tv Bloomberg Daybreak Asia Bloomberg January 1, 2020 6:00pm-8:00pm EST
paul: good morning. i'm paul allen in sydney were markets have just open for trade. sophie: i'm sophie kamaruddin in hong kong. welcome to "daybreak asia." ♪ paul: our top stories this thursday, china ramps up its credit support increasing the supply of cheap funding to banks in a bid to stimulate the start of 2020. hong kong starts the new year just after the end of the last one with vandalism, protests,
and tear gas the streets. australia orders large scale from bushfires as the death toll mounts. sophie: let's check in on the open in sydney after the asx 200 best annualrop the performance since 2000. we see it open slightly to the downside as we wait for markets to come back online elsewhere in the region. we are getting some data from australia coming out this morning. home prices notching up the biggest three-month gain in a decade. we are not seeing much reaction in the aussie dollar, softening a touch after hitting a fresh high. new zealand equity markets remain closed and the kiwi dollar keeping fairly steady after topping 67 this week and japan also remaining off-line thel january 6, again,
currency cap a fourth annual gain. paul: thanks very much. president trump says he can assign the first phase of a trade deal with china on the 15th of this month ahead of a visit to beijing where talks will begin on the next part of the deal. let's bring in our china correspondent now, selina wang, in beijing. how definitive is the deal at this point, and is it too early to get excited about prospects for phase two? >> after getting some positive sentiment from navarro last week, peter navarro saying the trade deal was essentially done and robert lighthizer saying he was expect them to sign the deal in january, we do have a date at least from the u.s. side on where and when this will be happening. mind you, the china site has not confirmed date and the actual text of the agreement has not been released. the u.s. reducing existing
levees. china significantly picking up its purchases of agriculture but this deal is really just seen as addressing low hanging fruit and leaving out contentious substantive issues at the heart of the u.s.-china trade dispute including china's use of subsidies to support state-owned enterprises, but observers have noted washington seems to believe there is a lot more momentum flowing into phase ii and phase three than the china side, given that the remaining issues china sees as key to its economic security, its economic models, and there is not -- that's not an area china will easily make compromises on. sophie: on wednesday, we had the pboc following up with a pledge by china's pboc to cut the rrr.
quickset unleashes about $50 thaton -- >> -- >> unleashes about $50 billion in liquidity and will likely trigger a reduction in the rate. this was largely expected in that the premier had signaled these cuts. markets had largely priced in the expectation that he pboc would be doing some market easing measures in january, given the fact that there will be a ramp-up of local debt issuance as well as the fact there is often increased cash demand right ahead of chinese new year. in addition to that, the pboc did say they are maintaining their prudent monetary policy. we should not see this as a signal that they will be significantly easing monetary policies in the future, and this prudence is bolstered by the fact that china's economy does seem to be turning a corner. we are seeing improving economic
data, including better-than-expected pmi data that just came out before the new year, but there are still concerns that remain in the economy that are really preventing growth from accelerating, including the fact that private and small companies are struggling to get cheap access to credit. sophie: thanks so much, selina wang, our china correspondent. , the city hong kong kicked up 2020 with renewed protests, vandalism, and protest . tens of thousands of mostly peaceful protesters flooded the streets. us on thegle joins ground in hong kong. give us an update what has been happening over the last day. thehen: of course, we have january 1 rally. the organizer of the rally said more than one million people
turned. police put the number at least at the beginning out about 60,000, so quite a discrepancy. we can safely say tens of thousands of protesters did turn out, and not just protesters, ordinary citizens of all ages and again, they are calling on the government -- protesters are calling on the government to meet many of their demands, those five main demands, but the government, they say, has remained intransigent towards those demands, and that is where we stalemate.tty much a pretty much the date has changed, everything else has not. staying here are is because again, there was a lot of graffiti and vandalism overnight, including the 85 year old lions that sit outside the hsc headquarters. cast in bronze
back in 1935, so 80 years ago. they are replicas of the original lions outside the shanghai building, the headquarters from the 1920's. they have been here for a long, long time, long before this more recent headquarters was built, and the graffiti that is sprayed around it in jet -- in chinese characters says he much that hsbc has been dyed red by china. that is what this graffiti says. the other one basically says red color, again, the metaphor that hsbc is siding with china. keep in mind, the ira focused on hsbc is because a couple of weeks ago, they did close an account of spark alliance which is an organization which helped raise funds for protesters largely to pay for their legal fees, including the high cost of bail for the more than 6000
people who have already been arrested by police over the last six months. hsbc in a statement says the graffiti was unjustified and that the account was closed at the behest of a client, not necessarily their choice. again, police froze the account of spark alliance, seizing about $9,000 -- or freezing, i should say, about 9000 u.s. dollars on charges or suspicion of money laundering. gave president xi jinping his new year's eve address and used that to defend china's systems for running hong kong. let's listen to what he had to say. >> the situation in hong kong has been everybody's concern over the past few months. how can there be a home where people can live and work happily? we sincerely hope for the best kong'sg kong and hong
compatriots. a prosperous and stable hong kong is the aspiration of hong kong's compatriots as well as the expectation of the people of the motherland. prosperous and stable hong kong is the aspiration. any hopes for hong kong government will achieve that? stephen: the chinese government has been pretty steadfast in their support of carrie lam in the local government here and the condemnation as well of the violence that has ensued over the last six months. carrie lam in her new year's resolution address, voiced similar sentiment, that her resolution would be to restore social order and harmony. again, that is an end result desire, not necessarily a plan, so that is why many of the protesters who took to the streets yesterday voicing their frustration at the local government, that they do not necessarily have a plan to end their six-months, almost seven
months now of ongoing unrest. a call for an end to violence is not necessarily a plan. paul: thanks very much for that. let's get a check of the first word headlines now. kim jong-un says he is no longer bound by his pledge to halt major missile tests, and he will soon debut what he calls a new strategic weapon. the north korean leader says u.s. sanctions leave him no choice but to reconsider commitments. trump's immediate reaction was muted, repeating his assertion that kim had agreed to denuclearize. japan is expected to speak with lebanon through diplomatic 'sannels about carlos ghosn escape. according to a senior japanese official, the government was still unaware of details, including how he managed to flee japan and his exact whereabouts. the countries do not have an extradition treaty.
thousands of tourists and locals have been told to leave coastal areas south of sydney as authorities warned of australia's bushfire crisis is set to intensify. at least seven people killed this week and hundreds of thousands of properties destroyed. the scale of the disaster has fueled criticism of the government's climate change policies. >> i want to thank all those who are out fighting in these parts, all those out there supporting him in these difficult times. conditions remain tough, and for the rest of us, it is a matter of simply listening to instructions, staying safe, being patient, and doing what we need to do to put ourselves in a place of safety. tensions may be easing around the u.s. embassy in baghdad after anaren-backed iraqi militia has agreed to stop attacking the compound and leave the area. militia groups called on supporters to move on out of respect for the decision of the
iraqi government. the attack came as -- amid protests against u.s. airstrikes in the region this week. sophie: still ahead, kim jong-un warns he has a new weapon and is ready to take action. we will be live with the latest. paul: up next, the tribeca investment partners portfolio manager will tell us why emerging markets should outperform in the early part of the year. this is bloomberg. ♪
i want to start if we can in the u.s. in 2019 wege run-up saw a chart outlining how expensive the u.s. has got. can you still find value? is this sort of pricing justified when you consider earnings? what are your thoughts on that? >> we absolutely still continue in u.s.pportunities equity markets simply because we have a lot of political risks that seem to be easing into 2020 , and we should see the underlying earnings improving. that means positioning should be slightly different going into 2020 simply because some of the sectors that underperformed should outperform this year and will probably have cheaper multiples this year. paul: i wonder which sectors you alsoutperforming, but i
wonder which sectors you see outperforming. what are your favorite short picks? >> i do long and short together so i manage my risks. these could be some of the growth or tech names trading on very expensive multiples. this is not to say they are not going to continue to perform well, but this is only on the basis if their earnings can match expectations. , thee earnings don't match growing expectations, you will see the share price downside quite meaningful. sophie: what about the monetary policy side of the equation? do you expect more central bank easing in 20? thedo you see leading charge? >> i do believe monetary policy will continue to be pretty relaxed, so we will see more easing coming out of both ecb
the tory itself will continue to be reasonably accommodative. we will also see the australian rba continue to cut rates simply because of the continued struggling economy, but what is most important, i think, in the is the emerging markets. central banks should continue to use this opportunity to cut rates to support the trajectory of growth. sophie: the pboc looking to shore up the economy. what about this chart on the terminal here which indicates we could see this being a good leading indicator for the em space? are you seeing investor
confidence returned to em in a big way, or are we just testing the waters? are somewhere in between. we are testing the waters, but we are seeing performance start to come back in the markets. we do believe the early part of 20/20, we should see quite meaningful outperformance in those markets, simply because of the phase one trade deal should the much needed confidence returning to the corporate sector in terms of capex spend and manufacturing related sectors, so the earning will do better as well as will be pretty accommodative relative to the rest of the world. paul: do you think there is a risk maybe we could see some sell the facts going on? >> we saw that a little bit toward the latter part of
december, only because people are not putting fresh positions in. market rally were boring into the january 15 deadline, there is the possibility there's expectations baked in before possible outcome relative to the next phase as well, which is a little bit risky. caution is required as we head into that deadline. paul: yeah, caution is required. how do you hedge against that kind of thing? i'm thinking about one of the big portfolios that did well in 2019, the 60/40 strategy. rewards inng to reap 2019? >> i do believe you need to manage a portfolio is a barbell strategy. i was going to say one of the ways to do it is through longs and shorts. you can manage your risk on those bases. you can go out and buy the great tech companies but short the .thers
important to remain defensive but selectively moving into cyclical sectors. how are you positioning when it comes to volatility? some pickupcipating across asset classes? >> absolutely. we feel volatility has been pretty low, so it should improve as we are heading into the reporting season for sure simply because there is a bit of movement in terms of earnings expectations and there might even possibly be some weakness headed into the reporting season. tohie: returning once more china, given the anticipation of the phase one deal being signed protracted into negotiations with the election coming up, what might chinese authorities see in terms of
economic growth? >> i do believe at this point still might sign the phase one deal and the phase two deal will take much longer to be sorted out given some of the , but for china, we do believe once phase one is done, the rhetoric is very much going to move back toward the deleveraging rather than growth, so that could possibly in the latter part of 2020 force a bit of pause in the equity market, but it is a feat to see how things are planning out -- are panning out. paul: we have china lowering the rrr again, and everyone expected that. >> this is just part of their interest rate reform.
it seems they have accelerated that reform, really moving towards what it should be. potentially, there could be issues coming through, but it seems that they are very focused on stimulating the economy to .et that growth back up once we have that clarity, things could -- you know, they could stabilize in the rhetoric. for joining so much us. you can get a roundup of the stories that you need to know to get your day going all in today's edition of "daybreak." bloomberg subscribers go to dayb on their terminal. this is also available on mobile and the bloomberg anywhere app and you can customize your settings so you are only getting news on the industries and assets that you care about. this is bloomberg. ♪
paul: this is "daybreak asia." i'm paul allen and sydney. sophie: i'm sophie kamaruddin in hong kong. here's a check now of the latest business flash headlines. foru gaming revenue slipped december, marking its worst annual decline since 2016. gross annual revenue was down almost 14% from a year earlier. casinos have struggled to lure highrollers in recent months amid ongoing protests in hong kong and an economic slowdown in china. of a big tie talk up in the sports entertainment space. we're told the talent agency and media group endeavor is poised to buy a luxury events company on location experiences in a deal valued at about $660 million. on location offers luxury travel services and exclusive fan experiences including on-field access to events such as the super bowl in ryder cup.
sophie: trumps the fire says his administration will soon issue new regulations on flavored vaping products. according to bloomberg sources, the regulation will require all prepackaged flavored vaping products other than tobacco and menthol to be at least temporarily taken off the market. paul: we are watching tencent .hares in hong kong it ends months of talks with a deal that values the world's biggest music company at $30 billion. tencent and its partners have an option to increase their stakes to as much as 20% of the same valuation to january 15 next year. sophie: commodities traders closely watching the price of platinum. bringing 2019 investments to
$850 million. her. biggest annual paul: thanks very much for that. let's get a check on how we are trading here in australia right now. we have markets returning to 2020, higher by .1% right now. we are about 30 minutes into the trading day here. bit of a mixed picture sector wise. information technology performing quite well, but the heavyweight financials and both a little weaker. the aussie dollar about $.70. it has been a wild since we have been there. holding steady for now, some suspect maybe this rally has been a bit overcooked. plenty more to come on "daybreak asia." stay with us. this is bloomberg. ♪
sophie: this is "daybreak asia." i'm sophie kamaruddin in hong kong. paul: i'm paul allen in sydney. let's get you up-to-date with the first word headlines. hong kong has kicked off the new year with renewed protests, vandalism, and tear gas. riot police and demonstrators clashed again on new year's day and into the night after tens of thousands of mostly peaceful protesters took part in an organized march in the central business district. protesters vowed to maintain their fight for more democracy and less chinese control. president trump says he will sign the first phase of a trade deal with china on january 15 at
the white house. he is then planning to go to beijing to begin talks on the second phase. the first part of the deal will seal an agreement for china to increase purchases of american farm goods in exchange for lower .ariffs a new trade deal between the u.s. and japan has officially kicked in under the accord. japan is reducing tariffs on u.s. beef, pork, and other agricultural products. japan is still pushing to pursue its goal of reduced tariffs on auto parts it shipped to america. japan says u.s. officials including the president have given assurances that new tariffs will not be introduced. israeli prime minister benjamin netanyahu says he will ask parliament to grant him immunity from prosecution on corruption charges. that could block the start of his trial for months. the tv statement, he called trailer cornerstone to democracy and vowed to tear to pieces the
charges against him. israel --tizens of the immunity law is meant to protect elected officials from tailored lawsuits, from serving political cases whose am is to harm the will of the people. the law is meant to ensure that elected officials can serve the people according to the will of the people. sophie: let's check in on the session in sydney. we are seeing gaining ground at the start of a new year. recovering somewhat from the worst session for a benchmark in four weeks. in terms of the sectors, we do have health care and communication names helping while we seechmark .inancials on the back foot time to check in on the aussie dollar this morning. somewhat with signs of overheating for the
currency following the best quarter for the eight ud since march 2017. extending gains, up about .1 percent. thanks, sophie. north korean leader kim jungle and has declared he is no longer bound by his pledge to halt major missile tests, and he will new strategic weapon. from survivor's reaction was muted, saying he and kim have a good relationship. >> he did sign a contract, an agreement and agree to denuclearization. that was done in singapore, and i think he is a man of his word, so we are going to find out, but i think he is a man of his word. paul: what is this so-called
strategic new weapon mean for future talks with the u.s.? >> the announcement of the strategic new weapon shows there will be a significant policy shift in terms of how they carry united states. it also indicates that kim jong-un will no longer be sticking to his word, abiding by of promise to halt testing intercontinental ballistic missiles as well as nuclear bombs. this is specifically mentioned in an agreement that kim and donald trump signed in singapore, so it would be an indication he is escalating his rhetoric, pointing toward tensions between the u.s. and north korea instead of diplomacy. sophie: how was this message delivered on north korean television, and what does that indicate?
>> how the message was delivered is quite different than how kim normally delivers his speech. newersonally read out his year speech, it was not kim jong-un but rather north korea summarizing what kim had said. the party meeting report said he spoke with about -- he spoke for about seven hours with party members, and it also comes as a result of a four-day meeting theing that they are taking situation in terms of the policy shift not only towards the u.s. and north korea talks but also domestically in terms of economic development as well. sophie: carlos ghosn's dramatic escape to lebanon continues to pose more questions than answers.
asia consumers reporter lisa joins us. what is the latest and what have reactions been? >> it has been quite a story out of tokyo, but the latest we heard was a senior official has told us they plan on engaging diplomatically with lebanon on the carlos ghosn issue. it is not exactly clear what they will seek in their japanatic talks, just as and lebanon have no extradition treaty in place. of locallly, in terms reaction, i think it could return from shock initially -- even carlos ghosn's own lawyer said he found out about it on one ofal news -- two growing anger and frustration. several japanese lawmakers have been tweeting about how what he did was illegal, leaving the country and breaking his bail conditions. we have also had local media
reports talking about anger within the prosecutor's office saying that carlos ghosn had made a mockery of the japanese justice system. paul: carlos ghosn is no longer in the country. we are still waiting to hear from the man himself. will that be the next key point in the story? >> yes, that is going to be the main thing we are watching for. a local media report said he planned on giving a press conference in beirut on january 8 next week, so that will be the key point that everyone will have their eyes on. he said in a statement on tuesday that he plans on speaking his side of the story and is able to speak more freely now that he is and lebanon. also watching what will happen in tokyo. paul: still to come, and outlook
upstream e&p sector because of improved supply/demand fundamentals and we are bearish on refining. we are also bearish on natural gas because of a demand slowdown from japan and china, so we would suggest investor focus on the upstream e&p names, particularly for those in australia and china. >> we don't think china is going to replace coal soon, at least in the coming decade. : ounce for amount -- around -- coal amounts for around 59% of energy. by 2020, we think china is going coal energy links.
sophie: quick check on the latest business flash headlines. asia's richest man is taking on the world's richest man in a battle over online shopping. reliance industries started testing its online shopping portal, aiming to set up additional platforms to take on jeff bezos' e-commerce giant .mazon in india paul: commodities traders are closely watching the platinum price after a surge in interest at the end of the year. longley etf's focused on the metal jumping in december, bringing total investments to $850 million, their biggest ever annual inflows. platinum is used to curb emissions from diesel cars and had fallen out of favor among volkswagen'ser emissions cheating scandal. sophie: oil in new york tapped its biggest increase since 2016
a the back of opec production cuts. joining us from singapore is the founder of vanda insights. the start of 2020 after a very choppy year for crude, we saw it have a rocky second half, falling to about $61 a barrel this morning. with the timeline we have for opec, much being the next meeting to reconsider what their appetites may be, how are you positioning for this first quarter? sophie.morning, clearly, there's two factors up pricesbeen holding obviouslynd of those has been deeper cuts that have been pledged, and the other was that the u.s. and china agree on a partial trade deal. as we get into 2020, both these
factors remain quite supportive, but with caveats, of course. be thethose is going to durationopec cuts, the is unusually short, and as you just mentioned, though it is valid for the first quarter of this year, they will meet at the start of march to decide what to do for the rest of the year, so, clearly, barely two months into the year, the market will be looking for direction, you know, what they are going to do with their production restraint for the remainder of 2020. sophie: how will they find a market balance? >> it's going to be tough. i think one key take away for me when they announced in december that they would be just extending -- or rather, deepening cuts for the first quarter of this year was that realized the
unproductive ability and uncertainty in the markets has grown quite a bit. for the past few years, uncertainty used to be mostly u.s. shale and how that will perform in any pricing environment, but increasingly since last year, the uncertainty is around demand. i have a feeling, though, that even two months into the year after the phase i deal has been signed, they will probably end up meeting again with that same uncertainty around demand. belief is they will probably keep rands on supply. we have had comments from the russian minister in the past few days that he is again looking ,or an unwinding of the cuts but i believe they will have to keep a tight rein on supply throughout 2020. paul: is the global growth outlook really the critical driver for the oil cost in 2020?
>> yeah, absolutely. again, a couple of things here. earlier in your show, you have been discussing quite a bit about what the market over the world should expect now with a phase one deal about to be signed. for oil markets, it gets a little more complicated. outmarkets have to figure the progress of how china and the u.s. can de-escalate the conflict, and i don't think anyone is holding their breath for a complete rapprochement or ,hings getting back to normal but the oil market gets a little more complex because you have to with what anyts potential de-escalation of the conflict would mean for growth. fromld caution our viewers drawing a very straight line.
things are starting to look good on the trade front between the u.s. and china, that means demand growth will pick up. i do not think that is necessarily the case. we saw quite tepid growth, especially in the largest market, the u.s., and third-largest oil consumer, india. we will have to see how china does in 2020. it held up in 2019. aul: is opec heading for tough discussion about discipline among some -- among some of its members when it comes to honoring those cuts? >> discipline is definitely back and we saw some very tough discussions were had and that december meeting. the new saudi industry minister especially has, you know,
especially nigeria and iraq's feet to the fire, insisting that they have to do their bit. and he has the moral authority to do so because the saudi's have been cutting way more than needed through 2019, so i think the message has gone out loud and clear. it remains to be seen if iraq back toria actually go 100% compliance. however, overall, and i think this point needs to be made, that i do believe saudi's will continue to do whatever they need to do to ensure that overall within opec, there is full compliance if not more than full compliance even if some cheating continues to happen at the margins. sophie: turning to geopolitics at the moment, markets continue to look for developments around iraq. again a bigcs were
factor in oil markets in 2019. i expect them to continue to remain center stage in 2020 as well, again over the past few days. we have seen quite a bit of disturbance again, this time slightly different. we saw a lot of protests against the government's corruption last year. this past few days, we have seen a sort of proxy war between iranian militias and the u.s. in iraq. nigeria and libya remain problematic as well. overall, the middle east instability -- we saw saudi attacks on saudi oil fields. allegedlyacks again by iran, so all of this is very much going to the main concern. if the oil market factors that in or not, that remains the question. that will probably happen once there is a bit of tightening in
supply/demand balance. we will probably see more of the risk premium starting to come back into oil prices then. sophie: focusing on non-opec supply, what indicators are you seeing that u.s. shale might be oilonding to lowering prices we have had of late? >> i think that he can is a bit of a wild card we don't hear much talk of u.s. shale responding to better prices, and this is something i would like to highlight to our viewers as well. of course, throughout 2019, the story was how u.s. shale is siphoning itself. i'm not suggesting the story has changed dramatically. we did see some of the total oil rates laid off through 2019. if you look at the fleet count and other metrics to measure imported activity into the , butr, that was also done i would say this, shale does
remain highly responsive to oil cwt i, and as we do stabilizing around current levels, or maybe even rising a little as generally sentiment picks up in the market around the u.s.-china trade deal, we could see the shale sector coming back. not a very big jump in activity and spending, but a little bit more. tosaw 2019 close out close 1.3 million barrels a day. the outlook for this year is close to about 9 million barrels per day. ,t could be substantial growth something that opec and non-opec, the collaboration will have to keep a very close eye on. paul: we have a report from bloomberg intelligence that some asian refiners are facing a fuel for, some weak demand
excess capacity. >> one of the countries that asian refiners are keeping a very close eye on is china. again, it has been a sort of two-speed world in china. we have had about 4%, 4.5% year on year growth. what has grabbed the headlines through 2019 was a nearly 10% jump in chinese crude imports. sometimes people confuse that for -- that is not the actual end-user demand in china, but china has continued to add refining capacity. it has increased its crude imports, but what you need to keep in mind is it is also .xporting a lot of products
the trend is likely to continue. the new capacity has to be used. they have to run it at a certain operating rate. i do believe that will remain a major concern for asian refiners because china exporting more essentially means less market opportunities for other refiners a japan, korea, india, and potential supply glut of refined products in the region, which is obviously not good for their products. sophie: thank you so much. happy new year. don't forget our interactive tv function, tv . you can watch us live and catch up on past interviews as well as any of the stories we've been talking about. plus, send us instant messages during our shows. this is for bloomberg's scrubbers only. bloomberg's subscribers only. ♪
paul: extreme weather in the coming days is expected to intensify australia's bushfires. the death toll is rising in the military has been scrambled to help thousands who have been cut off along the coast of new south wales. australia managing editor ed johnson is here. ed: it truly is grim. this week alone, seven people have died on the coast of new south wales as these devastating fires swept through coastal communities that have been packed with tourists during the peak summer holiday season. there's also been reports of a death in the far southeast corner of victoria state. firefighters are taking advantage of the cooling weather in the next couple of days to these take advantage of lasers, taking the unprecedented step of urging thousands of tourists in a strip of land
between bates men's bay and the border of victoria, urging thousands of tourists to get out of the region, saying it is extremeot safe, and as weather conditions return on saturday, they should take the opportunity to get out now. paul: there is a political dimension for this as well. what has pressure been like on the prime minister? >> that's a really good question. i think the politics of this will play out for some time to come. there has been a tremendous backlash against prime minister scott morrison on social media over the past week or so. in hawaii, people appear to be angry about his government support of the coal industry, and on social media, there is a hash tag, #scottyfrom
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♪ good morning. sophie: welcome to daybreak asia. ♪ paul: our top stories your starting with stimulus, tied up ramps up at supply of cheap funding banks to jumpstart the economy. hong kong start the new year as it handedly last one, with protests come up vandalism, and teargas. a diplomatic dilemma for japan.
we will get the latest on the falloutnd consequences. --l: sophie: we have lines from singapore. yet the rise of 0.8%. at in line with the quarterly .asis we saw gdp growing as for the year, singapore posted the slowest pace of annual growth in 10 years, expansion, 0.7% which was slightly better than forecast. they lines managing to avoid a recession in 2019. the prime minister on tuesday in his address set the economy is growing less vigorously than he would like. joining us, a bloomberg managing editor. we have those gdp numbers out of
singapore. the country narrowly escaping a recession. to what extent is singapore a canary in the trade coal mine? these are backward looking numbers. will things get better? they definitely will. singapore is such an open economy, it is dependent on trade. it captures the overall economic mood in asia. the fact that it is the slowest gdp growth in 10 years shows how much the trade war has affected the region. there is reason for optimism. even though it is a backward offender, you may see impact on the singapore dollar. the short-term, the quarterly number is deceptive wanting. these are numbers that often missed estimates. overall, 20/20 is looking positive. the lowesting for level it 18 months. there is room for the singapore dollar to get back recent gains. sophie: how excited can markets
be given the deadline we have or president trump to sign the phase one deal with china? because we good news have extra certainty. that is what is most important. there is a lot of optimism on this trade deal. it is not like this will be a game changer. the fact that a deal is signed will provide an extra tailwind for markets. the first quarter of 2020 looks to be a good one for equity markets. given we have certainty on the trade policy and central banks pumping liquidity into the system. the new year is set to start off with good gains, not the exuberant rally at the end of last year, but steady gains in the first quarter. lowering the china rrr today. this is a continuation of
a long-running theme that the chinese governments, policymakers continue to support the economy in a targeted way, support markets in a targeted way. would get ated we rrr cut in a january. we talked about in december it would come on january 15. this is a little earlier. it is effective 90's earlier than we expected. -- nine days earlier than we expected. definitely was there even though it was expected. this is another tailwind from chinese policymakers, they are willing to do what is necessary to support their market as they deal with this debt control situation. be ae: january 10 to decent month for asian stocks over the past three years. we saw gains weight regional benchmark. starting a new decade, how are
we looking? i think the new year will start well. asia has more gains to be made than u.s. stocks. the rally in u.s. stocks is looking more stretched. we will see a global wisconn valley. asia is where there is the most potential for gains. the biggest concern for the region is those ongoing hong kong protests which have affected the local economy. i do not think that will hold back the entire region. asia can be a leader in an equity rally to start the new year. i do not think it will be exuberant. most of the positive news was expected. it is still positive news coming through. i think it will be a good start for asia-pacific. paul: thanks for joining us. you can follow more on the story on our markets live blog. if can find it on the bloomberg at mliv .
is can find out what affecting your investments right now. let's check in on the headlines. indonesiae killed in has monsoon rains hit of regions around the capital, triggering the worst flooding in a seven years. a downpour submersed homes and , acting out power to a wide area. indonesia's weather agency expects rainfall to continue for three days. kim jong-un says he is no longer bound by his pledge to halt missile tests and will soon debut what he calls a new strategic weapon. he says u.s. sanctions leave him no choice but to reconsider commitments. reaction wass repeating --
japan expected to speak with lebanon according to a senior japanese official, the government was aware of details including how someone managed to flee japan at his exact whereabouts. countries do not have an extradition treaty and it is not clear what the japanese government can pursue in diplomatic negotiations. terrorists have been told to leave coastal areas south of sydney as authorities worn australia's fire crisis has yet to intensify. seven people had been killed this weekend hundreds of properties destroyed. burning forve been weeks and the scale of the disaster has fueled criticism of the governments's climate change policies. >> i want to thank those fighting the fires. all of those supporting them in these difficult times. the conditions remain top. for the rest of us, it is a matter of listening to instructions, staying safe, and being patient.
doing what we need to do to put ourselves in a place of safety. day: global news 24 hours a , powered by more than 2700 journalists and analysts and 120 countries. this is bloomberg. sophie: hong kong kickoff 2020 with protests. police and demonstrators fought on new year's day and into the night after mostly peaceful protesters flooded the streets. our asia correspondent joins us on the ground in hong kong. give us an update on what has been happening. pretty much the same situation we have seen over the last six month. insight. in the streetn and no change from the government. the protesters say the government has been transitive
towards their demands, not giving an. carrie lam says she wants to see a 2020, a restoration of social order and harmony. anything but that last night. graffitiented by the and the vandalism we did see late into the night as that of went from victoria park to central here. upwards up to one million people. police say 60,000. quite a discrepancy. everyone are turning to vandalism and violence but the hard-core did. they turned their vengeance on two icons, the hsbc liens are outside the headquarters. otherne stephen and the one said. these liens cast in bronze 85 years ago. they have seen worse. they have been painted in red
spray paint and black spray paint, with chinese graffiti that basically says, hsbc has been dyed red by china. charactersien as the in a manner in which says the color red. hsbcrotesters are angry at closing down the account of sparked alliance, an organization which raised funds for 6000 protesters who have been arrested, to pay for their legal fees. actions with the isns -- with the lions unjustified. the account was close at the behest of the client. freeze thed, police accounts of spark alliance and that is why the hard court protesters have turned their eye to hsbc. lions are iconic. the local people have a strong affinity towards them.
they are considered to have good luck for money flows in hong kong. they have seen worse. there is a shrapnel marks in stephen here from the 1941 japanese invasion of hong kong. byy were uprooted and taken the japanese imperial army to japan to be melted down in japan. fortunately, the war ended at american soldiers found them, returned them to hong kong. they have gone through a lot. right now, they are covered in spray paint. a woman came up to me, she said, this is terrible. than if for the invaders came into hong kong. there is a strong emotional feeling for these lions. paul: we heard china's president using his new year's eve address
to defendant china's assistant for running hong kong. let's have a listen. konge situation in hong has been everybody's concerned over the past few months. a stable environment, how can there be a home where people can't live and work happily? we hope for the best for hong kong at hong kong's compatriots. a prosperous and stable hong kong is the aspiration of hong kong's compatriots as well as the expectation of a people of the motherland. and aspiration for prosperity and stability. how is the hong kong government going to achieve this? that is the big question. that is where there is a sense of frustration on the part of many protesters at not just the hard-core element, the other people who showed up who want answers and plans from the local government. , the chief executive,
and her resolution address set her resolution is to restore social order and harmony. that is an and result, not a plan. frustrationthere is . there are many people who do not support the violence. do not support the vandalism of iconic structures or symbols like this. they are frustrated with the inaction from the government. sophie: thank you so much. let's get a quick check on markets. aussie shares pretty much the only market trading for the moment. checking in on aussie bonds, under pressure, pushing the 10 year yield back 1.4%, the highest level since july. new zealand's equity and bond market remain close. the kiwi dollar having a good
start to the year. the best performance in two years. little reaction in the latest gdp figures, the economy avoided to -- managed to avoid a recession in 2019. we do have korean markets coming online at 9:00 a.m. hong kong time. after an escape from japan, forced to settle. we look at the risks to nissan and the japanese authorities. paul: pmi data out of china and south korea today. for asian look economies and 2020. this is bloomberg. ♪
pboc, markets will watch the china manufacturing pmi figures. here is bbva chief asian economist. thank you for joining us. setting the tone for 20 with a rrr cut. to --uary 6, thanks go from 30% to 12.5% what does this indicate? i think it is consistent with pboc's tone. chinese central bank is going to keep a competitive stance. because of other pressures, this .rade war, there is pressure they have this concern of debt. uselieve they are going to the liquidity tool or quantitative tool rather than
interest rate cuts to stability to the economy at the beginning of the year. this is a welcome step. it will boot the markets, get more confidence to investors, producers, and consumers in china. they are going to do more. this is the first step. it is good stuff for the year. does it mean for the loan prime rate? determining market -- if they cut of the rrr, there is pressure for commercial banks to guided to a lower level. i do not know why they are going to make this one happen. if we look at the trends, the lpr is going slower -- going
lower this year. we expect they are going lower by another 20 basis points. have seen an encouraging pmi numbers have china. a have the numbers due out in little while. what are you expecting to see? signalsdo observe go to from this official manufacturing pmi. rebound a going to little bit as well. environment the between 80 china and u.s. trade -- between the china and u.s. trade talks. we have the phase i deal. if you look at other trade ,artners of china like europe like korea, like japan, you can
external environment is starting to stabilize. putting together, this pmi is going to rebound a little bit. put together, that shows the chinese economy is going to stabilize at the beginning of this year. we do have pmi's how to later for south korea and taiwan. can see -- can you see reasons to be optimistic? reason is 2019 was bad. that is why we are going to have this big recovery. war --look at this trade the reason why we have a bad 2019 is we have such bad news from the trade war china and the
u.s., now the trade tensions between the two biggest countries are starting to resolve. then we can expect a recovery, it will lead by the manufacturing sector. in the region, especially east asia, these important sectors are important for the overall economy. sophie: with the pmi numbers from china, when you take a look at details, we saw stabilization and new orders. happening in the economy, this resurgence we are seeing, what risk could derail this rebound? xia: the first one is the china u.s. trade talks. we have the phase one deal but they have not assigned it --
they have not signed it yet. there could be uncertainties from this one. they are going to start of the second phase in negotiations, tot could create new noise the trade relations between the countries. we know this region is dependent on trade. china, there are other high winds. the smaller lenders in china, they are not in a good situation. if you look at the chinese markets, the housing markets, they suffer from the housing bubble. if the housing markets start to slow down this year, it could weigh on the gross, it could cause trouble for the financial sector. these problems cannot derail the recovery. sophie: turning to currency markets, do you see that
propping up exchange rates -- which do you favor in 2020? yuan is goingse to rebound, but we should not put too much of a bet on that one. suffer. region,rrencies in the benefiting in are some degrees. inflow is going to accelerate and then we will have more favorable environment for these currencies. thank you so much for joining us. you can get a roundup of the stories you need to know to get your day going, bloomberg .ubscribers go to dayb
♪ ."ul: this is "daybreak: asia sophie: we have a quick check of business flash headlines. eta's richest man taking on the world's richest man in a battle over online shopping. they started testing their online shopping portal. they are setting up a digital platform to take on amazon in india. they promise more than 50,000 grocery products, and a return policy that asks no questions. paul: we will be watching shares universalng by 10% of music group. moms of talks with a deal that
values the world's biggest music company more than $30 billion. partners have an option to increase their stake to 20% of the same valuation until january 15 year. sophie: commodities traders watching the platinum prize after a surge in interest at the end of last year. jump focused on the metal in popularity, bringing their investments to 850 million dollars, their biggest annual inflows. curbeim is used to emissions from diesel cars and has fallen out of favor after a scandal. but get breaking lines up. the chinese liquor meter coming out with its net income arising 15%. it's preliminary fiscal year net --ome, 40.5 billion u.n. 40.5 billion yuan.
♪ from we have breaking news a number of places. let's start with south korea. we have pmi's for december. manufacturing pmi coming at 50.1. inansionary territory, leads november was 49.4. not seeing any reaction at the moment. for story for taiwan, pmi's december, 50.8. an improvement on the 49.8 in november. pmi's from south korea and taiwan back in expansionary territory. sophie: we are seeing pmi lines
up for vietnam. coming in 50.8. slight deterioration from 31 in november. in indonesia, after for a port to end november, a slight pickup to 49.5 in december. there could be a hand that the indonesian economy model -- might be try to escape the trade war. asia get some more from an -- >> a couple of qualifiers. it is awfully low base. a cyclical recovery. south korea numbers, exports are since september 2018. that is a good indicator. a good read across the region. overall, a go takeaway today. have another read coming later. pmi numbers for china.
and we expect encouraging news? >> that one has been positive for a little while. it has been front running. official data -- the official story is the china story is stabilizing a little bit. the external amount is picking up a bit. a lot of it is because of sentiment on the trade war. we are expecting be deal to be signed up over the coming weeks. when you look at the pmi's for south korea in particular, half of south korea's gdp comes from exports. when you see that emerging into positive territory, at the least, things are bottoming out. well -- bodes well. a decent set up pmi's from across the asia region. let's check in on first word headlines. hong kong kicked off the new
year with protests and teargas. new year'srs clashed day and into the night. protesters about to maintain their fight for more democracy at a less chinese control. president trump says he will sign the first phase of a trite deal on january 15 at the white house. he has been lenny to go to beijing to begin talks on the second phase. the first part of a deal will see an agreement on china to increase purchases of american farm goods in exchange for lower tariffs. a new trade deal between the u.s. and japan has kicked in. japan is reducing tariffs on u.s. beef, pork, and agriculture products. it is still pushing to secure its goal of reduced tariffs on cars at auto parts. japan says u.s. officials including be president have
given assurances that a new tariffs will not be introduced. tensions may be easing around the u.s. embassy in baghdad after a militia agreed to stop attacking the compound and leave the area. the militia groups called on fighters and supporters to move on at of respect for the decision of the iraqi government. israeli prime minister says he last parliament to grant him immunity from prosecution on corruption charges. that could block the start of his trial for months. he called immunity a cornerstone of democracy. to tear to pieces the allegations against him. his request does not. you have majority backing. citizens of israel, the immunity law is meant to protect elected officials from tailored lawsuits, from serving political cases who aimed to harm the will
of the people. of the law is meant to ensure elected officials can serve the people according to the will of the people. paul: a former nba commissioner has died aged 77 after a brain hemorrhage three weeks ago. he was the longest-serving commissioner of any professional u.s. export and is credited with transforming the nba into a multibillion-dollar powerhouse. during his 30 years, he boosted than $5 billion when he retired in 2014. china's tech industry is entering the new year after turbulence and 2019. giants,r saw technology the brunt of washington's efforts. here is lumix asia tech editor. what is 20 look like -- what does 20/20 look like? interesting 2019.
i think we can expect a lot of the same in 2020. toot of things contributed volatility last year will extend into 2020. despite warmer trade negotiations. the white house remains intent on containing china's ascendancy. a big part is the tech sector. that is why you see various measures against companies like huawei. also on the social media front ,gainst companies like tictoc they are gaining momentum in the u.s. paul: what is the outlook for huawei and other chinese tech giants? >> there are signs that the
administration is considering ways to tighten loopholes in sanctions against the company. we will have to wait and see. a lot is tied to trade talks, which whacked at wayne depending on the time of day. in terms of alibaba and tencent, the two incumbent chinese tech giants are under fire from , which areng rivals gaining momentum in social media, as well as smaller players. chipping away at the dominance they have enjoyed for years. xact we will see a decoupling trend continued between the u.s. and china? >> absolutely. we always refer to the chinese internet space as a parallel
theerse, from the one that u.s. and european audiences are used to. that will continue and strengthen in 2020. so much.hank you let's get a check on a markets. pretty much flat. stock futures looking more positive while the dollar is stalling around -- aussie dollar is stalling. the qe dollar up after the best month in two years. the rally looking overheated. from a screen, you can find analysis on bloomberg radio. app.ning beyond the this is bloomberg. ♪
♪ this is "daybreak: asia ." costco jones -- colors carson's escape -- complaints was that he could not get a fair trial in japan and japan does have a high conviction rate. does he have a point? >> i think so. all your read and hear about the japanese prosecution system is terrible. and 42 makeocked up confessions, not allowed to have lawyers, and so on. he has a strong case on that point.
he is probably going to speak to the media at some point . the expectation is people on the shape pr a war. that dash anyes hope of a trial after that? john: the likelihood is there will be no trial. one of the interesting points, maybe not having a trial is in the japanese government interest. some people are speculating the japanese may facilitate his exit from japan. the reason is, the japanese prosecutors have had difficulty mapping a case to prosecute him. that would be embarrassing for them. case involving him may expose dirty laundry in the japanese corporate system that he japanese elite do not want to have exposed. issueis there a broader
that there is the need in japan for better corporate governance? could this have been avoided? john: certainly. corporate governance is notoriously bad and many organizations have analyze it. system,of a transparent you have a system of relationships between corporate banks and companies, board stacked with insiders. there is no system to holding company to account. if you have a stronger corporate governance system, nissan could have stopped this before it got out of control and solve the problem within the company itself. sophie: what are the ramifications for foreign investment into japan and how they country may be perceived by a foreign businessperson? -- japan is aany funny country.
if you cross the authorities, you get into the legal system, which is one of the most dangerous in the world. japan is a country that has never been friendly to foreign investment. one of the both levels of foreign investment even though is a big foreign investor itself. many culprits will be hesitant about investing in japan. this is bad for japan. japan needs for an investment badly. japan needs to revitalize its economy. this is a big negative for japan. negative for shinzo abe, given that he attempted to drive more foreign investment into the country as part of his economics. john: there is a target of doubling the stock investment into japan. that target has not been reached at all. broadly, japan is aligning itself with the west and america
against china. it should present itself as being a democratic country with a rule of law. in cases like this, it undermines the political credibility of japan as a nation at a time when we have this rivalry between the u.s. and china. sophie: this is the latest in a string of scandals around corporate governance that have plagued japan and the business environment. there have been attempts to approve governance. -- what are view your views about what remains lacking in that aspect? john: there have been initiatives to try to improve corporate governance like opening up boards to outside directors and trying to improve the environment for investment. the changing laws are not enough. you need to change mindsets and behavior. is doing in the
markets and behavior of people, even if laws are changing. that will take a long time. a close to my insider society and economy. up tountry needs to open realize its potential and not fade away with an aging population. sophie: where does this put nissan going forward? many challenges facing the carmaker. what kind of leadership doesn't require to shake off this particular episode? underminedepisode is the alliance. nissan has had problems for a while. it has low profitability, it needs to restructure. it is going to take a wild to get out of this hole. it also needs to rebuild trust
and confidence with their partnership, including the whole alliance with mitsubishi. nissan has lots of challenges in front of it. automobile time, the industry is changing. each future looks challenging. sophie: where could meet talk to for that strong leadership it needs? executive saint he join another company. or look toook inward external candidates? john: ideally, someone who can come in with fresh ideas and fresh energy. you have to be a smart manager. i work in japan for a few years. system,in the japanese being an outsider, it is not easy. i think they need to revitalize nissan. sophie: thank you so much.
sophie: this is "daybreak: asia ." the global market for ties airlines is turbulent but likely to strengthen and 2020. 20 us as a transportation analyst. let's start with the domestic picture. what are the drivers that will allow for strength in the domestic space? luya: for china, the main thing is the u.s.-china trade war. we are expecting progress in 2019, for the domestic market, it means a lot of headwind that has been plaguing the industry will be better in 2020. we believe in general it will be better in 2020. the picture is provider. but still a lot of uncertainty. sophie: how are chinese airlines managing capacity growth? luya: overall capacity is still
growing at the fastest speeds across all global airlines. the biggest thing is they are being for tactical about which markets to target instead of targeting the u.s. market, european market, etc. a lot of their focus is on asia, korea, japan. 42020, we are going to see rapid growth, but markets are going to be more cleverly targeted. sophie: short flights will see a boost? luya: we believe that will be the highlight of the year. to cafes ins turn hong kong. it was a turbulent year for the carrier. we see optimism this year? luya: it is a to cafes in hong kong. it was a turbulent difficult question. it is still tied to the hong kong market itself. it is still tied to the local environments. we believe if things improve with demand, with inbound
tourism, it has a good foundation and there will be buying opportunities for the company. right now, it is hard to say. it is mired in the most uncertain market. sophie: you noted the transit passenger traffic has been resilient for hong kong. do you see that improving? luya: that is one of the most interesting things. people are less willing to travel through hong kong. not to go into hong kong, but stop by. number a good passenger we have seen growing and the past few months and we could see rebounding, despite the fact rebound demand is at a low. this is something that could cushion the impact of continuous falls, this is something the can help theket
market rebounded normal and expected. sophie: i want to highlight your contrary to view regarding the return of the 737 max to the market. what are you seeing? when ite 737 max, returns to service, by 2020 or later, that is seen as a positive for airlines. for the airlines, it means they get the aircraft they had been a needing to use for a long time. short-term, a massive influx of aircraft could provide a lot of pressure to airfares added a lot of pressure on airline profits. of theeve an approach reintroduction of the 737 max is the best outcome. for operations, they would prefer it to return to service quickly. sophie: do see potential to boost airfares in the region? luya: we believe 2020 is the
year airfares will rebound from 2019. better news for the airlines. it also means if the 737 max comes back into service in the middle of 2020, that would throttle this airfare increase because of so much supply. sophie: got to look out for discount rise. thank you so much. let's get a quick check of the business flash headlines. and exchange commission implementing a new trading guideline. the will seek to address concerns of shortselling and transactions and the impact on traders risk pay capital. says the movean will make stock market trading in the philippines more robust. there is talk of taiex at the sports entertainment space. the talent agency and media group and ever is poised to buy luxury events company on
atation in a deal valued $660 million. on location offers travel services and experiences including on-field access at events such as the super bowl. president trump says his administration will issue new regulations on flavored vaping products. sent a proposal to the white house on monday to restrict the products. according to bloomberg's sources, the regulation will flavoredrepackaged products other than tobacco and menthol to be temporarily taken off the markets. the gambling hub's worst annual decline since 2015. canning revenue was less than $3 million for a month. from a year ago. casinos that struggled to learn and high rollers are made
protests in hong kong slow down in china. been happening with revenue, i want to highlight what is going on in that space. we will focus on macau stocks at the open in hong kong. better than three consensus? that will be a positive even though we saw a slip in that figure, coming down to 14% year on year. the weakness is partly due to be some restrictions that president xi visited the city. the positive voice actor cast a sector really teachable are copyrighted we will be gauging reaction to that. you have futures noting higher. the offshore yuan -- offshore yuan holding steady. this after a terrible year for the currency would saw it weakened by 1.3% at the end of the year.
>> welcome to bloomberg markets china open. david: happy new year's to everyone out there. we are counting down to the open of trade. let's get to the top stories as we kick off the new calendar year. starting with a pyrex display. hoping to jumpstart the economy and 2020. the newhong kong starts year way it ended the last one, with protests in hong kong. david: