tv Bloomberg Markets Asia Bloomberg June 30, 2019 10:00pm-12:00am EDT
activities, weekend the weekend finances. this is the deal at the moment. we are seeing gains across the board. it is establishment day for the region. shanghai, and nikkei also boiled up. it is the south koreans who are the laggards. the kospi is up. withng to what is going on the currency again, there is strength for offshore and onshore renminbi. beingtension for the time has just been lifted. the yen has been weaker.
currencies losing their luster. let's have a look at this chart. this is telling you about the damage that has been done to some extent with regards to china. ofs is what we have in terms official pmi. the large ones going into negative. overall, that is everything. showing contraction here for companies. more company pmi's. all of these have entered into negative terrain. they inhabit. let's get market action. what are you making of all of this? what about this deal? the g 39, i think we get that
risk doing that you would have anticipated. a lot more to run. i think market is missing the point. it has nothing to do with the g20 that we had over the weekend. fed cuttingout the cycle that we are about to get into. that,d: with regards to was it a case that we got all of this dovish language, looking at the damage done by this trade conflict? maybe they will dial back on that dovish term? >> that is obviously the risk. it is just a perspective of when, rather than is. there could be a lot less liquidity. given language from the last
meeting and the fact that we had pushing for 25 bits, i think we will get a cut. you absolutely are spot on. a positive outcome does lower the probability and touch, but i think we are still moving one way. a little mores about how long this rally can last. we have been asking our viewers that question as well. can this be sustainable in any way? kindat goes back to what of asset class we are talking about. relieved.lly it means that we will get a dollar.ally weaker that is actually very constructive from a much more
medium to long-term perspective. the key risk is if we see some of the reversals in language and sentiment that took place over the weekend. that will be the key thing to watch out for a. the biggest move is that we will potentially see higher highs and lower lows over the next he weeks. i was reading your notes and you had your early prediction. you now think that it is almost certain that the president will not win another election. what is the thinking behind that? what happens to the s&p? thehis is very back of envelope and it is very early. very constructive pushback.
it is super simplistic. president trump won marginally. that anybodyis except hillary. it is super early. if i were his strategist, i would lineup the going into the next election with getting the north korea deal done with china and potentially getting a deal done with iran. if that is not possible, than having some kind of conflict there to control the headlines. rishaad: where does that leave us in this part of the world? will this be at the behest of what happens with s&p? it could make you change your mind in the weeks to come. what about this part of the world?
how does that dovetail? great point. i think it is very positive for the in -- for the em is slowingt growth down. it should outperform. it should be great for us in asia. equities performing , especially in japan where we will be getting a much stronger yen. rishaad: good stuff as always. let's move things along. let's join su keenan for the first word news. su: we start with opec and its allies.
closer to extending cuts into the first part of next year. and saudi arabia have otherd a deal on the g20 producers later agree to push out those production cuts. the so-called opec plus group meets to coordinate strategy and possibly formalize an agreement. >> i am for an extension. i think that is needed for the current condition of the market. a meeting and hopefully, we will see the numbers. my expectation is for there to be higher than 100%. su: the u.s. and china have agreed to a trade truce and said they will stall negotiations.
president trump said he is also delaying restrictions on chinese telco while way, letting the company resume sales. not proceedould with additional tariffs. talks, which the had been interrupted for a while , it is a very big deal. that is a matter of headlines for this. i think everybody will be pleased at that. no deal made, no timetable. the president also became to stept sitting leader foot in north korea. he said it was a great honor and invited kim jong-un to visit the white house next year. they agreed to resume nuclear talks that had stalled.
investing and reiterating that interesting taking the country out of the european union without a deal. jeremy hunt said they want an but aret with brussels afraid there might be a no deal brexit if negotiations fail. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. asiand: our chief correspondent is here for the summit. what is on the way? we were going to continue to talk about the trade truce between donald trump and xi jinping, perhaps this
the hour.op of it is our time to get over to seoul. next guest.th our take it away. yvonne: we are talking about what happened yesterday at the dmz, that historic handshake. president trump also stepping over to the north korean side, the first sitting president to do so. it was quite a scene. is dr. troy.
-- >> this is beginning another round of negotiations. the situation getting havingnd worse -- after the third meeting, i think that we are going back to the post singapore summit last year. they are going to talk about nuclear talks, but they are still unpredictable. we need to manage the situation. just theatrics? a photo opportunity? >> i think it is more than theatrics. it is the beginning of building
a new relationship between north korea. on the other, i do not know. some way.have all the details will be discussed. it was not that bad at all. on the other hand, we are back on the negotiation track again. it is a mixed feeling that i have. caused think about what the talk breakdown. the north koreans were asking for the sanctions to be lifted and they wanted a bigger bargain. order tos to happen in keep this from happening again?
maybe they are thinking that they have to think about -- not actually, but they have to think ,bout giving up something otherwise it is not possible to have a continuation of talks. after the meeting, he will not lift the sanctions. , he would liket to have a comprehensive, good deal, some people not rush for the conclusion anytime soon. still, they have the same posture as they used to have. the meantime, may they will think about a smaller deal. maybe that is the beginning of the talks. at the moment, i think that will be -- all details will be
discussed. discuss the conversation president trump had with kim jong-un. that is the beginning of negotiations. they will continue to follow-up. during what they noticed the visit was that the south korean president -- she was kind of in the sidelines. he did not walk with president to the border. what can we make of this? is this more bilateral negotiations? disappointed that he did not take part. talks between president trump and kim jong-un. now they will deliver the
concept of denuclearization. now, presidentto moon is eager to provide an opportunity for them to get together and discuss. from that, he has been quite successful, but he was sidelined at the photo op. personally, they are concerned party. yvonne: they are still engaging. >> the beginning of the presumption of talks is most important, so that is why he has been so patient. he wants to be part of it, but at the moment, we need to have the resumption of talks. asides why he has stepped
to let them have small talk. yvonne: some are saying that perhaps we could see the start of three-way talks between jong-un andump, kim president moon. haveesident's proposal to a meeting -- there is a counterbalance. growth too bring much the u.s. side. regard, china is not so much happy with the summit. they support talks for the sake the cheap way in this is the u.s., not china. i do not know what it would like to have, but they have to support the outcome of the summit and maybe support for the
resumption of talks. china wants to be the major player in this game. i do not know what action china will take. i am wondering what this invitation from the white house that president trump has extended to kim jong-un -- does he deserve that kind of honor? a dictator.l he is almost legitimizing kim jong-un. >> for the sake of the peace and stability, we have to think thet having kim jong-un in white house. it all depends on the outcome of the working level meeting. we do not have a concrete guarantee before the summit, i do not think it is possible to have him in new york or malaga.
that was not the first case. president clinton was very close to coming to pyongyang. maybe the president will come to pyongyang. in first president actually pyongyang to have a summit with kim jong-un. yvonne: it seems like kim jong-un only once deal with president trump. anyone below him -- he does not want to talk to them. when it comes to the north korea on the way will he be with? within the same people that were in hanoi? we have to see a shift of the line from this.
the main body of negotiation is the united states. it will be a shift. whether that is a good sign or not, i do not know. all the details of the negotiation all the way up until now, i spent years when i was a member. maybe that is not a good sign in terms of negotiation. she is in a good position. on the other hand, she knows american politics and she knows the united states. we had exploit that good side for the sake of a working level agreement. yvonne: thank you so much. seoul. us here in
we will send it back to you. rishaad: getting some breaking news out of the nikkei. cross board activity. electric. this is actually elated and affiliated with mitsubishi. this is all according to the nikkei news. membermer hitachi group and it should be doing so in the next couple of days. a nice, official announcement. it is about a quarter of the size. it has about 5000 employees. acquisition, expect it to be out in the next couple of days. more, to develop including artificial intelligence and 5g as well.
saying he has been working on a series of tough cutbacks after dropping talks with commerzbank. , creatingacquisition one of asia's biggest realistic groups. operate,an group will having agreed to buy the property unit. look at the market action in japan. this after the weekend up positive news on the trade truce. there we go. the yen losing ground early. the nikkei topix and moving. .ere we have those movers
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♪ kong,29 a.m. in hong 10:29 p.m. in new york. i'm su keenan with first word headlines. we start with the latest reading of the chinese economy, which shows continuing fragility and the need for a deal with the united states. manufacturing pma state at 49.4 last month, slightly weaker than forecast, highlighting the effects of the trade war. similar manufacturing reports for the u.s. in euro area are expected to add to reasons to worry about the global economy. iron exports from australia are set to fall for the first time in almost two decades, this in a perfect storm of bad weather and production setbacks.
forecast have been cut to 800.2 million tons, down from 867 million tons, bolstering prices that have been climbing to a five-year high. the department says it expects exports of iron or to get $55 billion usd in 2020. hong kong now is bracing for more protests, as the city marks the anniversary of the return to china. demonstrators are gathering again at the subway stations, which have been closed at police request. the traditional flag raising ceremony has also been affected, with participants and guests moved indoors. chief executive carrie lam made her first public comments in more than a week. reported to have started a lobbying campaign to convince china that it is not responsible for the huawei cfo arrest in vancouver.
they say the bank wants to distance itself from the diplomatic dispute, that she was long held under house arrest. the paper says hsbc provided information that helped u.s. prosecutors build their case against her and huawei. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. ♪ the last few days has been all about the g20 and the surprise visit to the demilitarized zone between the north and south koreas. coming outthe noise is slightly better than expected. the besto the g20, many commentators were suggesting is that we could perhaps get an agreement to keep on talking, but little beyond that. there is fire under a lot of these equity markets, with
what's going on in the currencies. yeah, we got that trade truce and a little bit of something. huawei, it was a bit of a surprise for most of us here, with president trump allowing u.s. companies to do business, to sell components to the chinese company. thet of questions out of backlash from republicans and democrats, saying, is this a backtrack? are you undermining the u.s.'s ability to continue on these trade negotiations with china by using huawei as a bargaining chip? that was the big question mark. ande was with me in osaka, we learned more of these developments -- i'm guessing that's the top of the agenda, in terms of the discussions you are having on the ground. yeah, absolutely. here at the world economic
forum, the question is how long the truce will last. seven months ago and they had the last truce, that lasted until about may. the main issues came back, bubbling up, the last so-called 10%, where they have not reached common ground, and that is some of the most tricky subjects, like structural reform in china, intellectual property rights violations, and getting an enforcement mechanism, changing the business models that have propelled the chinese economy to where it is today. that is the big discussion. how long to this truce last? keep in mind, the current rounds of tariffs are still in place. we just he escalated to the point where donald trump and others are not threatening tit-for-tat. that is what everyone's discussing here right now and the opening day of the summer davos.
>>. right well, we are looking at that with our guest lineup. we will be looking at henry wang, who will be joining us. i believe we are with him now. is henry there, steve? yes. our next guest is henry wong, from china globalization, a major think tank. thank you so much for joining us here. this was the that best case outcome this weekend, given that the expectations were pretty low already, or the dialogue had been evaporated since may? was this kick the can down the road? does this delay the solving of the major problems? >> i think it's a good restart, regroup.
amid all those speculations of disappointment and uncertainty hangover for quite a few months, i think this is going to stabilize the situation,, down the excitement, and now let's get back to business. it is needed for both countries, particularly president trump, taking a new campaign promise, and also that china is going to stabilize the international environment. we also have to see that the huawei issue has suffered quite a bit. -- it's atrump said great message to send. >> nobody wants to put out a headline saying we backed down. but who backs down most? -- theyld say it takes have to compromise on both sides. but they cannot really use the art in business.
country to country, the number one into economies. play, andcome into from what i can see, the u.s. tends to be more proactive. he creates the tariff. they promises that there is relaxation, and there's quite goodwill that the u.s. is sending. said at the g20 general meeting, the five concrete measures to further , that's the tune. >> how solid is that pledge, to reduce the negative list? those of the sectors that are closed to foreign competition. they say they will reduce that more by the end of the month, july.
but enforcement is always the big issue. how enforceable is it? china pledges well, but do they implement well? the threat this time is the highest level ever. there is a unilateral pledge, but this time it is a head of state summit, telling all the world that -- if that was coming from public leaders in china, that goes up the chain of command. 100%, butot definitely going to be some work on that. on january 1said china will have new investment laws,'there are huge things that can be implemented because of the protection of ipr, no forced public transfer, and equal
treatment to multinationals. that's a good message. if that principle is there, you can really implement. back tot really goes how much, especially in the sloping chinese economy, how much the central government is going to keep on protecting state giants. >> sometimes the chinese government should not emphasize so much -- they should emphasize 70%-80% of the economy which is private sector. tax, 70%and 60% of the of the innovation, 80%-90% of employment. 10% is multinational. out to about 25 maximum. i think the equal treatment for foreign companies should give
more private sectors. china is not open just for the china and the u.s. -- >> what does an eventual deal look like? everyone talks about we are 90% there. can they do a deal on that 90% or would that look bad? >> i think this is already remarkable. for the last 12 years we have reached 90%. that's not looking for perfect deal. 10% is the key issue the united states wants to, dare i say, dismantle. complain see the u.s. if wecommitted some -- were talking about the previous law, it is made by different companies, different ministries.
let's focus on the foreign investment deal. that implementation deal will not come out. half-year to a hammer that foreign investment, and that is really great news for multinational companies, and that should be the thing we should grasp. >> what you the next chessboard move be, and by whom? the markets are going, ok, this is good, the markets will go up, but how long will that last? >> it is good that president trump promised that they will relax on hallway. apple andy, i think qualcomm and other companies can now we don't have to use business -- ithe
is a sacrifice for american business. there is revenue american tech companies are losing. we don't want to lose business in the election. that is good for the u.s. to start that. let's send delegations to each other. it looks like that has been put into place. we can talk about this at the end of the day. henry wang, the center for china and globalization, founder of that think tank. back to you. >> thanks. coming up, we are looking at offense in hong kong, protesters gathering, marking the anniversary of the return to china. we will hear from the amgen hong kong chairman. this is bloomberg. ♪
♪ back with "bloomberg markets," hong kong marking its 22nd anniversary is the return to china, demonstrators gathering for another day of protest. henry lange gave the first remarks in a week, preaching a more open style of governance, with public faith in beijing at record lows. we have the chairman of amgen hong kong. welcome to the program. what you make of what's happening? seeingink what you are -- we are trying to tell members that there is more confidence, for stability and now that the extradition laws are off the these protests keep going on and they concern us greatly because it could lead to more violence. year, youppens every
get this march every anniversary of the handover. why should this year have particular focus? am guessing it's because of what receded it. what is the official view of what's going on? >> we don't have an official view. we have been hearing there will be more protests, and it is going to continue, because the extradition bill was shelved, paused, but hasn't been completely withdrawn, and that is what the people want. whether that will happen or not, i don't know. effectively it has been withdrawn because it won't be introduced until the next session. for now, it is off the table. it was almostat, like a damocles sword. it showed how fragile and brittle trade with the u.s. is in hong kong, and what they are looking at -- what has been the general feedback you've had from u.s. companies operating in hong kong? our members have been very
concerned about what's going on in china and the trade war. and china as asean well as places like india. we have a very broad agreement. war tot want this trade go on but that is not going to end the situation. our members are looking for a level playing field in china, restructuring of the chinese economy, rule of law, stability, the investment that comes down the pipe -- what is it going to look like? no windows. would they prepare themselves for this, and have they seen openings and reform moving in their direction? >> do you mean in china? >> yes. they are here to do business with china. >> we haven't really seen much yet. members that are doing business in china will stay in china.
we are not really looking to move out from china. but of course, we would like things to change, and we are just waiting and seeing. >> what about the hong kong policy act? washington is looking at hong kong to see if it is autonomous are not and if it feels that precondition. >> this is the sword of damocles you were just talking about, i was on a delegation to washington -- we delegate every year on behalf of hong kong, senator rubio stephen, senator schumer's team, there are number of bills being introduced to do away with the hong kong policy act because it has a special america, otherth international organizations, it is a great thing for hong kong and our policy is don't do away with that. don't throw hong kong under the china bus, don't hurt the
people of hong kong. 100 thousand people employed by american companies in hong kong. we are stakeholders. we don't want the u.s. government to do anything that will be precipitant and hurt the people of hong kong. we say first do no harm. make a statement. but we would rather have more american officials come out to hong kong. we would like to see more hong kong officials go to beijing, but that doesn't seem to be happening. >> in washington, no doubt. >> yes. that, how hase on the political narrative with regard to china altered? >> it is night and day from a year ago. there's not a hard narrative thatchina is the enemy and hong kong is part of the problem, and we want to refocus. business knows what to do.
we can do business with china in it's a great place for investment, for trade, for doing business, and it shares american values. dialogue and that feeling advocates on behalf of hong kong, how do you ameliorate that? apart from just talking, of course, and advocating? >> we want to work with the hong kong government to restore confidence where we can. we want high-level american officials to come out. they have started to come out. we want a dialogue between washington and hong kong, as well as beijing. g20ver the weekend, the moves and the tree truce -- that must be taking the heat out of it a little bit, for the time being. >> a little bit. trust but verify. it is great that things seem to be moving in the right direction, but the devil is in
latest business flash headlines. the boeing 737 was outsourced and code is being written at a time when boeing was using experienced engineers and pressing suppliers to cut costs. back andoften went forth between boeing and the contractors before being accepted. meanwhile, the company is facing further scrutiny from officials, demanding records from a factory in south carolina. the subpoena involves the 787 investigation. reportedyork times" issues of quality control that threatened to compromise safety. beaiwanese carrier will holding new talks with unions on tuesday after failing to coming to terms with flight attendants. the airline refused to withdraw and say numbers
industrial action will continue. the strike will ultimately cause the cancellation of about 2000 flights. to -- just about an hour ago before the trading day kicks off in india. mumbai.tanding by in what are we looking at? besides the heavy rains, we whethering and i on foreign influence has increased, and foreign reserves for india at this point in time are at million, and$420 that's a positive considering the inflow that we have seen. that has not really reflected in the indian markets -- last week we saw a half percent on an overall basis.
but we are likely to see some sort of improvement and we need to keep an eye on the indian rupee because that is seeing some strengthening. we will be watching whether or not that also is standing against the u.s. dollar. >> what about the automotive side of things in india? recent car sales numbers painting a very dismal picture. >> that's right. while we have been tracking big volumes and indian auto companies, and the latest report that we have gathered we understand that the registration of auto sales is at the lowest in 18 months, and this of course means more problems for a lot of automakers, which is why they are keeping and i on the auto index as a whole but also of the
will see how- they will volumes were shape up for the month of june and when numbers will start coming in. >> all right. that's what we have at the moment. thank you very much. we will be back with him as we get to the open in just under an hour. asia,s on a tear across u.s. equity futures up, american and chinese presidents reaching a truce on the trade war, and they resume talks in a better-than-expected scenario. yvonne? we are going to see how that impacts the south korean economy in particular. it will be interesting to see with that huawei repeat, does president trump have the impact from chipmakers, that actually do supply the chinese companies,
export data falling off a cliff direagain, looking pretty with those exports following for a seventh consecutive month overall. we will be speaking to the head of korean economic research, to talk a bit more about those numbers. also the news of japan tightening rules on these chipman material exports to south korea, which did lead to some of these stocks falling when it comes to the chip sectors. we will see what that really a worseningbly bilateral relationship that japan has with korea. we will continue our coverage. ♪
♪ singapore,1:00 in eight,: 30 a.m. in mumbai i'm juliette saly. >> i am rishaad salamat in hong kong. leftts closed, 30 minutes for the mainland morning session. this is a look at our top stories. osaka, butuce in weekend stores show china's increasingly crude deal. >> oil drums as producers move toward extending the output curve. the big players are on board but some countries aren't happy. >> hong kong bracing for renewed protests as it marks 22 years. carrie lam seems determined to cling on.
this is bloomberg. ♪ >> it is a risk on session as we pull that tree truce between president trump and xi, getting a boost to the start of the trading week, the new month. june was great for asian equity investors and we are seeing more risk on in terms of the movement coming out of the yen and out of old as well. the nikkei really leading gains by 1.8%, even though there was that discouraging survey with hard moves in china. hong kong is on holiday today but elsewhere you are seeing movement coming through into the renminbi and the on-and-off short trade up by .4%.
there are still concerns about what the trade dispute has been doing to individual economies. exports were taking another hit in june, and looking at the data out of china, the official pmi over the weekend were disappointing, and surveys coming through as well -- a reading of 49.4 for the month of may -- june, i should say, at 51 a year ago. this is the lowest reading we've seen for that index since january. >> lots to consider, a lot of moving parts. president trump making that historic meeting and trip with moving across the demilitarized border. stephen engle we have been watching these things unfold. let's start off with the truce, seemingly agreed to between precedence xi and trump.
what do we know about this? >> well, generally speaking, here at severed davos the reception has been quite positive -- not only in osaka for the g20 but also where yvonne is in the korean peninsula. but again, it's a fragile truce between trump and xi, because the tariffs are still in place. that is what the business people behind me want to know -- how long and how deep is it, and will we be back to square one if things turn sour again question >> there we go, and we will have more from this later. we will be talking to the head research, andomic with victor to, you don't want to miss that.
beijing tover to join tom mackenzie for the first word. >> thank you. opec and its allies are closer to extending production curves into the first quarter of next year in the face of weakening global demand and searching u.s. shale output. russia and saudi arabia reached a deal on the sidelines of the g20 to roll curves over for 6-9 months, and other producers are set to agree. the group meets monday and tuesday in vienna to coordinate strategy. the two men fighting to be conservative party leader, and thus u.k. prime minister, have reiterated their willingness to take the country out of the european union without a deal. boris johnson and jeremy hunt told the sunday shows that they want an agreement with brussels, but would be prepared for a no deal brexit if negotiations fail. both candidates also promised
tax cuts to boost the u.k. economy. eu leaders are deadlocked about the bloc's top job. angela merkel suggests the left facing france, who is opposition from fellow european conservatives, with other important roles depending on the outcome. they include the successor to mario draghi at the ecb. other potential candidates and themichel barnier imf chief christine lagarde. morekong is bracing for protests as the city marks the anniversary of its return to china. demonstrators are gathering again in the subway stations, which have been closed at the police's request. traditional flag raising ceremonies have also been affected with participants moved indoors. terry lam made her first public comments in more than a week. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700
journalists and analysts in more than 120 countries. i'm tom mackenzie. this is bloomberg. investors need to prepare to take on more risk after donald trump and xi jinping agreed to resume negotiations at the g20. also some good news out of north korea, with trump and kim planning to revise those stalled nuclear talks. liked there's plenty to what the question on the blog today is how long this rally can last. let's ask our first guest. great to have you with us. we've been seeing these risk on moves today, everyone was not expecting too much to come throughout of the g20 but the fact that there seems to be a truce has given appetite for risk assets. what is your thoughts? how long does it last? >> it will be positive for the
short-term, one or two weeks probably, and then a lot will depend on what the fed will do in july. that has bolstered risk appetite in the short-term because they have agreed not to increase in the short-term, and especially they have allowed while way to come back. appetiteslikely boost for the foreseeable weeks, and then the discussion will be on the fed. function,look at this we have been looking at the past month and have been seeing a strengthening yen. but when you look at it compared to other g10 currencies it has underperformed. in some sense it looks like people want to be looking at other asset classes. >> correct. and there's also a lot of demand for yield, especially where interest rates are likely to continue falling and we have seen central banks becoming increasingly dovish.
automatically all of these asset yield, which have less the market is not so worried and they don't have as much demand. >> you are not thinking the fed is going to cut as often. >> correct. july seems a given. it is likely it will go ahead. we just don't see it happening. if you look at the overall economic data, it remains solid. of course there are some headwinds with respect to trade war but we don't think that should be enough for a fed to cut three to four times per year, and we think the market is being too aggressive. >> just going back to what we were seeing over the weekend, while way has been a big boost to these tech players. the feeling is we could see another inflammatory tweet or
something else break down in the next month or so. how do you play that, looking at some of those concerns of the companies that are facing tariffs? >> we remain cautious in the long term. in the short-term, everything will go up, everything will be green. long-term, we don't have too much additional news. there are still lingering questions about where this trade war is going to go -- it will probably take much longer than the market expects because this is not a purely trade issue. it's a whole set of different issues in terms of a number of other important issues. we are just not ready to increase our base and we think -- markets are trying to take advantage of the short-term move tobut from their own
rebalance your portfolio toward higher risk we think it is not the time. background you have painted for us also really feeds into my question, which is about the geopolitics of what's going on. we are also talking about china-u.s., u.s. and other countries -- against the spectrum of enormous debt built up because of such cheap money in the system, global manufacturing and trade contracting, some signs that services is going that way. allhave aging populations, these things going on, and monetary policy is looking exhausted. it must be very perplexing is someone trying to allocate cash. >> yes, you are absolutely correct. it is not an easy time to allocate cash -- we are aware there are so many risks but for the moment they are not priced into the market. this does not mean there is no opportunity -- one needs to be
mindful of the potential risks. market globally, which is looking increasingly stretched and increasingly like they are not pricing in the potential risks, one should look at decreasing their equity momentum with a bit of rally. to definitely we will look be more cautious going forward, especially in the second half of the year. after sitting on great profits. investare looking to cash now, you can look at the fixed income space, interest rates will likely remain low, don't take too much risk. side, little bit on the should there be a correction, so you have something to reinvest in the equity market.
>> absolutely. arementioned that what you doing is looking for yield. corollary of that exhausted monetary policy, and when you are chasing for yield you were not expecting that much of she nation, are you? >> correct. room fornot so much capital appreciation on the fixed income assets, but there are some areas where we think with higherll there risk that's not for every investor but we think there's a lot of potential because yields are attractive and the balance sheets are sound and solid. we think the yield you are getting compared to the risk you are taking is interesting. but overall, yes, the interest , and the overall
population is yielding negative and that automatically becomes much harder to look for value, and you don't have to be trapped into looking for yield and buying anything, because once you have toeverses, make sure you invest in something which has value in which is sound. ask you about to some of the other central banks in terms of whether or not they are running out of ammunition. we have the rba meeting this week, but how much can these banks cut when they are already at record lows? >> it is going to be harder for them to cut, they maybe have a little bit of room. what they have to do is continue looking at some extraordinary orsures, whether that is qe even different packages -- the
real issue is what we've seen over the last few years, that monetary policy is on the only policy that is trying to boost growth. much fiscaleen too packages coming along and governments have had a hard time and we've had the rise of populism which was making everything harder. but one has to be mindful of the market we are creating. the issue is that the market always wants more and they always will. if they start pricing and rates zero or negative, it becomes a given. this is not a given. it is extremely exceptional. but the market is taking it as the new norm. the fed has been trying to hike rates and now they are saying you shouldn't. this is an extremely dangerous environment, because whether in the short-term it is positive, in the long-term it could create seeds. >> we will see what the next six
months bring. with me here in singapore. let's get back to yvonne in seoul. we are going to focus a little more on the south korean economy, this is off what has been a pretty remarkable weekend. yesterday president trump headed to the dmv, shaking kim jong-un's hand, the first u.s. sitting president to step to the north korea side, 20 steps forward, then brought kim jong-un over. more than just a two-minute handshake, it ended up being a bilateral meeting that lasted for about an hour or so. south korea is also not just about geopolitics, but also economics as well, sandwiched between this u.s. and china trade war. we will be speaking to the head of create economic research at standard chartered, next. yearse in hong kong, 22
♪ you are watching "bloomberg markets: asia." i'm juliette saly in singapore. >> in hong kong, i'm rishaad salamat. the u.s. and china reaching the truth at the g20, and we are continuing to see a fallout in trade data. south korea, seen as a barometer of what's going on globally, exports dropping in june after four-month trade numbers since the trade war escalated at the start of may. yvonne man is with the standard korea economic research. take it away. our guest joins me here in
seoul. let's start off with what we heard from the g20. a truce between the u.s. and china, easing tensions for now. what do you think that means for south korea? >> i think the immediate impact korea's to be limited, export for 2019 should decrease but our export is high enough that the exports are around 25%. korea was the one who lost the most. >> do the numbers point to the trade war as what we are seeing such a slide in the exports, or are there other factors? >> i think the main reason is the trade war.
chinese export to the u.s. has slowed down -4% this year. and also even though they chose think the trade war in this sector may continue. i think the semiconductor sector will last longer than the trade war. >> president trump is scaling back those restrictions for u.s. companies to do business with hallway. ken that at least alleviate concerns about the chip sector overall? do you think we could still see a rebound in the second half? -- theink when we semiconductor will be down around 25% again. we do not see any signs that it will recover right away.
but it's not just a slow down of trade tension, it's also global. recovery will take longer than you may expect and most of the market is expecting recovery around the end of the year, but probably later than that. we expect first quarter of next year. >> what will lead to that bottoming out? what needs to happen? >> i think the price will be the indicator. 30%,rice went down around so looking as the leading indicator we do not see any sign sector, andof the also we have inventory and semiconductors increasing, meeting there is the demand in the semiconductor sector. >> i want to look at this news we got of japan tightening rules when it comes to chip materials -- obviously there's a lot of political factors but what impact do you see question mark what indications >?
>> japan is the only country with 80% of the semiconductor -- it's 100% of the export to korea. korea has one month inventory needs to be it around the 21st of the month. easinghat we can see the , but if they do i think -- on importers are, behind the electronics. japan isdoes that, also weighing the cost and benefits. >> what is going to help stabilize growth? do you think it will be the fiscal side with its preliminary budget process, or are we relying on the be ok to cut rates? >> i think externally the
government cannot control it. is increase the additional budget, and also they should think about some investment. construction investment is doing quite well. governments should do what they can do. also the be ok should do what they can do, a lower interest rate boost in sentiment. i think cutting the rate probably increasing the housing price, which can create an imbalance. also they could increase household debt. cutting the rate can help incentives. >> we have to leave it there, but thank you. the head of korea economic research, joining us in seoul.
♪ you are back with "bloomberg markets," i'm rishaad salamat in hong kong. >> in singapore, i'm juliette saly. a quick check of the latest business flash headlines. much of the software design on the boeing 737 max 8 was outsourced to contractors paid as little as nine dollars an hour. it was being written at a time when boeing was laying off experienced engineers and was pressing suppliers to cut costs. sources close to the story say software often went back between boeing and the contractors before being accepted. >> following facing more official scrutiny, the government demanding records from a factory in south carolina
involving the 787 dreamliner, signals the investigation into the max is widening. back in april, the "new york times" reported news of flawed work and quality control, compromising safety on the 787. >> a taiwanese carrier will hold new talks with unions on tuesday after failing to agree to terms with striking flight attendants. negotiations broke down over the airline's refusal to withdraw punitive measures against cabin crew. the union says industrial action will continue. they estimate the strike will ultimately cause the cancellation of about 2000 by july 12. what'ss have a look at going on with the china markets as we head toward lunch break. syngenta for many of 3.3%,at level, china at all down to america's donald
♪ people are gathering in hong to mark 22y plan years since the territory was handed back to china by the british. hong kong police clashing with black clad protesters. to chief back executive seems to be more open and inclusive. this is the turbulent start of her third year in office, making remarks to mark the anniversary of the return to chinese rule in 1997 stop it is actually her first public speech in more than a week.
police did use pepper spray earlier on as some were wearing surgical masks. they attempted to disrupt the annual event at the exhibition center a few miles away from our offices. we are monitoring events with regard to these protests as people continue to gather and start marching later on today. let's get to the first word headlines from beijing. >> thank you. the u.s. and china have agreed to a trade war truce, and say they will revive stalled negotiations after talks on the sidelines of the g20. president trump says he is also delaying component restrictions on chinese telco huawei, letting american companies resume sales. he also tweeted that his meeting with xi jinping was "far better than expected," and said he wouldn't proceed with additional tariffs. >> the president is continuing to talk, which had been
interrupted for a while, a very big deal. that's the banner headline from this, and i think everybody will be pleased -- there's no promises, no deal made, no timetable, i want to emphasize that. >> the latest reading of the chinese economy shows continuing fragility and the need for a deal with the united states. manufacturing pmi state at 49.4 last month, slightly weaker than forecast, highlighting the effect of the trade war. similar manufacturing reports for the u.s. and the euro area later monday are expected to provide further reason to worry about the global economy. hsbc is reported to have started a lobbying campaign to convince china that it is not responsible for the arrest of the huawei cfo in vancouver. they say they want to distance themselves from the diplomatic dispute that led her to being
held under house arrest. hsbc provided information that helped u.s. prosecutors build their case against her and huawei. iron ore exports from australia are set to fall for the first time in almost two decades on the perfect storm of bad weather and production setbacks. forecasts have been cut to 814 million tons this year, from 867 million, fostering prices that have climbed to a five-year high. the department of industry says it expects australia's exports of iron ore to be worth $55 billion usd in fiscal 2020. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm tom mackenzie. this is bloomberg. >> thank you. returning to our top stories, stocks in asia are climbing along with the yuan after president trump and xi jinping
reached a truce of the trade war and agreed to resume talks. let's go to the world economic forum in dolly on. stephen, what has the reaction been in china? >> that's right. obviously there is a sense of relief in china -- they are talking again, and there is that cloud of uncertainty wafting away. keep in mind, the existing round of tariffs are still in place in those final 10 yards are still very hard to attain, and those are the fundamental structural issues united states is seeking to change. to delve into all these issues involving u.s.-china trade in the friction in hong kong, we are welcoming in the chairman and ceo of the private equity group here. you are a board member on airbus, you have a broad breadth
of business expertise. what was your first reaction when trump and xi made that he announcement, that they will talk again? >> quick relief. hopeful, while recognizing that it's a journey. we i think it is good that are getting back to basics. i think in the journey they are going to build trust, and i think the trust issue is key. more, as the leaders push forward to try to find compromise. >> what happened between g20 in buenos aires, and today? we had a 90 day truce, and in may, things fell apart. is either side or both sides testing each other too much? did they overplay their hands? how do you see it? >> i think part of it is culture. that soundngs
eminently reasonable, looking from the american point of view, are eminently unreasonable from a chinese point of view. you and i understand the cultures are different. when you get to the final stretch, you wake up to the fact that we may be seeing the same thing but think differently. >> jim strafford was telling me that they are both playing football but a different kind of football. different rules. >> one is western chest, the other is go. you need time to sort things out. >> how are we going to get that final 10%? stephen nguyen says we are 90% toward a deal and that final 10% will be hard. can we do a deal that is 90% complete? should there be? >> there has to be. politics is the art of compromise. president trump is a great
negotiator. he has his own way of playing the game. president xi is a reasonable man. you have to remember that china wants to be a friend with america. china wants to be a great partner of america. i think most americans do. other things, there could be for longer-term engagement. for trade and investment, it is win-win. >> what damage has this trade war protracted, has done to global investment lows? you are looking for deals all the time. what has it done to your risk appetite? isthe most unfortunate thing you are looking for america related investment and one has to second-guess. we are seeing less weight in the sector and while other
opportunities come along you hope for other things, which is unfortunate for both sides. i think the quicker we have clarity, the better for both sides. >> you are a big investor in the u.k. do you have any more clarity on the u.k.? on brexit, it looks like of boris johnson comes in, october 31, they are out. >> we are resigned to the fates that we need to look at pragmatic options and we need to look at opportunities for brexit. you just don't know what will happen with the new leadership. indeed with the leadership renewal. people are generally fed up. people want clarity, whatever it may be, to get on with it. >> there are a lot of people on the streets of hong kong right now, fed up with what's happening in hong kong.
you are a hong kong or. you moved when you were three years old. do you have sympathy for their plight? or is this a misunderstanding? how do you read what is happening? whether the number is 2 million or one million or 300,000. you cannot ignore the fact that there is a disenchantment. >> absolutely right. frustration of a all sides being built up and what happened in early june is a manifestation of that. there's a lot of frustration on all sides and it is something that we have to sit back and say, hey, how can we do better in engaging all sectors of society to make sure that one country, two systems works? it is an ingenious formula. >> ingenious are impossible? >> ingenious, but the art of
possible is politics. ground.to find common right now, it is lose-lose. >> carrie lam resigning doesn't necessarily resolve the issue they want. >> no. it's a difficult position. somebody who has always acted in good faith, and like all human beings, sometimes we may fumble on particular situations. around maybe we should have done it differently, should have talked longer to more sectors. think the good-faith part one should not second-guess -- she has a track record of trying to do things -- >> she's a negotiator. she would get down there and resolve these things but it seems as if she has withdrawn, or is that because of the nature
of the position? >> you don't want to inflame the situation so it is probably better to take a backseat and think through and try to come up with a better solution. >> as a dealmaker, what is your risk appetite even the trouble in the u.k., given the trouble we've seen brewing between the china and the united states? >> i think right now i would go more for liquidity because i see a lot of opportunities down the road, but right now the world is in chaos and playing a different game altogether. but opportunities are coming around. deales china get the trade before the end of the year, or is it a longer saga? >> by the time we come back today most, we should be able to celebrate. >> with champagne,. fantastic how about in hong kong? hopefully not with rumor bullets
and tear gas. >> i hope not. having said all that, you have to admire the 750 million people -- they have been civilized and courageous most of the time in hong kong by nature -- we are not violent. we are peaceful and we want to express our views to the international community, to hong kong leaders, to china, that we need more time and we need to work together with more patients. >> we always get people wanting to say hi -- i will give you your final question, which is is it a hard brexit off a cliff november 1 and into the unknown? believe that would be hard brexit, but it is not just britain, it needs other european partners, and i think all of goodwill can give us that.
meanwhile, the reserve bank of india is conducting its reverse repo auction. we are also looking for the finance minister presiding over the celebrations of two years of the goods and services tax, that is some of the things on the agenda. let's get straight to mumbai and have a look at what we can expect from the session so far, and how is the open given the strength of what we are seeing across the region? >> positive use certainly coming in for our indian markets, a good start for the trading week. half percent gains for the nifty and sensex, and we have seen that easing of tensions between the u.s. and china for now, and of course we are looking at some benefits. the banking index is also advancing, and the indian rupee continues to strengthen against
the u.s. dollar, which is currently below 69. indiag positive is that has had a record high well over $400 billion, which is affecting the rupee. >> india's retail auto sales jumped to an 18 month low last month. how has that sector opened? it has opened with a positive bias, and we are expecting the volume for the times to come through some later today. what we are looking at is an 18 month low in terms of the auto registration, and this clearly indicates a further slowdown in the auto sector and the volumes, however we are looking at labor strengthen the auto index as a whole even though it has come up by 14% year to date largely on
account of the slowdown in volumes . they are doing reasonably well but that is also because we have seen a little bit of correction of stocks over the past one or two odd months. the united arab emirates is supporting plans to prolong oil supply curves in the first quarter of next year. the oil minister spoke in vienna where they are do to later today. i am for an extension. i think that is needed for the current condition of the market. expecting an easier meeting then hopefully we will see the numbers. my expectation on the conformity levels are also set to be high, higher than 100%. >> the iran oil minister told bloomberg that extension is not
a done deal. end, i'mover to the supportive of that, but i would not say it is a foregone conclusion, not yet. plus, there are other ideas. 1.2, the issues may not really deal with the glut. >> our asian energy reporter joins us now in singapore. what should we expect when the group does meet later? >> i think the uae is right. this is not exactly a foregone conclusion but is pretty much a done deal. russia was the big question mark leading into this, so with them on board, you would expect the rest of opec's members to want to roll this forward. there's a little bit of mystery on how long they will do it -- six months or nine months -- i
think because medically nine months will be a little better for the market, because it shows that the group is really committed to keeping the supply cuts longer, but realistically it doesn't matter because they will meet in six months anyway. >> what do you think other market participants are looking at, amidst all these talks? >> the real thing people are looking at is demand. the u.s.-china trade war gave us good news, that trump wasn't going to add extra tariffs, but overall the demand has really been flagging in some markets, and if it doesn't pick up, it doesn't matter how much opec cuts, they will really never recover. demand is where the focus will really be on. >> so we are hanging around this level. >> unfortunately. opec will roll these cuts forward, u.s. production will still grow, and unless you get really good news on trade that could supercharge demand there
is not going to be anything to pull it out of this weird mid-50's era. >> our asian energy is reporter, joining, us from singapore thanks. coming up, fresh demonstrations in hong kong on the anniversary of the handover to china. what protesters are demanding and what is next for the embattled leader. this is bloomberg. ♪
♪ you are back with "bloomberg markets" in hong kong. i'm rishaad salamat. >> in singapore, i'm juliette saly. a quick check of the latest business flash headlines. deutsche bank may cut or than a fifth of its global growth forecasted its biggest shakeup in years. the ceo may have proved the loss of 20,000 jobs when he presents his latest restructuring plan, although the ultimate total has not been finalized. has beenhareholders he
working on harsh cut that after dropping merger talks of commerzbank. >> apple is said to make its new mac pro desktop when china moves devices,n of its major using quantum computers to make the $6,000 machine, down in a factory outside shanghai. this comes as the united states threatens new tariffs on goods imported from china. president trump had been slamming apple in the past for making devices in china. >> singapore develop the capital and had completed acquisition, creating one of the biggest real estate groups with more than $90 million usd of assets under management. having agreed to by two property units from state investment funds in january. >> protesters gathering in hong kong, working the anniversary of the return to chinese rule and
the start of carrie lam's third year in office. our senior reporter is with us -- we have had the flag raising. >> which is a traditional thing they do every year -- this is the one that is supposed to mark the return of hong kong to "the motherland. ironic -- youmely have carrie lam in a speech telling people that the last few months has made her fully realize that she has to remind herself of the need to grasp public sentiment accurately, and to listen more to what's going on. the administration gets that. are, toasting themselves with champagne, while
outside the convention center the police are fighting people off with pepper spray because there are these protests going on. xi says i'm going to listen more, let's toast ourselves, pepper spray outside, protesters -- she doesn't seem to listen. >> the extradition bill, it was about prime effacing anyway. what are they protesting, given that it has been shelved? it ishas been shelved, not going to be introduced in this legislative sitting, and after that it will most likely die. the protesters wanted to be withdrawn completely. this afternoon we are going to see another rally and protest return, 22rk this years hong kong has been returned to china, and it is difficult to tell how many
people are going to come out. if it's anything like what happened last wednesday night down on edinboro square, suddenly we had more than 10,000 protesting, and most people weren't expecting to see the amount of energy that is continuing to fuel these protests. they have morphed away from the extradition bill and it is more a call for democracy. there is this sense that because the government is so weak and carrie lam's popularity is lower than any chief executives popularity at this time in their terms, there is a sense that because the government is weak perhaps they are on the back foot and maybe they can introduce something like another discussion of the universal suffrage debate.
>> david, today is a public holiday, that is probably likely to garner a lot of people anyway that don't have to make the choice of whether or not to go into the office. how much do you think this protest movement has? >> it is a public holiday whereas last wednesday -- it was just after work and we got 10,000. now we have 2 million people in the streets after the extradition law had been shelved. says really difficult to how many people will be out there and today will be a super big test of how much energy there is behind these protests, and how much energy there is of these calls for democracy for hong kong. >> david, thank you very much. we will be having a look at what's going on with protesters through the day. also look out for economic data. we have opec and its partners
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