tv Bloomberg Daybreak Australia Bloomberg September 25, 2019 6:00pm-7:01pm EDT
paul: welcome to "daybreak australia." i'm paul allen in sydney. from: i'm shery ahn bloomberg world headquarters in new york. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major market opens. ♪ paul: here are the top stories we are covering in the next hour -- talking trade. president trump switches tony at again, saying a deal with china could happen sooner than anyone thinks. progress, too, on a deal with japan. a limited agreement is signed after washington withdrew the threat of tariffs and a threat
of impeachment still hangs over the president. he releases the ukraine transcript. shery: let's get a check of how markets close. as you mentioned, we saw impeachment drama play out in washington. that weighed on markets a little bit, but there was more optimism for potential trade deals, not only with china, but that limited trade deal with japan also boosting market sentiment. we had the s&p 500 gaining .6%, to stop a three-day decline. banks consumer stocks, leading the gains. also tech stocks, nasdaq gaining 1%. the energy sector was unchanged in the session. we had crude following for the last two sessions. at the moment, opening higher, up .3%, but still holding at that $56 a barrel level as we heard from saudi arabia that they are ahead of schedule in
restarting operations after drone attacks on their facilities. futures at the moment not doing much. let's see how we are setting up in asia. hintingasia futures are at a risk on start to the session, but emergency currencies may come under pressure from the dollar while yields may continue climbing. we will be looking for reaction to the u.s. and japan signing a limited trade deal as well. flipping the board, it is a busy day for data. we are getting a kick off with a check on korean consumer confidence. this afternoon, singapore will report factory output. we will be hearing again from furthergovernor after easing that sent the five-year yield to a record low. today, the philippines expect to cut rates. this is important in an economy growing at the slowest pace in four years and the contraction in hong kong export growth is forecast to deepen in august.
plus, we are counting down to the first community dialogue organized by the carrie lam government as the city readies .or a 17th weekend of protest that is headed for floor votes in the house and senate as well. on first's check in word news now with su keenan. su: let's start with the european union, which is weighing in with response over airbus tariff subsidies. the wto will authorize u.s. duties on nearly a billion dollars of eu goods. the terrace could hit next month targeting planes and parts as well as luxury products such as wine and spirits. onto the bank of thailand now, it left its benchmark interest rate unchanged, which was expected, but said it may consider steps to rein in bonds as the economy weakens. policymakers are providing support to spur growth, which the federal bank expects will be lower this year than previously
forecast. bywth is being undermined the strength of the currency, which has gained 5% against the dollar so far this year. divisions are widening at the a german policymaker resigning from the executive board more than two years early. it is the biggest show of draghi,against mario and neither she nor the bank reasons.ny to the imf now, it is confirmed a bulgarian economist is managing director, continuing the tradition of a european in the role. the former world bank chief executive starts on october 1, succeeding christine lagarde, who is off to the ecb. she's the first imf leader to come from an emerging market. aresaid warning signs
global growth continues to disappoint. boris johnson returned to a noisy house of commons refusing to quit or apologize for his unlawful suspension of parliament. britain is due to leave the eu october 31 and johnson says it will happen with or without an agreement to soften the impact. for him finally to take responsibility for his decisions. we decided to call that referendum. we promised -- we promised -- time and again to respect it. i think the people of this country have had enough. this parliament must either stand aside and let this government get brexit done, or bring a vote of confidence and finally face the day of reckoning with voters. dayglobal news 24 hours a
powered by more than 2700 journalists and analysts in more than 120 countries. story, theur top threat of impeachment hanging over president trump who has again defended his phone call with the ukrainian leader, saying there was no push, no pressure. >> the witchhunt continues, but they are getting hit hard on this witchhunt because when they look at the information, it is a joke. impeachment for that? when you have a wonderful meeting or you have a wonderful phone conversation? to washington,ad and our congress editor joins us now. releases his conversation with ukrainian president. >> the conversation is shown to be something of an ink blot test with the picture shown based on your political leanings. the memorandum, which is
basically a rough transcript of the call the president held with the ukrainian president last july shows that there was pressure put by trump for the ukraine government to begin an former vicen of president joe biden and his son. what remains in dispute is if the ukrainian president understood that as a quid pro quo for the release of u.s. military aid that the country is seeking as it continues to battle against russian-backed separatists. the big risk now is this is somewhat more clear-cut and simpler picture for democrats to draw, and where they have been falling short, the democrats, is public support for any impeachment drive. nancy pelosi, is weighing if they should narrow the focus of their investigations down to just this matter, rather than
the rather sprawling investigations that have already been under way. republicans are the in all this? >> for the most part, they have been standing behind trump. there is a lot of disapproval what heng that perhaps said was not entirely appropriate, but for the most been thatreaction has this does not rise to the level requiring or demanding and impeachment, so they are standing behind him right now and holding fast. some are being fairly cautious in that, but he is also in the house where republicans have been in lockstep behind him. they are defending the president and the writing the democratic attempts to impeach him. next?what happens what can we expect to see tomorrow? anthe next step is there is
open hearing of the house intelligence committee with the director of national intelligence, and both house and senate intelligence committees today were given the original whistleblower complaint that .riggered this entire matter that whistleblower still has not been publicly identified, and the house intelligence committee is trying to get an interview with him behind closed doors. the open hearing tomorrow will undoubtedly create some fireworks as democrats press joseph maguire, the intelligence director, over why the whistleblower complaint was held back initially and if there is additional material that so far has not been revealed. havingll also be closed-door hearings with the senate intelligence committee, so those will be the next steps as they house committees, under nancy pelosi's direction, begin
looking into this. paul: thanks for joining us. president trump has his eye on the trade war with china of course. he says the two sides want to make a deal and there's a good chance they will come to an agreement. >> right now, china is way behind us and they will never catch us if we have smart leadership. way behind. we picked up trillions of dollars, and they have lost trillions of dollars, and they want to make a deal very badly. could happen. it could happen sooner than you think. paul: all right, "sooner than you think." correspondent is watching from beijing. markets have been whipped sawing -- whipsawing from the president's comment on trade. >> it's not clear that even the president himself knows what he wants to do. is caught between competing
pressures, one is to present voters a deal with china, the other is the acknowledgment that farmers are under pressure, u.s. corporate is under pressure. the broader economy is starting to feel the pain of this trade war as it becomes more prolonged, so you have to address that. of course, he does have meetings coming up between the two sides in and around october 10, which he is looking ahead to, so some of this may just be gamesmanship, but yes, his comets, after giving china something of a tongue lashing the day before the united nations -- his comments most recently saying he thinks there could be a deal and it could come sooner than we expect. again, we are focused on that meeting between the two sides in washington around october 10. we are hearing from sources in china saying the companies are looking to buy more u.s. pork. is this an attempt to spice up the deal? there's two very good reasons for china to be buying more u.s. pork. one is to potentially, as you
say, sweeten the deal ahead of the talks. the other is because china faces a massive pork crisis of its own as a result of swine fever that has swept across the pig population here. prices for pork have soared 70% this year. hog populationhe drop. china has a 10 million ton deficit when it comes to pork in terms of the country's demands and needs. in terms of buying more from the u.s., it makes sense on that front. exemptey have started to some of their purchases of .oybeans if you look at the import numbers just for july, they were the highest level in more than expectrs, so we purchases of u.s. pork from china to continue, and again, as part of its play to sweeten the deal ahead of any conversations with u.s., but also to address this massive pork shortage here in china.
paul: we have the japanese prime minister signaling the theme of trade talking at the moment, you see him there. let's have a quick listen. >> i conveyed my concerns over the increased serious nature of the middle east situation and to play a constructive role for peace and stability in the region. statedsame time, i also that japan will play a role for its intentions in stabilizing the situation in the middle east. thatresident responded regional security is important that he will cooperate in addressing the issues.
based upon my meetings with president rouhani today, i met with president trump for our bilateral summit and strongly denounced the attacks on oil facilities in saudi arabia but also agree that japan and the united states will closely work together, aiming to ease tensions and civilized situations in the middle east. at the same time as i have already stated, japan and the united states enjoy very strong alliance, but at the same time, we continue to have favorable relationships with iran. therefore, i visited iran in ase and met with leaders well as president rouhani, and askedime, i have firmly iran to exert their and for theties stability and peace of the
.egion with president trump, we have had an in-depth exchange of views, so i hope that japan will exert our efforts for stability and peace in the region. at the japan-u.s. summit today, president trump and i confirmed has reached final agreement. i believe we were able to achieve a win-win conclusion for both japan and the united states . the trade agreement covers approximately 30% of global gdp .nd will continue
the digital trade agreement signifies high-level rules in the sector. it is important for japan and the united states to lead the world in rules making in the digital field. entry will contribute significantly for the growth of the global economy based on free and fair rules. therefore, the agreements are win-win for both japan and the united states. shery: that was prime minister shinzo abe of japan talking about the u.s. trade deal -- u.s.-japan trade deal contribute into the global economy. of course, he was also talk about the middle east tensions and how japan is strongly condemning the recent attacks on saudi arabia, but let's talk about all of this with trade
tensions and the moment, not to mention the impeachment drama in washington as well and how that is impacting the markets. the s&p 500 ending a three-day slide and recouping most of its tuesday losses caused by the impeachment inquiry. equity strategist at wells fargo securities who has been writing about what impeachment really means for the markets joins us now. great to have you with us. there is a lot of drama over impeachment, lots of headlines, but it seems at least for today, markets were able to forget about all of that and focus on the trade optimism, especially coming with the recent limited trade agreement with japan. >> you make a great point. you saw the market kind of shake off any witness today and from yesterday about impeachment. we have been writing about this talking to clients. while impeachment political headlines have been in the forefront, we think more importantly, markets are focused on what is the environment now? what are the fundamentals? we have based this on two
historical points. we go back to may 1974 where the house had just begun impeachment hearings for president nixon, who resigned in august, but the 12 months leading up to the impeachment hearing, you saw massive underperformance in the markets. while some people may say that could be driven by impeachment concerns, really, we had already been in a two-your heavy bear market at the time. to take the other side, another example with president clinton, you look in december 1998, the late 1990's were characterized by a strong bull market. 12 months leading up to the house approving articles of impeachment for president clinton, you saw outperformance in the market of nearly 24%. that gives us further confidence in our stance that right now, while we are keeping aside i on the politics going on, it is more about the fundamentals and the environment we are in. shery: does that mean we will see more risk-taking going forward? >> we think it depends on the
development in the u.s. and china trade war. maybe in the short term, you see aversion,t of risk but more on a 3-6-12-month look, we think it will be more risk on as long as we do not see anything crazy in the derailment of risk talks with china. paul: the markets do not care about impeachment, as you were saying, but let's talk about some of the things maybe they do care about. are the fed's preferred measures of where things are heading. it shows the yield curve inversion between the three-month and the 10-year, just continues to get deeper. how much of a concern is that? >> it is certainly something to keep an eye on it i feel like every time we come on here, we have robust discussions about the yield curve, how it weighs on investor sentiment. we heard from chairman powell himself a couple weeks ago, you see that consumer spending remains strong. while the outlook moving forward
has grown in uncertainty, we have seen some weakness. it is not surprising to us that we think yes, growth is slowing, but is a yield curve inversion really leading to imminent recession? we don't think so. can continue to perform well during your session, but when you look at equity prices, what is keeping them going right now? is everybody optimistic about with the third quarter will bring in terms of earnings, or is it really just the fed keeping things afloat? >> the fed has been very accommodating and chairman toell has done his best communicate and quell the markets. we look at earnings as a temperature check, and as we saw in two q, one q, the past couple quarters, we keep seeing firms repeat that they are able to pass along prices, shift along the supply chain. we expect in the third quarter, we will hear some issues with growth slowing down. manufacturers will probably see some weakness in the industrial space, but overall, we continue to believe that the fundamentals
are there and earnings will bode as a good, positive check and for the reformation for investors to put a little risk on. shery: the dollar has been soaring at the strongest level since 2017, i believe. will that the road some of the profits of multinationals? >> it is absolutely a possibility. when you strength about -- when you think about a strengthening dollar, especially unexpected, firms have to readjust and be more cautious, given more wiggle room on what to do with her importing, exporting, and where to put their manufacturing. it will be a factor, but so far, we do not see it as something derailing all earnings. fargo's securities equity strategist. thank you for joining us. we have plenty more to come on "daybreak australia." this is bloomberg. ♪
sydney and you are watching "daybreak australia." there have been a lot of conversations from the global business forum in new york regarding if tech can be allowed to manage its own risks. >> there are plenty of areas where we are currently already regulated or leaning into regulation and i will give you a couple of examples. a google, privacy is everything. it has been from the earliest days. our view is it is your data, so early on, we invested in things like privacy control so it is easy for you to find. 20 million people go to our privacy controls every day, and we keep trying to improve them. the question is what kind of relationship do you want to have? if you were trying to get here, trying to figure out the easiest or fastest way to get here and you googled how do i get to the
plaza quickly, it is helpful to have that anchor in your location. that is a choice you are going to make. or if you are coming to new york you might ask, what the weather is. that is a choice you have to make. it is our obligation to make sure consumers are protected. we have done a lot of work on privacy and data. how does that relate to your question? there is still yearning for more. what we are doing very clearly is working with congress. we support national privacy legislation. as always, the devil is in the details, and i think it is a comment on each of us to lean in and provide insight into the areas where there would be unintended consequences from regulation. privacy is one example. another is the question is often paying your you fair share in tax? we have paid the oecd average
for the last decade, but that narrative still exists. one of the key issues is that the international tax structure is outdated. the oecd has come forth with a proposal which is gathering more support, for a fundamental redo of the international tax system. we very clearly support that, and again, devil is in the details, but it does feel like it is progressing. if you want to be a constructive part of the solution, you have an obligation to bring whatever insight or technical expertise you have so we end up with smart regulations. >> i do think that one of the dangers of the regulatory regime and the direction we are going , which i very much --ee with this direction listen, we are big companies, and we will have a dialogue and aide by the regulation on global basis, and when the rules are clear, we will follow those
rules absolutely, but i do think the startups of the world, the businesses that are building the exciting new ideas, et cetera, whatever regulation there is, we would want there to be room for innovation at a certain level, at a much lower scale so you can who have some sandbox to innovate in, to take at a size where they will not have a fundamental change on society and once they get to a certain size, they've got to regulate just like everyone else. shery: we have more headlines coming up from prime minister shinzo abe. he has just confirmed u.s. will not impose additional car tariffs, as they have now agreed on the limited trade deal. those would be the 232 auto tariffs.
paul: 8:30 a.m. here in sydney. we have the markets opened 19 minutes away and futures currently pointing higher by about 2% after a positive close on u.s. equities markets. i'm paul allen in sydney. shery: i'm shery ahn in new york where it is 6:00 p.m. let's get to first word news with su keenan. su: we start with from survivor who followed up on pessimistic china comments by saying a trade deal could soon happen -- could happen sooner than we think. addressing the general a simile tuesday, the president insisted he would not accept what he called a bad deal, but 24 hours later, he implied things were
moving ahead and the two sides could reach an accord. negotiations are due to restart in washington on october 7. >> right now, china is way behind us and they will never catch us if we have smart leadership. way behind. we've picked up trillions of dollars and they've lost trillions of dollars, and they want to make a deal very badly, and it could happen. could happen. it could happen. it could happen sooner than you think. su: well, the u.s. and japan have made a limited trade agreement. abeidents trump and shinzo signed a pact. the u.s. trade representative's office responded coupling early achievements while the president says he expect a comprehensive deal in the fairly near future. initial estimates of the cost of the strike at general motors have top $500 million. credit suisse says that is how
out profit gm has missed on. researcher in chess -- ihs market agrees. to boeing now, the company will sharpen its focus on safety with the 737 max's return, funding a new oversight panel and recommending changes to the company's structure and design process the drugmaker also settlement.first terms of the deal are not cleared, but reuters says each family will receive at least $1 million. onto the latest in the newsroom, benjamin netanyahu has been tasked with forming a new government in israel, despite nuclear signs he can end the political stalemate. the decision by the israeli
president to give netanyahu first crack at building a coalition comes just a week before he faces a hearing on corruption allegations. this month's election left him the with the former military chief. global news 24 hours a day, on air, and at tictoc on twitter, powered by more than 2700 than 120ts in more countries. news ate have breaking the moment -- the justice department intends to investigate facebook after some prodding coming from u.s. attorney general bill barr. this is according to people familiar with the matter that now say this probe would come on top of the already under way inquiry by the federal trade commission, so facebook would be facing parallel probes by two federal agencies over if it has harmed competition in violation of antitrust laws. sources say the justice department's case will focus on
conduct that is separate from , andthe ftc is examining these federal inquiries are in addition to investigations by state attorneys general and the house judiciary committee as well. let's turn to hong kong and go to sophie for a check of the markets. outie: this is how we close the wall street session. the s&p 500 adding .6%. we see s&p futures little changed this morning. we will be keeping an eye on oil markets as well. i like to take you to the terminal because i want to check on some assets early in the asia session. from trump's remarks on a china trade deal, taking its cue from a stronger dollar. here is where we are at with jgb . that is a five-year yield slipping to a record low in the
10-year yield is here as well. markets are pricing in a full 20 basis points of cuts by the end of 2020 from the boj, and this backdrop has pushed jgb futures to a three-week high, and shorts are bailing on positions that would likely set during the broader fixed income selloff we saw in early september. paul: thanks very much. just get you across some news on the bloomberg terminal, peloton's ipo said to be priced at the top of the range, the range being $26 to $29. this is citing an unidentified person who is familiar with the matter. notet gun -- peloton immediately responding to requests for comment. let's get to more of what we should be watching with trading under way in asia. are we seeing signs of risk
appetite really returning, or is this latest move just a bit of stabilization? we'rea sense, what hearing on the trade narrative is not any move toward any constructive, positive deal. it's more just the fact that we have not had any negative headlines or negative news on the trade front coming through. trump, of course, saying a deal could come sooner than we think, but of course, there is plenty still to be ironed out, but markets are taking it in stride anyuse it is not adding to negatives. it is being taken pretty well, and the s&p 500 has been able to ride on the back of that and come off that three-day losing streak. the big move you had was in yields and treasury yields back up to 1.75 on the 10-year, looking very different to just a week ago, but of course, as you know, we have had some huge volatility and bond markets
especially of late, so we are continuing to see that, which doesn't mean we might have a little bit of a rocky session in asia. not a huge amount on the data front, but already people starting to look to next week when we get the china pmi numbers on the latest read on the economy. it is a fairly modest set up for equity in asia as we get the trading session under way. shery: we have seen also a little bit of volatility when it comes to the chinese economy and economic data. do we have a picture of how the markets are taking this? if we see more easing perhaps coming from policymakers? indications are in many ways more of the same and an economy that continues to manysigns of stressing in
different pockets, and this is really the first read we have before next week's official read on the pmi side as the manufacturing side of the economy, and what you have seen from a market's perspective, especially in equities, has been resilience going into the holiday week next week and the really wantsthing to upset the apple cart prior to those holidays, so the message really has been that authorities youinclined to make sure have the stability continuing and we have seen that to an extent in the currency, both onshore and offshore as well of late. overnight, of course, most of the move has been driven by the dollar, so it was not anything really on the chinese front impacted the currency there, but markets are still expecting a degree of extra stimulus to come later this year.
clearly, markets are expecting that. the question that is harder to answer is how much of that is priced into markets. you've got to assume that given the run that chinese equities have had this year, there's already quite a lot of that baked enterprises, so we are set for a bit more stability before we get into those holidays, and then we might start to see a bit of volatility pickup. shery: thank you so much for that. we will be speaking to china beige book president leland miller for more on the challenges facing the chinese economy. boeing's board of directors is sharpening its focus on safety. the maker of the troubled 737 max jet will form a new panel to oversee development and manufacturing. the head of a global airline trade group sees potential progress with the 737 max. alexander, always great having
you with us. boeing 737 seen the max grounded for about six months. could the silver lining be that at least we will see more focus and a positive change in terms of safety regulation ahead? we expect from regulators now is to have a common approach between the faa, which is a leading organization, and the other organization in europe and other parts of the to align the conditions under which the aircraft will isurn to service, and it absolutely key to restore the confidence of everybody in this aircraft. alignment of conditions is absolutely necessary to have a solid and trustful
certification system for industry. i will remind you of the tremendous success we have had with this certification system. we have had the safest transportation in the world, so we transport 4 billion people to italy last year, and it's not by chance. it is because the certification system, the safety system is absolutely, absolutely solid. u.s. faa ishe making it clear each country will take an independent decision on the return of the boeing 737, right? what problems could arise if all of these countries take independent decisions without consulting each other? if, youroblem is that know, the conditions or the decisions, the requirements that each country or each group of countries ask boeing or the airlines or the industry to
comply with are different, it raises questions about the precision, the acuity of the quality of the requirements. influence on a bad the reentry into service of the aircraft, and it will not restore confidence in the system and in the aircraft. we urge regulators to have a common approach. from the airline point of view, it is absolutely key. i think from industry and the general public. paul: you mentioned a moment ago, the safety record of air travel, which is indeed impressive, but it does leave deep scars on the public memory, disasters like we saw in indonesia and ethiopia. a recent ubs survey said 12% of all people felt that no amount of safe operations would alleviate their concerns about the 737 max.
what sort of job will it be to turn that attitude around in the public? all, the public must be aware that the safety record of this industry has significantly improved, is improving year after year. the number of fatal accidents, which is always too high when it is even one accident, has declined almost by 50% for five years. handful ofthan a accidents every year, and we fly 40 million flights a year, and point 3port four billion passengers, so it is an incredible success, but it requires a permanent attention and permanent, you know, focus
because it is our main priority. from the guy who is loading the luggage to the pilot to the ceo, everybody is obsessed by safety, and it is good news. everyone. paul: let's turn to another challenge being faced by the industry at the moment, and that is global trade tensions. can you give us an update on what sort of impact the trade war has been having on cargo volumes? >> out you know -- as you know, now since last november, cargo traffic has been declining regularly, month after month, and it is a direct consequence, first of all, of the protectionist measures, the , or the slowdown in someconomic growth that parts of the world are facing.
signalind of advanced that global trade, international trade is slowing down. that should be a worrisome signal for all governments to tell everyone that any restrictions to trade or to people, any barriers on borders is bad news for the global economy and, of course, for the aviation industry. we rely on open borders, open to trade and to people. shery: we saw the immediate impact on cargo demand. what about passenger demand? has there already been an impact on the sector where people are traveling less because of these geopolitical tensions? quick the impact has not been immediate, but we have seen a slowdown in growth in the
passenger traffic. passenger traffic is still growing, but at a rhythm which is two points, three points below last year. around 3%. last year, we were around 5% or five point 5%. we have seen a slowdown as well for passengers, but it happened a few months later than the cargo. nowy: you are right participating at the 40th assembly of civil aviation. what are the most pressing issues for your industry at the moment? >> i will give you the two main issues. the first issue is environment. areronment because we responsible for 2% of the global co2 emissions, which is not the biggest number, which is the oil
industry, but it is a significant number. 10 years ago, we commented to reduce our carbon footprint. we made commitments and started a very ambitious program. we convinced governments to adopt a global worldwide program to compensate our carbon emissions. this year in 2019, we have to theement, and we are in deployment and implementation phase, so we have to maintain the focus and energy of 190 thisries to implement on whichy key program the oil industry is working, so that is the first issue. another issue is how are we theg to integrate
newcomers, the drones into the airspace. taxi, lowee electric flying over the city's from the airport to the center. it is important to see how we are going to integrate all these new flying objects into the andpace, safe, secure, efficient way. that is another issue we are dealing with in this assembly. paul: thank you so much for joining us today. we have plenty more to come on " daybreak australia." this is bloomberg. ♪
challenges it aces today. the challenges are growing. a survey shows manufacturing services and the property sector slowed further while that -- debt soared. i want to start if i can with this chart on the bloomberg terminal. it shows some rather gloomy predictions heading into the third quarter in terms of gdp. when you see signs of a trade truce in the offering, will that be enough to change the trade future? quick set of think it is, but i also don't think gdp is the measure we should be looking at. i think china is an opportunity right now because of the external circumstances which are so challenging to embrace the slowdown, to talk about the fact that thee 6% numbers, idea of growth for growth's sake is an outdated concept that is not good for china anymore. i think being able to blame this on a global trade or blame this on trump will allow them to do some of this, you are going to
start seeing potentially numbers in the five's this year and start seeing a trajectory that a year or two ago would have seemed ludicrous. paul: your survey indicates slower growth that you manufacturing sector. can you tell us more? >> manufacturing looked worse than anywhere else. you had a relatively strong performance on manufacturing through 2019. it has not been great but it has not been bad for the civil reason there has been so much policy support going into manufacturing. we are able to look at this through the credit linens and what we have seen is that they share affirms borrowing and manufacturing has been remarkable all throughout 2019. it was a lot in 2018, but it has gotten more and more to the point where the numbers are really alarming. the government is clearly stepping in and pushing down rates because you are seeing borrowing rates go down despite the fact that these firms are in worse and worse shape. manufacturing is not doing well. it is borrowing out the was a -- the wazoo.
shery: policymakers were trying to stimulate credit growth, right? borrowing in the right places of the economy. are you saying that this is not happening, that all of this borrowing is going on in places that should not be happening? >> exactly. i think they gave up last year. we never saw deleveraging. we never saw rebalancing. we saw authorities clamp down on off-balance-sheet risk and try to move it on balance sheet. what happened last year with a very bad fourth quarter that was not acknowledged again by beijing in its severity, what we saw is basically beijing changing policy, throwing in the towel, and since then, we have seen a reversal in 2019 has seen a resurgence of shadow banking. the last six months are the shadow bankingf is a share of total borrowing that we have ever seen.
this is not a tight credit situation, and growth is still slowing. we talk about the chinese economy, we tend to look at, say, alibaba and they are doing fine because the chinese consumer seems to be doing fine. did retail upset some of the weakness we saw in manufacturing? >> it has been two sectors that have not been able to pick up the slack. one of the mistakes people make is they look back at how well the economy was looking in end of 2016, 2017, and said the chinese are claiming that there is this movement to the new economy, movement to services and consumption. that is actually not panning out in the data. this was manufacturing driven overwhelmingly. now that manufacturing is running into severe challenges, you do not have services or retail picking up the slack. they are not falling apart, but they are not enough to lead the economy and this is one of the reasons you have such downward
paul: let's get a quick check of the latest business flash headlines. goldman sachs can to offload a portion of its stake in a $3 billion credit line that helped arrange softbank's vision fund. they've approached other financial institutions to take on some of its lending commitment and decrease its risk. the credit line was set up to help softbank pounce more quickly on potential transactions. shery: a tough first day of trading in hong kong. the hang seng index fell more than 1%.
paul: good morning. i am paul allen in sydney. we are under one hour away from the market open in australia, japan, and south korea. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this thursday -- pres. trump: i want to make a deal. do we want to make a deal? paul: president trump switches tone it yet again, sin