in hong kong and china, we are used to looking at new factors, sectors in hong kong is more volatile than the traditional typical stock. you expect high return, you also expect higher volatility and higher risk. for the cash drops, we understand that some of them -- some of them might be testing their business model. people need to recognize that. you expect this new in next to become almost a proxy if the u.s. government ends up banning their funds and index providers from having access to major chinese tech stocks? think for hongi
kong, in the past couple of been criticized to some extent in the hong kong market's lack of new economy sectors. that's because we have a lot of traditional flashbang properties. this kind of stock in hong kong. some americaning companies are returning to the market. use thely, they may u.s. market as their funding source. an opportunity. in the hong kong market, the regulatory changes as well as the stock net, we are now bringing painless -- mainland hong kong investors to hong kong.
mainland investors are ready for large chinese tech stocks whether they are in china or live elsewhere. now they have the opportunity to come back to hong kong. and we hope we can connect global investors using the hong kong market to invest in these important emerging tech markets in hong kong. that was vincent kwan. broken to the record, 1922. the record was set in 2011. the stock price, $1922. goldman sachs and others say it could get to $2000. breaking through that record, a red head on the bloomberg, gold climbing to $1922. falling yields in the u.s., weaker u.s. dollar, concerns about the virus, focus on
monetary policy and stimulus, all of this hope in the gold price break through record. we will keep an eye on that story for you. here's the latest business flash headlines. from gold to goldman sachs. $3.9 billion agreement with malaysia over the scandal could pave the way for settlement with the u.s. department of justice. the malaysian deal announced late on friday includes the payment of $2.5 billion to resolve probes into u.s. bank's involvement with the state develop and fund. it also guarantees an additional $1.4 billion will be repatriated to malaysia from assets seized around the world. hsbc is denying it framed huawei , saying it did not spark the u.s. probe into the chinese tech giant. hsbc made the statement in response to allegations from huawei's legal team, which claims the u.s. misled canadian authorities by omitting key
elements of the presentation given to hsbc by its jailed cfo. possibility has no -- has no hostility towards huawei and did not ensnare the company in the u.s. probe. market, getting to the let's take a look at the action in hong kong. looking also at the nikkei and japanese equity markets in a moment, playing catch up after two days of public holidays on thursday and friday. yen on a tear. -- iuld say the tear is on should say the dollar is on a tear down words. the big story of the day is in the precious metals. gold, people looking for haven status. dollar weakness translating into gold strength. highs. testing all-time $1922.53 an ounce for gold.
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in hong kong9 a.m. in in beijing, 10:29 p.m. the city. these are the first word headlines. u.s.-china tensions simmer after american authorities broke into china's houston consulate three days after giving staff 72 hours to close the mission. ofs against a background spying. beijing describing this as forced entry that broke diplomatic conventions. they vowed to respond as necessary. friday, china ordered the u.s. to close the consulate in a southwestern city. a singaporean man pleaded guilty
to acting as an illegal agent for chinese intelligence in the u.s. and is facing up to 10 years in jail. of working for chinese intelligence as early as 2015. he set up a fake consultancy to obtain information about american government and military staff and was said to try to recruit others. protests have broken out at times violent, and several u.s. cities over the presence of federal troops on the streets. riots were declared in portland, the center of the new wave of protests and in seattle amid tear gas, fires and projectiles. thousands joined marches, shouting fed's go home in response to the trump administration's decision to send federal agents there in late june. victoria has reported a record number of coronavirus cases. most rose by 532, the since the pandemic began and above the previous record set
the day before. six poor people died. most of the infections are in melbourne. , reporting 17s new cases. in hong kong, at least seven potential pro-democracy candidates questioned over their political views and past statements. this is ahead of elections in september. in questionnaires sent in by the government, candidates were asked to prove they haven't violated the constitution or the security law. one candidate was asked to explain why he made a recent trip to the united states, calling on washington to impose sanctions on hong kong officials. in on the check markets. the virus stories, hong kong, tokyo, and the states of victoria, areas where there is concern about the rising numbers of infections and that will be something that policymakers will be wrestling with in the economic fallout. 0.4%,ci asia pacific up
the hang seng zero point -- 0.1% down. at the start of the session, it was up 1%. there is a lot of optimism among technology stocks going forward. mainland investors paired some of the gains after the early start of the session and you were looking broadly at essentially flat in the mainland. futures in the u.s. up 0.3%, we know this week the focus will be on the fed, jay powell and the stimulus conversations between republicans, democrats and the white house. in terms of the commodities index, this is what nymex crude is looking like. the demand story is another area, another issue investors and those with exposure to oil have wrestled with amid the coronavirus pandemic particularly in u.s. states. the yen is showing strength, up
0.5% amid some risk off sentiment. that is the 10 year yield, 0.58. we can move on to the gold story, once again, because it is in focus. the yellow metal is all about the bling, breaking through records right now. you had 1922 on the spot price of the records previously set in 2011 have been broken. the view from goldman sachs, you will get to possibly $2000 u.s. dollars when you look at yields as low as what we looked at, below zero point 6%, and additional fiscal stimulus coming through, potentially if they come to a deal, then there is maybe no wonder that gold remains well bid. say buy gold and keep at it. we will keep you updated as this develops. getting the hong kong market, hang seng raising and one gain it had,
thing contributing is the 19th coronavirus death taking place in this territory. that against a backdrop of yesterday, hong kong reporting 120 eight new cases, 25 of which are imported. the 19th person has died in hong kong. busye looking ahead to a week for economic data, governments confronting the impact of the pandemic and later today, hong kong will release trade data for june while second-quarter gdp data is due wednesday. the federal open market committee meeting as -- ahead of the release of u.s. gdp figures. they are out thursday. this week, japan's retail sales, jobless rates, industrial production numbers, they are coming out thursday on friday. manufacturingost and nonmanufacturing pmi data for july later this week. in carlos bring
casanova, head of the economic research at -- who joins us from hong kong. thanks for your time. what are the data points when it comes to the economy in this region that you are most focused to youru try to plot investors and clients the trajectory in terms of the economic recovery we are seeing in some part of the region? are observing -- we are observing a differentiated recovery. you have markets that are doing slightly better than others because they were able to control the spread of the virus early on, and we are looking at high frequency activity indicators related to transportation and also consumption, so on the restaurant bookings, etc., trying to monitor on a month-to-month basis who is experiencing the most upside and we do have some positives coming out of markets. taiwan,, south korea,
which were able to contain the spread of the virus early on. on the other hand, you have cases in hong kong and indonesia and india come also in japan, where the number of cases or the second wave of covid-19 cases continues to increase so it is likely this will be a major risk for the outlook going forward. these economies will have to implement some degree of social distancing and that is going to drag on the economy. one thing to highlight, we are getting better at navigating the risks, so the impact may not be as pronounced as what we saw in march and april, when countries were really struggling to understand what it meant and what could be done in order to circumvent some of those restrictions. we are going to see slightly less downside, and that recovery in a few markets will help boost sentiment for the region. even though we see a recovery,
it will highlight the gdp numbers, the overall values are not going to be anywhere close to 2019 levels this year or even in 2021 so we are looking at a two-year timeframe of lost growth in terms of overall values and we are not going to be at 2019 levels any time before 2022. tom: industrial profits and china increased 11.9% for june. how much of an anchor can china be for the rest of the region now that it has the virus seemingly under control? china will provide some upside for the region. it is the main trading partner for many economies in the region, so that will be beneficial. we saw significant upsides in q2, the model was expecting approximately a 1.5 increase in gdp but it came out higher at 3.6. we are inclined to maintain our growth forecast for the year, notwithstanding the upside
surprising q2 at 1%, because we do expect there will be challenges going forward and the main challenge will be surrounding that increase in coronavirus cases, both in china potentially with new hotspots emerging in different places but also, globally, which will dent domestic demand and global sentiment. we are expecting a recovery in china to add some upside, but it might be weaker than some of the investors are pricing in at the moment. tom: how does that play into corporate profitability in the region? do we have a better sense now of which sectors and companies are best placed as the economy starts to recover, which have got the secure risk balance -- the securest balance sheets? carlos: despite the shock on the supply and demand side, there are sectors that are being
impacted hard and there are sectors that are doing relatively better. i don't want to call them winners or losers because nobody wins in the context of a pandemic, but you have sectors where we did observe according to data, a sharp decrease in profitability and also a deterioration in their net ratio, which means companies had to incur additional debt, further inflating credit bubbles in places like china to be able to manage the risk. in sectors like the automotive, like metals come also transportation of course, were hit the most according to our numbers. other sectors are in a better position to withstand this crisis going forward so we see more resilience and pharmaceuticals of course, in ict but there are caveats because there is a discrepancy between software and also, hardware providers. so the demand for things like new laptop computers or brand-new flat tv's will be weaker going forward, but the demand for telecommunication
services is going to increase so we see some relative strength in that subsector of the tech and ict sectors. we of course also see on the agro food and retail front, anything that is not related to discretionary, so the consumption of food and basic ,tems will continue to increase potentially more than expected in some categories as people are at home more often and have to continue to eat and cook more frequently. there are certain companies that are experiencing some upside as a result of this virus, but across the board we are seeing and negative shock for the system. , your level of analysis, you look at accounts receivable, lag times between invoices being paid, tell us about the stresses you are seeing. we are definitely seeing stresses in those sectors.
including the metal sector, which is a prolific sector, and the heart of construction activity for a couple months this year. signs ofeing deteriorating payments and those sectors, but we aren't expecting to see that real upswing in corporate defaults and delayed payments until later this year. the main reason is, we still have policies in place that pride to alleviate the blow to corporate. that ranges from anything from moratoriums on bad debt, that range three to six and upwards for month, in many markets in the region, and you have extensions or magnifications of overdue of three months or above . on top of those potentially six months on your moratorium of debt. it will take a number of quotas before we see the upswing in corporate insolvencies and bankruptcies. we are expecting a significant upswing starting potentially in q3, more likely in q4 2020
stretching into the first part of 2021 so we expect -- yes? quickly,moving on looking at industry groups, what about nations, countries? which ones are you seeing the most stresses with accounts receivable? pd's.k you call them ul paymentultra long delays deteriorated significantly in china. that is a trend that has been happening for years. it is a surprising month -- it is surprising malaysia and thailand have seen a increase going forward. we expect these countries will continue to experience in increasing credit risk, but the smaller exporters into economies that can't depend on a big domestic market like china to overcome the impact of covid-19 will also experience a duration, although not as bad as china, malaysia and thailand in the past, going forward because it
will be less likely to be able to navigate the risk. places like singapore, hong kong, south korea, we expect duration going forward. rishaad: always a pleasure. . weos casanova of coface have goldman sachs close to marking an and to its decade-long 1mdb cs. we will tell you what is next. this is bloomberg. ♪
rishaad: goldman sachs is nearing the end to its worst scandal since the federal crisis after reaching a 3.9 billion dollar settlement with the malaysian government over their role with the 1mdb company. the bank still has the u.s. justice department to deal with. more from our opinion columnist in singapore. why settle now? that is the question. onthe clock was closing in both the malaysian government and on goldman. in the case of goldman, they wanted to get this done before november's election in the u.s.
they will have also kept an eye on the malaysian political terrain. the prime minister, who if we recall, received power in a backdoor paul early -- parliamentary coup in march, really wants to have an election to glue this unstable coalition he has together. having the majority be the one or two seats, depending on how you count them, integral to putting this behind the government and going to the polls is neutralizing 1mdb as an issue. this goes a step in that direction, a big step. mean, thedoes it settlement, for goldman sachs? with their dealings, for their dealings with the department of justice in the u.s.? again, let's keep an eye on the malaysian calendar. this time, the legal calendar,
and the prime minister when this went down faces a number of charges related to this. theict in -- the verdict in first of those trials is due tomorrow. messierust get so much once a verdict is handed down. if you are bob barr, the u.s. attorney general, and a verdict is handed down in malaysia, in the event it is a verdict that is unfavorable, how does that help you if you're goldman? both the malaysian government and the firm will be content to get this done before his fate is read in court tomorrow. dan moss, thank you very much the latest on the 1mdb and goldman sachs settlement, for close to $4 billion u.s.
tom: welcome back. to the philippines now, where president rodrigo duterte will be giving his annual state of the nation address later. protesters are gathering ahead of the speech this afternoon. the country has one of the worst infection rates in southeast asia. an extended lockdown has been dragging the economy towards a deep contraction. let's get a preview from our government reporter in manila. what can we expect from duterte 's speech to lawmakers? >> it is going to be all about the road to recovery from the pandemic. as you mentioned, the philippines is facing its deepest contraction in three decades. all eyes are on the president and the economic rebound. they are looking for a follow-up to the 1.7 trillion pesos
discussed in the past few months to be able to boost financial markets. duterte is spontaneous. he rarely sticks to a prepared speech. expect the unexpected from him. how important is it for duterte to achieve an economic recovery from the pandemic? we have about two years remaining in his term of office, right? >> yes. it is crucial for the president to be able to unveil and implement an economic recovery plan. down to his last years in office, this is the time when he has to maintain political capital to be able to endorse and help when a candidate in the upcoming elections.
the road to recovery may very well [inaudible] in the upcoming elections two years from now. tom: what is the situation in terms of lockdowns and other steps to contain the pandemic? >> after two months and lockdown that started in mid-march, the government is coming towards a stay homeof further orders being lifted and most of the country. most businesses have been allowed to reopen with limited capacity, observing strict health protocols. but economic managers want further [indiscernible] help boost the economic activity even further. thank you very much.
o in manila. the latest business flash headlines, the south korean company backed by bill gates, sk bioscience, could be capable of producing 200 million covid-19 vaccine kits by next june. that is according to the microsoft founder. bill gates making beth claim in a letter -- making the claim in a letter to the south korean president. ofis looking for evaluation 2.5 billion dollars u.s. dollars on the korean stock exchange. divisionce may sell a that makes parts for the typhoon jet. it is in talks with a spain based company. sale, afterl rolls-royce says it is considering all options to raise funds after con -- cutting 9000 jobs. competition and consumer
commission launching court proceedings against google, alleging they misled australian consumers over the use of personal data. they accuse google of failing to inform users and get their consent before collecting and combining their internet activity for targeted advertising. it claims -- the claims date back to 2016. india's second biggest lender seeing profit up 347 million dollars in the latest quarter, helped by a sale in its insurance subsidiaries. let's look at the company, they say the prophet came in and they set aside more than $740 million to deal with an unexpected rise in bad loans due to the covid-19 pandemic. gross bady said its loan ratios stood at just under 5.5% at the end of june. relentless rally in
gold continues. spot prices, currently $19,028 -- $1928. at 1900 $28looking for the precious metal and those are the futures, as well. futures. in terms of the broader equity markets, it has been a choppy session in the mainland. you are looking at the csi 300 with gains of 0.6 percent, shanghai composite up zero point 3%, the real estate sector 0.4% andeek, hsi up japan is back after a holiday, playing catch up with the losses we saw towards the end of last week. the kospi posting gains of about one he 6%, 26 points. taiwan looking strong, the type a up 2.45%. we have industrial profits out
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. geopolitical tensions over concerns about the global economy. >> india's central bank is set for a shakeup. the r.b.i. will have a new book policymakers and possibly a change to the mandate. breaking news coming through concerning the consulate in , they have taken over the building after it closed, the consulate, at 10:00 a.m. that is what we have at the moment. this is the latest in the tit-for-tat between beijing and washington, marking the deterioration in relations between the countries. the announcement that the consulate was to close came days after the americans decided to do the same thing with the chinese consulate in houston. that is what is happening at the moment, china has taken over the u.s. consulate in that southwestern chinese city. juliette: interesting to see if we see reaction in the markets
because it has been a positive start. japan coming back online after the four day long weekend, they were out of action thursday, friday. it is pulling back a little in response to what you saw friday but elsewhere, very good gains, industrial profits in china 11.5% rise year on year in june, a pretty good game coming through on the csi 300 rebounding somewhat from the 4.3% drop on friday. hong kong's market looking ok, focusing on the new hang seng tech index which launched today, tracking the 30 largest tech companies in the city. have a look at the taiex. tsmcun-up in tmc -- pushing the taiex to an all-time high at 12,619 points. we have been watching the dollar downward move, the rising gold, that has seen moves in terms of the raising asian currencies. you can see the japanese rising sharply against the dollar and a pickup in the onshore chinese
currency rising for the first time in four days on the dollar weakness. gold futures, we have been talking about the spot price topping the previous all-time high in 2011. 19 -- 1923 dollars for the spot price. crypto fans also touting the digital gold and you have seen a huge run-up coming through in $10,000 rising above for the first time in six weeks. rishaad: going to get back to precious metals, we are looking at silver, silver on an absolute tear, at levels not seen since 2013 with regards to that, $23.76 per hour -- per ounce. latin of not seeing the same sort of rise as gold and silver, but still firmly in the green. funds seeingtraded holdings backed by silver topping the record monthly gain
a year ago. this happened with a weak to go in this month. assets swelling by 86 million ounces, soaring by last -- above last july's high. the singapore market up 0.3%, the prospects for a positive open in mumbai certainly being indicated by the singapore nifty changesas we do have possibly on the cards for the body that decides on interest rates in india. a recap, china has taken over the u.s. consulate in chengdu as of 10:00 this morning. our international editor joins us. looking at what is going on, what is happening here? we have a tit-for-tat going on and it started off with the closure of the chinese consulate in houston. what is the united states discovering? call the administration officials had briefing reporters, they
basically said, these officials, that the decision to close the chinese consulate in houston was after years of frustration over trade activities to steal secrets in the u.s. the officials were trying to make the point that this is separate from the other tensions between the u.s. and china over everything from the coronavirus jinping'so xi decision to impose a national security law on hong kong. this is intended to send a broader signal that the u.s. is less patient about its views on chinesey consider spying an international prop rudy -- intellectual property issues. china says these are baseless accusations.
they say this is a breach in international law. obviously a lot of developments happening in the last couple minutes but we hear u.s. officials have taken into custody a chinese researcher who had taken shelter at the country's consulate in san francisco. how could this for the race tensions between the u.s. and china? the race tensions between the u.s. and china? jodi: we have seen each time the u.s. does something, china has a threat to retaliate that the u.s. should go back on whatever he did and the u.s. moves forward and china retaliates. , what we areith seeing now is china taking over the consulate in chengdu, which basically was a key output -- outpost for the u.s. to watch events. the foreign ministry spokesman said in a q&a that u.s.
personnel there were engaged in inappropriate interference in china's internal affairs. this is a whole back and forth. theeard officials decried entry of the houston compound by u.s. authorities. we have seen this, and one would expect that the move in san francisco from the compound will have another response from china. that is the concern among diplomats, that these things are growing very quickly and we are seeing continued x -- escalation. so far, they have avoided a military front but some are concerned that if this continues to happen, without people talking to each other, we could get into a dangerous situation quickly between the two countries. jodi, thanks. the latest first word headlines,
a singaporean man pleaded guilty to acting as an illegal agent for chinese intelligence in the u.s. and is facing up to 10 years in jail. he was accused of working for chinese intelligence as early as 2015. he set up a fake consultancy to obtain information and is said to have tried to recruit others. j.p. morgan and goldman sachs both see europe's recovery as stripping the u.s. thanks to different responses to the coronavirus. they cite a sustainable recovery based on the virus longer being out of control and europe's relative success will make shoppers spend. you are up -- europe is doing a better job at maintaining employment. republicans are considering a plan to extend jobless payments to cover 70% of lost wages or part of -- for part of the latest stimulants -- stimulus
efforts. the fight against the coronavirus is likely to push policymakers to keep interest rate need -- interest rates near zero. it is unlikely they will shift strategy. pro-democracy7-10 candidates are questioned over their views at of elections in september. in questionnaires, candidates were asked to prove they haven't violated the city's constitution or security laws. one candidate was asked to explain why he made a trip to the u.s., calling on washington to impose sanctions on hong kong officials. still ahead on bloomberg markets: asia, cashless currency. the pboc expanding real-world testing of the -- the digital you want and the implications of intelligence poverty aid and traceable tax collection to dollar sovereignty.
juliette: the dollar is sliding to the lowest it's march last year as investors weigh the diplomatic row between the u.s. and china. our next guest says the greenback is no longer king. >> they are dissipating. in terms of the u.s. exceptionalism, as was broadly referred to, in the sense the interest rate was large, the
u.s. outperforming the rest of the world, that is dissipating. there is also concerned about the dollar in terms of the absolute safe haven currency given the state of the virus outbreak in the u.s., so that is putting limits in terms of that phenomenon. i think the u.s. will no longer be as strong going forward. it is also not very crowded on trade so it has room to go. for manufacturing, and some currencies, for instance the euro, which i think can strengthen quite a bit because of some positives, they euro-eu specific factors. emerging in terms of assets, you would think this would be positive. what are you looking at in that space? markets, it is more specific to the markets,
because we are seeing quite a bit of a diversions in terms of how emerging markets assets are performing, whether we talk about currencies or rates and corporate. we see some value in some of the emerging-market corporates and we think, and i said this last time on your show, this year is not really, this is an alpha year, meaning there is a big differentiating theme that will continue to dominate the market. i think a lot of people say that often, every year, but this is really the year where it has been pressing itself. for instance, if you own the peso this year, you would have done better than if you had owned, for instance, the rupiah or rupee in terms of currencies, because of different considerations like responding , thee shock of the virus
fiscal space, and so on. juliette: let's talk about what is happening in the fixed income space. you were touching on safe havens and certainly you have seen the big fall coming through in the 10 year yield, approaching its lowest ever weekly close. we have a chart for viewers in terminal clients, showing what is happening in the bond market with real and nominal yields testing these lows. what do we see from here? omar: i don't see any major reasons for a big selloff from this point. policy continues to be extremely accommodative. i think the fed in the next will be as dovish as they can and progressively, they will move and they have started doing so in terms of more robust and specific forward guidance. as we mentioned before, the
crisis will have a long tail, so i don't really see any room to back up. i think the yields broadly on the 10 year will be sub-1% for the rest of the year. rishaad: i will move to the big story, what is happening to the gold price, record highs for gold. what do we have at the moment? $1939. also, in its wake, the silver price is up over 8%. it is not a record but it is sending a big prop up. silver buys the most gold since september, it is playing catch-up. is but i haven, or is it essentially people looking at the dollar weakening and getting out of the dollar? that would be a haven, too, i guess. omar: it is all of the above,
plus the fact that it has hedged against, we have really taken a big picture. it has hedged against the money, which is being printed left and right at this point. the gold, we think, has some more upside. the rally has determined to a large extent, if you look at some of the data, large central banks, etf investments and so on, it is not particularly speculative at this point. i think gold should go above $2000 soon. what silver is doing is, it is catching up because essentially it has been lagging quite a bit but more specifically on the gold, where i think we have more , stronger conviction, i think gold has more upside. rishaad: absolutely. we have the eu fiscal package in place for dealing with the
coronavirus, and its effects, and that is perhaps leading some people to suggest that should give the euro a big boost. is that playing into the equation? omar: i would thank, -- i would think, the eu package is actually quite positive. the eu got its act together essentially. it is a reasonably large package, which is north of 5% of the eu gdp. you don't have the traditional conditionality's the eu usually has particularly in terms of austere fiscal policies. it is really a true counter eu hasal tool that the not traditionally been doing. it sets a precedent for the eu, which i think is quite positive,
coupled with the fact that the more, stronger policies in terms of protecting the labor market. i think the eu will actually more stable recovery compared to some of the other markets, including the u.s. if you had to pick one asset or even an asset class right now in this environment, what would it be? ofr: i think in terms broadly, the assets that will be resilient, because of the fact that there will be a surge for yields because policy is to a large extent backstopping negative performance or losses, i think there is a lot of value
in credit. depending on the risk tolerance of each investor, i think there are opportunities in high yield but ig is in a very weak spot, particularly if you look at ig from this part of the world, from asia, asian investment rates. it still has some juice because of spreads compared to some of the similar markets. it will benefit quite a bit from a policy because policy really is pushing for this asset class to perform, and if you look at the dollar, for instance asia ig and the currency risk is mitigated. juliette: thank you so much for your insights. omar slim. plenty more ahead. stay with us. this is bloomberg. ♪
rishaad: you are back with bloomberg markets, and bling is also back. gold prices topping their 2011 , currently trading at $1929. let's bring in david with the story. assuming investors want to chase the rally, we have been crunching the numbers. how do investors actually do it? do they buy the physical stuff, the companies that minute or the etf's? david: good question. the issue with buying the miners themselves is, the bull market needs to continue in a big way because that is related to the equity market. what you need is a little alpha. found this one etf, you can see it, it is the white line
on the chart, the vectors gold miners etf. the equityerformed index itself, the gold etf itself. a quick background on what it is, it is the most dominant etf. it is 80% co-related to the weekly gold price. when things go up, you do get that extra push. now, assuming two things, two things need to happen. you need gold prices to keep going up and you need equity prices to keep going up. if you get those two conditions, this is probably one of the ways that gives you that exposure. it is short-term, it is leveraged, it is highly risky but have a look at this. they found this, this is gold, by the way. when we see this
outperformance in gold and other precious metals, is this part of the bigger macro story of the fact that we are facing a global recession? david: i saw the graphic you brought up with the previous guest when you talked about the zero,picture, yields at negative in many places. if i recall, he mentioned buying gold and silver, since silver was brought up, is a hedge against these currencies. a way to maybe expound on that is, when you measure the outperformance of precious metals against the broader commodities space, it is this blue line you see here, and you plot that alongside balance sheets of the g4 countries as a percentage of their gdp, you understand why that cap, that supports holding gold as a hedge against central banks, debasing the values of the currencies, why this actually is, why this speaks to that. to answer your question, yes, when you look at this there is a
broader macro story involved and that is lower rates. juliette: all right. david ingles. let's check the business flash headlines. we have been seeing hong kong stock exchange debuting a new tech index. tracking the 30 largest tech companies listed in the city, including chinese giants tencent and alibaba. tracking this would have returned 47% are investors versus a loss of 12% for the hang seng. chinese listing in the pipeline. goldman sachs 3.9 billion dollar agreement with malaysia over the 1mdb scandal could pave the way for a settlement with the u.s. justice department. the malaysian deal announced late friday includes a payment billionillion -- $2.5 to resolve probes and guarantees
an additional 1.4 billion dollars will be repatriated to malaysia for assets seized around the world. hsbc is denying it framed huawei, saying it didn't spot the u.s. probe into the tech giant. they made the statement in response to allegations from huawei, which claims the u.s. mid -- misled canadian authorities on a presentation given by a jailed ceo. hsbc says it has no hostility towards huawei and did not ensnare the company in the probe. the managing director of a bank reduced his holding to the lender, selling 7.4 million shares for $113 million. overgs show he sold shares three days last week, cutting his holdings to 0.01%. he is set to retire in october when he turns 70. the lender is awaiting the rbis approval for one of three
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♪ it is -- juliette: it is almost 11:30 a.m. in hong kong and singapore. global coronavirus cases have passed 16 million with a death toll of 646,000 people. the u.s. continues to lead with most cases and 146,000 fatalities. florida has overtaken new york as the state with the highest number of cases, behind only california. both cases and deaths fell in all three states over the weekend as well as in texas and arizona. the australian state of victoria has reported a record number of
coronavirus cases. daily cases on sunday rose by 530 two, the most since the pandemic began, and above the previous record set the day before. six more people have died. most of the infections are in melbourne, which has been in lockdown two weeks after the onset of a second wave. new south wales reported 17 new cases. spain is scrabbling to stay ahead of new outbreaks, which are dealing a new blow to its tourism dependent economy. only weeks after including spain u.k.list of countries, the now requires those returning from summer holidays to undergo 14 days of quarantine. this came after spikes particular in the catalonia barcelona, and other countries have issued warnings for spain. city korea has ordered a near the southern border into lockdown after someone was possibly infected with the virus. this was made at a meeting of
the workers party in what kim jong-un called a preemptive measure. they say the suspected infection is from a defect or returning from south korea. china's central bank is planning to test its digital currency on platforms operated by a food delivery giant run by tencent. our guest.ss with thank you for joining us. why are they doing this? jennifer: thank you for having me. i think there are some things we need to break down, one is from a consumer point of view, and china, one of the biggest objectives in the coming years is trying to eliminate positive -- eliminate poverty. think chinally, i
is also looking for trade security, which means the currency from the central bank, --itally issued currency without going through u.s. dollars. i think those are the two major immediate benefits. we can see from issuing digital currency. rishaad: the question everyone has been asking, is it a way of internationalizing the yuan more than it did already and also taking on the dollar in a sort of way as well? why do people ask that question? jennifer: i think the natural to then internationalization of the yuan is about the u.s. dollar, it is hard to displace if the u.s. sentience doesn't see
as a fair process. that's the potentially rate guest risk -- potentially biggest risk for the u.s. dollar. in terms of digital currency, from the central bank's point of view, it looks like pboc, china's central bank, is the first to issue digital currency. this should be adopted by every government, to be honest. u.s. during covid when people were supposed to receive $1200, they were still sending out a check. was to currency, it would make the process better. the currency issued by the pboc this function as one
of the key capabilities and it will bypass swift, and if it bypasses swift, it will become international impact. digital currency, , you partlyayments answer the question already but i want to get to it fully, because we have things like wiichatnd we chat -- pay. is there any need for this? jennifer: absolutely. this is one of the under discussed areas. there are a few reasons why this will become different compared to what we have with alipay and others. private companies,
and for every merchant, they decide to use the payment as more or less a commercial decision. they are still part of the not used byy are the consumer. this,he pboc issues everybody has to accept it. perhapsfunction is anyone traveling in china will realize, if your phone does not connect to the internet, you cannot use alipay and wiichat pay. payment andoff-line you don't have to access the internet to complete a payment. is probably quite useful as well, which is a big criticism of the others, which is that if you don't have a chinese bank account, is very difficult.
this will launch around 2022 during the winter olympics in beijing, and for international chinese going to china, bank accounts will not be required. everybody will be able to use the digital wallet, it doesn't matter if your phone is online or off-line, and it would be accepted by every merchant. when you say everybody, what about the poor or people who don't have phones? how does this work and what does china want to do to ensure it can be used by everyone? jennifer: that's a really good question. i think this is one of the main reasons why pboc initially starts to develop a digital currency in 2014. china currently has 60 million people living under poverty. many of them are in very rural
parts of china. it's not that the central government doesn't have the money to send aid to those families, but with the current process, the aid being sent to local governments, with the leaders of bureaucracy and corruption, and there's no visibility from the government. families,f the poor the poorest families need to receive the kind of aid that in theory the government needs to give everybody, to give them all a phone. they would not only receive aid from the central government but they could monitor how big of a proportion is being used for virtualize or. this is not just financial aid direct but also collecting toelligence as to how -- as what kind of expenditures are being done by those families paid juliette: we see facebook
shift its plans for its libra token. regulatory pressures there. what can america learn from china, if you think china is ahead of the space and how they are doing better than companies like facebook and american general? jennifer: it is interesting to take this from a historical view. some dynastyo in in china, the world's first from gold,, moved silver and iron money, in china. it was issued based on the trust with the bank that a piece of paper could be regarded as the equivalent to all of this gold and silver. companies like facebook trying to issue a currency, of course they have perhaps the largest platform in users,ld with so many
and they have the potential to have a pervasive capability by the largest population in the world, however when facebook starts to talk about libra a couple of years ago, it was very facebook compared to before 2015. the essential part of that me sing -- missing in libra is trust in facebook. the majority of people in china trust the central bank. the majority of people in the u.s. need to trust if they are doing a good job. the trust is there, and that is important. in terms of what the u.s. can learn from china, i believe u.s. also very actively considering digital currency. and as our world is moving to a more digitalized world, it is worth considering how do we move
from paper and plastic money to digital money? about the pbocng assets, and one of the points they bring out, it was really government, the identified that personal data is -- production, and there should be a link between the value of personal data to the currency. futuristic, but i think and 5, 10 years down the road, would not be surprised that the digital currency today is like a foundation to allow individuals to realize the value of their personal data. that part is exciting to me. rishaad: jennifer, great talking to you. up, a looming shakeup as
policymakers setting interest rates and possibly a change to its mandate. the overhaul comes amid heightened uncertainty as the economy has to its biggest contraction in four decades. our economic and policy reporter is in mumbai. will this shakeup risk changing anything for the markets? with ang at a time slowdown, it has the potential to harm the markets. that theyo remember have been cutting relates rather unanimously. external. allowed members over six months to provide some certainty. say thatclearly external members cannot be reappointed. changedwould have to be and parliament is not in
session. members expire in august, with one member already resigned. the government has formed a panel to select three external members with a new head of the monetary policy department vacancy from the central bank. this is driven by the governor and that is unlikely to change for markets and investors. has inflation targeted ,- hasn't worked for india things like the monsoon and etc.? anirban: a good question. it has held and it is one of the rare reaffirms -- reforms that has held.
it's staying in the 2%-6% rate in the past five years. fellong ago, the country double digits in the inflation rate and now we are used to a different paradigm in the low single digits. in prices.s inflation targeting has brought about greater -- for investors and inflict -- inflation expectations of the economy. [indiscernible] and especially a means to provide underlying price pressure also to be on thed so that demands economy can be factored in. foromists also call targeting of the nominal gdp so
that the economy can be provided a better quality direction. we will come to know your whether it works or not. juliette: we will wait and see, thank you so much to our economic and policy reporter. let's check the indian markets as they open up for the weeks trade. a pretty flat finish coming up -- coming in on the main indexes friday, and you have a look here at the sensex, a little weakness, down about 1/10 of 1%. a little different from what you've seen from other asian equity markets right now, the nifty bank index falling by about 910's percent on open. 1% on open. idici bank has seen help but there has been a sale of stakes in nonlife insurance subsidies
adding to quarterly profit. also hcfc bank, we have seen some moves coming through as we saw the managing director 7.42ng 7.4 toward -- million shares we've seen reliance overtake exxon to become the world's number two energy company after saudi aramco. by -- lured by reliance. latest: coming out, the on the global coronavirus pandemic. flareups across asia and cases in existing hotspots continuing to intensify as well. this is bloomberg. ♪
measures heading toward quite a strict lockdown, according to some reports. >> and we heard from the chief secretary, saying the city should be prepared for more stringent measures if this wave gets worse. options include possibly banning possiblyd drinking and requiring masks outdoors. what we have heard officially is they are still rolling out a full lockdown at this point. we have seen more than 100 cases every day for the past four days , half of which are unknown origin. we heard from the financial secretary on sunday as well saying the economic situation in the second quarter is still very severe but the state of contraction appears to have slowed down slightly. he is expecting a longer than expected economic recovery. we will get those second-quarter
gdp numbers on wednesday as well. juliette: when it comes to southeast asia, still hotspot, what is the latest in a number of these countries reporting a big jump in cases? yvonne: virus cases stay elevated. asia still ranking number one as the hotspot in the region. 99,000 cases. philippines surpassing 80,000 with cases nearly doubling from a month ago. going to tighten restrictions in manila. singapore exceeding 50,000 cases where we still see hundreds of new cases per day, mainly from poor workers living in dormitories. finishernment has to testing migrant workers month, allowing businesses to kick off again as employees returned to work. as one of well, seen
the early success stories against the virus, they reported the first local case in three months. rishaad: good stuff. korean baseball organization allowed fans back into the stands. numbers were capped at 10% of capacity with spectators having to take two better checks and register with qr codes. they had to sit at least six feet apart with masks. food was banned alongside alcoholic beverages. u.s., thein the regular season of major league baseball kicked off without any fans in attendance. dr. anthony fauci through the ceremonial first pitch for the opening game between the washington nationals and new york yankees. we spoke to the boston red sox president and ceo about the reopening of the sport in the u.s. and why getting fans back in the stands is critical. >> think we started right at the
right time. with theof dealing virus and looking at the schedule on the calendar, the different markets and to areas, the commissioner deserves a tip of the cap from the whole industry for coming together and getting an agreement together to move forward on health and safety protocols. this is an experiment. it is a high wire act, to be sure. players are taking it seriously, working seriously in our facilities, and now we need to execute. we have a very exciting brand of baseball. it will be great for baseball fans around the world. >> you have a relationship with legendary stadiums, and they will be empty for the foreseeable future. surely that changes the business. the way you spend money, cut money. talk me through the conversation now and what you are planning for -- a season of no fans, two
seasons of no fans? what does it look like? >> we have our upside, made case and low case. we have disaster scenarios. again, a credit to our ownership, they continue to invest in the product on the field. in terms of our business, it is critical we get fans back in the stands at some point as soon as it is safe and the government and health official say we can do it. for baseball, we rely on gait ofenues, 50-plus percent revenue. as you can imagine, this is been devastating for the business. the country needs sports, the country needs baseball, and we need to keep going through the pandemic. flexibility is the order of the day and everyone has shown a willingness to be flexible. we will keep doing that and readjusting our budgets and evaluating as we go forward. what is important is we will be back on the field tonight at fenway park. >> readjusting your budget goes
to the labor negotiations that hampered the beginning of this season. how much do you expect some of the players to accept cuts in wages based on what we've seen this year? >> amazingly, the players have accepted the fact that we are regularying 37.5% games season if we get going. they are taking less wages, everyone in the front office is taking less wages. it is a reality because our country and across the world. it is a very difficult time. none of us enjoy pandemic and i hope we don't see it again. intoe as we get going 2021, a vaccine is around the corner. kennedy,that was sam boston red sox president and ceo. let's have a look at the latest business flash headlines. a pharma company backed by the they could be
capable of producing 200 million covid-19 vaccine kids by next -- kits by next june. gates met the claim. the company is apparently seeking to list on the korean stock exchange at about 2.5 billion u.s. dollars. europe's biggest technology company selling a stake in units through a u.s. ipo. they bought the customer survey firm to compete with salesforce. they plan to keep a majority interest while giving the business greater autonomy. the decision marks a quick turnaround from the $8 billion -- back in november 2018. miss our don't interview with the ceo of sap. that interview through -- shortly after 6:30 u.k. time.
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