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tv   Bloomberg Markets Asia  Bloomberg  August 30, 2020 10:00pm-12:00am EDT

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minister and a long serving cabinet secretary. critics say that shinzo abe has failed delivering on promises. >> and they are optimistic about recovery despite tensions with the u.s. getting straight to the market action. the hang seng leading the charge along with the nikkei 225. have a look at what is going on, the futures and the s&p 500. overall, 0.8%. nikkei 225, shrugging off the abe resignation. look at the future with the candidates lining up. let us take it out to what is going on in china itself. earlier, some important pmi data. manufacturing activity declining in august.
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forget on the nonmanufacturing side, that july.actually rose from stronger than what had been predicted. economists coming on stream after the lockdowns in the country. the aussie market also justin positive terrain. look at some of the majors. what we saw after the abe announcement -- the yen is recovering. inlar weakness is resulting gains forthe -- in the euro.
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there is not much movement taking place in sterling. >> it is going to be a long talk there. first word headlines -- tiktok appeared the sale of its u.s. options as they stumble over approvals from china. bytedance is said to have met with china's ok. we are told that the government permits will now be required for transfers to safeguard national economic security. microsoft, walmart and oracle are known to be interested. centric has is also -- center ricus is also said to be in the game. talking u.s. politics now -- president trump is talking tough about the protesters in oregon. postsesident reach we did
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that accused portland's mayor of having blood on his hands. and we're talking about the president who is set to visit kenosha. say that the state governor told him to stay away. antnam says it expects agreement to be signed by the end of the year. hanoi will host a virtual discussion among asean ministers. mechanism --the the online talks included china, japan, and the u.s. and focused on how to prevent measures that could undermine global trade. new zealand's largest city has come out of lockdown after the government said the covid-19 outbreak over there is now under control.
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auckland schools and consumer businesses have reopened and the travel ban outside of the sustained -- outside of the city has been removed. however, everyone over the age of 12 is required to wear a mask on public transport. u.s. interest rates and a weakened dollar expected to boost investments. the dollar has dropped against major peers but it is still up about 2%. in 2019.than it was but us discuss this with credit suisse cio, john woods. the weakness against the majors is over with. but the weakness has been transferred to the em currencies. what is your take on that? john: we agree. we think it is likely with rates
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the decisions made by jackson hole and more broadly by fed chairman powell underscore that expectation. we believe that the u.s. dollar is set to weaken in the months ahead and as such, we anticipate the asian currency complex will be the beneficiary. the undeveloped currencies are unlikely to benefit and i think that is the case. the euro is set to strengthen over the next 12 months to 1.25. but the real value or upside will be in the emerging markets including the asian complex in particular. tend to see asian currency strengths, u.s. dollar weakness, we tend to also see a commensurate outperformance of asian equities >>. we could have one eye on what
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happens on november the third. what is your view on that? john: eight weeks away is a short period of time and the theme for the second half of this year at least from the investment perspective is the politics of change. just remind you that in the first half of this year, it was the politics of change that would characterize our asset allocation over the course of the next six months. view is thatg economic activity in the asia region will continue to gain traction but the catalyst for market volatility will come from the political sphere. and the u.s. election i think will absolutely be driving that volatility and it will probably get worse as the election nears.
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volatility will get worse. theyou factoring in scenario of a biden presidency? what will that mean for asia? chinai do think that .ould prefer a biden presidency i think that a more consistent rule-based and perhaps consensus driven administration would best benefit china's government. , the incumbent administration arguably is the opposite of that. whether or not there is a direct biden trade is less certain. certain u.s. sectors will outperform as they usually do in a democratic administration and certainly the so-called green infrastructure investment plan that biden has discussed will benefit certain sectors out here
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in asia. they are related to particularly the electric vehicle, smart city planning strategies. will do not think the u.s. change its course. i don't think the fed will change its course and i don't think earnings will be meaningfully impacted. almost whoever wins, i do think there will be a relief rally as that election related volatility diminishes. i am quite optimistic towards asian risk in the next 6-12 months largely as a function of improving earnings. and you mentioned the weakening dollar, rish >>. you mentioned the earnings picture. we have seen downgrades stabilize a bit. are there certain sectors that you are seeing the most earnings improvement that you could position yourself in?
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john: the sectors that focus on the new economy are those that are likely to outperform. the concerns about valuations. concern isnning this the backstop of the fed. forgive me for repeating the landmark decision to a just the percent policy framework announced at jackson hole, but it really does underscore this idea that the fed is relentlessly focused on supporting underlying issues. i believe that will have a halo effect around the world. i believe asia's new economy stops will continue to outperform and those subsectors, home delivery, health check, all of those sectors will do well. broadening away from that, we
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are also looking at energy stocks which we think are cheap and will subsequently outperform. it is very much a rally driven by this expectation of rate -- lower for longer, a weaker u.s. dollar and the innovation in earnings stemming from the new economy sectors. >> how long can it go on? momenteemingly at the factoring in a pollyanic world. john: [laughter] i love that phrase. another day, another record. look, i fully appreciate that as these big tech stocks grow ever , the breadth of the indices will narrow. we are not underweight.
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for as long as this unbounded enthusiasm and relentless commitment to under -- to support growth, almost whatever it takes, i don't think it is sensible to start selling the market. >> john, always a pleasure. john woods. coming up, the man known as mr. yen talking about what all be's resignation means. we will be speaking to the former japanese vice finance minister, eisuke sakakibara. a viewpimco will give us of the bond markets. a shift in the strategy. this is bloomberg. ♪
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-- for the race is on some inside look at what might happen to abenomics, let us bring in the man dubbed as mr. is aeisuke sakakibara former top currency official in japan's finance ministry and the former vice finance minister of japan and he joins us from -- joins us from tokyo. always great to have you with us but certainly during this interesting time in japan. withoutomics live on abe in place? can you hear me?
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i think we may have lost mr. yen . rishaad: let me try here as well. eisuke sakakibara, i was wondering if you could hear me? abenomics live on after the creator of it resigns? i think we definitely do have some technical gremlins out there. let us sort that out for you. saying -- adding to the wave of shares sales in the city. china's biggest restaurant company -- with bloomberg
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reporting a could raise about 2 billion u.s. dollars. yum has been working with goldman sachs and other potential listings. --chinext. asia's biggest refinery reporting a shortfall of just over $3 billion through june. that compares to the profit of $4.7 billion from a year ago. declared a never loss in the last 20 years. we go to a commercial as we try to get back to eisuke sakakibara in tokyo. plenty more ahead. this is bloomberg. ♪
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rishaad: getting back to eisuke sakakibara, former top currency
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official in japan and also dubbed as mr. yen. yvonnesakakibara, started by asking you if the loss of shinzo abe as prime minister will mean a stop to abenomics. what happens next? can the policy continue? i think thera: policy will continue. -- for will succeed him example, this candidate has been following this policy for a long time so i do not think there will be any major change of abe's economic policy. rishaad: what does that mean -- -- ne: rishaad: carry-on, yvonne -- carry on, yvonne.
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yvonne: some critics have said that shinzo abe was not successful in achieving things omics and fixing the aging demographics in japan. will the next leader be able to carry on the reforms that shinzo abe was not able to see through? mr. sakakibara: well, what are these reforms? for whoever succeeds will continue on following abenomics. so, whatever was not achieved with shinzo abe will be pursued by his successor. anyone youthere think is fit for the job? well, there are
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two big contenders. abehas been supporting mr. in the cabinet. and the other has been supporting mr. abe from the party. the two will of become the prime minister i think. but -- that means the objective will be to continue to have a weaker yen. last time we spoke to you, you thought the yen with be strengthened and it has not strengthened significantly. what will happen now? mr. sakakibara: i don't think
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there are any explicit currency policies. currency matters are essentially handled by the minister of finance -- the ministry of finance officials. it does not really have an impact on the currency policies, who becomes prime minister. rishaad: tell me, eisuke sakakibara, in your view, has ever been -- has abenomics worked so far? reformsour view, what need to be carried out for the policy to be more effective? mr. sakakibara: well, i think abenomics has worked. the exchange rate has sort of ratened so that a growth
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has been at 1% which is quite a good performance for this economy. as a total hascs succeeded and for whoever takes over will continue on with this policy. rishaad: absolutely. and the second part of my question was -- what tweaks do you think need to be made for the government policy to be more effective? --whatakibara: what precisely do you mean? donead: what needs to be in order for the economy to get going a bit more especially in this time of the covid-19 pandemic? mr. sakakibara: well, it is not -- theult of the
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immediate task of the government is to control this pandemic. you know, it may be difficult but that should be the major target. , youe: eisuke sakakibara mentioned about your two picks for who could succeed shinzo abe. the former defense minister has the most fit from the public to serve as the next prime minister. why is he not in your favorites? well, he is not among the party people so if you have a general election, he may , hisut within the party popularity is relatively low. more of aere is
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chance that he will become the next prime minister. economy,n terms of the how much fiscal room is still left? there has been a lot of criticism of how shinzo abe has handled the overall pandemic. securitythe country's budget position raise concerns? mr. sakakibara: the long-term fiscal outlook is dim. ,ut i think in the short run some fiscal measures could be taken to activate the economy. to recover from the pandemic. i just want to ask you about the yen. we saw the knee-jerk reaction on friday. the spike in the currency.
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is there anything to suggest that we could extend those gains? what do you see for year end? year-endibara: i think would slowly moved towards 100. appreciation. would bebe slow but i surprised to see the dollar-yen rate moved to 100. wenne: eisuke sakakibara, appreciate the time. thank you. japan's former vice finance minister joining us from tokyo today. we have seen a reversal in japanese equities to the upside on this monday morning. this risk on trade continuing into today. we are watching what will happen in the india open because we
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have the first quarter gdp numbers coming out. we expect historic contraction close to 20% lower. plenty more to come. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker,
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we are going to go back to our guest, eisuke sakakibara. thank you first thing with us. the bond buying program and other asset purchases have been the main form of monetary policy. is it becoming less effective in your view? the easing of: monetary policy will continue. but i think it goes on and on -- but i think if it goes on and
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on, the effectiveness will decline. i think the bank of japan is determined to continue the easing of monetary policy. rishaad: the balance sheet is huge and japan's debt position is growing exponentially. does it worry you? mr. sakakibara: no, because although the government debt has sector is the private huge. so current account balance is still in the black. , japan is a country in good condition so i am not that worried. yvonne: do you think that the boj has to be more proactive in rise togb's when yields
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show their commitment to monetary policy is intact? don'tkakibara: no, i think the bank of japan will change its policy. it will continue on. as has been done in the past. yvonne: ok. has had such a long track record of serving as japan's serving prime minister. markets like that kind of stability. in terms of the prime minister candidates right now, do they have enough power to go through a short-term agenda? theill japan return to revolving door of leadership that we saw before shinzo abe? mr. sakakibara: i hope not. abe is the longest
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sitting prime minister since the reagan administration. abecandidate that replaces will try to do that but i don't know. it depends on how well he is in politics. also, when you look at what is happening with the japanese economy, what do you think needs to be? tweaked?to be does the motor of the japanese economy in some ways need to be changed? i am notibara: well, that much worried about the japanese economy. maturednese economy has with the gdp as high as we have right now. 1% growth rate i think is sufficient and there is no
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widespread dissatisfaction with the policy at this moment. ,ishaad: eisuke sakakibara thank you so much. the former vice finance minister. the billionaire founder of one of japan's biggest conglomerates is optimistic despite the u.s.-sino economic tensions. they spoke exclusively to tom mackenzie from the shanghai headquarters. first of all, fosun covers a wide range of business but we concentrate on family consumption. our business is very focused particularly in recent years. we have been more focused. inondly, i am very confident the chinese economy. china has a large middle class so there is huge domestic demand.
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in competition. our chinese business in the future will still be the priority and the most important for us. we sense there is huge growth potential. we sense there are rising tensions between the u.s. and china. how much of a headwind are those tensions for business like yours? i don't believe some extreme voices during the election campaign can represent the future of u.s.-china relationship. i believe they will find a solution in the future. friendly toery local communities. all of our investment and business development are welcomed. in terms of investment, we will focus more on strengthening our
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industry in the future instead of expansion. we will concentrate on strengthening our existing businesses in regions that we are already yen. m: are you comfortable with those levels around that ratio? are you looking to raise by bondal funds eithe issuance? >> we will maintain a prudent financial policy. we will not aggressively change our financial strategy but we will not be too conservative. over the last few years, we have tried to get a balance between investment and debt which means we have investment that we also have exits. in terms of multichannel financing, we have both bonds and stocks.
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we have financing in the chinese and in mainland china financing in u.s. dollars overseas. more and safer sources for funds. a strategy for the future is to maintain prudent finances and adequate cash flow. tom: which parts of the world to you righticing now as an investment opportunity? >> we have taken a position in brazil. we are optimistic about its future development. southeast asia is a place where we do not have significant investment that we will strengthen there. but the treatment for malaria has made a great contribution in africa. it is called almighty medicine there. i think africa has been facing a huge challenge particularly from this corona virus pandemic and we can do more for africa. tom: 10 years from now, where do
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osun to be?ow decade,pe in the next we will see big growth in the customers we are serving. we will also bring them better products and better services. the foscunt was chairman-- fosun speaking to tom mackenzie in shanghai. executive director stephen chang will give us his outlook on asia's bond markets. this is bloomberg. ♪
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yvonne: positions favoring a steeper yield curve earned a boost last week when the fed chair jerome powell announced the central bank is shifting its 2% inflation arctic implying a tolerance for the overshoot when it comes to prices. robert kaplan told us the central bank is not rushing to hit a specific target for price expansion. it is possible that it will take a while to get to 2%. technology enabled disruption in
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theicular is limiting pricing power of businesses and inflation has been muted for close to 10 years. chang, joining us now on the line this morning. more tolerance of inflation from the fed. the dollar lower, real yield declining. what do you make of this shift from jerome powell? stephen: we think it is a pretty significant evolution that the fed has in some way changed its constitution. a lot more focus will be put on increasing inflation back to above 2%. if you think about the dual mandate that they have come it is a lot more asymmetric both on the inflation front as well as on the full employment front as well. they aree think attempting to run the economy
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hot and they will also need to work with the congress and -- on the fiscal side to have a partnership. there will be a higher tolerance thedeficit in order to make economy recover faster. and there is a lot of talk that this is supportive for em and credit as well. what do you think investors should start pricing in that investment premium? stephen: i think you have already seen the inflation rate comparing the tips and the nominal treasuries. that has been on a steady trend up expecting the strategic review from the fed to give more of this type of guidance that we just heard last week. along with potential fiscal supply, the curve has steepened
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out from five to 30 in the u.s. i think it is still a risk on environment in the u.s. see a are low so we supportive environment for credit as well. the core credit and the u.s. investment grade for example has done really well and now if you index, it isg, cbx around the mid-60's. people are looking for something a little high-yielding. one has to find things that may have lagged including e.m. credit, asia credit and the credit across the investment grade and the high-yield sites. the spreads are still quite a bit wider than typical averages. i wonder though, because there are still a lot of people skeptical about the fed being able to reach the overshoot of
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2%. and the tools we have used have not generated inflation to that point. in a way, does this reflation trade get derailed too? stephen: there are certainly some uncertainties here and we still need to await what specific tools the fed will announce in roughly two weeks meeting but ioc think the market is pricing a little more of the things they can do. at least there is the old toll of guidance and asset purchases and maybe something along the lines of potentially what else they could do would be released at the meeting. rishaad: i want to have a look at credit in this part of the world and get your views particularly on chinese credit and some of these bondholders.
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they are in trouble. the government has been issuing debt in china. how have you been looking at it? in china, we have seen the economy in terms of the normalization and recovery to be surprisingly rapid and almost anticlimactic. the policymakers now can afford to be more patient and from our standpoint, that gives them more -- that givese them more room to ease if there are hiccups. it is not a bad place to be on china local currency bonds. in some safe off haven characteristics and could provide a good hedge along with increasesusion and along the way. u.s. and, even with
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china names, we think with the underlying growth, it will provide a positive backdrop but we will be focusing more on the domestic sectors. we have been hearing a lot more about this dual circulation framework that the top policymakers in china are making and putting more emphasis on the rebalancing towards a consumption economy. and so the domestic sector to us could do quite well ahead. rishaad: with all of these central banks pumping liquidity into the economic system, it must be distorting the markets. will we find out who is naked when the tide goes out? stephen: so, this is kind of a million-dollar question. when you look at the central
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expectations on future rates, we are not expecting any move in particular -- the most important one with the fed. so, it will still be a while along the way and we think there will be some areas that show cracks. since march, the general liquidity situation is a very -- and we think the number of accidents will be relatively manageable. you have said now that the dollar decline has just started but it has not exactly em'fited all pms -- all s. u.s.en: all income a dollar in terms of the yield advantage versus other developed markets such as the euro and the
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yen, that interest rate cap has shrunk to almost nothing. that reduces the support of u.s. dollar and u.s. dollar on a longer-term valuation is also expensive. the u.s. dollar also would've benefited more from a safe haven if investors wanted to flock to treasuries but treasuries reduce that attraction but the yields so low. there will be more impact looking at different countries and how they are doing on the howic health situation, they have seen their a economy recovered. -- for selective asian economies -- currencies, we think there will be some strength ahead including the renminbi and the korean wan. other markets have more vulnerability in terms of the
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macro imbalances to how they are dealing with this covid-19 situation so there will be quite an uneven type of dollar and fx transition. rishaad: stephen chang from pimco. coronavirus this infections -- the new epicenter of the pandemic. .uman and economic costs as we look ahead to the second quarter gdp data. that is coming up next. ♪
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rishaad: you are back with bloomberg markets. india hitting a world record it does not want. the most coronavirus infections in a month. worstonomy is facing its quarter slump on record. at an 18% or 19% contraction for the economy there. can we put it all down to the pandemic? >> absolutely, rish. critics are unanimous that placed onetion -- he
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of the strictest lockdowns. factors behindf the sharp contraction. he decided to lift some of those harsh codes in may and june but with the case is increasing exponentially, some of the states have been shocked. as a result, the services sector which makes double of the economy has come to a virtual halt and is likely to show deep contraction in the next quarter. show a steepbly decline. data is a chance that this could be muted. the only good news is the farm sector has provided a flow of activity. there are policy missteps while other measured economies have had generous fiscal stimulus. even worsedecline
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especially in the face of collapsing demand. yvonne: ouch. india,lockdown lives in are there signs of things reviving as economic activity comes back? lockdown has been lifted partially, there are signs that economic activity is coming on track but the cases of are also rising exponentially and there is evidence that the indicators show the world is behind us and there are signs that services, manufactures, and the farm sectors are growing after the deaths in april and may. but there is a "but." it does not expect a recovery to until the january-march
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quarter. there will be a contraction of a contraction of 5.6% for the year. you just mentioned that there have been some policy missteps. do policymakers have some fiscal wiggle room to revive the economy? the short answer is yes, they -- likehe government some of the advanced economies. modi's ministry is loath to adopt these. it is opening up the bond market to foreigners. there is also a case for income -- the has cut rates but
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[indiscernible] on if modi's government will provide more support or not. our economy and policy reporter in mumbai ahead of those gdp numbers out of india later today. is planning to buy an lcd well for just under 1.5 billion aussie dollar's which is around $1 billion u.s. they will need to raise two thirds of that to complete the deal and will sell shares at three dollars 50 -- $3.50. offering the equivalent of $3.5 billion for a near 30% stake in its french rival. trying to create a world leader in waste and water services.
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suez directors will meet shortly to consider the bed. if the initial offer is received veolia will try for the rest of suez. it seems like it is a risk on session today. we did see that better than expected number coming out of china. slightly a miss on manufacturing but overall, steady as she goes. it seems the recovery is still very much in effect. in japanese equities -- we will see how it plays out after the lunch break that it seems it is coming back in a big way also. rishaad: looking to the headlines -- shinzo abe and president donald trump speaking on the phone at length during which time donald trump said mr. abe was the best and the greatest prime minister in japanese history.
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relationship is extraordinary and the president saying the prime minister has done a fantastic job. a lot more to come in the next hour on bloomberg markets. ♪
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>> it is almost 11:00 a.m. in singapore and hong kong. i am haslinda amin. welcome to "bloomberg markets: asia." >> i am rishaad salamat it. the race to succeed shinzo abe includes a former defense minister, japan's longest-serving secretary. critics say abe failed to deliver on most of his initial promises. clock is the tiktok
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ticking but there could be new obstacles. disposal of its u.s. assets may -- china clamps down on a sales abroad. -- ai sales abroad. rishaad: asia's richest man looking to dominate in the retail industry. group intends to take the battle to amazon and walmart. haslinda: asian markets extending gains for the day, currently at two-year highs. we are looking at possibly a rotation into beaten-down stocks. that is what some analysts are saying. inching up 1%, getting a lift since 2016. china pmi's showing recovery even if at a slower pace. we have the asx 200 index up .2% , set for a fifth straight months of gains. we are watching -- we are keeping a watch on australia
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bancshares which are trading higher. it is sticking to rates to buy the wealth management unit for national australia bank and dollar-yen at 105. investors have been piling into the yen as a safe haven as japan always a successor to prime minister abe. the yen rose as much as 1% versus the dollar. it matters more than abe from dollar-yen. looking at india as well, the open 43 minutes from now, another positive day for the markets. take a look at what is going on. the rupiah at the moment appreciating. it is at levels we have not seen since the start of march, all against the backdrop of u.s. dollar weakness. certainly, what we are looking forward to -- we will be getting data later on, it :00 tonight hong kong time, which may show
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the indian economy contracted by 19% in its latest quarter. looking out for those and looking out for earnings as well. we have at the moment the likes of -- dynamics. up withothers which are their quarterly results later on. let's get to the first word news headlines as we get over to new york and join karina mitchell. karina: another grim benchmark. coronavirus infections have risen above 25 million with several regions reporting a surge in new cases. the u.s. reported the most infections since early june. california's cases rose by the most in a week while russia recorded almost 5000 new cases, and more than 10% of them from moscow. virus locked down in victoria has seen consumer spending slump and job losses rise. unwanted set an record. the health ministry reported more than 78,700 cases, topping
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the previous record holder. india's total virus infections are now above 3.5 million with fatalities climbing above 63,000. india is third in the world in terms of infections behind the u.s. and brazil and forth for deaths. vietnam says it expects the trade deal to be completed and signed before the end of the year. hanoi hosted virtual discussions among asean ministers and said they agreed mechanisms for certifying the origins of exported goods. the online talks included china, japan, and the u.s., and focused on how to prevent measures that could undermine global trade. the race to succeed shinzo abe as per minister of japan includes former defense minister -- also in the running is the long-time cabinet secretary. and the former foreign minister. he is seen by political insiders in tokyo as best suited to lead
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through the elections in october next year. kyoto news says the new leader is expected to be chosen in parliament on september 17. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. thanks. we are going to take a look at the sale of tiktok's u.s. operations. beijing added the overseas transfer of artificial intelligence to the list of prospects it considers vital for economic security and that means any sale needs the approval of the chinese government. let's get more from our asia tech reporter. let's start with details of these new regulations because our bloomberg opinion columnist has likened it to somebody buying kfc but not being allowed to use herbs and spices. onchina's commerce ministry
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friday revised its list of products and technology it wants to restrict if a chinese company wants to sell them to a foreign entity. these includes interface technologies like speech and text recognition and personalized recommendations so these are the features that made tiktok viral. it was known for tailoring different viral video clips for users across the world. it reported the company was wanting to seek government approval for the sale of tiktok 's u.s. operations. the timing is especially interesting because the revised scheme came shortly after -- show the deals will become more complicated. talk about complicated, how will this affect tiktok's sale given the
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deadline for an acquisition is just two weeks away. zheping: right. needse thing, bytedance to meet the deadline, meet the chinese requirements, and the procedure for the application, , will take up to 30 days, so it is a bit difficult for them to satisfy both governments at the same time. also, from beijing's perspective, the new rules might give us an equal footing in the negotiation table because trump and the white house have power. it appears beijing will be -- want to be a part of it as well. haslinda: asia tech reporter zheping huang. still ahead this hour, we unpacked china's latest pmi
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numbers and look ahead to india's gdp with our guest from oxford economics. rishaad: next, we speak to a money manager who has serious doubts about the rally in tech shares. they tell us why. that is next. this is bloomberg. ♪
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haslinda: stocks seem to be enjoying the best of both worlds. they are seeing signs of improving economic momentum. auditory stimulus continues to be very accommodative. the rally is not based on fundamentals but on demand exceeding supply. in our guest. it does seem like another day, another record.
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when you take a look at fa are showing highs and the bullish momentum seems to be stalling. >> the momentum is still there. i don't know when the top might be but the fact is that when you have the stock market being up as by the prices going the basis for buying something, it is impossible to predict when it all comes to an end and right now, we have certain developments that make it more nerve-racking, i would say, to be invested in tech stocks that have gone up so much, so you have this tech war between the u.s. and china which is unnerving, to say the least, and then you also have, you know, increased political tensions in the south china sea. it is also unclear which way the virus will turn, even though we are clearly closer to some sort of vaccine
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then we were when it first started five months ago. the thing is, there is a lot of uncertainty. uncertainty,much but why is it that tech is leading the pack? versus the small caps. when do you see the smaller one catch up? benita: smaller cap will catch up only when the strong momentum driven market takes a breather and the simple reason is the large-cap stocks are in the indexes. that is what people are buying if they are betting on directional moves in the market. until the market takes a breather and people start investing based on fundamentals, it is probably going to be a while before this happens, but in the meantime, it's possible to invest in companies that are strong based on the fundamental basis that are in the tech sector. they don't happen to generally be in the u.s.. there are companies in korea
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that are quite attractive. taiwan. it is lower in the u.s. youlinda: utah touched -- touched on the tech war, the rising tensions between the two. how will that play out in terms of tech stocks? chinese tech stocks like tencent, alibaba, baidu. how do you see that playing out? benita: we are at a critical point at this juncture with the on the benita ban sale by thee tiktok chinese government. if there is a breakdown in the way that these tech companies can operate in each other's the negativeere is impact on earnings. for example, apple -- $44 billion of revenue is from china.
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if the tension between the u.s. and china escalates and it makes it harder or impossible for apple to do some of the things they have been doing so far in china, that is detrimental to apple and also to companies like facebook, for example, where 10% of their revenues are from china so they are not allowed in china. what they do is they advertise for chinese companies outside of china, and so far, those rights have been protected. they can continue to be that business. happens withe what this current tech war. i'm going to ask you what fed chair powell told everybody. it was not really a big change. was a change in phraseology more than anything else. we tried to let inflation run. far as employment goes, their mandate is to target full employment and point to a short while in employment is really to point out the bleeding obvious.
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benita: i think you are right. i think his comments were not a huge surprise but they did confirm the fed's attitude towards monetary policy and their willingness, their commitment to continue the easy policies they have and the amount of help they are willing backve for buying treasuries, corporate's, and possibly in the future, even etf's, the way the japanese central bank does. provides ay stronger, more stable foundation for the valuations of the stock market currently. monetary policy cannot alone theort the market or economy, so fiscal policy has to take a role. absolutely. that is just it. if they are doing what the bank of japan has been doing for the last few years, it has worked
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out really well for them. they have not got anywhere near the 2% inflation target. that?rry on like can't they see the example? benita: they can see the example, but what choice do they have? they don't have a lot of options. the fed has done as much as it can. the ball has to be passed into the hands of the treasury and the government in terms of fiscal policy. do everything. powell is doing a fine job. he's doing what needs to be done. he just cannot work a miracle without the help of the rest of the government. withad: talking of japan shinzo abe resigning, how does that move the dial for you? benita: shinzo abe has been a stable force in japan. he has been, relatively speaking, because until abe came
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into power, japan has been a revolving door of prime minister's spirit he's been around almost eight years, which is remarkable. he is very popular. also, he's leading at a point in time when it seems as though japan has more or less recovered from the worst effects of the pandemic and the virus. it seems to be bottoming out in terms of corporate profits, and it looks set for a recovery in the fourth quarter. reformporate governance that the japanese government has put in place for the last six years have borne fruit. we are seeing progress. a whole pile of private equity on the sidelines waiting for deals. that the next prime minister will continue these efforts which have borne some fruit in the japanese stock market and the behavior of japanese corporate's who are being asked to recycle some of the cash on their corporate balance sheets back into the
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economy. haslinda: some of the investors we talk to say that you should brace for volatility in the japanese markets. dips buying opportunities? benita: when the market goes up or down, we react based on the prices of where we think we should buy or sell. during the next month or so, i believe the election results are supposed to come in september 17 for the next japanese prime minister. for the next month, you can see some volatility based on speculation about the next prime minister but the fact is that they are pretty much all steady hands. they have experienced. they will continue the current policies. so while we might see volatility, i think we will take advantage of weakness to buy the companies we have done the work on that we think are good investments in japan. haslinda: great insights.
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benita ong from dalton investments. thank you so much for being with us today. still to come, it look at what is next for japan. shinzo abe. this is bloomberg. ♪
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continuity isicy key from a market standpoint, from a yen standpoint. for one, a lot of the overwhelmingly dovish monetary policy that has yield curve buying, bond orchestrated by governor kuroda at the bank of japan, he still has another couple years on his term left. >> i don't think there will be a discontinuity from autonomic's to the next because there's not much room the japanese economy can deviate from the mainstream
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strategy. for not't blame him defeating deflation. >> whoever takes over from prime minister abe is likely to crucial that relationship between government and central bank. some reaction to the resignation of shinzo abe the race is on -- longest-serving prime minister after abe said he is stepping down for health reasons. onphen engle has the latest this. no clear front runner, but there are favorites. one for the people, one for the party. stephen: that's right. there's not usually -- no obvious successor. there's not a lot of new blood coming up through the ranks. we can talk about the environment minister, the son of the former prime minister.
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he's not going to run but at least he is throwing his support tari kono. he is 71 years old. likely to be a caretaker prime minister for continuity. who is 63 years old, the former defense minister. more popular among the populists. if this is going to be a general election, he would probably win. in the latest poll, he had 43.3% of the pole. the problem is, at least, we heard from mr. yen earlier today. he said may be ishiba is not as popular within the party as suga or others or he might win a general election. ldps the lbb stalwarts --
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stalwarts that will vote for the next prime minister. it will not be up to a general election. maybe ishiba is not necessarily the favorite pick. there's also kono, who is fluent in english, georgetown graduate. he has been really out loud, saying that boj should possibly exit its monetary policies, and that maybe is not the right path forward to some because of the coronavirus a decimation of the economy happening in japan right now. rishaad: what is the conventional thinking for policies?do they think of abenomics or is there somebody who has a different plan, a different course to take? stephen: that's a tough one. everyone is saying it's pretty much going to be staying the course, especially with kuroda-san, his term does not end until april of 2023. factory output in july, we just
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got those numbers. they jumped the most since 1978 but do not be fooled by the reopening jump. output is 16% below last year's levels. inflation is flatlining and deflation could accelerate after the coronavirus hitting the economy. households and companies aren't saving what again so the three arrows, monetary easing, fiscal policy, regulatory reform as well, you know, he had initial success, but going forward, what are the other options, right? the coronavirus has put everything into a tailspin in japan and the boj has had to shift from reviving inflation to throwing lifelines to businesses. we will have to see, but right now, most of the candidates we are seeing, the five main aso --te, suga, i would say they will stay the course for now. haslinda: no jitters in the
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market before japan went to break, it was up 2%. quick check ofa the latest business flash headlines. china's biggest banks suffered their worst decline in profit for more than a decade as a wave of -- posted loan loss provisions which soared by as much as 97%. the banking system has been drafted onto the frontline of helping the economy survive its worst economic slump in four decades. lenders are asked to put cheap funding ahead. sinopec posted its first ever yearly bond as the lockdowns and cheap oil way on earnings amid china's fragile recovery. asia's biggest refiner reported a shortfall of jumps of $3 billion through june compared with a profit of 4.7 billion a year ago. sinopec has never reported such a loss since the company listed in hong kong 20 years ago.
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yum! china is said to have won the green light for its second listing in hong kong, adding to the wave of share sales in the city. we are told china's largest restaurant company will gauge investor demand for the offerings in the coming days with reports it could raise about 2 billion u.s. dollars. in new york and has been working on the potential -- get to the market actions. a day of gains led higher before it took its lunch break. tokyo markets come on stream. three minutes or thereabouts. dataospi with economic that was not that pleasing to the eye. world in this part of the going up well above the line as it were as well. quickly looking at what is happening here in shanghai. take a look at what is happening
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in xinjiang as we get the lunch break nearly upon us. weaker than expected pmi. this is bloomberg. ♪ businesses are starting to bounce back.
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live pictures of the lion city. we are in the middle of the trading day and the fti is higher by about .3%. of ang a close watch speech by the singapore premised or. a top singapore analyst is taking a bullish view on small-cap stocks in singapore. he says they can generate exponential returns. group down 20% year to date. sti up .3%.
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let's get the first word headlines with karina mitchell in new york. karina: good to be with you. we begin with tiktok. its u.s. operations may stumble over approval from china. we are told government permits will not be required for transfers to, quote, safeguard national security. microsoft, walmart and oracle are said to be interested. largest city has emerge from lockdown at the -- after the governments of the covid-19 lockdown is now under control. lifted almost three weeks after a cluster of cases prompted a return to health restrictions. but everyone over the age of 12 is required to wear a mask on public transport. president trump is demanding tough action against
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demonstrators in portland, oregon after violent clashes between black lives matter protesters and his own supporters. tweetesident retweeted a that said portland's mayor has blood on his hands. planning to visit kenosha this week, but he is being told to stay away. five companies. shares were purchased during the last 12 months. warren buffett signaled he plans to hold onto the stock long-term, and says he hopes there will be opportunities of mutual benefit. the future of arguably the best soccer player in the world remains unclear, with lionel mes si failing to report for health checks at barcelona. it means you will not be with the team for training ahead of the new season, and underlines a determination where -- to leave
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a club where he spent two thirds of his life. he has a 700 million euro buyout clause but he says he can leave for free. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. haslinda: taking a look at the markets, asian stocks at a two-year high. seems like stocks are getting a boost. nikkei 225 back from lunch break, up by 1.8%. awayese stocks about 2% from the highest level since 1990. surging after berkshire hathaway declared it buy. japanese trading companies have passed 5%. oty include mitsubishi and hers. hang seng up by 1.2%. we know shares of the hong kong exchange getting a fresh record
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high. noting a tech ipo frenzy seen since the dot-com bubble. kospi bucking the trend, down .2%. help smalla steps to businesses with a boost by mid-september. taking a look at futures in india, pointing to a higher in -- higher opening. ddp report markets working at the worst on record. 6% stake in the retail unit. for $3.4terprise billion. have the billionaire founder of one of china's biggest conglomerates optimistic about the country's economy, even in the escalating u.s.-china tensions. also eyeing opportunities in southeast asia, brazil and
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africa. spoke with tom mackenzie in shanghai. all, it covers a wide range of business, but we concentrate on family consumption, health, happiness, wealth. our business is focused. in recent years we have been more and more focused. i am very confident in china's economy. china has a large middle-class, so there is huge domestic demand. also china's industrial chain is very strong in global competition. for the future, our chinese business will still be the priority and the most important. we sense there is huge growth potential. tom: we are obvious easing tensions between beijing and washington rising. there is also trade friction between beijing and australia, canada, india. how much of a headwind are those tensions for a business like yours?
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i do not believe some extreme voices during the election campaign can represent the future of the u.s.-china relationship. i believe they will find a solution in future. secondly, they comply with local laws. we are friendly to local communities. all of our business and development are welcomed. in terms of investment, we will focus more on strengthening our industry in the future instead of expansion. so we will concentrate on strengthening our existing businesses in regions we are already in. tom: the broader business, you have debt to capital ratio of about 56%. that is not at famously high levels. are you comfortable with debt levels of around that ratio, and are you looking to raise additional funds either via bond issuance or loans?
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we will maintain a prudent financial policy so we are comfortable with the existing debt ratio. we will not aggressively change our financial strategy, but of course we will not be too conservative. over the past few years, we have tried to get a balance between investment and debt, which means we have investments but we also have exits. in terms of multichannel financing, we have both bonds and stocks. in terms of regions and currencies, we have financing of the chinese yuan in mainland china and financing of u.s. dollars overseas. that gives us more safer sources of funds. one of the more important strategies for our future is maintain prudent finance and adequate cash flow. tom: as you look out across the globe, which parts of the world look most enticing for you right
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now as an investment opportunity? guo: we have taken a position in brazil. we are optimistic about its future development. southeast asia is a place where we do not have strong investment we will strengthen there. sun's from that, fo treatment for malaria has a great treatment in africa. i think africa has been placing a huge challenge from this coronavirus pandemic. we hope we can do more for africa. tom: 10 years from now, where do you expect, where do you hope folks and to be? -- fosun to be? guo: 10 times in 10 years. we hope our overall business will see 10 times growth in the customers we are serving. more importantly, we will bring them better products and services. rishaad: that was the fosun
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chairman speaking exclusively to tom mackenzie. manng up, asia's richest has continued to cut deals as he looks to dominate india's retail industry. we look at the latest acquisition from reliance industries and ask how he will use his newest purchased ticket --to take on the likes of amazon. this is bloomberg. ♪ omberg. ♪
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you are back with bloomberg markets. $3.5ing the equivalent of billion for a near 30% stake in his french rival. it's an attempt to create a world leader in waste and water services. aiming to acquire the holding for 27% more than is friday close. investors will meet shortly to consider the bid. saudi aramco says it has found two new gas fuels near the border with iraq. both sides have begun production. drill newtempt to wells and evaluate the size of reserves. is tiny compared to existing assets that may help the company achieve goals of raising oil output. top chinese brokers losing another executive.
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the ceo is leaving after less than 18 months in the job, the latest in a string of departures after the grip was tightened on hong kong. has enjoyed working with his team for the past six years. reportedly planning to sell its london headquarters as it cuts jobs. employees have 6500 staff in the u.k. they aim to leaseback the building from the new owner for up to two years before leaving for good. bp bought the building for $156 million in 2001. 13% of london workers have returned to the office. haslinda: british reliance industries seals another deal as it continues to make move to dominate india's retail sector. reliance will buy part of india's future group for $3.4
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billion, then it'll invest and take a 6% stake in remaining businesses. let's get more from son jay in mumbai. up 20% in premarket. take us through the contours of the deal. after getting a $20 billion investment in a technology company, it is now focusing on its retail unit. they promised in a shareholder meeting that he will be getting a strategic investor. see he has secured businesses from india's largest department store. the retail, wholesale, logistics businesses, this would be the largest off-line, online retail
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company in the country. in the coming days, he will be getting most strategic players for reliance to make it big and to fight with walmart and amazon of the country. rishaad: how is this going to help reliance and future here? >> future group was struggling under huge debt. on the verge of default. this will help to get some funds thethe company and promoters will sigh relief. for reliance, they always wanted to take on amazon in india and this will help give them more firepower in terms of off-line stores. it is the largest off-line retailer to the country with futures department, it will be
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very challenging for any online or off-line retailer to take on them, the richest man. what is theckly, retail landscape going to be looking like? regulations,ne which many international players would like to see removed, where are we in terms of reforms in regards to the indian high street? >> indian retail industry always wanted an indian partner. in this case, they are in a sweet spot. it is amazon coming in, or flip cart coming in. they all needed an indian partner. he is complaining to all. in the future if he is taking a strategic investment from any strategy player, that will be under regulations by indian law.
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very sweet spot where they can get investors in this addition to what he did saturday by taking over key businesses of the largest department store. rishaad: ok. thank you so much. ago we hadseconds the indian start of the trading day. we see some positivity, not least with the three companies. up 1.2%. coming into the backdrop later today, the anticipation of getting the worst ever gdp data. india is one of the world's fastest-growing major economies. it becomes a global hotspot for the coronavirus. biggesta record for the
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number of people catching the pathogen in one day. india at 8:00f hong kong time. haslinda: speaking of that data, still to come, oxford economics looks at india's economic data. also a reaction on china's manufacturing numbers, and that call on central bank moves. this is bloomberg. ♪ ♪
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rishaad: this is bloomberg markets. the gauge of china's manufacturing -- the pace may have picked. china is ahead of -- let's get to louis kuijs, head of asia economics at oxford economics. tell us a little bit about what landscape is being painted by the date it we have been getting out of china? louis: yeah. so today's official pmi index probably puts it together nicely in the sense it is still pretty solid, 51%, slightly lower than july, which is a little consistent with the idea we had a strong rebound after the plunge. maybe now the pace of sequential
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recovery, how we move month from month, is coming down a little. we still expect a recovery, but we are probably past taht per -- that period of very rapid improvement. rishaad: that is one country were looking at. the other we are going to be looking ahead to is india. we are looking at possibly the biggest economic contraction in the country's history. this is after one of our reporters on the ground, whether it could all be laid at the doorstep of the coronavirus, or has it been made worse by mitch management -- by mismanagement. what is your take? know, fromink, you our perspective, there are a few that stain theia reputation of the continent, because most asian countries have had the reasonably well -- have handled it reasonably well. but india, i would argue,
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mismanaged the lockdown. we had a very serious lockdown, which did not really prevent the outbreak of the virus. and i think in that sense, india wasted quite a bit of economic and political capital. so yeah, i think it was right to put some of the blame at the door of the government. guess the common ground between china and india is also the banking sector, how both governments are banking on the banks to help sustain growth. how do you see that playing out in the banking sector for the two countries? louis: yeah, this is an issue. in china, they have been very explicit about this. basically they have asked the banks to fulfill, really, some economic policy objectives. they basically asked the banks to be an instrument of the state in terms of pursuing lots of
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regulatory forbearance, which means they were asking the banks to be easy on struggling creditors and to lend especially at those companies. seen from the profit data that came out today, that it's having a major impact on the financial, on the balance sheets and profits of these banks. explicitomething less is happening in india as well. e's somenks, ther persuasion from some pressure being put on the banks to help out in terms of struggling creditors. in addition to that we are having the impact of that slow down itself. all in all, in both of these countries, banking sectors are
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facing a lot of pressure on their balance sheets. also a lot ofe is pressure on consumption and that recovery, the uneven especially for china. when do you see consumption coming back materially? louis: yeah. it really has been a two track economy, two track recovery. we saw a pretty impressive rebound in industry and investment. forly, the usual recipe china's recovery was also used by the government, of course, in terms of how do we stimulate the economy, putting a lot of emphasis on infrastructure investment, other kinds of investment. china has been remarkably frugal as it concerns fiscal support for the housing sector. that is true also if you compare
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it to what is happening in many other countries. and that, i would say, combined with people's worries about job prospects and more generally, the economy, continues to weigh over consumption. that is why even the economy recovers quite nicely overall, we think that consumption will be the laggard both of this year, but also we will see lingering effects of that in 2021. haslinda: how encouraged are you by the pickup that we are seeing in exports globally? we have been -- very impressed in the case of china's export. part of that was china increasing market share in a way that is not really sustainable. i think more generally, we are impressed by the pace of improvement globally in terms of the economy, international trade
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in q3. what we now start to worry about a little bit is to what extent we will have enough momentum carrying over into q4 and in next year. we think q3 has gone pretty good globally and we are encouraged. the big question is can we, after the first recovery steps we have seen in many countries, can, in the u.s. and europe and big asian economies, can we sustain that pace of recovery, and can that help global trade? we have some concerns about that going into 2021. rishaad: i just wanted to get your view on what really is going on with regards to inflation, and this ongoing debate about inflation currently. it something that people
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actually want? certainly in the u.s. and japan, that is the case, but is it a worry for you that inflation can actually get out of control? louis: yeah. of know, i think a lot people have a really hard time accepting that if you have such gigantic stimulus, fiscal, monetary, people have a hard time believing that that will not lead to inflation. we have done huge amounts of work in our firm globally looking at it, expressing our view about it. we raare basically of the view that there is some supply-side pressure taking place in terms of increasing prices. firms have to measure temperature, do all the things that make it more expensive to produce stuff. supply-side pressure is
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gored by negative impact on prices from very weak demand, in our view. so we think that globally, we are very skeptical about reemergence of inflation as a result of this pandemic. there are a few exceptions, and again, india is one of them. in india, we have seen supply-side pressure. if you really want you could add to that the philippines, but i would say generally in asia, we think the global story i just talked about, it's one to look at where -- rishaad: we are out of time, but thank you for joining us. quickly looking at some headlines coming through here, they are going to be taking steps to complete an acquisition acsa.5% equity stake from an --vest in
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that will be according to debt for airport lenders as well. that is what we have coming through. that's just coming through. bloomberg daybreak middle east is next. ♪ experience the ultimate sports hub.
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