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tv   Bloomberg Markets Asia  Bloomberg  August 26, 2019 10:00pm-11:01pm EDT

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rishaad: it is that whole thing pessimism andt of optimism. we have been here before. we have seen some form of opt mitch. >> following a bad day yes yesterday. yvonne: bond markets have not really moved. we're focusing on the lam almost a presser at the moment. the hang seng is heading lower now down about 1%. the shanghai bouncing back a bit after the brutal selloff that we saw yesterday. coming through from that presser, this is what carrie lam is saying. the escalation of a violent scene during the weekend.
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she has mentioned that she is continuing the existing work that has been conducted by police complaints council. they mentioned a couple of dozen to 100 or so that came through as of her last week when she also spoke with reporters then. one interesting line she says she doesn't agree with an independent inquiry, one of the key demands from the protesters. rishaad: looking for a dialogue. she doesn't believe in having an independent inquiry, one of the demands the protesters were making. david: the hang seng index is starting to move toward session lows. unclear whether or not that is correlated to what she is saying and what the investors want her to say. hat is another conversation. hong kong now down 56 points. we were up 35-45 points earlier
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at the open. rishaad: she is speaking cantonese. once she starts speaking english we will bring you her comment >> there is. zero tolerance on violence and says an escalation also is something that is showing lawlessness too. 4 these particular assets. just to see how they are doing at the moment. the yen has come back. it was 106.1 a short while ago. at the moment trading about .25% stronger. gold at the moment. 1.20 an ounce. people are keeping their money in the safe havens and going into the yen at the moment as well. let's move things along and get to new york.
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4 here is sus this keenan. >> the g-7 summit wrapped up with no traditional communique ut it has a sparse declaration for fair global trade and stability. a stark contrast to last year's post summit statement in canada which was rejected by president trump. speaking of president trump, he also said he would be prepared to meet with the iranian leader under what he called the correct circumstances and said he would extend a letter of credit to iran backed by oil to help them meet their financial obligations. tehran said a tanker has been
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told but declined to name the buyer or the destination. exports contracted for a ninth straight month in july. while the jump is not as bad as expected, the city's economy is suffering under the trade war and the continuing anti-government protests. exports declined to 43.2 billion u.s. dollars down 5.7% from a year earlier. shipments have retreated 9% in june, the biggest decline since february, 2016. to boeing's latest troubles. they are facing the first lawsuit from a customer of its grounded 737 max. a russian aircraft leasing company had ordered 35 max jets before they were grounded worldwide back in march. the company wants a $35 million deposit returned with dr. along with $75 million in lost profits
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and several times that amount in punitive damages. global news 24 hours a day on air and on 2013. powered by more than 2700 journalists and analysts. this is bloomberg. yvonne: president trump is dialing back some of the trade rhetoric praising china's top negotiator for his calm words asserting beijing wants to make a deal. president trump: when you say do they want to make a deal? maybe they want to. maybe they don't. i don't think they have a choice. i'm not saying that as a threat. the united states quhch has never collected 10 cents from china will be over $100 billion in tariffs. so i think they want to make a deal. very badly. yvonne: he also said china had been on the phone urging new
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talks. tom mckensji in beijing for us. that is not what the beijing side is saying. tom: that's right. we had a senior editor from one of the influential newspapers here saying in fact there had not been talks or phone conversations between the top negotiators from the two sides over the last two days saying in fact trump was exaggerating the level of contact that the u.s. and china had been having. nonetheless you did see the leader of the negotiations on the chinese side dialed back the temperature with comments saying that the chinese side still wants to consult with the u.s. and cooperate with the u.s. and do so in a calm way with a calm attitude. over the weekend, we saw the rhetoric really stepped up. and then you have the vice premiere dialing this down. it seemed like president trump was whiffing on some of the
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comments at the g-7. the skepticism remains as to trump's intentions. very much the focus remains on trying the plan as best they can of course for this trade war being a long drawn out affair. what we're looking to now is whether or not these trade talks which have been penciled in in washington will indeed continue. david: you could industrial profits surprised us a little bit. gave us m so good news that investors were begging for. tom: it did. it surprised us and bloomberg economics and our guest mary. 2.6% was the number we got in july year-on-year. the highest tickup since march of 2019. so maybe there is a positive story to tell there. the reason that we were surprised of course was because these industrial prices have been falling.
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the belief had been, the assumption has been that would push margins down and squeeze profits. there was a view if you get weaker profits, you get weaker capex. there is also pressure from trade tariffs. we'll have to wait to see in a few months if there is a stronger picture to tell. the focus remains on whether or not there will still be additional stimulus coming down the line. yvonne: thank you. tom mckenzie joining us out of beijing. carrie lam taking agrees journalist here's. one in particular has been about whether hong kong needs the help to have p.l.a.. a lot of reports and speculation that china is preparing troops
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at the border near shenzhen. she said they are comfortable they can handle the disturbance at the moment. at this time they are saying the government can handle it. rishaad: she is now talking in english and taking ghess english. reporter: any news from these talks about the incident when policemen were seen beating a 62-year-old men in custody. do you think the police should apologize to the public for what happened and what is your mment on the force used by police? >> on your last question, i have said in any introductory remarks that we will adopt one -- in dealing with all sorts of violence. even if it concerns a police officer, that applies.
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so the police has already taken very deice is i ever action against the suspected offenders in the police force in that particular incident. that is the firm position of the hong kong government as well as the force. with regards to your first question, starting a dialogue doesn't mean that we will condone violence. if violence continues, the only --ng that we should do is to through law enforcement actions. you just imagine if under the pretext of communication of starting a dialogue that we're not going to enforce the law in hong kong, that we are going to tolerate all forms of violence and disruption in hong kong, that will be the end of the rule of law in hong kong. when some people -- continued
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violence, we should stop communicating, i said in introductory remarks that was another too extreme view, that we should prepare for by communicating with different people for a reconciliation. yes, we have to say no to violence. we want to put an end to the chaotic situation in hong congress to law enforcement and at the same time we will not giving on building a -- for dialogue. in the last two months or so, the government has repetedly given a reply to the demands from different people. it is not a question of not responding. it is a question of not accepting. those demands. but the most important demand that we have accepted was day a.f.c. the outbreak of -- days
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after the outbreak of this incident. to put an end to the bill. if the bill was the cause for all of these disruptions, that has been stopped over two months ago. e have to ask ourselves, the continued resort to violence and protests and harassment, what are we going to do? if we continue to tolerate, accommodate and accept demands because of those protests, that will be a very inappropriate, inacceptable response from the government. and on this particular point since i have mentioned harassment, i just want to put in a word for the families of my police colleagues. i just cannot see the association between the protests and the demands with the harassment of police families repeatedly going through police quarters to do all sorts of checks and intimidation of
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police families. especially the young children. those young kids have to go back to school. i hope everyone of us, in particular, the education sector, will play their role to protect all of these kids. not only police kids but every kid who will be put under this sort of bullying when they go back to school. this is what a civilized society expects from everyone of us. reporter: have you lost control of hong kong given the chaotic and violent scenes that we saw over the weekend and can you tell us have you at any point during the last 12 weeks of protests offered your resignation? >> the question of resignation
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has also been answered. i think a responsible chief executive at this point in time should continue to hold the fort and do her utmost to restore law and order in hong kong. ok? and i wouldn't say my government has lost control. day in, day out, they are not only supporting the law enforcement bodies, we are also acting responsibly to deal with other issues that have arisen. for example, i just mentioned about the possibility of bullying. i mentioned about the disruption -- destruction to public properties. i mentioned about the downturn in the economy. all of these problems require a responsible government to tackle. though i remain committed to serving the people of hong kong with humility. so that is perhaps the best response that i can give at this point in time in order to ensure that we can come out of this
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eadlock as soon as possible. rishaad: just leave that there for a time being. she responded to the question if she lost control in hong kong. she said she hasn't. we got very little new here thus far. looking for some of the demands to be met. area >> i think the stability in the market first. actually no violence, separately. second is the market right now is thinking about this is a deadlock. you have to be -- so i think in the financial market, there are people thinking of move of
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liquidity in hong kong, based on the record, the situations right now. we hope that -- but it is not an easy thing. i hope the government steps up efforts. we want to -- hong kong. for humility. no violence. no tolerance. rishaad: aren't participants concerned at an international hub, financial hub, it is losing its sheen ? >> no. i think like now we are at a pretty good situation now. we are very strong. if we lose control, we'll lose order. then we lose our status. so now the most important thing is to restore the order. actually like pop up everything
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on the law order. that would be -- in our situation in hong kong. i hope there are -- situations. long-term. of a hong kong future. i hope there will be helpful for us. to be a whole society again. yvonne: you would be buying in hong kong. even at times in market volatility, hong kong suffers more than the mainland markets as well. would you be buying? >> i think you see the volatilities going on. i think it is lower than other places. i agree at that. at the same time, you can see a big drop. future stocks still lifted in hong kong. you want to move -- because of
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the company. their platform now i think is still very strong. whenever there is like a big dip, i think of things that could come up in the market. yesterday afternoon -- david: which means international finance center which means you have a lot of companies listed here but don't really do business here. what then would you be buying? give me an index? what would you be buying? an index that you would avoid because of the domestic economy. >> the hang seng index. local companies. the proportion is much smaller than expected. approximately like 70%. he chinese company, the h.s.i.
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that would be good to buy china stocks. they would be more affect bid trade war. like a hong kong event. >> looking at msci hong kong. i had a look at estimates from the end of last year to the end of this year is a drop of 20%. do you think that gets much worse because the economic cycle in hong kong seems to be getting worse swl. what is your stement there? >> you just look tat hong congress companies, the e.p.s. drop 10%, 15%. rishaad: it is down as well. the e.p.s. could result in being fairly stable. >> you are looking at some -- h.s.i. the forecast. it is a negative growth.
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the thing about is hong kong companies will be affected. a lot validations of the assets. property companies. they would be lower. much lower this year. that would be affecting the e.p.s. and at the same time chinese companies, depreciation also a factor. the whole situation, the earnings grow. and then how much -- that would be like a concern right now. i hope like the most important thing is -- the stabilization. that would be helpful for the whole index to rebound. david: in a month's time. do you think that knocks this cycle out of this cycle? >> not that easy. because in india. basically we saw that. it is not helpful. like too much.
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will give some relief to the market. because what is the situation now? stabilized. we still have some -- to build in society. actually that time is business activities are very slow. at the same time, that would be helpful but not necessarily whether we -- the whole market. some stores down 20%. on average 40% down in terms of rev nufmente that is going to be mething which is city-wide which is going to hurt. >> all of the retail business in hong kong affected. rishaad: hotels. >> of course. ccupy si rate 20%. arder for hong kong.
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employees actually if they -- they can fire them. they lose their job, they lose their income. how can you spend money? that is the issue right now. we want to stop everything. yvonne: markets, at least stocks are picking up. the back and forth trade headlines that we have seen. is there a sense over this alleged call to happen between china and the u.s. and president trump saying yes, can markets take that as a sign that we have reached a turning point? >> this is a technique. negotiations right? i think right now, both sides want to return to the table to talk. you think about the -- the volatility of the growth or financial market. china as well.
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you already have sentiment ready. what they should do now i think i would say in the coming months, they would have a more constructive talk on the trade. sign a trade deal very difficult for the moment. how big is the concessions on either side. for sure like a bad trade environment in the world. e still have lots of room. the end of this year -- david: key takeaway ps. long shares. empty hotels. consumer discretionary. we'll talk more about it later on in the show. coming up, we'll hear from china's biggest sports brand.
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talking about his company's fitness level as the trade war rages on. rishaad: a billion dollar payout to government. what the administration may do with the money. this is bloomberg. ♪
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>> bloomberg markets. a chip maker has been sued by a u.s. semiconductor rival. it has accused them of patent infringement. they are using global boundaries technology to help it win tens of billions in sales. they said they have always played by the rules. david: the party in mccaw.
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they are sticking with 2% to 4% drop. yvonne: checking over on loomberg earnings. china, higher education was good. ♪
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>> it is 10:29 a.m. in hong kong and shanghai. i'm su keen within the first word headlines. we start with the latest on the situation in hong kong. chief executive carrie lam says the government has a zero tolerance policy towards violence in the mass protests that have dragged on for three straight months. she says she is confident the authorities can handle things without intervention from china. and is working on a platform for dialogue with the public but is ruling out an independent inquiry into alleged police aggression.
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there are conflicting versions on the latest phone calls between the u.s. and chinese trade negotiators. president trump said china called on monday and is desperate for a trade deal but china's global times newspaper denies any recent calls and says trump was exaggerating. there is one area of grem. trump praised china's top negotiator for urging the two sides to remain calm. the president also defered to trade talks with japan. he said tezz not at this point considering tariffs on cars and auto parts. it was part of a deal he struck with shinzo abe. the commerce department said a ito imports could pose a threat to national security. volkswagen one
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of the top car markse has died. he passed away in a hospital on sunday. he was the grandson of ferdinand porsche and became v.w.'s c.e.o. in 1993 when the company was deep in losses. under his loss, they built quality, made money and eventually bought porsche. global news 24 hours a day on air and twitter. more than 120 countries. i'm su keenan. this is bloomberg. yvonne: china's latest sportswear maker is feeling the heat. earnings the first half still beats estimates and they have skyrocketed this year after a $5 illion deal for finland. the c.e.o. told me how the trade
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war is affecting his plans. >> the trade war is indeed having a massive impact on all fronts. mainly ast, anta focused on the china market and was impacted very little. now as a globalized company, our product, sales and supply chain is across the globe and the trade war is impacting our products and retail sales. we will proactively deal with the trade war impact and i believe as long as this strategic operations are improved and the implementation is inforced, the impacts can still be controlled at this point. >> we were speaking to one of your competitors. they were putting the number at 25% of the production capacity in china by global sportswear brands has now been idle because
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of a lot of these global brands have shifted production out of china. how does anta take advantage of that or using that kind of production capacity now. can local brands actually make up for that gap we see in the market? >> the trade war has reduced orders at chinese factories and it has impacted china as a whole. this helps chinese brands to have more sourcing choices. we do see more choice but our choice of supplier is mainly based on quality, delivery time and other metrics. so it is not only a simple function of cost. >> so you are considering moving production outside of china maybe the southeast asia? >> in the past, anta has always
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been engaged with supply chain layout of this kind of some of our suppliers are already in southeast asia. we will continue to work with our current set-up. >> we have seen a surge in online sales for your name sake brand. how big a part does online sales now play in your total sales? >> now the online sales contribute to close to 20% of the group sales but the growth rate is relltiverly high. we see that the younger generation prefers to shop online. we will continue to strengthen our efforts in this field. anta has been the target of short sellers over concern about financial reporting, also anta's relationship with its distributors. has anta done anything differently since some of these reports have come out? >> facing these short sellers,
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anta has made a lot of timely responses. we send our clarification statements to investors. anta has been list for 12 years and we have adopted high standards for ourselves. of course there are possibly areas in which we can do better. including information disclosure and corporate governance, which for working on m instance, in this interim report, we disclosed the breakdown of our fila business because one of the short seller's reports revealed an unlater in with fila's -- unfamiliarity with fila's business. he made a lot of assumptions. now we have made a lot of explanations and communication with investors. we will continue to make an
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effort to use higher standards, to use governing structure and information disclosure. >> what do you think is the biggest risk to the business? is it china slowing down? is escalating tensions in the u.s. and china, the trade war? what concerns you the most? >> china's g.d.p. growth has been slowing down and consumer growth is not as high as before. so i do feel that the challenge that we face in the future is consumer growth slowdown. also, as the market is more open, more international brands of different submarkets have entered china. the comp in addition the market is increasing. but we still feel that the industry in the next few years in china has more opportunities than challenges.
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>> that was our exclusive conversation with anta's sport's c.e.o. our guest joins me here in hong kong. it is good to see you here. tell us about the earnings this time around because talking about risks, about more competition in china. a lot of global brands coming through. they themselves are a global brand knew. what is driving fila here? the sales skyrocketed. >> in 2019, a big driver for them is fila who they managed to turn it around and it is now contributing more than 3040 pkt of the overall sales. 80% year-on-year growth in the first of 2019. no other brand can beat this ind of report.
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the first six months of this year highlight that the fila profitability has gone up. this is coming from retail stores that they are operating on their own in china and can achieve sales productivity, increase efficiency. that is driving the bulk of their results in the first half. >> he also mentioned other local brands in china, sports makers are not doing as well as they are. what is contributing to that. what makes fila so attractive to young chinese consumers? >> exactly. their target audience. this applies for all of the sportswear makers in china. the younger crowd, they are not your most loyal consumers out there. you have to be in a position to be nimble and do targetted marketting to capture the
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attention. if you actually look at what morehas done, some of your popular celebrities and young celebrities to endorse brand. this speaks a lot to the company, the management, they actually have to roll out marketing campaigns. it is selling effective marketing campaign. that actually didn't cost them a lot more. in fact, their advertising to sales ratio came down in the first half of this year. >> can may ever beat the likes of nike and adidas in china? >> the likes of fila and anta, i think it is different positioning for these two brands. we're looking at more affordable sportswear for the younger crowd in china. fila takes a different angle for being pricier but trendier.
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i actually think they are -- they add a lot of the functionality aspect that can put them in a better position to compete with nike and adidas . > they are getting ready for the beijing olympics. where are tokyo coming. focus is on the winter sports. they have a good another two to three years to get ready for beijing winter olympics. that's when you sue more of the coming y for the brands more strongly to chinese countries in 2022. >> also mentioned aboutecommerce sales. they take about 1/5 of their total rever knew now. how significant is that? >> i think for online shoppers, they are owning up more
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exclusive products they felt they are online they are also tying up with joint marketing programs with their offline sales. it is going more than just to shop eastern line, stores kind of thing. they are getting consumers to buy more online and offline. i think that is -- that will be a big driver for theecommerce sales going forward. it is only 20% now. i'm betting it is going to double to 40%. >> all right. thank you. we were talking about some of these sponsorships that anta does too, guys. it is quite interesting. a more popular sponsor they have is with the golden state warriors klay thompson. take a look at these shoes. they showcased it for us. it is the klay thompson k.t. 4's.
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retail price is $200, $300 a pop u.s. dollars. that is around the same price as nike jordans. they are basically these local brand s that arebasically competeing with some of these foreign labels out there. the secondary market, they sell up to $3,000 worth. 10 times worth. people are willing to pay premium for these local brands. a good sign. a boon for their business. rishaad: reasons not to buy. most is -- the high -- brought by the -- whatever that is. some reviews -- these basketball sole feels rather soft. david: back to english. it is like a bad i.p.o. on the way up. it is also a bet on the chinese consumer.
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i know we bang on about this. consumer stephen a.:s are head and holesdz above everything else. everything from -- sports. does that -- do these stocks keep going up? you would not think there is a market downturn happening when you look at these stocks. >> i think the market now is -- from the stocks with the exposures to international items. so like a buy back on the story of china, like a domestic -- because now china is shifting the economic from a trade driven economy to more consumption driven. in this case, i think china still has more than 6% growth. that is a big potential. rishaad: that's such a staple.
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is discretionary item. >> one interesting thing you see. you have a lot of competitors. who can -- be a winner the brand. at the right position ises. it is a very successful case. others, in the market, in sportswear, they have an international brand but they are not doing very well. david: the other thing that they mentioned during the interview is they were worried about the chinese consumer because their exposure is there. are you seeing signs that of less appetite for more discretionary types? >> i think they have lots of -- china is more open. you can see a lot of stuff we can buy in china, international brand, everything. at the same time, china, the re tail sales will be more than
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u.s. you have to be like a -- at the right position. but the positioning is much better than the economic slowdown. you have to -- what brand, at the right position. rishaad: thank you so much for joining us today. c.e.o. of research at international investment. coming up we're headed to mumbai. that's next. this is bloomberg. ♪
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rishaad: we're back. australia out with a 59% profit.
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eir long standing m.d. stepping down. they said they will address it by selling 50 retail sites and launching 100 million aussie dollar cost saving programs. avid: net profit was 3.7 billion u.s. aside from the big deals, things were a bit tougher for west farmer's operations. missing the average estimate. counting down to the india open. an hour away from now. it was a great session yesterday. we have a charts that shows you to best day since may was enough to knock the sensex index back above -- your 200-day moving
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average. yvonne: this was all on news the reserve bank of india approved a record payout of more than $24 billion to the federal government. it comes on top of new measures from the finance ministry to bolster the economy. our reporter is in mumbai for with us details. finally the government is going to ease fiscal policy. >> well, that is the expectation. but one never knows. we have the government which has been running a pretty tight fiscal ship. what heavy lifting it has done. it has cut interest rates. given the dividend to the government. not only the dividend but part of its surplus which is very controversial. back to -- but coming
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the government, this will add pressure on the finance minister to ease some of the fiscal -- especially on the auto sector which has been struggling with sales. while this comes at a good time for the reserve bank of india, the finance minister will bite the bullet or not, we will have to wait and watch for that. rishaad: tell me, a lot of people have been concerned about this. raid on be termed as a the r.b.i.'s coffers? >> that is a good question. in simple terms, maybe. india is bank of looking into this whole ramework and the temperature
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it on was that -- recommended that some of the contingency funds that they have een keeping for a rainy day, they are giving it back to the government. there is nothing wrong with it. 5.5%, 6.5% are accepted terms. whatever it used to set aside for a rainy day in the past few years it is transfering to the government as part of its esults transfer. ome of them will call it a raid. >> thank you so much. our economics and policy reporter. out of mumbai. up, your favorite segment.
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rishaad: it is battle of the charts. tell everybody what it is about. david: they are going to find out in a couple of minutes. this is bloomberg. ♪
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rishaad: battle of the charts. pitting their best charts. > let's kick things off. -- best chart is about
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>> your best chart. look at how you start. >> the yuan had a miserable month in august. the monthly decline is the largest since january 1994 when china unified at the future exchange rate, the black market rate. you can see it is heavily oversold against the dollar and we have big investment banks, bank of china, bank of america and citi downgrading the orecast. 7.5%, the impacts of the trade war. the good news is the pboc is pretty unhappy with the decline already. the level is very much stronger than expected.
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today, 200 stronger. the largest since june. we may see more action from the central bank to reign in the appreciation. so far the efforts are not being paid off. rishaad: eric? >> we're checking with our old friend bitcoin. you might say gold is the new bitcoin. you take a look at the chart. pulling it up there. the correlation trade that we had through the latter part of july into august is basically disappeared. you can see the blue line for bitcoin has fallen off. gold has continued to rise. we have seen some headwinds for bitcoin. there has been some price crowding around the 10,000 to 12,000 levels. we have seen some concerns about facebook's libra proposal. gold, looking like the traditional haven for investors,
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it ecause it is shiny but is still considered a strong haven. rishaad: wow. >> i don't like bitcoin. i'll go with the yuan chart as well. rish? rishaad: i'm sorry. you come second on this occasion. > fair enough. sorry. i hate judging. bloomberg users can interact with those charts. go to bloomberg tv and catch up with them. ♪
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♪ taylor: i'm taylor riggs in new york in for emily chang. this is "bloomberg technology." while president donald trump says china wants to make a deal on trade, the u.s. and france actually strike a deal. trade is front and center for apple investors. the company sheds millions of dollars in market value as the spotlight shines on its chinese production base where almost all


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