tv Bloomberg Daybreak Asia Bloomberg December 8, 2019 7:00pm-9:00pm EST
paul: good morning. i'm paul allen in sydney. kathleen: good evening. from bloomberg's global headquarters in new york, i'm kathleen hays. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." paul: our top stories this monday, optimistic numbers from japan. the economy grew more than expected in the third quarter. weaker than expected shipments show why china needs a trade deal.
sliding global demand is increasingly hurting the mainland economy. kathleen: thousands join hong kong's biggest demonstration in months. the protests may drag on into the new year. let's get straight to the market action. what are you watching? sophie: this monday, stocks in tokyo are gaining ground. the nikkei to 25 adding 0.7 pipe -- 0.7%. 225 economy -- the nikkei adding 0.7%. the economy grew. jesper sees a payoff in 2020 with likely massive boom in productivity. checking on the yen, holding at about mid-108 levels. we are seeing the kospi gain ground, up 0.4%. the korean won is also looking stronger. we are seeing gains for the asx 200. there was a surprise resignation. we are seeing futures marginally
lower this morning early in the asian session. a quick check on bonds. keeping a close eye on 10 year jgb's to reach that 0% level for the first time this march. we are seeing dwindling demand on the short end as expectations fall for more boj stimulus in light of shinzo abe's spending package. we are seeing aussie 10-year yields rising for a third straight session. are holding steady ahead of a sale later monday with the supply frontloaded. you have a u.s. 10-year yield holding at 1.84% this morning. paul: sophie, checking on the first word news now. >> we start with the latest opinion polls in the u.k.. all of them give boris johnson's conservative party the lead, just four days ahead of the general election. brexit is expected to be top of
the agenda as people vote. those opposing the exit from the eu are now urging a tactical vote against the tories. backing the candidate most likely to win a seat. the prime minister has warned that complacency is the main threat to a conservative victory. can the u.s. -- to the u.s. and north korea. president trump is downplaying recent missile test in north korea, saying kim jong-un is too smart and has too much to lose if he acts in a hostile manner towards the u.s. he tweeted after kim's envoy to the u.n. said that talks on denuclearization are off the table and pyongyang said that kim had overseen a long-range test of a missile launcher. sayse mideast now, qatar it is holding talks with saudi arabia, the latest sign that the diplomatic and business standoff in the gulf may soon be
resolved. news of contact comes after saudi's king invited the emir of cutter to -- qatar to attend a summit. saudi arabia, the uae, bahrain, and egypt cut links with qatar back in 2017, accusing doha of funding terrorism and of having close ties with regional foe, iran. to australia now, emergency services remain on high alert in new south wales and queensland as hot, windy weather continues to soak -- stoke devastating bushfires. thousands of firefighters and hundreds of aircrafts have been involved in attempting to hold up the flames. air pollution in sydney has hit record levels and was ranked worse than some cities in china last week. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg.
kathleen: on to our top story today, china's exports unexpectedly fell last month, a combination of the trade war and sliding global demand taking their toll. let's cross to beijing and our china correspondent, selina wang. make sense of these numbers, what they mean to the mainland economy, how they go on with the trade deal. selina: that's right. this underscores the impact of the trade war as well as weak global demand. these numbers were a surprise. we were expecting total exports to rise, but they fell more than 1%. the impact of the tariffs were stark when you look at trade with the u.s. exports falling more than 20%, and that's the 12th straight monthly decline. bloomberg economics expects this sort of long-term pressure to continue even if a phase i deal is reached, because of the weak global demand. there was a bright spot, which
was in china's imports. macquarie says this may be a sign that china's domestic economy is starting to stabilize, but at the same time, some of that boost may have been from increasing imports from the u.s., which we saw a rise as a result of some of the goodwill measures with agricultural purchases. selina, what's the latest on the progress of the trade talks? we've had some recent comments from larry kudlow. selina: believe it or not, it's been eight weeks since trump said that a phase i deal with china had been reached. in that time period, we've seen escalating rhetoric and diplomatic tensions. despite that, our sources say the u.s. side is still expecting to reach that december 15 deadline, when the tariffs will hit consumer products like smartphones and laptops. it's going to hurt consumers in the u.s. ahead of the major holiday and it's going to further dampen chinese exports. a lot of incentive on both sides to reach a deal. we did get a little bit more information from larry kudlow on
what this might mean and just how far along they are. >> the final strokes are not there. we are coming down to short strokes. we have been there. now some of the most delicate matters have to be adjudicated, discussed, analyzed, and evaluated. ofina: we know that some those delicate areas that larry kudlow just mentioned include the amount of agricultural i goods that china is willing to purchase as well as china's continual demand for rollbacks in tariffs. there has been some positive momentum. on friday, we learned from the chinese government that they will be offering some exemptions on some u.s. pork and soybean products. i want to reemphasize that we
have been here before. we have been close to a deadline, only to have talks break down again, so we still have to wait and see. paul: alright. china correspondent selena when, thanks so much for joining us -- selina wang, thanks so much for joining us. hong kong protesters calling for a general strike. my coanchor, yvonne man, joins us live from hong kong. what's going on today? yvonne: well, we have seen that some of the subway station lines have been impacted just a bit here, paul, this morning. the east rail line is facing some delays, longer than usual. in a tweet, the operator mentioned they are adding more train captains to some services to ensure foreign objects don't get thrown into some of the rail tracks as well. not a huge disruption, so to speak. perhaps some delays to your morning commute. we've seen some police in some of the stations standing on guard so far, but pretty peaceful after what was a pretty peaceful weekend as well. you mentioned this was a big turnout.
the numbers were quite big as well. 800,000 people, according to organizers, that showed up in this march that went on from victoria park and causeway bay all the way here. 183,000 is where police put it at the peak of this event. it was pretty tame until nightfall when there were some escalations between riot police as well as radical protesters. by and large, it was pretty calm. families showed up, perhaps because this was the first rally since august that was approved by police. that probably prompted more people to show up. in terms of the damage as well, we have seen crews -- cleanup crews. police said protesters through -- threw petrol bombs outside the court of final appeals, but it seems like it was pretty team -- tame. a couple hours before this rally, police also seized
weapons and arrested 11 people, everything from nine millimeter semiautomatic guns, knives taht -- that were found. they say these extreme groups were attempting to attack police and create chaos. overall, pretty peaceful. kathleen: a peaceful event now a call for a general strike. what's the sense now of where the protests are going? is this a stalemate? are they going to move ahead? what are you picking up? you saw some of the signage from the graffiti. we are seeing this is not the end of it. keep fighting is what you are seeing. the momentum, at least at this point, is on the protesters' side, on the back of this district council election win, which was overwhelmingly in favor of the pan democrats. this is on the back of president from signing that human rights and democracy bill into law --
president trump signing that human rights and democracy bill into law. they want to keep this going on until next year perhaps, the next flashpoint will be the legislative council elections that are happening in 2020. but, at this point, we haven't heard much from the government in terms of conceding to the remaining demands from the antigovernment protests. we will see what carrie lam says tomorrow, still set to make the weekly press briefing with reporters. we will see what she has to say about this event. kathleen: yvonne man, thank you so much, joining us from hong kong. we will have more on the unrest in hong kong ahead. activist investor david webb will be here later this hour. o memberong kong legc michael chen joins us. paul: this week may set the tone for emerging markets heading into 2020. we will have more on that. this is bloomberg. ♪ this is bloomberg. ♪
this is "daybreak: asia." i'm paul allen in sydney. kathleen: i'm kathleen hays in new york. another busy week for global economic data. in addition to potential tariff increases, investors will be looking at signals from the last fed decision for the year. from chinese inflation data -- margaret. now is as we step back, fed is going to meet. they probably are done cutting rates. ecb's going to meet. maybe they cannot do more. with so much going on in the world, is this a pivotal week for emerging markets? margaret: good morning, yes. this is -- this is going to be a busy week
for asian markets. sorry, i'm hearing my own voice as well, so it's a bit disturbing. kathleen: let's see if we can get that fixed. i've had that happen. it is definitely discouraging. you sit tight. we will take care of that. in the meantime, i believe we will take a look at the latest business flash headlines. let's take a look at that right now. ok, here we go. very quick check of the business flash headlines. goldman sachs ended the week on a high on reports it may end up paying less than expected for the scandal. the justice department and other federal agencies discussed penalties between $1.5 billion and two point -- $2 billion, less than what some had been expecting. reports from japan say nissan may be fined more than
$20 million as part of the carlos ghosn affair. they offered no other details. ghosn was arrested a year ago, accused of crimes ranging from falsifying documents to diverting company money for his own use. he denies wrongdoing. kathleen: hsbc has begun shaking up top management ahead of the arrival of the new ceo. it is expected to announce within days the retirement of the chief risk officer and will split the leadership of its investment bank arm. it could also see hsbc focus more of its resources on the asia-pacific, where it reckons it could make a better return on shareholder capital. so, a lot more to come here on "daybreak: asia." we will take a look at emerging markets in a busy week ahead. this is bloomberg. ♪
."ul: this is "daybreak: asia i'm paul allen in sydney. kathleen: i'm kathleen hays in new york. very big week. central banks meet, u.k. general elections, more data out of china -- a long list. what does this mean? is this a pivotal week for emerging markets, particularly if two of the world's leading central banks signal they can't do much of anything as the year draws to a close? joining us is margaret. what do you think? dotsa -- connect the between these big macro events and emerging markets, particularly in asia. emerging markets are heading towards a busy week this week. we have our eye on december 15 trade. deadline -- trade carry deadline. china and u.s. will eventually reach a final resolution to
avoid the deadline -- the full tariffs on chinese imports by that deadline. foreseee, i would selling in emerging markets. another big event is the fomc meeting. given the fact that the u.s. jobs market has been really strong, last friday's nonfarm payroll had beaten expectations to the upside and unemployment hit a 15-year low. given the strong market performance, we are seeing that fed is not going to cut rates further until july 2020. that's the market consensus. central i think the bank is likely to hold rates unchanged and see what is going to happen in fundamental picture. seeinggingly, we are
that global manufacturing activities have likely made a turnaround in the last couple months. survey,g to the latest most global economies have shown signs of improving in their manufacturing and export sectors, especially u.s. and china. we are seeing that u.s. manufacturing activities have improved a lot in the month of november, same as china. kathleen: these export numbers for china that we just got in the last few hours suggest that the trade war is continuing to take a big toll. now, it's true manufacturing has weakened as well. you mentioned that strong jobs report. i wonder about leverage in the trade deal, if it has shifted a bit, if china isn't more on the back foot because they are seeing the damage that continues to be done while, broadly, the u.s. economy seems to be holding in there. margaret: china's exports in november have fallen about 1%,
although this is still -- this seems like the trend has been more baseline over the last couple months. we don't see high single digit or double-digit slump in chinese exports. another good signal is that china's him boards have -- china's imports have slipped back into positive territory for the first time in several months, a good signal for export-oriented economies, like singapore, taiwan, and japan, because these countries are highly reliant on chinese imports. that's a positive signal for emerging markets overall. of course, given the fact that u.s. market, economy and jobs whereas really strong, china's economy is still trying to bottom out a little bit and its manufacturing sector is largely suffering from tray tariffs, in the
upcoming negotiations, the u.s. still has a lot of leverage to negotiate a good deal with china. paul: is part of the reason for the optimism around emerging asian economies -- surely things can't get any worse on the trade front? exactly. i think for 2019, emerging market equities largely underperformed the developed markets, and that is largely because of a trade uncertainty -- of trade uncertainties and the nature of export, major asian emerging markets. this picture could change in 2020 if we see continued improvement in manufacturing, exports, and business conditions. we are already seeing light at the end of the tunnel as pmi reports start to swing to positive territory and u.s. recovery is leading the rest of the world. next year if things continue to
improve, we could see emerging currencies strengthening against dollar or yen, and that will lead to capital flow back into the emerging markets. valuation wise, i would say that emerging markets are already invest in ato long-term right now. oner valuations are around standard deviation from their mean. this gives investors a safe margin. paul: you do say beware of profit-taking. is that another way of saying that a correction could be on the horizon? garet: usually december is a month of very slow trading. this year we could still see windowdressing. will chase already outperforming sectors and markets and let go of
underperforming ones. this could lead to some kind of volatility and sectorial rotation in markets. i'm looking at u.s. markets. the s&p has registered 25% year-to-date gain. nasdaq, 30% gain. i won't be surprised to see some kind of technical correction or profit-taking towards year-end. paul: all right. margaret yang, thanks for joining us. we are just days until the u.k. elections. polls suggest boris johnson's conservatives will win healthy majority unless brexit opponents can find a way to coordinate against them. the vote will determine britain's relationship with the european union. david joins us. my blood froze a little bit when i said the words "polls sugg est." there's a tremendous amount of risk surrounding this, isn't there? >> yeah. you look at history of u.k. elections. even the referendum.
the polling was basically wrong. that's the worry around this time is that the polling is --icating that consensus conservative will retain majority. but you don't need that majority to climb to have a hung parliament. you have 60 to 90 seats that are quite close. those could swing either way. while the polls indicate the majority, traders have been burned before and they are worried this might happen one more time. kathleen: if that's the outcome, what does it mean for brexit negotiations and therefore the pound? david: certainly, if it was a hung parliament, it would not be a positive for sterling. you would see sterling sell off very quickly. it's trading about 1.32. it would be back under 1.28 very quickly indeed. a hung parliament -- it is tough for boris johnson to get his
brexit deal through parliament. this is based on if he gets a majority, gets his deal through parliament, takes no deal off the table, at least temporarily. then hung parliament, they will be back at square one again, tough to get a brexit deal. we go back yet again and ask for another extension. is that agreed? it just adds uncertainty, and markets do not like uncertainty. much, ourthank you so foreign exchange and rates reporter. next, activist investor and website.com founder david webb joins us on the continuing unrest in hong kong. this is bloomberg. ♪ here, it all starts with a simple...
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su: this is daybreak asia. i am sinking in. we start with mexico which says changes to nafta must respect what it calls its red lines. theforeign minister says u.s. proposal for steel and originate in north america would only be successful if implemented after five years. washington's demand that aluminum is impossible. negotiations are going to resume later monday in the u.s. in india lawmakers will approve legislation to prevent muslim migrants from winning citizenship.
it is the latest move in the hardline hindu nationalist program and seen against going india's secular constitution. the proposal allows citizenships for sikhs and buddhists from pakistan and bangladesh but muslims are excluded. chinese exports fell unexpectedly last month, another sign the trade war is hurting the economy as global demand slips. outbound shipments declined 1.1% from a year ago and were down 26% for the united states, the worst reading of exports to america since february and the 12 straight monthly decline. shipments had been expected to increase. china's third richest man is expected to get richer, set for a $2 billion windfall. the chairman will earn the money after the property developer and
electric car one of the declared a record dividend. the board is proposing a record of 1.42 you want to share. -- yuan a share. he will pocket most of the cash. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. paul: let's check in on what is happening in the markets. edging asian stocks marginally higher, bonds dipping lower as we race for an event of events -- it week of events. we have the brexit election and the surprise drop in chinese exports which has weighed on the aussie and kiwi dollars. the offshore yuan close to the 703 level and pressure in the
asian session. a quick word on oil. you can see me have new york crude. i want to highlight what is going on. we are seeing wti moving back below $59 a barrel. cuts, weck of opec's are seeing goldman raising is with al forecast long-term anchor price and $50 a barrel. and highlighting utility yields, building modestly after a three-day rise. they opened lower as tokyo stocks are gaining ground. it is a reaction to the final third quarter gdp report which showed faster growth than an estimated -- than estimated thanks to strong business investment. the economy is slowing less than feared. the white house is
striking an optimistic tone after the seller payroll numbers. -- stellar payroll numbers. larry kudlow is bluster about a trade deal with china. importantr 15 is a deadline. there are no arbitrary deadlines. these are decisions that will be made by president trump depending on how the talks go between now and then, whether we have buttoned down all of the buttons and whether it is a satisfactory agreement that is great for america. selina: -- jonathan: we want to understand the minimum conditions the -- that china needs to meet. what is the minimum condition of success so to speak? >> i don't want to single one out. there is no certain condition. we will work towards phase one.
and then what is left to be done over time would spill into phase two. it is a sensible approach which reflected a change in president trump's thinking that he was willing to do this in pieces, sequentially. phase two could be out there. i would tell you and advise you, there is no one single condition that would make or break the talks now. jonathan: the administration has done a fantastic job of putting no pressure on china. to highlight the issues around forced technology transfer. you have changed the dialogue but they are now a serious allegation of human rights abuses taking place in the country.
why is this a country the united states wants to do a trade deal with? >> we always stand with the freedom of -- the side of freedom and democracy. that is in our bones. it is in america's dna. that is what we are. we will continue to make that clear. that includes not only the hong kong story but as you know, disturbances and disruptions on the chinese mainland with the various groups as well. that, i don't think those issues are interfering with the trade talks. that was larry kudlow. let's continue on the hong kong protests. webb,g us is david activist investor and founder of a webbsite.com. protestsother round of over the weekend. wondered what your assessment of this rally was. it was quite peaceful. does it have something to do with the granting of a rally
permit? tears and nono tear gas. 800,000 people turned out. i took part and walked around the bay. it was smaller than the 16th of june and larger than the ninth of june which makes it the since-largest protest 1989. the unaddressed issue is the democratic deficit the people of hong kong can't fully elect their legislature and not the chief executive. there is no accountability. paul: the protesters have their five demands, not one less. i am wondering how you are gauging progress and thinking in particular we see the american chamber of congress heads being denied entry into macau with no chip -- no expedition given. our thanksgiving the other way
-- are things drifting the other way? they are. they never take into the account the people in -- of course they do with providing them with a blacklist. it is tightening up. but of the five demands, one has been met, the withdrawal of the extradition bill. one of them is primed to the others, and the demand is for democracy in hong kong. if you had a democratic government they would launch the independent commission of inquiry into the protests and leading up to that, the s introduction of the bill in the first place and they would address the calls for amnesty for nonviolent offenders because there are so many calls -- people taking part in this and it will only get small sentences anyway, hours of community service. to democracy and if
the government will not do anything, eventually there will have to be a crackdown against the protests. kathleen: i want to ask you about that because in a recent piece, you make a point that people hoped hong kong would survive long enough china would continue on a path towards more the rural democracy. you point out since xi jinping took over it is going the opposite direction. a there is a crackdown, is it violent crackdown that is damaging not only to hong kong ? t china the world could be an immediate crackdown? >> we don't know. it could take a number of tracks. there would be a tightening of the laws in hong kong. there is a case going through the courts now on the emergency regulations ordinance which carrie lam tested earlier this year by introducing her own law
against facemasks. if the first instance the court said that is unconstitutional, you can't make laws, that is what the legislature is for, that will then go up to appeal. an beijing may intervene -- and beijing may intervene. i have done it before. -- they have done it before. that means whoever the chief executive is would be cleared to issue new laws for internment for the law -- a terrorist or traders, cracking down on internet applications and blocking vpn's and extending the great firewall around hong kong. basically banning public assemblies or introducing severe penalties. there is a number of other things they could do which would
affect the laws. there is the enforcement of those and they might be to call in the armed police have been on the other side of the border or to call the bla out of there -- .la out of their barracks if it is bloody, you could expect the u.s. to invoke its own legislation and not recognize hong kong and other nations would follow, as a special part of china. that would affect the economy. impressed when people who continue to protest when they can see this threat out there. let's underscore something else you have argued. people talk about this being the economic reasons for the protests, the fact there is not enough housing and the wealthy billionaires have not put enough in to change things.
the determination speaks to the fact that this is really definitely mostly about democracy and where hong kong is going. you will get different taxation policies and so on if you had a different estimate critically elected government. is thatcomes down to very issue. you look at the fact office workers in the upper income brackets are coming out at lunchtime and protesting, if you look at the fact about 60% of the vote was pro-democracy in the district council elections to the week or the week before, it demonstrates the breadth of feeling and the fear of losing what freedoms they have because we don't have democracy in hong kong. we hoped we would get it from 2007 onward and it would stave off encroachment by the mainland until the mainland is self becomes a liberal democracy. eventually.ill
no large-scale economy on earth has delivered this beyond reasonable limits without having freedom and getting rid of centrally planned enterprises which they currently still have. they have listed lots of companies in hong kong and shanghai but they are still controlled by the government. point, the risk of a bloody crackdown creating to the u.s. striking out hong kong special status, would that not merely hasten hong kong's assimilation into broader china? could. if all of the countries have withdrawn the special region, the mainland government might give up the pretense they are one country, two systems. they will hold onto it.
it is symbolic and they want to keep a separate capital, open capital markets they don't have in china. point they might throw in the towel on that. freely. could drive there would be upside to full integration but it would be proof of a failed experiment on one country, two systems. it is more likely -- beijing would pretend the basic rule was still functioning, that the government asked for assistance, the majority got it and they would wait it out in the way the china government did after tiananmen square. there had to be some time -- bill clinton reengaged with china and then they have been emitted -- admitted to the world trade organization.
the effect on the retail sector has been pretty pronounced. if we look at other parts, property prices are holding up. on theg seng is still up year. if we look at this chart, we can see implied volatility on the hang seng does remain below historical averages. the question is, are you surprised and how long you think it can persist? >> not really. petrochina, they are not greatly affected by hong kong. withhere is arbitrate mainland prices. ultimately there is a fair amount of mainland buying offsetting any setting of the hong kong stock market. it is not very surprising. prices have been going down but they reflect futures and no one
is clear on the demand for the property. it would be lower than it would be if hong kong introduced democracy and restored harmony. i have been calling on tycoons to get out of the way and give up hong kong -- corporate voting in the election committee that chooses the chief executive. the chief executive has the ability in hong kong without going to beijing to reform the whole process and introduce a government by property voting and replacing it with one worker, one vote in the small circle functional insurgencies. see if they will are listening. thank you so much. fascinating discussion of hong kong, where it is and where it is heading next. what should be -- we will discuss this next with our mliv team. this is bloomberg. ♪ s is bloomberg. ♪
kathleen: you are watchingkathleen: daybreak asia. a new report from the bank for international settlements, septembers mayhem in the u.s. ipo market was not just a temporary pickup. joins us now. i have been thinking about this for the longest time. there was a big overhaul of the repo market led by some of the biggest banks during the financial crisis. there used to be repo desks with 10 people on a desk. there are now two in many places. it is more than just a hiccup. >> that was the conclusion of the report. it is getting people worried. we know it is more of an issue over the year end when there is this window dressing, balance
sheets and more demand for cash balances. at this time of year people are sensitive and worried about what might be the squeeze. i'm getting this report saying there is a structural problem and maybe the temporary pickups of september will not be fully resolved with recent fed operations. one of the conclusions of the report was people are less familiar about managing these transactions. the banks are less well staffed. there are also news from the banks themselves. itorgan ceo jamie dimon said is regulations which prevented his bank moving in to provide more liquidity with the blowup in september. i think the report is coming out , even though it could have come out anytime of the year, it was not time sensitive. but this is going to make people nervous. paul: right before christmas.
regulation,t about does jpmorgan have a point? you structural reform needed? neeley -- needed? >> much-needed regulation has had a lot of extremities in any market. we are seeing the mismatches theeen whether the house -- cash is allocated and what we can do with it. the banks are expected to have a higher percentage of reserves in liquid assets and in treasuries. the four big banks that dominate this market have a mismatch between the treasuries and the cash repo. it means this side effect of regulation, based on what they are required to hold by the fed and the new regulations since the financial crisis. despite the big hiccup, it seems the federal reserve with the new york fed doing the operations did a good
job of what they used to do in the olden days, to add reserves when there is a shortage, move it out. is that a big deal if the fed keeps doing it? >> that is a fair perspective. they just back to what they used to do regularly. there should not be this panic. i think it is simplistic in the terms that the repo rate did spike to 10%. it is an incredible move. clearly there was problem. whether you blame the fed or the orks being out of practice regulation or these temporary factors in terms of the treasury option that week, there is separate issues. it is a way to get to 10%. this is not the year end. the fed has done a good job. the fed balance sheet has increased $300 billion, which has been a side effect to this move. it hasn't been directly related but it has been in terms of
liquidity in the system. they were squeezing the liability side too much in terms of reserves coming down. they are being cracked about addressing it. ifwill make people nervous the squeeze might be worse than normal yet again. the argument is we have been talking about this for months. surely everyone must be prepared. we have said that before. paul: thank you for joining us. and the bloomberg mliv 2020 asset survey is now over. we are looking to see what you think nine different asset classes end up. -- can visit debbie h get your forecast in and put your reputation on the line. this is bloomberg. ♪ is is bloomberg. ♪
paul: you are watching daybreak asia. let's get a check of the business flash headlines. hong kong airlines has avoided becoming the first carrier to collapse in the city for more than a decade after the regulator ruled out action on certain conditions. it has to ensure it has sufficient cash on hand by a stipulated deadline and maintain that in the future. hong kong airlines has been hit hard by the long-running street protests which have seen travel demand lapse.
alitalia is considered jumping from the sky team jump -- group of airlines to the star alliance. the move would bring them closer to -- which is seen as a potential investor. management's new intends to reduce the job losses to 1200, lower than reported. this u.k. company is considering selling options in thailand and malaysia. they received what was called inbound interests and they could value the two operations at $9 billion. the company launched in 1998 and has 1900 stores. the malaysian business was in 2002 and has 74 stores. preview ofet's get a what to watch in markets. banks ine are watching
hong kong. the chief signaled the monetary authority has lowered capital buffers further after doing so in october, if the economy keeps slowing or the property sector weakens. and other see regulators have started discussing details of a wealth management connect program and open at the end of this year. we are looking at chinese automakers with november sales figures out. they would see a 50% slide in new energy sales last month. castle asset management partners will be with us at the open of the chinese markets to discuss strategy. this is bloomberg. ♪ ♪
a.m. -- 9:00ot :00 a.m.. welcome to "bloomberg markets: china open" >> this is look at our top stories. unexpected shipment showing why china needs a trade deal. sliding global demand increasingly hurting mainland economy. thousands joins hong kong's biggest demonstration months. the test will drag on into the new year. demonstrations will drag on into the new year. >> still room to act in support. ♪
>> the countdown clocks are ticking on the central-bank action from the fed and ecb on the u.k. election in the middle of this week on thursday. then, december the 15th, the paris deadline. we have more in dictations of the damage being done to china's exports in terms of the drop in november exports. while the momentum we saw in the market to the end of last week on the jobs numbers follow into the chinese session as well? >> absolutely. and what we do have if you look at the import side of the trade numbers, you see strength for the inlet economies -- in land economies, imports did manage to rise. just about flat in singapore. looking at the nikkei at 1/5 of
1% up. a way better reading for the final gps. 1.8%. the original figure was 2/10 of -- median medium thinking 6/10. see of 1.8% annualized also cost be one paper set up. in sydney looking anemic with a 1/10 of 1% gain. where getting tailwinds here that are than anticipated job numbers as you mentioned, tomic. that helped to buoy the s&p and the dow at nine tense 1% and 1.2% respectively. let's look at the other asset pretty u.s. futures, what are they dictating? not much, prevent the active future flat down. it could be taking the edge off the gains we are seeing this morning. 8/10 pere at $64 and barrel with the opec meeting taking place in vienna and a surprise appearance of mr. mbs, mohammad bin salman, that affect
-- that of saudi arabia the fact out leader of saudi arabia instituting cuts which should buoy oil markets and taking the froth off that market. the u.s. dollar index flat. gold futures suggesting there's not much in terms of taking risk off the table, risk is on in some parts. that is a look in markets. let's look at first word news. >> we start in hong kong where hundreds of thousands of people join hong kong's biggest demonstration in months and a sign that popular unrest will continue into the new year. posttest organizers say 800,000 people marched through the city on sunday while please put the number much lower at below 200,000. the rally was the first promoted by the civil human rights front
since august. to the u.s. and north korea, president trump is downplaying missile test and north korea saying kim jong-un is too smart and has too much to lose if he acts in a hostile manner toward the u.s.. trump tweeted after kim's envoy to the onset talks on denuclearization are now off the that and pyongyang said kim jong-un had overseen an important test of a long-range missile launcher. the mayor did not say what kind of rocket was tested. qatar says it is holding talks with saudi arabia, the latest sign that the devil madigan business standoff in the gulf may seem be resolved. news of the contact comes after saudi king salman invited the this of qatar to attend month's summit in riyadh. saudi arabia, the uae and bahrain and egypt cut links with qatar back into 2017, accusing doha of funding terrorism and of having close ties with regional
so iran. the latest opinion poll in the u.k. give boris johnson and his party lead, four days before the general election. brexit is expected to be at the top of the agenda as people vote . those opposing the split with the eu are now urging a technical vote against the tories, backing the candidates most likely to win the seats. the prime minister has warned of a complacency as the main threat to a conservative victory. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. >> thank you. to our top story in china's exports unexpected leaf fell last months due to accommodation of a trade war and sliding global demand. let's bring in our china correspondent selina wang. help us make sense of the numbers from the weekend, what
they tell us about china's economy. >> this underscores the impact of a trade war. on top of global growth you saw instead of imports rising as expected, they felt more than 1%. the impact of tariffs were especially stark when you look at the u.s. with exports falling 20% paired the 12 monthly decline. bluebird economics say they do not expect pressure to let up anytime soon even if that trade deal is reached in that is because of weak demand from china's major trading partners. bright spots were in the import numbers you sell rise more than expected. some of that, macquarrie says it could be assigned of stabilization china's economy as well as more purchases from the u.s. as a sign of good well it comes agriculture. >> what about us where we are with these trade negotiations, these comments from larry kudlow and how they play into things? we haveve it or not, been talking about this trade deal for eight weeks cop. that is how long it has been
since trump made an announcement that a partial deal had been reached. since then we see heated rhetoric around epaulet attention. our sources still say the u.s. side is expected to reach the deadline of december 15 when the tariffs are affected come through that would be heading consumer products like smart phones and laptops. a big incentive on the u.s. and china side to reach a deal. we got comments from larry kudlow who provided color on where the two sides are. >> the final strokes are not there. we are coming down to short strokes. we have been there. now, some of the most delicate matters have to be adjudicated, discussed, analyzed and evaluated. could though also added this comes down to trump who is not ready to sign a deal yet. in terms of the delicate areas he is talking about, we know that is round the amount of agricultural purchases kind is
willing to buy, as well as china's demand for a rollback in tariffs. we have to wait to see if those demand will be reached. >> thank you. this is chief economist joining us today. what you get from the import export numbers and trade balance figures over the weekend. how much of them are chargeable to what is happening with the guard to the transcat? -- the trade spat? >> if you look at the numbers in the last three months, the rhetoric of china's export growth is .1% paired most of the damage is trade. on trade experts to europe they were ok. again, the damage of the trade frictions with the u.s.. if you look at the base from december, it started to flatten out -- it should start to flatten out. people talk about year on year but the decline happened since
the second half of this year. >> the base effects you're talking about. but when you look at the import numbers which are actually positive. and we're looking for negativity and how much can be put down to the strength of the economy within china, or is it a reflection of them buying more farm goods from the united states? one would suggest that would be fulfilling pledges and the other would suggest canonic strength. the think it is a mix of two paired globally, we are looking at a restocking cycle. industries of the hit hard i the industrial slow down, you see a pickup in activities paired on the other hand, there are areas of stress that do not square with the rest of the economy paired one is agriculture. the other is the very strong oil imports. china's oil imports are around 10%. there are certain things looks like just restocking. >> good to see this morning.
are you seeing signs the squeeze on the export and many factoring sector is impacting employment now, particularly in provinces like bond on, which is a key focus for efficiency? guangdong. >> damage and export related sector could be running at 1.5 to 2 million workers. that is a large number but if you think about it overall, the chinese manufacturing sector employs more than one had a people. in relative terms, -- more than 100 million people in relative terms is not that big heard. the slow down has to do a some of china's own restructuring including environmental protection policy efforts which have reduced employment in the sector as well. >> we are likely to get senior officials here potentially this week setting their gdp targets for 2020. what is your forecast and
explain this goldilocks. your spec to see in the second half of next year? is a you look at it there pretty heated debate in china about whether china should support exports and growth. our focus is around 5.9% i think at the end, the official target will, around 6%. overis taking into account the counter cyclical measures the chinese will take. but continued weakness in global economy as well. >> all right. i want to get a sense of when we look at gdp numbers, what you think the real run rate is for growth in china? >> this is a very interesting question you ask paired last year a lot of commentators would say china's official number probably is overstated heard this year you have a group saying maybe it is understated in parts.
because if you look at e-commerce, in consumption numbers, some of the numbers are running incredibly strong. if you look at a list of companies, pdd with such a large base of of their growth rate is still running at 30 or 40%. a lot of those activities may not be captured by the official statistics. >> and it first a nominal gdp, doesn't it? >> and if you look at a shipment, domestic shipments, the run rate continues to be 20% more. that is, again, if you think about what is the underlying activity, probably the official statistics are not equipped to capture them. again, if i look at? >> and echoes to gdp around the world and how you calculated? >> in china if you have 20% more retail sales, it is already a significant base running at 20% rate. if we have any discrepancy, that would be bigger. >> do you expect a turnaround in
the november money supply data? is that demand for new credit there? >> we do expect some turnaround in that number. again, i thing investors will debate the quality of the data. verily, that pboc has been window guiding a little bit more credit provisions to the private sector. as far as we know, the banking sector, the investor community, continues to be cautious about the outlook. so some of the credit numbers may be coming from that discounted bills. a lot of people will say that is a lower quality type of credit. >> to be clear, you have something of a contrarian case when it comes to monetary policy. you do not think we get a triple arc i the end of the air. there are some out there -- by the end of the year. some say there will be more cuts by the pboc. >> i think pboc is concerned about still elevated food prices
and concerned that credit may be going to the wrong sectors. it seems to be they are much more interested in working on getting credit to the right place. allocationre direct for credit rather than just using the rr and interest-rate channel. hong cicc head of research and chief economist, always good to get your thoughts. still ahead, hong kong saw its biggest pro-democracy march in months on sunday. we ask whether the turnout signals more unrest in 2020? >> and later we will be joined 2000 toely by the g discuss the economic impact of the protest. this is bloomberg. ♪
open of trade in the chinese mainland. we have the fixing for that yuan for the day. -- the estimate was for -- 7.04 vs. est 7.03. here in hong kong we have protesters calling for a general strike after the city sought's biggest pro-democracy march and months on sunday. our quaker yvonne man -- our coanchor. what have we seen so far and how are things looking? if you take a look behind me it looks like business as usual. the morning commute is still going on here. we have heard of some disruptions on mtr, the city's
railway operator and some lines that have been dealing with some delays, they mention the east redline in particular. also the mtr talking about how they are adding precautions as well, extra train captains to some of the services to ensure foreign objects do not get thrown into their role tracks. they are being prepared for this. i have to say not a huge disruption so far. this is after what we saw as you mentioned a peaceful weekend here and a big turnout with , the organizers are putting that showed up in the streets. please put the number at 183,000. this one all the way from the park to the central district and it was like a déjà vu where families showed up as well. perhaps they were prompted to come out after police for the first time approved this rally for the first time since august. overall, it was pretty tame. yes, we saw some vandalism and
-- in some of the chinese banks and stores. and the court of final appeal in central was targeted by protesters who through petrol bombs at the entrance. but we have seen that open up already this morning. overall, pretty tame. a couple of hours before the march, police did arrest 11 ,eople and sees a list of items weapons including a 9,000,008 or semiautomatic pistol as well. there were some nerves heading into this event. overall, pretty,. rishaad: tell me has there been any response from the government in hong kong in response what happened in the streets yesterday? not that we have heard so far. we have heard from police so far as well. the overall numbers and saying that there were some disruptions when it came to vandalism and damages. but we have not heard from the government as yet.
in fact carrie lam should be having a press briefing tuesday morning. perhaps we will hear more from the chief executive. this turnout goes to show that momentum has not died and that after six month of protests, people can still show up in these numbers. the power of the people, i guess you could call it. and they do have momentum on their side, after this district election. a landslide victory for the pan democrats. ther president trump signed hong kong human rights and democracy bill into law. at this point they are bowing this can continue well into 2020. perhaps the next flashpoint is the lead laid council elections next year. tom: while that is obvious that key one for the calendar. the question is how beijing responds. so far they have not shown flex ability. is there any sense from the people you have been speaking to on the ground in hong kong that they expect any changes in terms of a stance from beijing?
we have heard for months that beijing continues their support around the chief executive, carrie lam peered we have seen signs perhaps that beijing is showing more of a tightening grip here in the city. we heard from the american tabor of commerce, their chairman -- the american chamber of commerce that their chairman and president were denied entry into account over the weekend. they were detained for hours and then told to go home, without any reason given. perhaps it is a form of retaliation. denied entry into macau. trumpknow that president sanctioned some nonprofits and human right groups but we have not heard it go as far as business groups. zhongshan coming out of the statement they are hoping this is an overreaction to the current situation and they hope businesses can forge ahead. yvonne, thank you very
>> your back with bloomberg markets: china open. let's have a look at the business flash headlines. hsbc has begun shaking up with the arrival of a new chief executive. the bank is expected to announce retirement of the chief risk officer mark moses and will split that leadership of its investment banking. a fresh tragedy could see focus on the asia-pacific where it
reckons it can make a better return on shareholder capital. -- a fresh strategy. hong kong airlines avoiding being coming the first carrier to collapse in the city after a decade. that is after the regular route ruled out certain action on certain conditions. the airline assured it has cash on hand biased to belated deadline and it must maintain that amount in the future. hong kong airlines has been hit hard by long-running street protests that have seen travel demand in and out of the territory. british supermarket chain tesco says it is considering selling its operations in thailand and malaysia. it is carrying a strategic review of its global business after receiving what it calls inbound interest and a deal could value the two operations at $9 billion. tesco's thailand launch in 1998 and has 1967 stores. the malaysian business started four years later and has 74 stores.
few mitts away from the start of the trading day here in hong kong. premarket prices. china mainland stocks also coming on. i suppose the question has to be, how is the day shaping up especially in light of the economic data we had over the weekend. surprise was a drop in exports and eight plummet in the number of goods sent to the u.s. and china. a silver lining suggesting the domestic economy is maybe turning around a little bit. the clock is ticking toward the december 15 deadline on tariffs. in terms of markets, we can check in on the futures are china futures up 1/10 of 1%. the hsi in terms of hong kong and the back of the protests is essentially flat the currency offshore, seven .029. ever gland offering a higher dividend, currently up 1.4%.
streets of hong kong. tom: it looks like investors brush up what happened. maybe the domestic economy with stabilizing. we saw those in the import numbers. 15 is that unofficial deadline in terms of trade talks. resources in washington suggest there may be a deal. there are still discussions underway. shenzhen is up 3/10 of 1%. this was on the back of some commentary suggesting china and its policymakers will not be opening up attacks in terms of credit supply. in terms of their credit supply.
we can move on to some individual stocks and focus. we have sales data in terms of the retail sales. the tension around 2:00, local time. we are looking at local automakers. get two straight years of declining sales. analysts sayice -- this could become clearer. we could have more strength in the consumer. we have a slightly sweeter fix than economists would expect. the chinese yuan is 7.00 offshore. rishaad: there is positivity here as well. it is a 10th of 1% up. msn hong kong this flat.
the indexes continue to go up just a fraction here. the markets could go in the other direction if we seek an increase by investors. let's look at some of the companies moving on the hang seng at the moment. aac technologies doing well. this is done to a report coming down to iphone sales been robust as we go into christmas. 1.1% oil prices. as saudieen a move up arabia came in with that. a surprise cut in output there. there are some of these mobile companies. this is the biggest one on the hang seng at the moment. let's look at what is going on market wise. tom: more insight into the withts and opportunities
this hedge fund, higher council. thank you for joining us on set. it has been a good year for you. the hang seng is up. where is -- have most of your gains come from? mainland? hr? i would say a majority of them -- >> i would say a majority come from industrial names and consumer names in asia or adr. none of them come from hong kong unfortunately. kong has had an underperforming market because
of the chaos there. tom: are you taking money off of the table as we are closer to a trade deal smart do you want to put more money to work at this point? >> i think you're right. that we wante deal to salvage a little bit. we think it will diminish. we think we are bullish into next year. we see a couple of elements over looked by the markets. stretch desk strength of the manufacturing pmi was underappreciated by the market. rishaad: what about the potential upside in the first half? >> i think i am looking for 10%. it does not some big. there are some issues. they do exist.
we think the opportunities exist for the sectors that benefit most from text does. for the index level, i don't think it is a big year. rishaad: if we look at what has happened in the u.s., we look at what has happened with china. do you expect any catch-up to take place should we get that elusive trade deal or phase one trade deal in place? >> are you talking about hong kong? rishaad: i am talking about shanghai stocks versus s&p 500 stocks. fort is about a 10% cap
2019. i don't think so. couple ofere are a issues that still exist in the mainland. watching the transition, i think it is important the transition is ended by next year. it will give us an application of capital inflow into the stock markets. there is lots of local issues that we need to figure out. i don't think the trade deal is .o important rishaad: let's look at some of the adrs. tell me about the ipo earlier this year. love coffee the most.
i think the penetration for coffee is very low in china. look -- call it latte penetration. similar.eople pay if we look at the data in japan 10 taiwan, we still have times penetration room. strategy --pricing they are pricing strategy very well. i think there is a dynamic pricing strategy where china is trying to figure out the most comfortable level for people. it creates a new consumer group like me. i was not a coffee drinker i think a lot to is five u.s. dollars and it is very expensive to me. sometimes i need to buy coffee for my teammates. i figured out that it creates a
new consumer. i became a coffee drinker after that. we are talking about specific stocks here. i'm sure i will pronounce this month. ?hat about this power company that is another one you like. tell us. >> sure. the strength of manufacturing pi was impressive. i think it is underappreciated by the markets. positive coming off the replacement cycle. it is 10 years away. certainly, i think this sector benefits most from the tax cuts.
rishaad: what about 2020? do you think the fed stays on hold for 2020? >> asia is not that important. i think the price impacts the most. thank you very much. it is great to get you on set and get your insights. he is the managing partner and co-cio. let's go to su keenan. su: we will start with mexico. they say that the change to the successor of nafta loves this broad land. the u.s. proposal for steel in carmaking would only be acceptable it implement it after at least five years they say. washington's demand on aluminum is impossible for mexico to meet. to australia where emergency
services remain on high alert in south wales and queensland. this as hot and windy weather continues. ine than 2000 firefighters 100 aircrafts have been involved in an effort to halt the flames. hit recordon has levels. china's third richest man is about to get a lot richer. he is set for a $2 billion windfall. he will earn the money after the property developer declared a record dividend. that is the equivalent of $2.7 billion. ever gradual pocket most of the cash.
india lawmakers are set to approve migrants looking for citizenship. this is part of a hardline hindu nationalist program. it is said to have gone against secular -- india's secular constitution. muslims are excluded. global's, 24 hours per day. 2700 --more than 20 -- global news, 24 hours per day, powered by more than 2700 journalists and analysts in 120 countries. i am su keenan. this is bloomberg. rishaad: there is michael. the hong kong protests. also, whether they will drag on into the new year. is there a solution in sight? this is bloomberg. ♪
ua -- eddie youei has said there is room to cut capital buffers if there is room in the city. let's go back to our man who was central in oblong -- hong kong. tell us how things are panning out after significant protest. >> this was the first interview .e heard from eddie you do see this drag on the economy on the retail side, the tourism side, the financial side of the economy remains stable. it has been stable for the past couple of months now.
they are preparing if things do get worse. there are loans for small and medium businesses out there. the banking side is still quite robust. market showrty signs of weakness, they could do some further work here. this is still pretty resilient. our guest is joining us here. thank you for joining us. >> i am a current member. i am a former district councilmember. >> that is correct. >> i am at the roundtable group
as well. >> that makes your answers that much more important. where are we in the standoff between the government, the authorities? like a very loud majority in hong kong. >> it only but to clashes between police and writers. -- rioters. the drop of the bill is not enough to quell public unrest. confrontationre things there are more about police brutality and the background of the radicals. is it a foreign government? the taiwan government?
there is more buildup between groups., wives, also, our community at large. of the bill,drawal the key is stepping up a commission for inquiry. an independent one. it should have full power to summon and subpoena. lam refuse-- carrie all the way -- refused the hallway. you can't keep saying that until --ouple of weeks ago they made a joint statement that this board does not have the power it needs to get to the truth. then all hell broke loose.
being -- people being set aside. that is one of the causes of the land side bus for the forestablishment -- loss the pro-establishment cap and election. now they're coming back onto the streets with a peaceful march saying that you have to hold back on violence. yesterday, there was not a lot of violence. just a peaceful march with supposedly 800,000 people saying we still want our demands. we now control the district council. we still want our demands heard. i think the public is still supporting this particular cause. not with the radicals are doing. somehow there is a situation that they don't have to support medical behavior. put felt the radicals
pressure on the government. rishaad: absolutely. we thought there would be a response after the district election. there was none. how much will the room does he have? looking at she beijing rather than her own constituency? how much room for maneuver does she have? unfortunately, as the chief executive, everything falls on her shoulders. it is quite apparent that the police are against setting up this mission. that any surprising party will be investigated. it is understandable.
it is only up to carrie lam. she is still in that office and trying everything to convince the police or the central government to let this thing continue for god knows how long. it will possibly affect next year possible election. that is serious. that is the root of governance of a government led structure in hong kong. tom: do you still think that carrie lam will be replaced in 2020? it is hard to say at this point. i think most people would agree she will not move onto her second term but if we look at what happened back in 2003 or two yearstepped down
after the fickle march. so far, it has only been six months. two years from now is about the time when we will go to the second term. it is hard to say at this time whether she will step down the -- in 2022. xi jinping has come out and given his total support behind carrie lam. carrie lamthe case, tose segments -- needs commence where the parties are to lock into a inquiry. -- an inquiry.
an independent review committee has no investigative power or authority to summon or doing nothing like that. i am proposing that the review forth reformld put and a review on the i tcc and the possibility of reforming the i tcc so that in the long run, it will become a statutory body. supporthas the public to look at corruption crossroads i pcc be, why can't performed? i think in the long term, for the sake of hong kong and then to close the gap between police and citizens, a reform of this is the most important thing. that is what i believe now. of course, at the same time, to
solve the current impasse, we really need to have a coi. it not only looks after police but the radicals. it looks after the white shirts and the blue schuurs and the citizens who supposedly have some sort of organization behind them going after the normal citizens and the lecture protesters. news is to be settled by the coi. they need to make sure that families, parents and kids come to terms with each other. the investigation is not going to look into that. that is going to be a long-term problem for hong kong if there is no coi. one of many. tom: in terms of support that we have important has that been for galvanizing the protest? michael: you mean the human rights bill? tom: yes.
michael: i have openly stated that whatever hong kong has received as an advantage or special treatment by the u.s. is something they could take back anytime. they could reduce entry. it is more of a political gesture rather than an substantive move. what is the implication about the pandemic in hong kong going to do? going to the u.s. and getting help is a very bad move because --will drive beijing especially the more conservative part of beijing to really stand not to consent to any request by the protesters. you are talking about hong kong
going to a foreign government and asking for help to punish hong kong to insert pressure on beijing, a sovereign entity. and u.s. is at work. thiscouple kids tremendously. >> there are various moving parts. quite the politics and economy, i am sorry. the politics and economy, i am sorry. rishaad: how is your business doing in all of this? is a retailbusiness business. rishaad: it is still reflective of wider hong kong. michael: my sales are going to pieces.
i have to downsize. i will take a big hit this year. hopefully i can survive. i will cut my orders for the future. i will cut down on my footprint in hong kong. we talked about 30% year-over-year. they're talking about single digit growth. my group has experienced a 20 or 30% console drop. rishaad: we could talk for ages but that was michael. you have not seen it, michael on this, -- tom: checking in on the mainland markets here. there are early gains that have
rishaad: it is almost 10:00 a.m. in hong kong, shanghai as well as singapore. mackenzie in beijing. here are the top stories. weaker than expected shipments shows like china needs the trade deal, sliding global demand is increasingly hurting the mainland economy. rishaad: there is more optimism in japan. the economy growing more than anticipated as higher business spending lifts sentiment. tom: thousands join hong kong's biggest demonstration in months. the authorities say it still has room to act.
rishaad: lots of things to be keeping our eyes on. we have a look at his equity markets in china at the moment, turning negative and digesting those trade numbers over the weekend. we are looking at those japanese gdp numbers. hong kong protest speeding into that some of -- and to some of the negative sentiment. swiss national bank and the european central bank as well. >> measure moments in terms of diary of events. we are also counting down to those december the 15th tariffs. the u.s. may impose those chinese goods if they don't have some type of trade do. you touched on japan.