tv Bloomberg Daybreak Asia Bloomberg October 26, 2020 7:00pm-9:00pm EDT
shery: i am shery ahn in new york. we are counting down to asia's major market opens. paul: i am paul allen in sydney. welcome to "daybreak asia." washingtond talks in drive on wall street. the s&p 500 posting its biggest decline in a month. energy and industrials down almost 3% at one point. the ma is set to surge up
billionaires index. raise 30 $5ting to billion in hong kong and shanghai. aviation -- in australia. alice springs emerges as the ideal place to store passenger planes left idle by the coronavirus. shery. shery: breaking news out of south korea. we are getting the preliminary third-quarter gdp numbers and we are seeing the quarter on quarter -- the economy has grown 1.9%, which is beating expectations of 1.3% and this is also coming after its first recession since 2003. we saw a contraction of more than 3% in the previous second quarter. you're on your, still a contraction of 1.3% but it's a much smaller contraction than was expected and it is also a contraction that has eased from the previous quarter. we have seen growth and strength when it comes to south korea's exports and manufacturing
industries. third-quarter manufacturing actually growing 7.6% quarter on quarter when you look at the details in the gdp numbers. we have seen the rebound in china. south korea's biggest trading partner helping in the recovery in exports and investment, now quarter on quarter, the economy growing 1.9% for the third quarter after the first recession since 2003. we have seen a lot of help from the government as well. four extra budgets this year. let's get some analysis of the south korean gdp numbers with .oody's analytics economist give us some reaction to these numbers. much stronger than what is expected. how much room does this give the government to implement some long-term policies and switch away from just a reaction to this pandemic? >> thank you, shery.
a strong rebound, absolutely no doubt about that. this exceeds the moody's analytics focus for a 1.4% rebound and as you mentioned, point hasthe turning been facilitated by improving exports. south korea has continued to benefit from a recovery in overseas demand conditions, a strong tech by demand as well as recovering production activity in china. of course, this number is what it is. domestic consumption has suffered some setback to the september quarter, largely as a result of the emergence around the end of august. investment results are likely to have -- but this is to be -- globaln the
conditions. overall, this is a promising return to growth. has been relatively less impacted in the region. byis extremely welcome domestic fiscal support as well as the conditional recovery. in terms of what the government can do, they have mobilized substantial resources for its supplementary budget. what we do expect is to see an extended phase of support. just to ensure any short-term deviations from the recovery in the global demand for the domestic pickup materializes. extended phase of policy. shery: we are seeing the south korean won, and the highest, a
19 month high. how does this pressure the south korean economy when it comes to export competitiveness, and what do you expect the bok to duke bok to do?- >> we do expect that the pressure we have seen buildup will be a contemporary one. the tablet surge in exports is likely to put it through the december quarter even though the net exports position is likely to be moderated to some extent, considering the restrictions which have come up in europe. this prevents downside risk. recovery, ink to a our perspective, is for global infections rather than the recent surge for the strength we have seen. we don'tof korea, expect any major deviations in policy.
the interest rate is unlikely to be changed. we do expect a fairly accommodative policy environment regardless of the recent surge in the strength of the currency. you are still unsure about how long favorable conditions for south korean chipmakers can last. we are wondering if you can explain some of the risks you are seeing around that. is a risk involved in the segment. this is primarily because of two recent developments. one of course is the fact that off through the end of the year. seeother major risk that we is how the global tech battle is going to shape up, especially post the u.s. election. it's true that south korea's chipmakers have been benefiting
since september as a consequence of the restrictions that have come up on a number of tech companies in china, but whether this is a sustainable in the long run really depends on the trade dynamics between the u.s. and china. the conditions for risk remain highly -- in the near term. this is what will shape really the strength of the recovery in tech exports for south korea. remains uncertain at this moment. paul: i went to get your thoughts as well. good news we have had out of australia. we now have a second day in a row in the state of victoria with no new coronavirus cases. restrictions are being eased. it looks as if the outbreak is under control. with that in mind, what is your outlook for the australian domestic recovery? the latest development marks
a turning point for the australian economy, especially as in victoria, retail, hospitality, it resumes operations after months of suspended activities. most of australia is already in recovery. resuming restrictions and victoria can-- in be eased in terms of their limits, in terms of the limits we currently have. have a stronger revival in consumption. also, the recent fiscal measures. to gainpect recovery momentum through early 2021. paul: the moody's analytics economist, thank you so much for joining us. let's take a quick look at the
markets right now. have been trading in australia almost 10 minutes, and most sectors were off by .2%. ands communications consumer staples in positive territory. new zealand weaker by 1%. we did have trade numbers for the month of october out of new zealand a little while ago. $600 million deficit. nikkei futures unchanged and s&p e-minis pointing ever so slightly higher although things do seem to be getting drowned lower at the moment. the reality is really sinking in that the economic studios package in the u.s. has turned into a political football. let's get to karina mitchell with first word headlines. the stimulus optimism is fading further in washington with differences remaining on both sides despite plans to keep talks going. nancy pelosi and steve mnuchin say they are closer to agreement but each accuses the other of
introducing new conditions. infection rates surge across the u.s. with stocks falling as investors doubt a deal will happen before the election. as wall street slumped infections trigger fears of damage to the global economy. california remains home to the most u.s. cases, surpassing 900,000 infections although the rate seems to be slowing. elsewhere, france recorded its biggest jump in cases since april with president macron preparing to host a special cabinet meeting to discuss the worsening situation. of amy coneyion barrett seems imminent with the senate set for an evening vote on a nomination despite democrat objections. the debate takes on yet more controversy with mike pence being urged not to attend. several top aides tested positive for covid-19. the confirmation would cement this agreement for years to come. sanction leading u.s. aerospace companies over arms sales.
beijing says it will target boeing, raytheon, and lockheed martin in order to "uphold national interest. the 1.8 billion dollar package includes long-range missiles from boeing, global artillery from lockheed, and raytheon's surveillance sensors. the sale is also proposed. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. shery. shery: still ahead, we will have more on u.s.-china tensions with the presidential election just days away. the national foreign trade council president joins us later this hour to discuss the outlook for american trade policy, but first, the latest on the world's biggest ever ipo. jack ma's ant group is set to become one of the most valuable finance companies on the planet. all the details, ahead. this is bloomberg. ♪
paul: jack ma's and group is set to raise almost 35 billion u.s. dollars through dual ipo's in shanghai and hong kong. a mega listing that will rank as the biggest ever and make and one of the most valuable finance firms on the planet. tom mackenzie joins us now from beijing. superlatives abound with this story. can you run us through some of the numbers? tom: they do indeed. this is a company that is essentially a financial service firm within an app. they offer payments but also insurance, credit scoring, so this is the proposition for investors. they are looking at raising 34.5 billion u.s. dollars. it is a dual listing in shanghai and hong kong and it will give the company evaluation of 315 billion u.s. dollars. that puts it in line with jp
morgan and it makes it one of the most valuable companies on the planet, four times that of goldman sachs. in terms of the demand we are seeing from investors in the offline offering, you have seen this stock an ipo oversubscribed by 284 times. the pricing, 68.8 yuan in shanghai. 80 hong kong dollars in hong kong, about over 10 u.s. dollars per share, and in terms of the timing, we are expecting it to list in hong kong on november 5. shery: what does this mean for jack ma's personal wealth? where are we at now? well,e is doing quite jack ma. he cofounded alibaba with 60,000 u.s. dollars. he had been an english teacher. a few years ago, he spun off and group but remained -- continued to have an 8.8% stake. that stake in the company for
jack ma is now worth over 27 billion u.s. dollars and that puts his total wealth at 72 billion u.s. dollars, just short of 72 billion u.s. dollars. in terms of where that puts him, he is the world's 11th richest person, above larry ellison of oracle, above members of the walmart family. he has had a very good 2020. paul: jack ma is not the only one who has had a good 2020. excellent year for china's brokers. yearit has been a booming for china's brokers. we have the homecoming of those companies, chinese companies listed in the u.s. that want to have a dual listing in hong kong or on the mainland so china's brokers have taken advantage of that. the economy is recovering in many countries, far away from that kind of scenario and the government has pushed through
measures to open up the capital markets so all of that has fueled what has been a bumpy year for china's brokers. forou look at the rankings 2020, 24 out of the top 50 brokers are now chinese, led by the likes of cicc. in terms of underwriting, they are doing well. in terms of asset management, they are a long way from their peers and competitors on wall street so just an example of the 131 registered chinese brokers. have combined assets equal to goldman sachs. in terms of underwriting ipo's, it has been a stellar year for china's brokers. shery: tom mackenzie with the latest from beijing. coming up next, hsbc releases third earnings later. we will look at what to expect. you are away if from the screen, you can always find in-depth analysis and the day's big newsmakers on bloomberg radio, broadcasting from our studio in hong kong.
shery: hsbc will announce its third-quarter earnings. profits slumped in loan losses are continuing to plague the bank as it contends with the economic impact of the coronavirus as well as tensions between the u.s. and china. stephen engle is in hong kong. it will not be pretty for hsbc this quarter. stephen: no, the numbers will not be pretty but one thing i guess you can say they have going for them is all the other banks are faced with a similar headwind on the low interest rate environment because net interest margins have been squeezed across the board. it is just how you deal with the other elements and headwinds like we saw on wall street. some of the biggest banks saw big increases in trading volume and revenue in other areas of
the business in the calendar third-quarter so hsbc, yes, the numbers are not going to look good. we need to look at a number of things in addition to the net interest margin being squeezed. you have to look at the restructuring and downsizing that was announced in february by the ceo because they seem to be not hitting those targets in the last quarterly results, so how much cost savings are we going to see? he wants to cut 35,000 jobs over the next three years. significant downsizing in europe in markets like france and emphasis ina bigger hong kong and in china, of course. this is what bloomberg intelligence had to say about the third-quarter. apologies. i'm going to read a bit of it. it really sums up what they call the fall from grace for hsbc. you mentioned of course, shery, about the geopolitical interests
between china and the united states but there's been other issues. it seems the shares of hsbc folsom 47% year-to-date. much worse, underperforming the hang seng index. we hit a 25 year low last month for hsbc shares. that's according to bloomberg intelligence. it's been driven by a legal combination of covid-19 driven fears. the dividend, which was canceled, and suspended, i should say. revenue margin contraction, a delay in the cost savings program, and escalating u.s.-china ties and relationship. and the bind that puts the bank in. paul: let's talk a little bit more about that. hsbc standing right in the crossfire of the u.s.-china struggle. relationshey repair and grow in hong kong and china? obviously, the last
year has been very difficult for hsbc. we had the protesters attacked the banks for allegedly closing down some accounts that were tied to revenue-generating -- some money. direct source of income for the protest movement, and that it was slammed later by beijing and state media for not outwardly supporting the national security law, but then when it did come out and support the national security law, it got attacked by some members of parliament back in london for allegedly kowtowing to beijing. it is also in the policy quagmire of having to comply with the national security law with bank account holders as well as the sanctions coming from the u.s. government because of the crackdown here in hong kong. hsbc media has criticized for allegedly helping the united states in its investigation against huawei. they need to prepare all that. has beeny the chairman
in beijing, talking up the importance and opening of the china market. northbloomberg's chief asia correspondent, steve engle. sergio ermotti's last week at ubs after nine years at the home. during his tenure, a key question has been whether european leaders can never catch wall street. sweeped if a democratic could level the playing field. >> i will say it's very difficult to predict, but you know, what we see and what clients are telling us -- i mean, you are going to see changes. you will see asset allocations. you will see new policies being implemented. even if the current administration is confirmed, probably, they will need to make changes. manus: you always kept saying to me in quarterly
interviews that it is an uneven playing field, and comparing the wrong thing. so could that be a constructive thing where maybe the playing field gets a little bit more level for europe versus the u.s.? we will see. we will see. we will see. is it europe improving or is the u.s. basically losing ground? we will see. it is difficult to see how europe can gain ground from where it is today without, you shakeup ofnificant its, you know, of its system. the u.s. is still not to be undervalued, underestimated, because, you know, it has always been able to come out somehow stronger by -- from any changes in administrations or politics at the- you know, may be
beginning, you may see some dislocations when changes come through. manus: nine years. what did you enjoy the most? sergio: well, you know, i would say that i enjoyed most of the days. the fact that, you know, it was always something new. the early days was managing, you aftermath of yet another crisis for ubs, and then starting to reposition strategy and working on the execution and getting tractions with employees and clients was the first focus. over time, things have changed a lot. i have to say, i'm not so sure i enjoyed that. i spent a lot of time in resolving legacy matters.
shery: that was sergio ermotti speaking to manus cranny. a quick check of the latest business flash headlines. ubs is planning a compensation revamp with fixed resets rising by 20% as it looks to reduce coaching and lower the bonus. a review of switzerland's biggest bank found pay among employees was less than its rivals. the changes come as competition heats up. coaching teamsh from ubs in recent months. wells fargo is set to be exploring the possible sale of its corporate trust unit and that could affect more than one billion dollars. sources also say it is during whether to known portfolio and may sell its $600 billion asset manager with bids expected by the end of the month. the ceo spent the last 12 months reviewing the banks businesses after years of scandals. still ahead, we speak to the emq
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now it's your turn to lose weight, look great, and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. karina: this is "daybreak asia." i am karina mitchell with the first word headlines. the u.s. is stepping up its fight with iran by sanctioning its petroleum ministers in the days ahead of the presidential election. the treasury department is targeting -- saying iran uses oil to fund its guard and destabilize the middle east. they are seen as the architect of iran's recent recovery and as one of president rouhani's more moderate aides. protesters in bangkok rally at the german embassy, demanding to know the status of the king when he stays in that country. the king spends much of his time
in germany and demonstrators want to know if these exercises -- exercises royal authority there. the king has broken the law in german soil. the rally came as tie lawmakers -- thai lawmakers hold a special session in parliament. indiaa is proposing new laws to tackle one of the worst pollution problems in the world. new delhi's air-quality index slumped as coronavirus restrictions were eased. the toxic atmosphere reaches hazardous doubles in the winter and is estimated by the world bank to cost as much as 8.5% of gdp. a new report says india accounts sulfur dioxideal emissions. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. shery. shery: it could be a down day for markets across asia. let's turn to sophie kamaruddin in hong kong for a check of the markets. sophie. gainings&p e-minis
ground after the selloff we saw for the benchmark overnight. aussie stocks under pressure, extending to clients for a fourth straight session with all sectors in the red. you have financial miners, energy under pressure, along with tax. you are seeing iron ore continuing to fall as we see rising supply risks for base metals. we are seeing the aussie dollar trade study along with bonds this morning ahead of melbourne listing a four-month locked from midnight on tuesday. flipping the board, checking in on what is going on elsewhere, i want to highlight what is going on with treasury futures. we are seeing them hold fairly steady after we saw cash shares fall below 80 basis points as the curve flattens on stimulus and virus worries and on that in japan, the nhk reporting hokkaido is planning to raise is virus alert level on a rising infection. the yen holding below 105 and nikkei futures in chicago, we are seeing some pressure there.
we have earnings on cap from japan due to report today. check out the offshore yuan holding around 6.70 after falling the most in two weeks after china imposed sanctions on u.s. defense firms. it will bring us chinese industrial profits after we got korean gdp numbers this morning and later, we will get exports from hong kong where markets come back online this tuesday. hang seng futures have gone higher. we are keeping an eye on hsbc earnings. results through from the likes of ping an and a motor company as well. of course, we are watching alibaba after aunt priced its dual listing. peg givents currency the demand around ipo's, spending $3.9 billion, paul. paul: thanks very much. let's get some more on aunt group. it is remaining to be the
biggest ipo ever. it was founded by jack ma and it has set prices for the dual share listings in shanghai and hong kong and together, they would raise more than $34 billion. joining us now is kevin carter, founder and cio of emq q, it is an etf that targets em internet and e-commerce companies. kevin, the superlatives of surrounding ants impressive indeed. this will dwarf the $829 billion $35of aramco last year at billion, the biggest ever. can you give us some sense of ant financials and revenue growth outlook? >> the business is a monster by almost any measure. i think for the first six month of the year, they did $10 billion of revenue, which is 40% of year-over-year growth, and they are also extremely profitable. net income of $3 billion so a
30% net margin is a world-class business, so it is big. it is growing fast, and it is very profitable. paul: we are hearing from sophie. there are measures by the hong kong monetary authority to protect the hong kong dollar peg but it does speak to this issue. a dual listing in hong kong and shanghai. considering the size and popularity of this ipo, there's going to be some uncomfortable price distortions here. >> i am concerned. concerned might not be the right word. i'm eager to see how it plays therecause, as you know, is a so-called h-share premium. companies that trade both in havehai and in hong kong traditionally sold at a higher price in shanghai and i am not aware of any other market in the world where that is the case, with the fact that the
chinese mainland market is dominated by retail investors and the fact that aunt group is something the majority of people in china used on a daily basis, i think it could be a real significant premium to the hong kong listing and it poses a a lot of interesting questions for of's and indexes in terms having calculated the market cap when you have two different prices and which line do you include and so forth? i am kind of concerned but i am more just intrigued to see how it plays out because i think investor demand after the pricing and trading starts will be significant. shery: how much of a diversions can come from a retail frenzy, and as you mentioned, we could see the widening gap when it comes to those shares? kevin: i think it could be
significant. here in the u.s., we have this new sort of robinhood frenzy and you see the statistics about how retail investors here have gone from, you know, 10% of the market to 15%. it's over 75% still, so that plus an already, market, ienergetic think you have all those things together and this particular company again, because it is a staple in the lives of all chinese everyday, i think it could be a very big premium and i think it will be very interesting and we will have to see how the trading gets going on the fifth of november. paul: what will this listing -- shery: what will this listing
due to the transformation in the chinese banking industry? some people have put this as a systemic valuation transfer from traditional chinese financial institutions like banks to this data-driven platform. that's a very real thing. ant group originally was very much a disrupter. many think that was in ways a challenge for the company entrenched,ots of vested interests, and those people don't like disruption, so alibaba did i think an amazing toot to actually work digitize the existing financial system and it has worked quite well and it is now the majority of the business so i think the way you describe it is spot on. there's clearly a lot of the in the financial sector of
china, is accruing to aunt group, and others and their digital payments offerings and financial services offerings. whether that is jd.com, the digits business, tencent platform. you have seen this all over the world. ipoone thing about the ant that i am most excited about is it is a coming out party for how big simtech is in the emerging markets where these aliens of people are becoming consumers and leapfrogging the traditional bank account and going straight to payments via the phone and once you get payments on the phone, then you have got all sorts of other financial products and categories to offer so it is a big coming out party for the simtech part of the em tech story. paul: cap -- shery: kevin carter, great to have your thoughts.
u.s. department of state approved $1.8 billion in arms sales to taiwan last week. joining us for a look at this tenuous relationship between the u.s. and china as well as its businesses is the national foreign trade council president. always great to have you on. thank you so much for your time. just before we came on the air, we were talking about what a difference the november 30 election could make. i was in the view that perhaps not much, given that joe biden seems to be as tough on china or on trade issues as president trump. it will it just be the substance or the approach that will be different? what are we expecting in terms of concrete tensions we are seeing flareup now and again? >> thank you. good to be with you. there's going to be a big difference between the two. it's clear that president trump has favored a very confrontational approach going
it alone against china and even fighting some trade wars with many of our best trading partners and allies. he has been hostile to the wto. i think biden has clearly said hethink trump's approach -- thinks trump's approach has been terrible p or he does not think the tariff war on china has resulted in much success. we have not really gotten fundamental reforms in china, and look at the latest figures. the u.s. gdp declined in the last quarter and 32% on an annualized basis and china has increased 6%. there's been some shifts in trade within asia. it's hard to see how the trade war has gotten. it cost consumers and businesses a lot. try to work more with our allies and bring an end to
action to took against europe and canada and mexico and others. it will increase support for the wto system but push for reforms on china, they will have a .trategic reassessment it will be less of a go it alone approach, working with japan, europe, and other allies. noty: democrats have necessarily been easier when it comes to those issues of protecting american firms. but joe biden campaign platform has included preferential treatment for u.s. goods, list of subsidies to domestic industries could i wonder if the change will be more and approach in the way that biden goes about dealing with these issues more than the actual substance. rufus: past democratic presidents have been pretty pro-trade. clinton negotiated the wto and nafta.
obama was pushing for a tpp agreement. it has always been within the democratic party, a lot of hostility. the polling now shows that democrats are more free-trade than republicans. the republican party has had a major shift towards much more protectionist, nativist kind of economic nationalism approaches. the democrats seem to be more saying that they want to be tough on fair trade. they think china presents major strategic issues but they also seem to be saying we need world trade. we need markets. we need to be a leader in the global trading system. paul: of course, the u.s. is still firmly hidden the grip of corona -- in the grip of coronavirus. when things began to die down a little, when do you expect the recriminations to really seriously begin? president trump is referring to it as the china virus regardless of the election outcome. there is likely to be some
blowback, isn't there? rufus: against china? paul: absolutely. rufus: well, i mean, clearly, there's a lot of anger about how china handled it. there's also a lot of anger about how trump and the u.s. administration has handled it. is most health professionals and a lot of political leaders realize we are going to need some global cooperation to eradicate this. unless we are successful with vaccines and other things. that means cooperation even with china. we have suspicion of them. to how wed not extend cooperate together on coronavirus. being angry at them about unleashing this is not going to solve the problem. shery: just finally, we know that we have the wto selecting their new director general coinciding with the presidential
elections, what is the future of the wto right now? some of the rules are so outdated from the 1990's. we have seen the trump administration easily paralyzed highest judicial body. what sort of reforms does it need to survive in the 21st century? thes: the hostility towards wto is justified in certain respects. it needs to move forward. it is also going to take u.s. leadership to move it forward. which everyone., is elected president, is going to push for a reform agenda. the question becomes are they considered trustworthy by their allies and trading partners? this is where biden has the advantage because he can start fresh with some greater trust in the report, particularly if he brings an end to the fight trump has had with europe, japan, and
others, but either one of them is going to push for updating the wto and moving it forward. in the end, it's going to take a lot of effort to figure out how others. and china and economies can all coexist in this system of rules together and how we can push the chinese towards a more market oriented set of rules that we need in the wto to expand world trade. , president ofrxa the national foreign trade council. thanks for joining a state. still to come, the fate of many stops in asia are tied to the outcome of the u.s. election. we zero in on japan and the possible winners and losers in the case of a blue wave. this is bloomberg. ♪
shery: here is a quick check of the latest business flash headlines. holdings co. said to be preparing temporary closures and cuts to working hours and benefits as some employees -- first strike in more than 40 years p or the financial times says workers were warned of the cutbacks last week as the coronavirus continues to cripple aircraft demand. india's bank rose 22% in the second quarter as interest income and lower provisions aided growth. india's largest private bank says there is less than $2
million for losses related to the pandemic compared to 80 million in the first quarter. saw: when the pandemic passenger air travel come to a virtual standstill, airline operators were faced with a unique problem, where to park all those empty jets. called alice springs in australia's northern territory emerged as the ideal location and i went there to take a look. the near empty cathay pacific flight lands in australia's red center. ans small, remote town is unusual destination for unusual times. joins 114, this plane other jets from international airlines already parked at asia-pacific aircraft storage. there were zero planes here. now they are expanding capacity as fast as they can to keep up with demand. have 150 by to
christmas with further deliveries in january and february. we are in the final stages of planning for our stage that will lift capacity to 250 to 300 aircraft. paul: according to data, the number of jets making at least one flight per day in the asia-pacific is almost back to pre-covid levels. this is thanks to recovering domestic markets. international roots remain weak and many planes once -- that once flew end up here. >> it's quite nostalgic. they are not sure when they will see aircraft again. plane is here, it's not just a matter of parking and walking away. a dozen people up to five days to prepare a plane for storage. two days alone and 40 to 50 rolls of tape just to get everything sealed up and protected from the insects and the gust. conditions make
this the near perfect environment to store planes, the gust can be a problem. ofre are a surprising number places where tiny invaders can take up residence. >> small insects can get inside these critical systems and build nests and that can block the ability for that to read correctly. an aircraftd to be engineer in dubai. he was made redundant as covid-19 crippled international travel. connections helped him find a new job preserving planes in outback australia. the impact of the pandemic does not end there. >> my family is still in new zealand. i'm working here on my own and probably until the quarantine rules change, that is how it will stay. once these plans out connected family, friends, and businesses are anchored to australia's red dirt. many of us would have been on board at least one of them. your he monument to a different time. to aallen -- eerie moment
different time. paul allen. shery: let's look at which stocks could face fallout from the u.s. elections with our equity markets reporter in tokyo. give us the just. who are the winners and losers from the elections next week? they will be within the environment. a lot of the industrial electronic makers and semiconductor makers -- a biden victory. he sweeping environmental --orms will increase analysts say. on the other hand, the pharmaceutical companies could --weighed on with policies prices. what are the varying scenarios investors are keeping in mind for the election?
sawo: initially, investors the biden victory as a negative. i think investors are starting to warm up to the idea. at the current level, it seems that a lot of investors say, either way, trump and biden will focus on economic recovery from the pandemic and keep the fiscal and monetary policy in tact. the biggest worry is of course results, iftion they are not materialized within days, if biden loses, if biden wins, and trump decides to contest the results. that seems to be the biggest worry. shery: a contested election. japanese futures under pressure. how have japanese equity markets been trading in the weeks leading up to this election? shoko: it has been very uneventful. they have been stuck in a range. turnover has been below ¥2 trillion for the past 11 sessions which is quite
remarkable. the nikkei 225 jumped recently. uncertainties with the election any potentialn rally upward for the moment. it has been very much stocks. shery: we will continue to see a little bit of strength at the 104 level. shoko oda, our equity markets asia reporter. coming up on "daybreak asia," we have an exclusive interview with one of australia's biggest gold miners. evolution mining executive chairman jay klein joins us later. plus, we will speak to macquarie wealth management at the top of the hour. the opens in seoul and tokyo are next. this is bloomberg. ♪ ♪ you can go your own way
switch and save up to $400 a year on your wireless bill. with the carrier rated #1 in customer satisfaction. call, click, or visit your local xfinity store today. paul: asia's major markets have opened for trade. shery: welcome to daybreak asia. asian markets face an uncertain day as stimulus talks stall in washington. marketsm sees the posting their biggest decline in
months. expecting to raise $35 billion in hong kong and shanghai. earnings reported with late analysts expecting rate cuts. investors will want to know about the virus. boneyard.on passenger jets left idle by the coronavirus. votes to chas the onfirm amy coney barrett to the supreme court. this is a week before the presidential election. her confirmation to the supreme court would create a 6-3 conservative majority. ginsburg.
it is also his third supreme court pick. with theen some doubts democrats trying to stall this process, but after the senate on a party line vote broke that democratic filibuster. that amyl but assured coney barrett would be confirmed to the supreme court. now, we are seeing that the senate has the votes to confirm the confirmation. paul: we have a bit of a weakness in asian equity markets. let's get over to sophie in hong kong. a risk toseeing stocks in japan. the nikkei 225 under pressure. the yen hovering below 1.05.
japanese manufacturer did upgrade its 2020 outlook. we are to south korea, getting earnings from companies, including sds> the latest gdp report showing the economy rebounding. extending declines after falling to a three month low. the government planning to impose capital gains taxes on retail traders. pushing up the korean won to a new high. .e see more jobs monitoring forex markets are volatility. writers reporting that this company has secured u.s. licenses to provide display
panels to huawei. let's check in on the session in australia. we are seeing the asx 200 extend declines for the fourth straight session. we are seeing u.s. futures swing this morning. ahead of the two=year sale, we are seeing cash treasuries opening slightly higher. even as we see this move and -- turning to the offshore yuan, we are seeing it however just around 270. this after china imposed sanctions on the u.s. tensions will be looming over today's session. we're keeping an eye on alibaba, this after adgroup priced its dual listing.
the hong kong dollar strong end of the trading range. shery: let's get more on the markets. we are joined by martin lycos, the division director. great to have you with us. we continue to see the volatility in the markets. we are seeing asian markets pressured at the moment. what are the markets reacting to? be a series of uncertain news. expect until the election in a week? that we goteresting that correction overnight. it has been building toward it to some extent. particularly, the increased cases of covid in europe and the u.s. and the added combination of the failure of negotiations
and of the additional expenditure with regard to the u.s. economy. performance by markets that seems to have ignored the potential risks around the election. what we do find when we look at see elections, we tend to that an election creates a lot of noise but doesn't have a more meaningful impact on markets. the policiesaround of the candidates. we saw substantial gains in yen. now that we have a weakening chinese yuan, it is taking it away from the en. what can we expect from this space? september,ook to another down month. we had a rebound in october. the markets have been ignoring
some of these risks. that we seesurprise underperformers until we see the election results, and a few weeks from now, over and above the actual ballot day. the market is waiting for news. we need to get through a number of these totals. in general terms, we see short-term volatility. monetary policy is unaffected by the election. the fact that we have low interest rates, still very much y disposed toward equities. shery: the u.s. senate have just confirmed amy coney barrett to the u.s. supreme court has it was widely expected.
barrett would be president trump's third supreme court pick. they tried to stall with a democratic filibuster that was broken by the senate, broadly voting among party lines. votingtwo republicans against allowing barrett's domination. with the gop-controlled senate, we have seen this nomination virtually a sure thing. we are seeing the senate confirming amy coney barrett to the u.s. supreme court. this has implications on different fronts including abortion, the affordable care and lawsuitsghts, that could stem from the 2020 election. we are expecting a 6-3 conservative majority on the u.s. supreme court. paul: i want to return to that point you are making about
looking at past elections in the u.s.. the one that really matters is the 2000 election. it could make the 2000 look like a picnic. on our radar is a possibility that it is too close to call. the equity market performance depends on the policies of the parties. this perception that the republicans are more market friendly than the democrats is not necessarily supported by historical returns. we certainly have a more big
picture perspective on this. paul: i'm wondering if there are any sectors you are getting short? >> not short but what we are focusing on was what does 2021 present? if you look at both outcomes on the election, a biden administration is likely to see fiscal policy that is more expansionary. auto, construction, solar, wind, hydro will be beneficiaries in the medium to longer term. it's likely a biden administration would have trade policies more unilateral. face higherte's may taxes. trump regains the presidency, it is a status quo
perspective in terms of his current fiscal policy. obviously, just keeping the focus on deregulation. thank you for joining us. itchell.t to karina m stimulus hopes are fading in washington. nancy pelosi and steven mnuchin say that they are closer to an agreement but each accuse the other of introducing new conditions. this comes as infection rates surge across the u.s. over to the u.k., the prime minister boris johnson is facing a resolve within his -- revolt within his conservative party over lockdowns. mp's are 50 tory
demanding a change saying they are disproportionately affecting local economies and widening the divide between the north and the south. they want a dedicated economic recovery plan. leading sales companies over arms sales to taiwan. 1.8 billion dollar package includes mobile artillery from lockheed and surveillance centers. a further $2.4 billion sale is proposed. the embassylied at demanding to know the status of the king when he stayed in the country. the king spends much of his time in germany and demonstrators want to know if he has exercised his royal authority there. berlin is warning of consequences if the king has broken the law on german soil. global news, 24 hours a day on
air and on quicktake powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. shery: still ahead, an exclusive interview with the mining chairman jay klein on how the company is navigating the pandemic and geopolitical tensions. to surge up the billionaire index. this is bloomberg. ♪
valuable investing firms on the planet. give us a sense of how much interest there is from investors in this ipo. >> institutional investors have subscribed to 70 billion shares which is 284 times the initial offline offering according to aunt -- ant. sourcesbeen told by that folks subscribed multiple times within the first hours. shery: this will not only make jack ma but his staff very rich or richer. >> jack ma is already one of the richest men in china, has a grouplling stake in ant
and it will help his wealth empire as well he has many cofounders and jack ma has been generous in giving these staff share options as part of a generation of people who will be expecting a windfall from the ipo. it's not just jack ma and his staff, brokers have had a good year as well. importantup is a very ipo for them. the most important deal of the decade as some people say. already moving to the rankings of chinese investment banks that are very active in leading this deal. right now they bumped goldman sachs off the lead tables
shery: president trump's pick to the supreme court has been confirmed by the senate. it was never really in doubt given the republican majority. have the latest that chief justice ruck -- john roberts will deliver the oh on tuesday which will let her start work. let's bring in our supreme court reporter for the latest.
new justice the will start work immediately. what does this mean practically for the united states. >> there are two of the supreme court justice has to take. she will take one of them in an hour at the white house from justice clarence thomas in the at theat the ceremony supreme court tomorrow and will be able to immediately begin work. and that is important because there are a number of cases including some pending with the election right now. paul: justices are meant to be impartial. we have the expectation here. are other important landmark cases in the u.s. like roe v. wade. expectation.e
justices do surprise people when they get on the court. conservative republicans were overjoyed by this nomination. she has a track record with being personally opposed to abortion and having rulings that she would be skeptical of abortion rights. less of a clear-cut track record on the election but of course donald trump, when he nominated her talking about the need to have nine justices over the election comes to the supreme court, donald trump is imagining justice barrett voting for him. shery: we have live pictures from our viewers of supporters and opponents to this nomination just outside the supreme court. hellas a little bit about the big issue that she will have to tackle as soon she gets into
office. we know the obamacare argument will be heard november 10. not to mention every buddy looking to her when it comes to roe v. wade. >> and right now the supreme court does not have an abortion case but they do have an appeal that is pending. they want to hear arguments on a law that would ban abortion after 15 weeks of pregnancy, so she may have to make a quick decision on whether she would like to hear that case. there are pending election-related fights having to do with ballots in various states and we could have another bush v gore type dispute after the election. paul: this wall street investors says investors have already baked in a democratic win next
week. those tax changes won't come until 2022 at the earliest. >> i think the market is probably not saying it is a blue suite. if it was a blue sweep and if the senate does go democratic, taxes will go up on corporations, and that will probably have a less than positive effect on the market. as to where the market ends up i don't know if that is driven by the election. i think that is a confluence of economic growth and recovery, where the virus is and where the vaccine is. i it relates to the election think it would be a big surprise
if trump wins. i don't know what the market would do. i think it would be a negative reaction if there is a blue sweep. >> in the event of one, how will investors reposition? >> what i think will happen is that investors will think about what companies will pay more in tax over time and they will discount that, but they are also going to do the number on infrastructure spend and capex cycle. will see some of the industrials and stronger cyclicals react well to that because the spending will be domestic. they think investors will start to look at that more carefully. >> do you think we will see more for selling in anticipation of that?
>> i think companies that have unusually low tax rates, and companies that benefited significantly from going from 34 to 31 will say 121 is not sustainable, 28 is more likely, and how do they feel about discounting earnings with a 28% tax effect. i think that will either have a slowing effect on how earnings are grown or a negative effect on prices. change andne-time after that the market will start discounting future growth. >> do you think that a biden administration would introduce tax hikes that quickly given the backdrop of the virus? i don't think it is possible for anybody to introduce tax cuts that quickly. by 2022i do think that there bel be tax policy that will
debated and put into place. a mother was a great chart over the weekend that looked at specific industries and a lot of the industries gave more to democrats than republicans. somethingtell us different than what might have been the case four or five years ago? >> i would have a hard time speculating on policy changes versus contributions but it does highlight the fact that the market generally thinks that the democrats will be in power, so you are seeing the political contributions shift. >> a quick check of our currencies trading at the moment. level we have seen it a little bit under pressure on dollar strength.
reboundedouth korea with exports and investments leading the recovery from months of the virus-related downturn. beating estimates. the upturn is helping the revival but with comparison to the same time a year ago, the economy shrank 1.3%. the u.s. is stepping up its fight with iran by sanctioning -- sanctioning its petroleum minister.
he is seen as the architect of iran school or recent recovery in one a president rouhani's more moderate aides. and the breakthrough that makes the idea of life on the moon more possible. water is found not just in the shadows but by an area lit by the sun. h2ondicates that frozen could be widely distributed across the lunar surface. future observations showed ice present only at the moon's holes. paul: we've had markets open in australia for about 90 minutes now.
what ist a check on going on with sophie cameroon. >> we are seeing right across the screen, stocks extending. the cost of being led lower by samsung. you have real estate and energy sectors weighing the most whereas health care is one of the gainers. heavily.eighing let's look for a check on currencies. the aussie just total -- holding above 71. some have come through for the korean won after a march 2019 high. that intervention could come if
necessary to stabilize the markets. the offshore u.n. hovering over the 670 level. this comes two weeks after china for the salesons of arms to taiwan. gold at $1900 an ounce this morning. some brightviding spots. theave seen some reports likes of canon gaining ground. the annual profit outlook upgrade. we are seeing kia motors gaining ground as well. this despite a loss in the third quarter as it booked an engine recall provision. will see profit growth in the quarter ahead.
due to the increase of sales being helped along -- germany has warned of immediate consequences if the thai king broke local laws. he spent much of his time in germany. an explanation of what the protesters are demanding of germany and what exactly germany is saying. >> yesterday the german foreign minister was asked at a news conference about the type of demand for the german government to look into whether the king has broken the law there. letter they asked the german government to disclose the entry and departure records whethering to determine
he had exercised his sovereignty on german soil. they also asked the german government to qualify if he will be liable to pay inheritance tax. >> why did protesters focus on the king? >> monetary reform is one of the demands of the protesters. they say that for some change to happen they will need policy reform. this elevated demand was to be expected after the government refused to make concessions on the other key demands. parliament is still stalling on the process. come, ourll to
its september quarter. we are joined exclusively by the executive chairman jake klein. i want you to give us some reaction to those numbers. are they pleasing and where do you go from here? >> they are very pleasing. they are ahead of where we expected to be. most important for us is that we are banking a lot of money for every ounce we are producing. that is really important to us, ensuring that we keep our andins high, our costs low the growth opportunities are important as well. the organic growth opportunities will be great for our shareholders. >> you have cash on hand. are you able to give us some idea of the sort of opportunities you are looking at?
any benefits for a canadian or u.s. listing? for evolution at this stage. i've had experience with second-degree listings and it is difficult to get liquidity in them. we have strong support from global shareholders but the organic growth is coming from the macau operation, and underground opportunity we will andrade lake which we acquired earlier this year has proven to be a transformation opportunity for us. we are expecting growth to -- 3000 and 500,000 ounces. strong growth and organic growth is only the best growth.
shery: will you see an extension of your assets in north america beyond the acquisition in canada? to but we havee been very strong of only doing things which improve the quality of our portfolio. investors in the industry supporting consolidation and growth, we are on the other cited the leisure saying we are looking for opportunities but only when they make real sense for our shareholders. critical is the u.s. presidential election to the immediate outlook for prices? it could be a messy election. >> they probably been appearing on the show for the last 15 years.
as a lot of companies have said recently, the environment for gold is probably the best it has been in 15 years. whoever the president of the united states is. it's an environment that has been amplified by the severity of the pandemic. loads of fiscal and monetary policies are required to address and a lot of geopolitical tensions which overlay that. outlook for the gold price is incredibly positive. paul: we have an outlook that indicates $1904 per ounce. what do you see is the key catalyst for gold? >> i think everybody is waiting for the u.s. election results. they seem to be talking about
progress that is not a matter of if but when in the u.s.. run in thed a strong last 12 to 24 months. it may need a bit of a breather to maintain that momentum going forward. it may be a slightly over traded opportunity going forward. a little bit of a reset don't think is a bad thing. generallys that influence the gold price are strong at the moment. i repeat what i said to investors for many years. at evolution we are pleased that the gold price is high. we focus on building a business that can be strong through the cycle. ,hen good times are occurring we are building a business that can sustain itself, whatever the
cycle. paul: you have said that the u.s. dollar is down 85% relative to gold over the past 20 years. what is your outlook for the greenback? >> it's going to go even weaker because the amount of money that needs to be printed is significant and that will be a drag on the dollar. ofis unfortunately a case governments needing to print themselves andet their populations into a more growth oriented environment. it is expensive and it is creating a lot of debt and printing a lot of money. i think debt currencies are on the decline against a hard asset like gold. shery: we know that gold prices
have been stuck as well. what would be the key driver for silver, and where do you see the prices going? >> silver is a relatively small byproduct for us. when the gold price goes up silver investors get excited but a more important byproduct for us is copper. about 15% of our revenue is copper. the price going up over there has been very helpful. jake klein, thank you for your thoughts. next, hsbc releases third-quarter earnings. we will look at what to expect. pandemic.lty of the jetliners gathering dust. spectacular pictures coming up.
the u.s. and china. is inside hong kong. what do we expect from these results? >> they are not going to be pretty but some analysts are looking for a few glimmers of hope. one analyst saying this has been a double down cycle. all banks are faced with a lower interest rate cycle around the world and that is really crimping net interest margins. where else can you find that growth? we will be looking how deep the debt pile and the nonperforming loans and the provisioning. that.round the corner on downturneep is the from covid-19.
those expectations really waiting on the stock. underperformed the hang seng index. low ina 25 year september last month. all of these headwinds are compounded by hsbc being stuck in the middle geopolitically between china and the united states and their friction with the national securities law and to the sanctions coming down from washington. we will look at a number of different numbers, whether they can widen the positives. environment, the headwind of the low interest rate environment really shaving off the net interest margins. >> how is the bank trying to share -- trying to repair relations?
>> not surprisingly we have seen in the last couple of weeks the ceo in china at various conferences speaking about the importance of the chinese banking market and as china recovers quicker than the rest from therld coronavirus lockdown. both of these leaders of the to --eally appearing appealing to what is going to be there most important market. are the most china important markets going forward. we are seeing the massive restructuring plan that they embarked on in february, shaving 35,000 jobs over the next three years, shaving costs across the global network.
of really throwing a lot emphasis on the china market. we saw mark tucker speaking and 'sah quinn saying a client appetite to invest in china is as strong as ever. as i mentioned earlier, there is a delicate balance and hsbc has been attacked by the protest group here, they have been attacked by the united states and members of parliament for allegedly kowtowing to beijing. they've been hit from a number of fronts. it is no surprise that mark quinn and mark tucker have been there recently trying to repair those ties.
we will speak to them later. at 4:40 in hong kong and 1:40 a.m. in new york. here is a quick check of the latest bloomberg business flash headlines. nearing 9% stake that would be worth more than $27 billion based on the stock pricing. above larry ellison in the walmart heirs. set to be preparing closures and cuts to working hours just as some employees prepare for their first strike in 40 years. werepokesman says workers warned of the cutbacks last week as the coronavirus continues to cripple flight demand.
net profit at the bank rose 22% in the second quarter compared to a year ago. the largest private bank set aside less than $2 million for the losses related to the covid pandemic compared to 80 million in the first quarter and a similar amount in the march period. paul: the pandemic's passenger air travel come to a virtual standstill. springs andd alice australia's northern territory has emerged as an ideal location to take a look. café pacificty flight lands.
this small town is an unusual destination for unusual times. this plane joins 114 other jets from international airlines already parked at asia-pacific aircraft storage. they are now expanding capacity as fast as they can to keep up with demand. >> we expect to have 150 by christmas with further deliveries by january and february. fivee planning for stage that will lift capacity to 300 aircraft. kim according to donovan aviation, the number of flights per day is almost back to pre-covid levels thanks to recovering domestic markets. international routes remain weak.
>> it is quite nostalgic for some of the crew. they are not sure when they will see the aircraft again. paul: it takes a dozen people up to five days to prepare a plane for storage and 50 rolls of tape just to get everything sealed up and protected. conditions make this nearly perfect to store the planes the dust can be a problem. and there are a surprising number of places where tiny invaders can take up residence. >> it can block the ability. >> dan baker used to be an engineer at emirates in dubai. his industry connections helped him find a new job in australia.
in newamily are still zealand and i'm working here on my own, probably until the quarantine rules change. >> these planes that once connected families, friends and businesses are anchored to australia's red dirt. many of us would have been onboard at least one of them and now they serve as an earring monument to a different time. those were some gorgeous pictures. what a shock that you got when you were there but it reflects the sad reality of what is happening to the airline industry. what was it like being there among those grounded planes? paul: it was a very weird and surreal experience. we took a stills photographer. me he took over 1000
images. so strange to see it in the middle of nowhere. it is a lot smaller than some of those big boned yards, but at the end tom was saying that this is intentioned to become the asia-pacific hub for aircraft storage and they intend to grow the facility, eventually topping out at 200 planes. this placementioned and i've never heard of it and you are telling me that it is a desert. it is good for the maintenance of those planes. tell us about the town. what else do they do? paul: it is very dry but the town itself is very small, just 25,000 people. it is the jumping off point for a few tourist spots as well. interestingly, pine gap just over the hill from where we took those pictures.
♪ >> that is not :00 a.m. in beijing and shanghai. welcome to bloomberg markets: china open. i'm tom mackenzie. david: we are counting down to the open of trade in the chinese mainland and hong kong. let's get to your top stories today. alibaba founder jack ma is set to surge up the ritualist as anti-group prices its mega dual ipo and