Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  December 29, 2019 7:00pm-9:00pm EST

7:00 pm
>> good morning, i am paul allen in sydney. asia's markets have just opened for trade. >> i am shery ahn. sophie: i am sophie kamaruddin. welcome to daybreak asia. paul: our top stories this monday, volumes may be low but sentiment seems high as markets enjoy a year and recovery. can the yuletide cheer continue this week? the financial secretary says the economy is set to end of the year in contraction as months of
7:01 pm
protests take their toll. shery: china continues to push the liberalized market with a more flexible loan. japan and south korea have come online. let's get straight market action. offie: the nikkei 225 is .3%. best court of the again since 2016. asian stocks are drifting toward the year end. we are digesting the latest figures. we are going to be getting hong kong trade numbers. taking a look at was going on in sydney. we are seeing shares snap a
7:02 pm
three-year game. paul: let's get you up-to-date with the first word news. wildfires in australia are expected to get worse this year -- week amid rising temperatures. -- 122 millions of million acres of land have burned. nine people killed and over 950 homes destroyed. scott morrison says that firefighters battling the fires in new south wales will be compensated. >> this is putting additional demands on our firefighters in particular. it means the turnouts and the callouts have been far more extensive than in previous years. this is beyond and above what is
7:03 pm
expected of those engaged in volunteer services. >> the philippines disaster response agency says at least 42 people have been killed by a on christmas eve. the typhoon was the 21st tip the country this year. jong-un may have reconsidered his so-called christmas gift according to the u.s.. thanks to the diplomacy efforts of donald trump. abc the u.s.n told .s ready to respond this muammar's and and to the previous benchmark and takes another step toward liberalizing
7:04 pm
the financial system. the pboc has asked new banks to use the new rates as a price reference. they are gradually converting existing loans from march to august. >> the financial secretary says the economy is set to contract in the fourth quarter. the city reels from six months of social unrest. let's turn to rosalind chin. we has in the government put in effect four rounds of stimulus measures. can we expect them to do more? that he willsaid unveil some measures to support business and revive the economy in hong kong. there are external factors as well with the trade were going on between china and the u.s. not helping the situation.
7:05 pm
hong kong has been contracting for the last three quarters. it does not look like it will get any better than the forecast. it is inevitable that the economy will continue negative growth in the fourth quarter. that has been hit by retail sales and the number of tourists. there was a big posing retail sales. -- fall in record retail sales. mainland visitors accounted for 76% of total visitors. those fell 46% year-over-year in october. the hong kong government says the protests did a severe blow to the economy. it has been weakened by economic slowdown and u.s. china trade tensions.
7:06 pm
were worse numbers than expected in exports and imports. it is not expecting a great number for the month of november either. the numbers will come out in february. >> the government is introducing some measures to prop up businesses during all of this. is they lasting solution end to the unrest. could that happen? >> the protesters have five which, only one have been met. we can expect that could be more protests going on into 2020. that is the expectation for most economy observers of hong kong. 1 by is a plan for january the civil rights fund.
7:07 pm
a peaceful ballot took place on sunday yesterday in hong kong. there have been more violent clashes. several hundred people prefer to have been arrested over the holiday season. the question is how long will the hong kong economy continue to be better? the elections in november were swept by pro-democracy candidates. we are looking ahead to elections that will be later in 2020. paul: you can get more on the
7:08 pm
situation in hong kong and round the other stories you need to get your day going. that is all in today's edition of daybreak. you can get all that on the bloomberg anywhere at. -- app. >> next we will be discussing the latest with paul gambles. he joins us live from bangkok. this is bloomberg. ♪
7:09 pm
7:10 pm
paul: this is daybreak asia, i am paul allen in sydney. shery: i am shery on in new york. classmed like every asset was a loser in 2018 but in 2019, it reversed. haveof the biggest winners come from unexpected corners of the market. less -- let us get the latest.
7:11 pm
what do these track investments show? most markets, most asset classes did very well this year thanks to central banks, the ease policy and easing concerns about the u.s. china trade war. to get a little outlook, do even better, you have to go out on the risk spectrum. the stock market, russia and police are the real standouts. each of these markets went up about 50% this year. you put in $10,000 this year, your sending -- you are sitting on a $5,000 return. russia is badly beaten up in the currencywith
7:12 pm
depreciating. sanctions imposed by the trump administration, the economy not doing well, concerns about the oil markets all beating them down. this year, we have seen enough stabilization and -- in oil prices that the central bank was able to cut interest rates, the economy is looking a bit more stable. the stock market just went gangbusters. similarly, in greece, we had a transfer of power from the far left party to the main political party in the country. things look to be on much more stable footing politically and economically. bank has done particular well -- particularly well in easing policy. ?aul: what could do well
7:13 pm
what about in the bond category? : we did a separate survey of china market participants and bond market participants. the number one pick there is local government financing vehicles. this is a particularly risky area. many of these financing vehicles like sustainable sources of revenue to pay off their debt and run off more than $1 trillion in debt over the next decade or so as local governments use these financing vehicles to fund all kinds of projects. only some of which have any kind of income streams tied to them. the thing is that every time one of these local government financing vehicles gets into isuble, what has to happen
7:14 pm
local officials either into extendingnk a credit line or they will get all of the bondholders together extend you guys have to the bond or restructure it in some way. there has not actually been a default on one of the securities. that has made the yield premium on these things particularly attractive. broadly, whatre is the market that has been beaten up this year that could potentially bounceback next year? to -- look at chili, -- if you look at chile, their stocks are down. they had concerned this year.
7:15 pm
werenping and donald trump supposed to sign a trade deal. that had to be canceled. we will have to come back next year and see them in 2020. paul: thank you very much for joining us, chris. next up is paul gambles. we heard chris talk about some of the assets that might be worth keeping an eye on in 2020. these local financing vehicles in china, are they too excited? paul: i think they are. you have to believe in fairy stories to get hold of some of these local governing financing aspects. into getting strong-armed not defaulting.
7:16 pm
at a certain point, that will not happen. the china credit market is evolving. they are starting to creep in. i think the biggest story could be when one of these will be allowed to take its natural course. -- don't want to be all that holding that particular one. paul: in 2019, there was not too -- there wasn't too much toxic about that. paul: i am old enough to remember when we had things that would last three years, five years or longer. i think the real danger is, --
7:17 pm
when we talk about foam up, we are not talking about the key acronym. people need to be aware that we could get a pretty violent transition from the goldilocks 2019 scenario. >> how do you hedge? >> good question. there is not one simple single answer. i think you have to look at the price of options. athink you have to look these long and short strategies. strategiesn using ai
7:18 pm
for equity exposures as well. they read the markets. they have to generate signals. this helps you to generate signals. sure that you have multiple ways of hedging your data. in 2020, they could still be using good old-fashioned u.s. treasuries. >> does that also work in a market like china when it seems the rules of the game keep changing? we have seen the pboc announced that they're changing their loan pricing system, the rate system. when you take into account that you don't know what you will get from the government, how do you hedge that? paul: nobody knows what is working in china. that is the problem.
7:19 pm
this is an experiment for all of us. the key issue is that china will be different. the chinese policymakers, they operate in a different way. i am not sure you can second-guess the chinese policymaker. the better idea is to try to second-guess the u.s. policymakers. we are sure that the fed will have to end up being much more accommodating in terms of monetary policy than they are already laying out at the moment. we expect some pretty significant fiscal measures in the state as well. the question is do the u.s. policymakers get ahead of the market? this time, will it work? china, i think you have to watch and wait and see what happens.
7:20 pm
shery: do you take the latest move as a rate cut? the bloomberg chart is showing how they will get rid of that when you lending rate. then they would start using the longtime rate. is that a rate cut? paul: it is an effective rate cut. it is another storm -- form of stimulus. china's policymakers had inability to operate. i think what we will see is stimulus heading parts of the market such as the domestic place. it will be in a way that it will help those stocks. i will have more faith that china will see some form of stimulus.
7:21 pm
there is a lot of people in the mindset that china can keep or 7% orgrowing at 6% more. this is really a recognition from chinese policymakers. it will be a managed slowdown. people expecting high growth in china are going to be disappointed. we might see some form of stability and china that the markets will look at with envy. >> we are seeing that reflected. paul gambles, thank you for joining us. don't forget our interactive tv function if you missed out on any of our interviews. you can also catch us live and dive into any of the securities were bloomberg functions that we -- anye are part about bloombergurities or
7:22 pm
punches that we talk about. this is bloomberg. ♪
7:23 pm
7:24 pm
is teaming up -- grab is teaming up to attract tech firms into the financial sector. joining us now is edwin chan. what did is to bring to the table for each other? grab is the majority leader of this tire. what singtel brings is the track .ecord some foreign leaders will be focusing partially on -- harshley -- focusing a viableng forth business.
7:25 pm
grab has a couple entry suite of online financial services, most notably, its mobile laws. >> his digital banking the next big thing in asia? -- is digital banking the next big thing in asia? edwin: it is one of those final untapped frontiers in terms of the ability of the internet to disrupt traditional industry. financial services the world over are moving toward this digital transformation phase. in asia, it is moving faster than the u.s. and europe. you have seen this happen in china. there is a recognition from companies that this could be a massive and lucrative market. >>is ripe for transformation
7:26 pm
thank you, that is -- it is ripe for transformation. >> thank you, that was edwin chan. egypt has signed off on over's acquisition of their rideshare at. other companies may be able to view over's mapping and trip data to encourage growth in the market. buy careemced to back in march. paul: we work will have to pay a $.3 million each to its co-ceos -- 8.3 million dollars each to its co-ceos inhibit the company. were sent toages shareholders ahead of a 10 line
7:27 pm
dollar tender by softbank. -- $10 million tender by softbank. theyon musk says that could launch a starship vehicle in the next two or three months. starship is designed to transfer people to the moon and mars. they launched the project back in september. coming up next, charging ahead, tesla lamarck a major milestone. more, this is bloomberg. ♪
7:28 pm
7:29 pm
7:30 pm
shery: daybreak asia, let's get the first word news. president trump is facing criticism from political opponents for retweeting a social media post that names the alleged whistleblower. the move is seen as potentially breaking laws on protecting whistleblowers in the intelligence community. hong kong's economy is set to attract -- contract in the fourth quarter as it reels from social unrest. paul chan says it is inevitable that the negative growth will continue and to the government will be less flexible under an
7:31 pm
economic recession. demonstrations are set to continue into the new year. onice approved a mass rally new year's day. protesters marched into a facility here. we are taught about 700 protesters blocked access to the refinery. they process 25 and 30 barrels per day. they are putting more from the .eels -- fields in bosworth eased lifting rose. specifieson also securities and corporate bonds. punishing companies.
7:32 pm
vietnamese authorities are expanding their crackdown into chinese manufacturers who are trying to bypass u.s. tariffs. they are investigating local --ms best set up operations bonds that set up operations for exports to the u.s.. -- >> lets get a market check with sophie. they are up 70% year-over-year. santa biologics -- is trading at the struggles levels since november 8, making it the best forming asian currency this month with identical indicators signaling further gains in 2020.
7:33 pm
the kiwi and aussie dollars are gaining ground, training around -- trading around five month highs. let me show you what is going on with the bloomberg dollar index. this level has hovered around the past 1.5 years. in's check in on some stocks tokyo. i want to highlight the tory -- nitori. the stock is gaining grounds. the company is yielding results in china. this company is planning after planned job cuts in the wider first-half loss. leah powell is 21, climbing. shareholder seeks to remove the entire board of director. >> let's turn to china.
7:34 pm
lenders are adopting a new lump rising regime for all credit for next year. our chief economic correspondent joins us now. we are showing that one you lending rate. that is the white line that the idiocy was to get rid of -- pboc was to get rid of. red is about 20 basis points lower. how significant is this move? >> what they are doing is trying to move away from the key benchmark rate. measure all ofan the bureaucracy that went with that decision-making process. they are moving to a rate that is attached lower than the current benchmark rate.
7:35 pm
in the bigger picture, this will be a more reflective market sentiment. it probably adds to this feeling that china is slowly and gradually opening up in certain areas. it is still an economy with government owned companies. the banking system is heavily controlled by the government still. it still has a long way to go. paul: we have been talking a fair bit about local government financing vehicles. these bonds despite the mere hints of default. enda: the big backdrop of the china credit story has been corporate defaults on the increase. we have seen a lot of people worrying about whether or not the government is stepping away
7:36 pm
from providing a backstop to these credits in china. they are normally pretty high up the worry list. it is never clear why the government backs of the money. it shows you that investors are more confident that the do have the government's backing. that is why we are seeing potential bond issues. that is a good thing for the government to do. they want the government to continue borrowing into the new year. it is a positive from the governmental point of view. >> thank you for joining us. over the weekend, china's electric carmaker nio unveiled a
7:37 pm
new product. tesla will start delivering china built cars on monday, bringing more competition to electric vehicle makers. selina wang is our china correspondent in beijing. she has been watching the story. financiald some difficulties. what is the plan to stay upload? >> this company is only a few years on. it has backed up a lot of debt. over the past few months, they have been scaling back dramatically. analyst are still concerned about financing. they did announce that william li and one of their biggest shareholders would be restructuring the business.
7:38 pm
they had this big blowout day over the weekend where they announced that their production vehicle. they have also been offering some incentive for three years. demand is picking up for nio. they are of against increasing competition next year. >> today, we will see the first delivery of those made in china cars. what are we expecting? >> we are eagerly watching for the first 15 units of these cars delivered from its shanghai ghetto factory. these are expected to be delivered to employees. the first one is much more symbolic than the first round of
7:39 pm
deliveries. this is the was largest car market. how to build its relationships. this is the first factory for tesla outside of the united states. first for china's manufacturing car plant. tesla is going to face a number of critical challenges including local competitions from the global players, benz, bmw. they all want appease of china's ev market. of china's ev market. be watchingll also
7:40 pm
upper what this rollout says about tesla's broader ambition. tesla wants to go the end the markets and they are planning on opening a production unit in europe. i will be watching very closely on how to execute in this market. >> selina wang, thank you. bracingp, investors are for this to continue next year. the city monetary authorities told bloomberg that they are seeing massive capital outflows. this is bloomberg. ♪
7:41 pm
7:42 pm
>> at least double-digit growth for you in 2020 in the chinese market. >> would you expand hong kong? >> i see are going through amazing changes and difficult moments. confident about them -- about hong kong. >> the social unrest in hong toll.s likely to take a eventually it could interrupt
7:43 pm
the sales to local residents as well. traffic could be very unpredictable. to sum it all up, we believe that the sector makers of 20 or 30% drop in premiums. this could be coming down 40% over the next few months. it takes time to get the visitors coming back to hong kong. even for the office, we could see more charge. >> we don't expect the hong kong political rest -- unrest to see any resolution in 2020. that will put pressure on the hong kong dollar. there could be ipos coming up as
7:44 pm
well. that could i should be a better window for investors to push the hong kong dollar. a that could actually be better window for investors to push the hong kong dollar. >> investors bracing for the political impasse in the city to continue next year. hong kong's image as a financial hub has taken a hit. deputy chief executive howard the -- cowardly -- howard seeing they are not affect in the market. howard: the market has been pretty calm. bankers and market
7:45 pm
practitioners think the immediate impact of the bill is not going to be huge for the time being. much of it depends on further development. what they are doing is looking very much at the fundamentals of hong kong. including what we can have under the one country to system. two systems. i don't think it is very helpful to speculate on different possibilities. i think the hong kong special status is still intact. that is what made hong kong a place well-positioned to offer the opportunities that many investors would like to have.
7:46 pm
there is no apple on the hong kong dollar in the paschi months. , itou look at other metrics is actually pretty stable in the past few months. intoe economy has entered a recession. you have this trade war. now the domestic situation as well. is this time any different? the markets are showing some signs of stress but it is nowhere near anything extreme. what would bring the foundation? you talk about the economy. we look at a different sector, we are going through some difficult times. that did not start from the middle of this year or the summer of this year.
7:47 pm
it started from mid last year when the trade war actually heated up. this is having an impact on our economy. starting from summer, we're seeing more impacts on the more visible sectors. -- particularly, the tourism sector. this is something we need to be concerned about. this is why they may have been launching measures to help the economy. we have a platform to discuss with banks how the government has launched a new loan scheme.
7:48 pm
paul: that was howard lee talking to yvonne man. clinicalcome, starting trials next year. that this is some skepticism. we will tell you all about it next. this is bloomberg. ♪
7:49 pm
7:50 pm
>> this is daybreak asia, i am shery ahn in new york. paul: i am paul allen in sydney. china is expanding its generic drug program to include 33 drugs moved to pit domestic and international drugmakers into a price were. -- war. provided skepticism about this. we are joined by rachel chang. let's start with the story of the alzheimer's trial. this is being very closely watched. why are there any expectations that this drug could work when so many before have failed? >> that is an exciting development. when the chinese government gets conditional approval for this drug, that was a real global reaction. companyortantly, this
7:51 pm
just came out of nowhere. nobody knows this company. giants haveceutical failed to find a solution for this. this is really something that is being watched globally. therapyoes the chinese for from the western approach? rachel: this drug is very interesting. the western approach is very focused on the plaque that those of in the brain for alzheimer's patients. major pharmaceutical giants have been trying to find a way to get rid of this plaque in the brain. this chinese company is using a compound that is interested -- ingested like a normal drug. that affects what is happening in the brain. people are looking forward to finding out how this is working. paul: you have been reporting on how china is expanding its drug
7:52 pm
buying program. what is the significance? rachel: china wants to save money because it wants to spend more of that money in expanding health care quality access. what it is doing is forcing companies to drastically cut prices. these are drugs that have been on the market for many years. they are very widely used. they range from cluster authorized to chemotherapy drugs. the chinese government wants the the chiefhina to be globally. course how is this affecting the global players? >> it is putting a lot of pressure on them to shift away into new drugs. i think more importantly we will start seeing the global ramifications of when you have a massive country like china where drugs are so cheap, other countries are going to start
7:53 pm
asking why we can't have these drugs at these prices for our patients. that is up and that will affect the global pharmaceutical market going forward. >> macau's monthly casino revenue is going to continue to plunge wendy gaming regulator reports this week. gross gaming revenue is projected to fall year-over-year according to nine analysts. that is worse than the 8% fall last month and relatively marginal 3% drop in october. paul: grab is partnering with singtel to attract tech firms into the financial sector. 60% stake and singtel will hold the rest.
7:54 pm
they will grant as many as five virtual bank licenses. pledging to improve the company's finances. a deal on monday is expected to show mounting losses. this is fueling competition from teslas china. models of the tesla three. shares have plunged 61% since the debut last year. this u.s. billionaire is nearing to purchase of the italian soccer club from roma. he is buying the club from its main shareholder. it team would be valued hundred 72 million u.s. dollars. shares have surged 9% in italian trading on the prospect of a deal. pressure across
7:55 pm
asia, let's turn to sophie for what to watch. sophie: we will be watching china. they ordered banks to shift all existing loans to the new loan prime rate. it is 20 basis points lower than the old benchmark line. moving along, a snapshot here in hong kong. we are mainly very much elevated. this is the biggest premium in about 20 years. paul: therefore we handed over to bloomberg markets china open, let's get a snapshot of how we are trading right now. we have most of the key markets weekend -- weaker at the moment. new zealand giving up some of the gains we have seen as well. they are off .25% right now.
7:56 pm
australia is weaker by 7/10 of 1%. >> we are not seeing much in terms of movement. we saw asian stocks leading in commodity shares. course, we had mentioned that a new regime when it comes to loans and interest rates. this could actually give a boost to the equity market. we will see how the markets respond to that. we also have the industrial profits rebounding in the last month. that could feel some positive
7:57 pm
sentiment there. -- fuel some positive sentiment there. aroundshore yuan is 6.98. we will have more with william now. that is it from daybreak asia. market coverage continues. paul: let stand by for bloomberg markets, the china open up in just a few moments. stay with us, this is bloomberg. ♪ here, it all starts with a simple...
7:58 pm
7:59 pm
hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today.
8:00 pm
david: we are counting down to the trade of opening in hong kong. let's get to your top stories. reforms underway and china. the new market order from the pboc. selina: a downbeat into the year and hong kong as protests continue. david: and president trump's tweeting is landing him in trouble. the fact that he shared a post that identified the whistleblower who triggered his impeachment.
8:01 pm
♪ selina: as we head into the new year, things are looking a little bit better for china's economy. in december. we have this new interest-rate reducingelling -- borrowing costs and stimulating the economy. david: hopefully that is the effect. -- unpack that story and a bit. we are approaching the open. we are off by about a fifth of 1%. keep in mind, it has been a very good december 4 risk assets.
8:02 pm
it does not seem like we will get that. have a look at the open of several markets. korea is trading for the last time this year. a tepid stock market. you're under performer for this year has been malaysia. a quick check of the bloomberg dollar index. have erased all of the gains of 2019. a pretty steep drop. we have seen a relatively steep drop. 10 year yield, nothing much to talk about their. -- there.
8:03 pm
that is your market set up today. nothing very exciting. china's top lawmaking body has approved changes to the security law easing. affect depository receipts for the first time. in addition to stocks and corporate bonds. vietnam is punishing for companies. authorities are expanding their crackdown into chinese manufacturers are trying to bypass u.s. tariffs. the customs department says it is locating -- investigating firms. a man has been arraigned on five counts of attempted murder after a multiple stabbing in a new york suburb during the jewish
8:04 pm
celebration of hanukkah onset in night. andrew cuomo describes the attack as an act of domestic terrorism. president trump urged the nation to unite against anti-semitism. wildfires in australia are expected to get worse this week among rising temperatures that are set to peak on new year's eve. more than 12 million acres of land have burned. nine people have been killed and 950 homes have been destroyed. volunteer firefighters are challenging the bushfires in the state of new south wales. >> this is a very prolonged fire season. this is putting additional demands on our firefighters. the calloutsand have been far more extensive than in previous years. it goes beyond and above what is normally expected of those who
8:05 pm
have engaged in volunteer service. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. the earliest indicators for the chinese economy indicating a rebound. first time in eight months. take a look at this graph that outlines all of that for you. the other thing we want to touch on here is what the pboc announced over the weekend. telling the banks to start using the new prime loan rate. our china economics editor is here to talk about that. let's start with the pboc. tell us about the mechanics and with the impact will likely be. >> this has been in the making for quite some time.
8:06 pm
get it ise going to all of the existing loans and new loans will be transitioned to the new low prime rate. that is a more market-driven rate. starting from the first of january. this should be complete by august of next year. what is left out his mortgages. part of the economy will see lower bargaining costs. some will be kept on the little bit longer. selina: what about the sectors that are set to's -- to gain the most? if you are a company that has extensive borrowing, if some of those lands or all of them are on floating rates, you will receive on average a reduction
8:07 pm
in your interest payments. the loan prime rate as it stands is 30 basis points lower than the existing old one-year lending rate. all else being equal, interest-rate payments for companies should go down. that could benefit developers. and also state-owned companies as i just mentioned. david: we also mentioned the early indicators that we might get a rebound. what we are seeing is the stabilization that has been in the air for a couple of months. we are going into 2020 not exactly on a rebound, because 2020 as a whole will probably be slower. but we are seeing the deceleration of the economy coming into check. there has been a lot of policy in the last few months.
8:08 pm
we have seen the tariff cut. of anothern pledges rrr coming in next year. rules ineen changes to the private sector. is an awful lot going on. this seems to be helping. it is showing up in our indicators. david: pmi is up. looks like you and your team are going to be very busy in the new year. joining us to talk is william ma. it looks like 2020 is setting up quite nicely. : we believe 2020 will be a paradise for active managers in the china market. we are talking about active versus passive. we are seeing wide dispersion.
8:09 pm
david: it is already becoming unfair. some are lifting the benchmark. william: we will continue to trade that. in 2020, we are seeing more global and institutional money going to the market. that will increase the dispersion on the company level. selina: we were talking about this new loan prime rate. china scrapping the old
8:10 pm
benchmark. how do supportive do you see this change being? excited.we are very it is good for the chinese economy. it is more supporting to the private sector and the china market. you look at the contribution of the private sector. gdp is about 60%. liberalization of markets will defend tray shape the good companies from the bad companies. all in all, we are very positive on this change. selina: how effective do you see affixing the transmission problem of giving credit to the smaller and medium-sized enterprises? what transmission issues still arise? william: the issue has been addressed.
8:11 pm
the chinese government is suggesting the chinese banks domestic and small companies. the second is to develop a healthy bond market. david: if i own a banking stock, should i be worried about this? william: it will compress the negative margins for the banks. we are positive on overall biking sector. generating up to 6%. with us.tay a lot more to break down. still ahead, a beijing expansion of a drug buying program. will this be a shot in the arm for chinese pharma companies?
8:12 pm
next, as protests continue, hong kong's finance chief is getting a shanking feeling on the economy. this is bloomberg. ♪
8:13 pm
8:14 pm
selina: we are just a few minutes from the open of trade on the chinese mainland and in hong kong. david: 15 minutes away. let's talk about hong kong for a minute. the finance secretary says the economy is set to contract this corner. .- quarter where did we get these comments from? on sunday --a blog he wrote it in a blog on sunday.
8:15 pm
we have seen contraction in the last two quarters. technically hong kong is already in a recession. hasgovernment in hong kong predicted a 1.3% fall in gdp annually. these fourth-quarter numbers out in february. he is already saying things are not great. he said the financial markets have been better. also said in his february budget he will roll out some measures to support businesses. the issue has been facilitated by the protest. retail sales have been badly hit. 24% in october. we saw visitors on the mainland
8:16 pm
falling as well. not a good link -- look. selina: when it comes to the protest, we did not see any let up over the christmas holiday. in 2020 thathope there will be deceleration in the protest. the last few days, over the christmas break, we did see protests filing -- firing up in large malls. mainly on the kowloon side. despite the rain we did see numbers of people coming out. we do expect smaller protest to continue. that is a sentiment echoed by
8:17 pm
the business community. are not expecting that to let up in 2020. there will be a big rally on january the first that has been approved by the authorities. we are expecting some big numbers to turn up for that one. selina: thank you for that. i want to quickly bring up the yen. significantly stronger than what we were expecting. the strongest since august. still with us is william ma. we were just hearing that dismal news about hong kong protests continuing.
8:18 pm
weaknesses in the economy. do you buy the dips in the hong kong market? been increasing our exposure to the hong kong market for various reasons. you look at the revenue from all companies. is domestic valuation. you look at the inflow to the hong kong market, we are looking at 29 billion u.s. dollars. look at the china and asia domestic consumption. it is cheaper. when you say you are increasing your exposure, to company simply listed here? and not really getting their business from here?
8:19 pm
will you be increasing your exposure to hong kong? william: i think it is a little bit too early. until we see the earnings recovery. be looking at stable businesses like banks. that is a good fixed income. david: a lot of people have said that. december is on track to be the second-best month this year so far. -- behindu think is a this turnaround in overall sentiment? 2019,m: if you look at earlier this year, there was a sale sign indicator. in april, the peak is 80%.
8:20 pm
now it is back to 80%. in 2020, we are expecting investors to focus more on the china and hong kong market. if that happens, i think the sentiment will grow stronger. look at the hedge fund manager exposure. they are having peak exposure. 80% invested. 20% cash. the investment community is increasing its exposure already. about theu talked opportunities when it comes to evaluations. how does that compare to the opportunities in other markets? william: for the asian market, we are seeing risk and overcrowded trade. as i mentioned earlier, year-to-date to date, the best
8:21 pm
sector is food and beverages. some of the stocks are trading at more than 20% times the books. if they want domestic consumption exposure, they may as well use the stock to invest in hong kong listers. banks and stable income kind of stocks are worth investing. david: if you have anymore more questions, tv is the place to go. we will consider them. if you are away from your screen , catch us on the radio from a brand-new studio here in hong kong. listen on the app. bloomberg. ♪
8:22 pm
8:23 pm
8:24 pm
selina: here's a quick check of the latest headlines. a government initiative to attract tech experts into the financial sector. the monetary authority of singapore has plans to grant as many as five virtual bank licenses to boost innovation. a .3rk will have to pay million dollars to each of its co-ceos. if the are fired or leave the company. this is according to the financial times. the exit package terms were sent in advance of an
8:25 pm
offer. on uber'ssigned off acquisition of a ride hailer. uber announced its plans to buy the company for just over $3 million back in march. david: the open in just five minutes. a lot of stories to talk to on the mainland. bank said start using this redline that is your new prime rate. pricing ofing your credit to the banks. the end objective is to substantially bring down the cost of financing. it is one of our top stories of the day.
8:26 pm
it is a step in the right direction. it remains to see what the impact will be on the chinese ago -- economy overall. it, this is assed one month measure. that being said, it has now taken to hong kong. have a look at this graphic. the hong kong dollar is on track for the strongest month going back to 2002. as wes your set up approach the open. of thets is the upside hang seng index. we might get a double-digit return this year. about 9% or so. this was quite stronger than
8:27 pm
bonus people anticipated. the open is coming up. second to the last trading session of 2019. bloomberg.hing ♪
8:28 pm
8:29 pm
♪ david: almost 9:30 in shanghai which means it is almost -- either happy hour or post dinner drinks in the united states. if you are having a beverage and -- you probably deserve it. have another one. we are set to open lower. lots of views on the weekend, they were trying to -- last couple of minutes or so. warm drinkould use a
8:30 pm
in beijing. it is freezing but a beautiful clear blue sky. when it comes to the policymakers, they have been busy announcing a slew of changes. rrr cuts. private firms getting more market regulatory using when it compares to the state owned enterprises in the scrapping of the old benchmark moving to the prime rate regime. looking at the board that disappeared behind me we were seeing -- here we go, across the board. this is after a friendly month when it comes to risk assets. the shanghai composite was up about 5%. parent back a little bit of the gains. also want to point out there is a new security flaw -- security law that will be relaxing some of the listings. we will talk about that later in the show. looking at the 10-year yield, as i said, this new low prime rate
8:31 pm
is to reduce the borrowing costs , hopefully reduce the transmission issues. until yesterday we saw yields pick up slightly, bonds rallying for six straight days. the 313 level. looking at the currency, the six came in stronger than expected. 698. around 699.g it there has been positive sentiment with the chinese markets as a result of the phase one trade deal and better indicators with china's economy hitting a bottom and turning around and stabilizing in 2020. david: we will get some numbers tomorrow to turn that around. the open is looking ok. december has been very good for hong kong. i mentioned it earlier. the hong kong dollar is on track for the -- is
8:32 pm
for the strongest. the hang seng index for the second-best. you look globally from the start of this month, the hong kong enterprises index, actually the china enterprises index is the third best-performing benchmark globally after argentina and after hours as well. very quick look under the hood. mrr takes you to this. looking at the hang seng index, it is up .6%. it is that time of the year. selina: china's top legislator approved changes and it is using listing rules and stiffening pollens these -- stiffening penalties. they want to list -- have chinese companies list at home rather than in the u.s. why is this securities law so
8:33 pm
important? >> this is really fundamental for china's securities market. i have been to plenty of forms and meetings were regulators are saying we want this to be passed level of raise the violations. in terms of the big changes, the big one is formalizing the registration-based ipo's which are already happening and we know it will be extended in shenzhen. perhaps one day it could be on the main board. we don't have a timeline. this is really about formalizing the fact you no longer need the csrc to act as a gatekeeper and approve all of the listings that go on and instead have to closure -- disclosure which is closure -- disclosure which is giving more to investors. selina: these changes have been
8:34 pm
a long time coming. were there any surprises? >> this has been basically in review for more than four years which is a testament to how difficult it can be to pass these changes. there are external factors like in 2015. market some of the changes also include raising the penalties. issuance fraud, the maximum penalty is 20 million. before it was 600,000. in what youcrease are looking at if you basically [indiscernible] in the market. david: we will continue to track that. regulators are upping the bar, in the mainland to global standards. thank you so much. our china regulations reporter. let's bring in william now. our partner and co-cio --
8:35 pm
i know there is a lot of money being reallocated back to china. it opens up more. how much money is being refiled back on -- being put back on shore? >> if you are like, don't worry, and money, actually growth area. growth asset. the country and market, provide the highest growth, we are seeing global allocators. exposurereducing the in the european market and shifting. the challenge for the asia market is because of the excess and reform. access and reform. now people see -- they feel more comfortable. last but not least if you look things, the northbound flow is about $54 billion u.s. the flow has been very strong.
8:36 pm
there is a lot of money coming this way, the market is opening up. there is not as much quality information on as much companies as one would need. does that well? how far up the risk spectrum is the money going? >> investing in china is not mainstream as compared to global. a lot of active managers and apparently in the hedge fund alternative space as well. funds,look at the mutual $2 trillion u.s. $2vate equity, there is trillion u.s. most of them are active managers. , 2016, 2019, cycle a quarter of the country's generate positive reform. -- positive return. there was dispersed on the stock
8:37 pm
level. the investor who worries about the trade war and the domestic economy slowing down -- going forward we believe there will be a sector rotation. selina: when it comes to mainland markets, are you seeing a lack of exuberance? beentock accounts have slowing. many ipo's have flopped in recent months. domestic retail investor is not reactive because of the outlook and earnings and they are worried about sentiment. if you look at the institutional investors brace, we are seeing them increasing exposure. retail,es the domestic they are lagging behind fundamental investors. continue to go up. we expect retail will become more active again. do you think the chinese
8:38 pm
economy has reached the bottom? we are seeing signs of. stabilization from various angles. on gdp is slowing down but l-shaped recovery. the company earnings, we see as down we see some domestic stoppingrer, ceo's are to increase. talk to them late last year, they are so uncertain about the u.s.-china trade war and they don't want to invest. but they are getting more evidence. they start hiring and they start spending. spending just -- start capex. david: is dividend stocks a good place to be? if you look at the global investment space, 3% locally, we
8:39 pm
are talking about high-yield 6%. at this juncture equity is more attractive. secondly some of the em fixed outcome, those are more attractive as well. great stuff as always. have a happy new year. let's get you an update of your first word news. starting things off with ongoing news with north korea. leader kim jong-un may have reconsidered the so-called christmas gift to the u.s. thanks to diplomacy efforts of president trump. north korea suggested a gift would be forthcoming after demanding additional concessions as part of the stalled nuclear talks. robert o'brien said the u.s. was ready to respond should kim fire additional long-range missiles. at itss shut operations
8:40 pm
refinery after protesters marched into the facility according to people familiar with what is going on. about 7 million -- 700 protesters blocking employee access to the refinery which and 30es between 25,000 5000 barrels a day. the oil industry is pumping more from its fields to make up for the drop in output. disasterppines response agency said 41 people by known to have been killed a typhoon that hit christmas eve. dozens more are missing and injured. the damage to local crops and infrastructure totals near $20 million. it was the 21st cyclone to hit the sub -- the philippines. the pboc ordered lenders to adopt a new pricing regime for all new credit starting next year. it marks an end to the previous benchmark and takes another step
8:41 pm
towards liberalizing the system. the pboc asked them to use the new rate as a pricing reference for all loans from january while gradually converting existing loans from march to august. global news 24 hours a day on air and at quick take, powered by more than 2700 journalists and analysts in more than 120 countries. chinesecoming up, a new drug is set to start clinical trials but there is some skepticism. this is bloomberg. ♪
8:42 pm
8:43 pm
♪ david: welcome back. you are watching bloomberg markets china open. a reminder in case you haven't noticed -- we are going to talk
8:44 pm
about the renminbi, the trade story between the chinese and americans. they say they are not ready to start phase two of the trade talks, having reached the racial -- the initial agreement but a number of things remain. we have a senior policymaker in beijing who told us the main issue is tariffs should be rolled back. >> i think the trade war began with the additional terrorists, socially -- tariffs, so we should remove them. >> let's say we get a deal. the focus goes to number three. is china prepared to make changes to its policy and to cut as partstate subsidies of those negotiations? >> i think it will happen.
8:45 pm
when phase two and three happened, china will get deepening and accelerating its opening up. this is possible. we hope we will have new opening up measures of protecting intellectual property, optimizing investment environment and foreign investment and market access. charlene who from helps to negotiate china's entry into the wto. system of state capitalism, the role of the party, intellectual property theft, massive state subsidies for chinese companies, those issues remain. she pointed to those. she is right. those are still major issues for china. >> she is my good friend. i think wto needs reforms. of wto is aoblem can't keep pace with the times.
8:46 pm
so as to move wto it forward. of course in terms of ip protection and subsidy for mentioned,panies she we remove any unreasonable subsidy when we can conduct reform and promote market economy. tom: are we looking at below 6% growth in china? believe inally general next year's gdp will be better than this year. china's economy will be better than this year. china's gdp growth will be slow for the first half of the year but it was steadily grow for the second half of the year. david: tom mackenzie with china's former vice minister of commerce.
8:47 pm
staying in china, we are talking pharma and health care. the country is expanding its generic drug program to include additional 33 drugs. it could put people in a price war. and they are set to launch global tryouts despite skepticism about efficacy. let's start with the drug program which has been a, quite a big bigotry change. >> it is a big reform on the part of the government to save money on the buying of generic drugs which have been around for widely used.d are people are saying they will be saving $20 billion, that they can use them to build up the health care system for the chinese patient population. this is having a major impact on foreign pharmaceutical companies because they are seeing drugs , someelied on for revenue
8:48 pm
have dropped prices by 90%. there is a lot of skepticism this company could achieve something so quickly that has eluded so many western firms. waite company is saying and see. they are taking the next step now, to do trials in the u.s. and europe and it will bring and global legitimacy seeing if they can have success elsewhere. this will be a major breakthrough. it is a disease that has no cure. people have tried over 200 types of drugs and have not made any progress. if this chinese company has found a way, that is a big deal. david: and just taking a step back, what is the background and the company? >> it is a shanghai company green valley--
8:49 pm
cyber -- pharmaceutical. they found despite my current -- adjusting the microbiota means .- micro biomes in the gut this is a different approach from what western pharmaceutical companies have done which is to look at the compound in the brain which is a protein that builds up in alzheimer's patients. this came out of nowhere. when the chinese government gave them approval for this, it was the first new alzheimer's drug that was approved globally in 17 years. fewer. major that has if they manage to break through it is a massive market. thank you for that fascinating report. you are watching bloomberg markets china open. here's a quick check of business flash headlines. elon musk has great expectations. he said his market -- rocket manufacturer spacex could launch
8:50 pm
its starship vehicle in two or three months. they will transport people to the moon and mars. he unveiled this in september. electricof a chinese carmaker is pledging to improve mondays as earnings due will show mounting losses. they are fueling demand a mud the slow av market and competition from tesla's model three. they have accumulated $6 billion since 2003 and shares have since the debut last year. he may have deleted between but it is not stopping pressure on trump for naming an alleged whistleblower. we have the story. this is bloomberg. ♪ this is bloomberg. ♪
8:51 pm
8:52 pm
8:53 pm
president trump facing criticism from people to retweet a post to name that whistleblower. this resulted -- let's get more from our senior editor. can trump actually do this? walk us through the consequences he could face. welcome to another discussion of the difference between the word can't and should. president trump has stepped into another controversy here. this one, where he retweeted a twitter account naming of someone who is apparently the whistleblower who is said to be the whistleblower. we don't actually know. it is hard to say what the validity is. taken with grain of exception.
8:54 pm
the president has a legal duty similar to a fiduciary duty to protect whistleblowers under the intelligence community. this is what this person happens to be. outing them is seen as a form of retaliation. by retreating he may have actually according to legal scholars, he may have run into conflict with this. for people who have been following this recent difficulty with congress and the impeachment process, you will know it is hard to discipline a president for about anything. is main way one does that through the impeachment process. when congress comes back, we will have to see what lawmakers are going to do about this. as we stand here, about the only thing that has happened is there have been some fairly soft criticisms, most notably from
8:55 pm
john kennedy. that was pretty muted. some of the big people, chuck grassley, who has been a major whistleblower advocate in the past, haven't been that vocal. we are waiting to hear their a deals to know how big this will be in his base. david: has the white house made a statement and who was the person he retreated? -- retweeted? derek: i love that question. who was this person? let me take issue with the word person. the wall street journal went into this and it appears it may have been a bot the president retweeted. tweeted several times a day. as of right now, if you are listening to me talk and
8:56 pm
googling furiously you will see they account -- the account doesn't seem to be responsive. the looking like it was any actual person. is one of the, it more bizarre ones but it could be a consequential one. selina: thank you for breaking down that. lacking details still. for another look at the markets, it comes to mainland markets, we are seeing little changed drifting lower. that is after notching around 5% gains since the start of the month. there has been trading ahead of the holidays. they have been scrapping of the old benchmark and telling banks to use the new loan rhyme rate. david: u.s. futures looking like this in terms of the magnitude of the moves. nifty futures, we won't get a record out of india.
8:57 pm
and we have the of malaysian ringgit at the shortest level since july. plenty more ahead. this is bloomberg. ♪
8:58 pm
8:59 pm
david: it is almost 10:00 a.m.. selina: here are the top stories. gathering momentum, new interest rate benchmark for loans and securities laws. david: it is a downbeat and to the year for hong kong -- end to the year for hong kong. it will contract for the fourth quarter. selina: tesla charging of its expansion plans, and we will assess the impact on the saturated ev market. ♪
9:00 pm
david: welcome to the program. a quick market check, chinese markets have been running 30 minutes. as for his volumes are concerned, when it comes to the csi 300, volumes are quite heavy. we are on track for 15 billion shares. 50% heavieres are than usual -- currently 15% heavier than usual for volumes. the hang seng index, that is the sixth or seventh best-performing index of globally so far. the hong kong dollar is on track for the strongest all -- strong response. -- tongass month -- strongest month. a bit later on


info Stream Only

Uploaded by TV Archive on