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tv   Bloomberg Markets European Open  Bloomberg  January 21, 2020 2:00am-4:00am EST

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>> hong kong stocks fall more than 2.5% during the asian equities lower as a broad risk off move. cash trade is less than an hour away. stocks and futures decline as investors have concerns over the spread of a virus from china. and a digital tax truce. emmanuel macron and donald trump reach a truce not to impose punitive tariffs this year. president trump addresses the world economic forum in davos today. we are just under an hour away from the start of cash equity trading. at stake a look first off at futures. we have a picture you might not
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expect if you see the digital truce headline. that would seem to suggest it should be risk on. fewer tariffs, better for the economy. viruseless, this chinese and maybe the hong kong downgrade as well kind of spooking the market. as a result, you see futures down more than 0.5% across european indexes. take a look at the u.s. equity index and keep in mind the u.s. markets were closed yesterday for the martin luther king holiday. downasdaq, s&p, and the down, futures indicating they will all open down. anna: we have breaking news coming through. the low-cost airline sector. easyjet giving numbers, revenue ahead of estimates. a lot of talk about climate change over in davos. greta thunberg is due to be
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speaking there. whether she is keeping an eye on the prophet, if you like, of some of these businesses, we will seem. before tax better than the first half of 2019. full-year capacity sent to grow by around 3%. this is a sector that has been hit by higher oil prices. today, down by 1%. certainly that was the talk once we saw elevated tensions in the middle east. we do talk again about this being hurt. let's leave the prophet story there for a moment and the earnings season. as you were saying, selling across this asian session. the downgrade by moody's to hong kong having an impact, but also the coronavirus being cited by one of the reasons we are seeing this selloff. the hong kong market down by 2.6%.
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theresting to see on japanese sovereign bond markets a little bit of movement right out at the 30 year time horizon. boj, noheard from the change in policy stats. keep an eye on the earnings season. week we will be wrapping up the earnings story. news from ubs will be in focus. you have other breaking news? matt: the cfo of british petroleum is going to retire. down,going to step succeeded by the chief financial oilcer of bp, the big producer is going to retire and successor,amed a just want to bring you that news. change in the top of an industry seeing such volatility. yesterday we saw the oil price
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shoot up amid concerns about what is going on in iraq and libya. -- thethe oil price brand price, a 1% drop after the big jump yesterday. leaders, policymakers, executives are gathering in davos to talk shop while tackling inequality and the future of globalization. francine lacqua is there with a guest. >> good morning. -- it is executive good to have you. so much focus is on sustainability. i think my first question is what do you think the carbon price would need to be in order to achieve these net zero global emissions by 2015? >> we have different prices in different parts of the world, so we should have one to make this
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work. >> will we be able to do that? >> which is not easy. that was one of the reasons why in madrid, it did not work out. but let us assume we have one. it should be something between 20 and 40 euros. translate that into dollars if you want, it is more or less the same amount. progress if we go up as more competitive generation. that is basically the price. prices around 20 euros today. the globalook at economy being transitioned off fossil fuels, do we have the technology to do that? what technology do we need? >> we have technologies that enable this transition. up to a certain penetration of renewables. let us say we get up to 80%. past that -- we want to decide whether we want to kick out the
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other 20% left. for that, we think the storage technologies basically that will enable us to use renewable energy producing -- that is something that is being studied and worked at. i think this will happen in the next five years. >> technology coming from where? >> coming from other segments of the industry. namely automotive. the automotive industry is the industry that has the millions and millions of pieces that will drive this technology to economic levels. >> as we see more and more electric cars, how does that change your business? >> we will have electric cars. it changes our business into a consumption one side, but also the charging infrastructure that comes with electric cars and the ways in which you have to watch it.
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an electric car is a battery on wheels for us. any time is connected to the grid, it can provide services to the grid. the owner of the car can recover some of the cost of money. the services is great. >> but how do you power? the amount of power that is needed is incredible. >> it is large. assume electric cars will come in large numbers in a period of 10 years. it is not a problem. it can be managed. >> what can you do to reduce greenhouse gas emissions from natural gas? >> the only way to do that is , have that cutting out, the flaring, the methane leaks all around. second, work hard at reducing the amount of gas used for power generation and leave the gas to petrochemical applications. >> are they doing it seriously?
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or is it something people talk about to look good? >> if you look at the declarations, they are all committed. it is in their control. it is something they can do. it is something they should have done a little bit earlier. technology wise, it is totally possible. >> what is your take on the green new deal in europe? critics have been saying it is just not enough money. >> it is the right time to do it. it is time for europe to step in. and europe can have this leadership. the money europe has set aside is to be considered on top of the market money. more thanlready willing to invest in green technologies. i'm not looking at the green deal just on the money europe has put there, but put it on top of the large amount of money waiting for investment opportunities. i have no doubt of money there. it is not money the problem.
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perhaps -- that is more tricky. the money set aside to manage those sectors that suffer from transition. i think it is very wise this commission has targeted a large amount of money to use in that. that money that i think europe should use. >> thank you so much for joining us today on bloomberg. he is the chief executive of enel. back to you in london. we will have more interviews davos 2020.2020 -- >> francine will be back with us. coming up, an action-packed
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lineup. don't miss interviews with top executives including the ceos of microsoft. . , blackstone, and citigroup. plus we speak to the state bank of india chairman and hong kong chief executive carrie lam. ♪
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matt: welcome back to bloomberg markets. this is "the european open." a little bit more than 45 minutes away from the start of cash trading across europe. let's get the first word news. economy will grow this year, but slower than expected. that is according to the international monetary fund. it predicts growth of 3.3% for 2020, down a 10th of a percentage on its projection in october. still a gain on 2019.
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the imf is cautiously optimistic. it says risks are now less skewed to the downside. china, a new stage of severity. beenalth workers have infected, one critically ill, after the world health organization confirmed person-to-person transmission for -- four people have died so far. 17 years ago, the sars outbreak killed around 800 people. and in the u.s., senate majority leader mitch mcconnell is planning a tight timeline for president trump's trial. on air and at quick take powered by bloomberg. this is bloomberg. thanks very much. tom mackenzie in beijing. let's get back to the world economic forum. francine lacqua is there again with another guest. >> joining us now is the executive director of the iea.
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we want to talk about renewables. we want to talk about the oil markets. will they balance because opec will comply and because in general geopolitics will take the steam out of the oil price? a very unique year behind us, 2019. , 2019,k at the last year 2020, oil prices remained more or less the same. $65. this year, we lost venezuela, iran, saudi arabia, then libya. this is all because the world is in a rush to oil, mostly coming from the united states. we expect some surplus of oil. one million barrels per day surplus. therefore, the libya issue we are facing now seems to be not a major challenge from the price
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point of view. having said that, i am concerned. one potential concern is a rock. -- iraq. the second largest producer of opec, producing close to 5 million barrels per day. iraq isnt developments, not very comforting. anope the -- we all seem iraq which has stability and the production continues. someone could step in. do saudi's want to defend the oil price even more because of the saudi aramco ipo? fatih: definitely, but iraq is a big player. the numbers are big. , notin verdict today with
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too much, but i see iraq as a major issue, which is very important for the global oil markets and is set for the global economy. francine: how are you seeing demand? coming from emerging markets, or in general for oil? >> growth of one million barrels per day, perhaps higher. as strong as we have seen in the past. one million barrels per day, mostly coming from china. china, india,w and others are facing headwinds in terms of economic growth. coil --: went to ucp when do you see peak oil? oil fore see peak transportation, but not the entire oil.
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the petrochemical sector, for example, is going to grow. francine: when is peak oil for transportation? fatih: at least five years of time we can see peak oil for transportation. mainly driven by the efficiency gains in cars and trucks. four renewables, good news. only good news. wind --s from solar, onshore wind, offshore wind, they will all grow very strong. our numbers show in the next 10 new power of all plants built in the world will be renewables. improvement compared to previous years. francine: what is one piece of technology you wish we had to fully transition or be on the right path to the transition to a non-fossil fuel economy? fatih: there is no single technology.
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them, ie to pick one of would pick carbon storage. we need to accelerate that. carbon capture is very important. of fossilhuge amount fuels in the markets. let me give you one example. ago, fossil fuels in power generation was a 63% share. today it is still 63%. no change. renewables growth of because electricity demand is growing strongly and we are losing nuclear power. we need carbon capture and storage. it is the only technology. fossil fuels, we have oil, gas, and others. in the early stages.
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francine: how can we be so advanced and still not have a common harmonized carbon price? fatih: it is difficult. when we look at the global markets, it only consists of europe. we have china, india, indonesia, africa. they have other priorities. they do not put climate change as a top priority. they have other priorities. we have to recognize this. therefore, what is happening in europe is excellent. the green new deal. europe is responsible -- for only 9% of the emissions. 91% comes from somewhere else. europe's leadership is important, but it will not solve the problem by itself. we need other countries in the picture. co2 going into the atmosphere -- theyarta or paris or
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have the same effect on everybody. francine: thank you so much for joining us. the executive director of the iea. plenty more from the world economic forum. matt: looking forward to it. thanks so much. live at davos all week for you. a lot more coming up including ubs missing its first full year -- sorry, full-year profitability target, cutting its midterm goals. ♪
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matt: welcome back to the european open. ubs has cut midterm goals underlining the task faced by a bulk honest. manus cranny to his ceo sergio ermotti.
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moneyare not focusing on in terms of quantity, but quality. the net new money should not be overemphasized. very solid net new money outcome for the year, particularly if you look at asia. 9% growth taking client assets to 450 million. going forward, we are dropping the net new money targets because, you know, i would describe the situation we are in now in terms of negative rates in europe versus france. continue toy will be something we look at. at the end of the day we are focused on growing our business and growing our profitability. is not aoney per se good indicator of doing that. actually, you can see how
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passive deposits are not being deployed. it is costing millions every year. we are going to focus again on quality of net new money, not quantity, going forward. manus: i'm just train to get a sense of what has happened since the trade deal took root in december. there was a shift in global sentiment. have you seen that translate at a client level and activity in the past month? >> yes. you compareat -- if not only year on year, but also the more recent history in respective client activity and going into late november and december, last year we saw much more constructive and active environment. this is the reason why.
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since 2010. i think if you also look at -- clients expect and we expect a further drop in gdp growth globally somehow embedded in the market. the normalization of brexit, of trade tensions between the u.s. littlena, is giving a bit more comfort to investors. there is a need for a lot of this cash to be deployed. there is a much more constructive tone and the seasonality factor should not be forgotten. in that sense we have a much more constructive view on q4. -- on q1, but still, the visibility and the volatility and the uncertainty remains there. anna: that was sergio ermotti, ceo of ubs speaking to manus cranny earlier.
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a lot of focus on the asian session overnight with regards to the hong kong market. we see the hang seng down by 2.7% after hong kong got a downgrade from moody's. also a lot of focus on the coronavirus. the chinese renminbi well represented. ♪
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welcome back to bloomberg markets. this is the market open. 30 minutes away from the start of cash equity trading. you can see futures are down. asian equity indexes are falling fairly severely. if you take a look at the gmm, you will notice the hong kong hsi is down 2.7%.
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the hang seng down 2.7%. the outbreak of a deadly virus has already led to disruptions in across financial markets. for some strategists, it is alarming enough to cash out. this is no question that virus is already very serious. when it comes to financial markets, the question isn't the scale and length of impact. according to strategists, it is going to be short-lived and once the academic -- epidemic is controlled, the impact will fade. were you look at jefferies, who thinks the impact is going to be concentrated. for them, it is all about the hong kong consumer, which they said is going to take a hit quickly. however, it will be a significant impact. then you look at strategists who are very alarmed. we look at a money manager like amber hill who says it is time to cash out ahead of the lunar new year. that also means avoiding travel
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stocks. it also coincides with a holiday period, which means thin trading , rush to safety, and we could see yields in treasuries drop by nine basis points. anna: interesting to see the asian equity markets responding quite severely to these. dani burger with the latest on what the market is saying about this. this deadly virus. let us get a bloomberg first word news update. for that we go to beijing. presidents trump and micron may have reached a truce over digital taxes. neither france nor the u.s. will impose punitive tariffs this year. the readout from washington was more muted. it may reduce transatlantic tensions and prevent escalation into another trade war. the bank of japan left rates unchanged this morning. it also painted a brighter outlook,f the economic raising growth projections for
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the first time in a year. the central bank says overseas risks remain significant, but they have decreased. economists noted the outlook for inflation still remains week. saysommission president the eu must be prepared to back up its diplomacy with force. this as the block discusses sending troops to libya. >> the european union needs to have hard power, but always diplomacy and crisis prevention. only that together is comprehensive security. >> global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thanks very much. the markets are watching very closely what's going on in china
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with the coronavirus. plenty to talk about in terms of climate change on the slopes of amin has ae haslinda guest with her. ofjoining me is the ceo indonesia's biggest property developer. good to have you with us. first i would like to have your take on the economy. growth has been tepid despite all efforts to boost gdp. what has gone wrong? >> growth is looking good this year. 7%.owhere close to >> not yet. this week the president is submitting to parliament the omnibus law, which is trying to streamline 79 different laws and a thousand clauses. it covers labor reform, tax reform, investment reform, and the goal is to create enough jobs for the unemployed, plus a
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2 million new entrants that come to the workforce every year. for that, growth must govern the current 5% to 6%. omnibusre seeing this is going to be a. . game changer for indonesia. >> i think so. >> when will we see 7% growth? >> that is a better question for our ministers, but indonesia is one of the few countries where you see growth. years, indonesia has tried to achieve 7%, but we are living in a slower environment generally. 6.5% would be excellent for indonesia. especially with the backdrop of inflation continuing to come down. inflation last year was 3%. very helpfully -- healthy. you see the opportunities? how are you seizing these opportunities? momentumk the
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indonesia has is perfect for the businesses we are in. real estate will benefit immensely from the infrastructure the president has rolled out. finally the last two quarters of 2019 we are beginning to see a sustained and strong pickup in purchases of homes. also in our health care business. that is another business that has done well. ebita group and we are going to continue to build on that. care,r it is health malls, i'm very excited for 2020. >> how excited are you about the move to move the capital? do you see opportunities there? >> i think the move of the capital is another landmark policy the president is running on. boostk that will investment and capital spending and also help to spread out
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and address the issues of any quality of growth. >> you have cooperation with softbank. do you see cooperation materializing in the new capital in terms of new projects? >> we are doing a lot. i am a big believer developers must think alike consumer companies. we have to think about the customer journey, think more about the customer experience. to do so, technology is an important part of it. our partnership with softbank's to apply a lot of artificial intelligence, big data technologies, into townships and developments. i hope we will have that opportunity to do so in the new capital as well. >> you talk about opportunities in indonesia. when it comes to foreign investors, they see policies being a bit more nationalistic. it's like taking a step forward and two steps back.
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they are pretty uncertain if that is the bucket they want to be putting money in areas your take? >> that is a fair assessment and one the government acknowledges. bill beinge in the submitted, the government is taking concrete actions to address the concerns of many foreign investors. whether it is permitting, setting up business, land clearing issues, the negative list on foreign and direct investment, i think you will see the government is serious about reforming and attracting foreign direct investment. >> and the biggest risk in 2020 ?or businesses like lippo >> there's always a lot of risk. globally, the trade war and geopolitical tensions in the region, but look, we live in a complicated world. indonesia is fundamentally a solid and attractive growth story and, you know, we will
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roll with the punches. >> all right, let us roll with the punches. ceo of lippo karawaci. grandson of the man who founded the lippo group, one of the biggest conglomerates in indonesia. matt: thanks very much. boasts -- dad boasts -- davos, an action-packed lineup.
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anna: welcome back to the european open. 8:41 if you are in paris or berlin. looks as if it could be a weaker trading day. we have one i on the slopes of davos. around climate change. rittenberg speaking right now -- greta thunberg speaking right now. let's get a bloomberg business flash right now. >> thank you. missed key targets for 2020 as investors pulled money late in the year. downgrades across the board on profit, cost, efficiency, and dividend growth. turning around its wealth management business. manus cranny spoke to sergio ermotti. the last quarter, the plan
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was finalized. they are implanting many -- implementing many of the actions. i expect positive outcomes. >> boeing may be close to securing a $10 billion loan from a group led by citi. it will bolster finances amid the 737 max crisis. the value could be increased if there is excess demand from investors. no official word yet. that is your bloomberg business flash. matt: thanks very much. let's get back to davos right now, the world economic forum. haslinda amin standing by with a guest. >> hong kong in focus today after moody's downgraded it by a notch. let's get perspective. charles li, good to have you
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with us. hong kong is down 2%. investors are spooked the move by moody's. it will take a cycle for them to react. have been a lot of challenges in hong kong. it seems they are reflecting that. it is just one of the cycles. >> the timing could not be worse. thee is concern about china virus as well. surely that would impact investor sentiment. >> there are a lot of things. but you have to think structurally, the market is very resilient. challenginggue 2019, but the market bounced back quickly, very strongly. whether you look at trading
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volumes or ipo's, whether you look at the broader financing activity. capital will continue to be aggregating in hong kong. last year again, we are number one globally, raising capital for ipo's. seven out of the last 11, we are number one. year, we aree last able to be once again on top of the world in terms of ipo's. kong,ipo's coming to hong even the ones that went to the states and came back. we are going to see more of it. >> 2020 you will maintain the venue for listings? >> whether we are going to be number one, number two, number three, is hard to say. it is not only what we do, but other markets. this can get changed by a few
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big transactions, but we will always be top if not number one. the'm going to talk about failed bid for the lsc. intending to make yet another bid after the six months? we areybody knows looking at international market. we are trying to anchor it in china, collect -- connecting the world. to look.ontinue >> will lsc still be the focus? are you still interested? >> that transaction is over. so we are moving. >> where will you be looking? >> anything that allows us to gain market or capabilities that allow us to be able to connect the world better with china. we are not really looking for generically growth opportunities
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or cost opportunities. we are looking at anything that allows us to do one of the three key anchors of strategy. chinaed in china, bring volume, china opportunities out, or bring international capital into china, or connecting china and the asian better with the rest of the world. all capability exchange. very strong equity, strong commodities, strong in fixed income and currencies, but a lot of this is requiring both in terms of breaking barriers for china -- which one are you talking about? that is just a short technical issue. still thethat, we are most resilient and the most reliable exchange in the world. our technology, resiliency, is
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globally really very strong. this is the first time in 20 years any part of our market was down briefly. we obviously are happy with it. we will continue to make sure that similar event does not happen anymore. when you are in the technology business, some things go wrong. it is just about, how do you deal with that? >> i want to ask about primary connect. >> yes. connect is working very well in the secondary market. at some point, when china is ready, when the world is ready, we think connect absolutely should be extended into primary kongings, which means hong can directly place shares through connect into domestic chinese investors. >> why should china be interested when it has its own star board? >> but not everybody will be there.
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investors the chinese needs to deploy capital on a global basis, they have to really think about whether they put in, but there are going to be opportunities in hong kong, new york, or london. 30is like the japanese 20, years ago. the national wealth began to build. ultimately that wealth needed to be deployed. we thank you for your insight today. we are coming to you live in davos. anna: thanks very much. haslinda amin live on the slopes of davos. greta thunberg is speaking on a panel. saying thating, though people are more aware, talking about climate change, global warming, the climate emergency, nothing has been done.
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she is one of the voices on this panel. --t to bring you some of the she says if the situation is not treated as a crisis, we cannot solve it. seeing her speak as one of the hot tickets this year along with president trump, who will be speaking later today. how will the two of them interact with their different views? , stocks to watch including easyjet. a smaller first half loss. this is bloomberg. ♪ ♪
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matt: we are seven minutes away from the start of cash trading and looking at futures down across the board. the u.s. and france have agreed to a truce in the dispute over
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digital taxes according to a french diplomat. punitive tariffs will not be imposed by either side for the rest of this year. why this sudden change of heart? >> there was this self-imposed deadline of davos. since the french president is actually not going to davos this year while donald trump is on his way there, president macron had to come up with some kind of solution. there was some kind of agreement beforehand. we don't have too much detail. just this tweet from president macron saying, great discussion with donald trump on digital tax. we worked together on a good agreement to avoid tariff escalation, to which president donald trump responded, excellent.
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just one word. no further details. clearly the key word here is escalation. no side wanted to see any escalation because trade between the u.s. and the european union is even bigger than china. in 2018.lion the french wine for example is already impacting that. other things related to airbus and this new tariff will have impacted luxury french goods, french wine and cheese makers, -- clearlyike president macron has some kind of solution before the davos deadline. anna: thank you very much. president trump landed in switzerland, on his way to davos. we will see if he has more to
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say on that particular disagreement around tariffs with the french. let's look at stocks to watch ahead of the open. easyjet in focus. first quarter revenue better than estimates, guiding toward a better first half then they experienced last year. that will be something we watch out for. smaller industrial businesses closer to you, my attention. matt heidelberg. -- could be weaker at the start of the trading day. maybe they will set the tone for the sector. matt: we have ubs missing some key targets, including full-year profitability and cost targets. analysts are concerned the payout forecast may be reset lower as guidance trails. as a result we see shares falling in the free market. premarket aswn 3% the swiss bank misses on some
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key profitability targets. watch those shares coming up. it's the market open. futures pointing lower. ♪ ♪
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until thenute to go start of cash equity trading here in europe. investors cite concerns over the spread of a deadly virus from can't -- from china. firstan weakens for the time in three months. ubs struggling. from our interview with the ceo later this hour. digital truce. emmanuel macron and donald trump reach an agreement to not impose year.nitive tariffs this the president will address the forum in davos later this week. matt: looking at the european
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market come about to open lower. futures lower across the board. 0.4% on more than concern of the spread of the virus and a downgrade to the hong kong credit rating. as market start to open up, how do you see as coming out of the gate? future getting weaker as you pointed out. some issues to keep in mind including the spread of the virus in china. that is a focus and has been a focus of the asian equity session. on the upside, the settlement of some stocks including in the luxury sector could be impacted by that truce between macron and trump.
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by twitter only. what we could see some movement in those french stocks the we have no detail at the moment. tech sector ishe down. euro stocks pretty weak this morning. what do you see? asia after the drop in stocks and the outbreak of the virus, behind this. you can see on the move screen that we have 532 losers. only 63 stocks are gaining. gainers.few health care names. see easyjet rising now, 2.5% as well as ig group. both showing decent gains but
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they are not very heavy stocks. on the downside, anna, louis vuitton -- it is a big loser with the concerns in china and around hong kong. those are two of the places that hold the most shoppers for these luxury brands. falling buthsbc that is the other big bank. coming't see a big thing down after the ubs profit numbers disappointed. anna, let us get back to the top story. anna: luxury stocks and anything with exposure to hong kong being hit by concern of the outbreak of that deadly virus. , it ise strategist alarming enough to cash out. getus debt the -- let us the take from dani burger.
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citi it isding to the hong kong consumer that will be the hardest hit but they say this will end quickly. they do call it significant but that the impact will be short-lived. this is what we are hearing from strategist. -- strategists. says once the epidemic is under control, it will all go back to normal. but volumes are already somewhat thin. if the volumes are thin now, the impact could really hit yields and some strategist say they could drop as much as nine basis points. amber hill, a money manager in a cash outgesting heading into the lunar new year. they say it is time to move into cash with the potential for the
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deadly virus to spread. in terms of what to avoid, they say travel stocks. it is clear that call is coming to fruition because they are already taking a hit. they also say this may be an opportunity to sell tech stocks in asia. a flight to safety. a chance to get low to the ground. anna: dani burger with a look at the markets. markets being hit by concerns regarding the virus in asia. theme in public markets and a conversation centering around private markets . gave his thoughts. sell, you have to hold something. for us, we would have to invest in something else whether that
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was cash or some physical commodity. when we have a portfolio designed for investing, we want to be generally deployed but we want to be invested in a broad range of assets. some may perform well in a slow market. less well butrm we have a diversified portfolio. that is a typical strategy. >> that would include private equity investing. >> yes. think the trend toward private equity is still pretty robust. when we look at expected returns in different asset classes and even risk-adjusted, private equity is still quite robust. equity andca private european and asian private equity -- it is still a decent asset class to be invested in. i continuously ring the alarm
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important not is to be too invested in liquid assets. we are comfortable with our risk models. and what we would do it with various lurches in markets. what you can see if there is a lurch down in the markets, people rely on liquid things to sell. risk models trigger. people are being very careful to make sure that they truly understand their liquidity positions and if the thing they .re relying on as liquid anna: that was the canada pension plan investment board leader. coming up this hour, we will be joined by the chairman of
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hitachi and we also want to understand what is happening with the european markets. some of the worst losses coming through on the peripheral markets as well as the french market. harduxury sector being hit because of the concerns around the virus in china at the moment. c cac..2% now on the this is bloomberg. ♪
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matt: welcome back to bloomberg markets, this is the european open. 10 minutes into the trading day and we are looking at losses of ross the board with equity indexes down in london and paris and milan as well, 1% or more. is ubs.he big losers after saying it missed its full-year profitability target and cost target. shares are down 5%. they had been down 6%, the most since may. keep your eye on what is going on at ubs. we take you back to davos with tom gain -- tom keene. stiglitz joins us from columbia university. we are going to squeeze our conversation into six minutes.
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professor, thank you for joining bloomberg again. what is so important here is the globalization issue, all of the things you have written about over the years. i want to go back to the heart of your theory. the dissemination of information. do we have the information available for the fancy people to handle global warming, handle stakeholder-shareholder, and the other issues out there? do the elite have the information available to solve problems? joseph: not all of the information but they have the information to act a lot better than they half. we know what is happening with climate change. we know the data of what is happening to inequality. the problemhe u.s. of the opioid crisis and the diabetes crisis.
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we know the dimensions of the problems we face. we even know many of the remedies. we know why we have ended up in this kind of situation. information is important but not the fundamental problem. the incentives. the structure of how the system works. one issue being talked about here is stakeholder capitalism. moving away from the idea that milton friedman pushed that you should only focus on shareholders. michaelhappy valley, porter from harvard wrote an article that started the discussion. president clinton picked up on that. we move forward six or seven years. affect this ceo saying, thisard is is the mandate on january 1 two were turned capital to shareholders?
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how does a ceo execute stakeholder theory? realizeone aspect is to that the two are not totally apart. one of the problems -- one of the key issues today is getting a high quality labor force. a lot of the younger people, the millennials as they say really care that the company is doing the right thing. destroying theot environment for instance. and they are not mistreating their their customers, communities in which they operate. i think there is some degree of congruence but there will have to be a change in the framework. tom: is the stakeholder-shareholder debate a debate of prosperity and we are not in 2008 with the financial crisis -- i know you disagree with the statement -- we have a
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fully employed america. joseph: a reflection that things are not going well. up,fact that while gdp is the medium income of a full-time worker is the same as it was four decades ago. at the bottom, real wages are the same as they were 60 years ago. gdp is not a very good measure. tom: global warming clearly is going from a theme, a cocktail conversation to front and center. are we finally confronting this? the heat wave, the australian fires? joseph: the science is clear. report, it was clear even them.
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one aspect that people did not understand was that global warming is also associated with higher very ability. extreme weather events. we are realizing how disastrous it is for our planet. tom: global warming is when you are a kid and drive-by gary, indiana -- drive by gary, indiana. thedo we get from incentives of gary, indiana from another time ago to a better incentive for an industrial america? joseph: we have to have regulations. we have to have investment. we have to have investment -- incentives. tom: why do republicans fear in investment? joseph: new york city would the
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in gridlock if we did not have stoplights. tom: the ivory tower. i want to get to an important note about your new book. madamehis under lagarde's elbow today. liberals need to do to get elected in america so they can rewrite the rules that are appropriate for america? how do liberals had elected in america? , a clear statement of what the problems are. excessive inequality. exploitation of a whole kind and variety. there is an epidemic of childhood diabetes and opioid crises. companies exploiting to make more profits and undermining the
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strength of our society. and coming up with solutions. there is no panacea. there is no magic bullet. ways ofwhole set of changing how our economy functions from incentives, investments and come i think can get us out of the quagmire that we have gotten ourselves in. tom: joseph stiglitz from columbia university. anna edwards in london, good morning. anna: good morning. good to see you. thank you. up next, we bring you the stocks on the move this morning including ubs. targetss bank missed for 2019. what is on the to do list of that company? this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open and we are 20 minutes into the trading on which we see most of the stocks on the broader index, 570 out of 600 fall and equity indexes posting some big red 1% drops. let us get back to davos where haslinda amin has a guest. >> joining me now is hiroaki
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nakanishi -- hiroaki nakanishi from hitachi. good to have you with us. we know that hit tashi has been tashi has been busy devasting. isoaki: now, the background that we have been trying to change our business model dramatically. and it requires technology in the case of materials and engineering. the commodity products are where we are losing.
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the main markets are taiwan and china. social change.on onthat sense, we are focused operations. that is the background. the products for the solution, we will have to keep that. haslinda: where will growth come from now? hiroaki: we are always thinking about that. provinceion was which should be our business point? it was a busy -- it was a big decision. haslinda: you make motors for electric vehicles. how are things going along? hiroaki: it is a very dynamic
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change. is one where the dynamism really continues. inda: are you betting big on this? [indiscernible] affect the of things social structure as well. it is not just producing the card for the consumer. we are focused on future models. haslinda: but it is an interesting time because you are making investment at a time when ev is very popular. we may need more time
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to figure the ev uout. is mobility business seriously affected by climate change or environmental considerations. we have to watch very carefully what is happening. haslinda: a lot of focus on sustainability. whenu ever envision a time hitachi will make an exit from the nuclear business? hiroaki: some of the energy business, we cannot do that but now, the business we have shows that the u.k. is still a very important market for us. important market.
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haslinda: so you're saying that you will keep the nuclear business for the long-term? hiroaki: this is difficult business. easy of energyoint consumption, climate change, co2 nuclear technology is very important and we would like to keep it. slinda: i will ask you that question again next year. how about where demand will be coming from -- china is also aggressively looking at this project. hiroaki: two aspects. the public is focused on all of the commodities. on the focus is
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environmental considerations. more capital for this? this is the highlight of the target. this business is also growing. haslinda: ok, thank you. matt, anna, back to you. anna: haslinda amin in davos for us. stocks here are down. c is down by 1.4%. coming up from davos, and action packed lineup. microsoft,he ceo of and blackstone. and then we also speak to the indian bank chairman and carrie lam.
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it will be really interesting to speak to her about a couple of things. inluding the coronavirus china. that will be an interesting conversation to watch. this is bloomberg. ♪
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anna: welcome back to the european open. i am anna edwards at our european headquarters in london alongside matt miller in berlin. the week session is taking a clue from the weak asian session. the: it is the news that corona virus spreading throughout china and other countries that is dragging on stocks. the broader index is down by 0.8%. all industry groups are down. , personalurces, banks household goods are the biggest
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losers. you can see that that news along with possibly the downgrade on the hong kong credit rating is really concerned with the asian market then hours but is dragging on all of the sectors. let us get the bloomberg first word news and for that, we go to beijing and tom mackenzie. economy willal grow this year but slower than expected according to the international monetary fund. downedicts growth of 3.3% 0.1% on its projection in october. still a gain on 2019. the imf is cautiously optimistic saying risks are less skewed to the downside. presidents trump and macron may have reached a truce over digital taxes. according to paris, neither france nor the u.s. will impose punitive tariffs this year
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though the readout from washington was more muted. this could prevent as collation another trade war. hashina, a sars like virus entered a new stage of severity. it has affected 15 health care workers with one critically ill. four people have died. 17 years ago, a sars outbreak killed around 800 people. in the u.s., mitch mcconnell is planning a tight timeline for president trump's trial. he will give impeachment lawyers only two days. they seek a quick dismissal of the charges. the trial is set to start today. 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. anna, matt? the: tom mackenzie with
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first word news update from beijing. some of the world's biggest names are gathered in davos to talk about trade, globalization. haslinda amin has another guest. haslinda: joining us now is the ceo of xiaomi, chew shou zi. talk to us about your international plans. are you planning to sell smartphones in the u.s.? chew shou zi: it is a great pleasure to be here today although it is cold. iss is the first time xiaomi representing itself at the world economic forum. our revenue in the third quarter of 2019 from overseas markets is at about 49% of our total revenue. and our total revenue outside of china is now close to $10 billion.
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we are now truly a global company. we wanted to come and share this with as many partners as possible. haslinda: are you thinking about selling 5g smartphones in the u.s.? willshou zi: the plan revolve around markets in india, elsewhere with an emphasis on western europe including spain, italy, france, and germany where we are picking up very good traction. haslinda: what is good traction? chew shou zi: in western europe, we are the fourth largest growing smartphone. in spain itself, we are the second largest. this is just smart phones. we are more than a smart phone company. ar scooters have more than
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70% market share in some countries in western europe. and our wristbands are the second most popular in western europe as well. : are you benefiting in any way and are you hoping to capitalize in any way? chew shou zi: we are part of a very sophisticated global supply change. believers in the advantages of a global integrated supply chain. the trade tensions have so far not affected us directly but we are optimistic about the future of the relationship between these two countries. : do you have any numbers you could share with us in terms of sales expected? in china is a5g big focus for our smartphone business. we launched our first smartphone in china in uber-november of last year followed up by a
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device priced below 300 u.s. dollars. that created a big reaction within the industry because it is the most affordable five handset that anyone has produced. producinge anticipate 10 five g handsets in china. we expect to be able to launch our 5g portfolio elsewhere as well. : it is a very competitive market. of the most: one important things to know about our company is that we are very mission driven. we don't believe in just looking at the bottom line and selling as many products as we can to consumers. whiche a specific mission is to bring amazing products at honest prices to the most people that we camp. over the course of the last 10 years that we have existed as a company we have brought very high tech technologies to the
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market in the shortest time possible. our first generation phone -- haslinda: how much of the chinese market can you secure? chew shou zi: we see a great chance -- haslinda: give us a number. [laughter] vp ofhou zi: the senior international at xiaomi. back to you. matt: thank you very much. have, by the way, donald trump, the u.s. president arriving in davos. you can see what we believe to be his helicopter there. that itident arriving will be interesting to see when he meets up with greta thunberg
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and if he will acknowledge her this time. last time he snubbed her as he walked by. her facial expression is now enshrined for all time in an amazing meme. president trump arriving in marine one. we will also be speaking with larry kudlow live from davos. don't miss that interview at 12:30 p.m. london time. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. we are 40 minutes into the trading day. ubs has cut its midterm goals underlining its task. they are seeking to overhaul its wealth management division. ceo, cranny spoke with the sergio ermotti earlier. at the if you look environment of 2019 and the results after the third order, the fourth quarter despite being our best four quarters since 2010 could not reverse the trend of 2019. full year i can consider the results solid.
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considering the very challenging and mixed environment we have been operating in. the targets going forward, if you look at what they are, our targets were set 2018ptember, october of with totally different expectations for rates, economic growth. and also for geopolitical uncertainty and how it would affect our clients. as we enter 2020, if you look at what happened on all fronts, i think recalibrating the targets based on the fact that rates are down and the environment is more challenging is a natural definition. the target has been stressed tested -- stress tested. in a more constructive environment, we can deliver return of around 15% which makes
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us already one of the best in the industry in terms of return on what we call deployable equity. it take to gets toward that 15%? what needs to happen to achieve the upper bandwidth? sergio: when i look at the upper bandwidth, we just need a more normalized environment. we are not looking for huge tailwinds. if i look at our growth opportunity in wealth management growing by 15%, if you look back at delivering double-digit returns on allocated equity which is more in line with what you saw in the last eight years on average, if you continue to see our growth factoring in our swiss business in personal and commercial banking and corporate
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banking, you can look at asset management. banke still managing the for more efficiency and capital consumption and cost and you will get to the target of 15%. was sergio ermotti, the ceo of ubs. just bringing you pictures of donald trump's arrival to davos, switzerland. a little less snow on the ground. president trump will be giving one of the first keynote addresses at this year's event. this is the 50th anniversary of the world economic forum. people in attendance. president trump's arrival undoubtedly getting a lot of attention. will he and greta thunberg's
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paths cross again? we will let the trump delegation settle in and we look forward to hearing from him later this morning. china isy virus in increasing in severity. four people have died and a dozen health workers have been did indicating that it is transmitting more easily than thought. emma, good to have you with us. can you bring us up-to-date about what we have learned regarding the ease of transition -- transmission? emma: it has infected health workers, nurses and doctors in china. that was a key development because it is a very strong indicator that this is transferring from person-to-person and not as it was originally thought just from
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animals to persons. there is an understanding that this probably came out of a so-called wet market of fresh fruit particularly meet and animal market in wuhan in central china. it is now transferring from person to person which puts it in a different category. the lunar newnow year holiday. information, this is the biggest holiday for the chinese -- to go home, spend time with their families. there will be not just millions but maybe even hundreds of millions of people traveling in the next week. huge it is going to be a challenge for the chinese
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authorities. they call it the world's biggest temporary migration. the number of people heading home, heading overseas. this will be a huge challenge for them to have to deal with in the coming days. what they have done is focus on wuhan. the city of 11 million people was centered.s they are not letting anyone with a fever leave the city. there are some checks throughout china according to our reporters in the country. but that is slowly being rolled out by the government because they really want to appear to be on top of this one for obvious reasons. anna: let us talk about the impact on markets. andaw selling in asia interesting repositioning around pharmaceutical companies. i was looking back at the impact onsaw from the sars virus
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hong kong and chinese markets in 2002. at the worst of that outbreak, we saw a 20% drop in the hong kong market. but things have since rebounded and we remember that there is other context. but we are seeing an immediate impact. they are experiencing this more widely. there are some similarities with sars. widevirus is in the very coronavirus family. with sars, it was a different situation 17 years ago in terms of how it came out. the chinese government did conceal at the start the scale of what was happening so it was much more of a shock to markets when it eventually did come out.
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being a lotar to be more transparent this time giving more information. but as you said, market reaction as people try to come to terms with what this actually means. it does appear to be less deadly then sars so far. only four victims in china. they were elderly people with existing conditions. remains to be seen as to how this pans out. emma o'brian covering this big market moving story. also, turning into a human tragedy as well. up next, we bring you the stocks on the move so far this morning including ubs. the share price falls as the swiss bank missed a key profitability target and cost target for 2019.
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the concern now is the payoff forecast. ubs down more than 5%, its biggest drop since may and the biggest loser on the stoxx 600 index. this is bloomberg. ♪
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anna: welcome back to the european open. 52 minutes into the european trading day. a lot is coming through particularly the ftse 100 and the cac both down by 1%.
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component is a focus in france. >> i want to start with ubs dropping this morning more than 5% missing their targets for cutting financial goals and a wealth of assets left the asset management core underscoring the asllenge for the new cohead he gets underway. hugo boss -- this is a bright spot for the luxury sector. up 4%. beating estimates. a lot came from asia. they also have a dedicated that they also have a new line dedicated to david away. other luxury names are being hit because of the sars like coronavirus is taking hold in
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asia. a devastating illness. those luxury names will be front and center as they rely heavily on asia for sales. of this comes off the heels the hong kong protests. and this is another worry for them. matt: thank you. homogenousn for its 80, there are some diverse -- eity in dow post, s, there are some diverse views. the climate is a hot topic right now thanks to young people pushing. but pretty much nothing has been done since global omissions and co2 have not been reduced. and that is, of course, what we
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are trying to achieve among other things. we are all fighting for the environment and the climate beenf you see what has done from that perspective, basically nothing has been done. matt: a lot of talk then and no substantial action. analystoined by our live from the economic forum in davos. attendees responding to greta? >> i went downstairs as she was about to speak. there was not a line outside of her panel. it was sold out. a few ceos were standing on the outside. number onenges the
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topic that people are talking about here in davos right now. so is speaking again at 1:00 she has the advantage of sandwiching donald trump on both sides of his speech. attendees were delegates from germany and saudi arabia. applause when she talked about her science. she is urging people to pay attention to the signs. we do expect donald trump's speech which will be happening soon to focus much more on the economy. but the idea is the same. corporations need to be focusing on a much wider array of people than just shareholders. let us see how trump responds to the themes that are being looked at here in davos. anna: thank you for the low down of what lies ahead in the davos diary. lookingrump -- we are
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forward to his speech coming up later. stakeholders are also an issue. here is a look at some of the great voices we will be speaking to at davos later this week. this is bloomberg. ♪
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francine: the threat of a deadly virus from china, a sars concern. luxury stocks get hit. ubs misses target. the wealth management team sees unexpected outflows. president trump addresses the world economic forum shortly. what do global markets want to hear? good afternoon or good evening depending on where you are in


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