tv Bloomberg Daybreak Asia Bloomberg June 8, 2020 7:00pm-9:00pm EDT
>> welcome to daybreak: asia. we are counting you down to japan,open in australia, and south korea. here are some of the top stories. asia-pacific stocks looking for modest gains after the s&p 500 wiped out losses for the year. the dollar falls for an eighth day, the longest slide in a decade. little change in oil trading arabia isn news saudi
falling behind on the output curve. 7obal virus cases topped million a week after passing 6 million. usn u.k. show signs of a slowdown. india and brazil are the hotspots. have covered the historic session, s&p wiping out losses, pushing into positive territories the first time this year. we are seeing a recovery from the march low and the nasdaq also seeing a record high gain. the recovery seems to be playing out. when ithat repeated comes to the asian session. asian equities convincingly set to rise for a seventh straight day after we had that rally on wall street. taylor, despite the fact the overnight session was
confirmation the u.s. ended the recession, it seems like the ultimate mode of reopening. taylor: i think you are right. the easing lockdowns bolstered leading among investors the s&p 500 to erase losses for the year. effectiverning how the restrictions and lockdowns might have been. max joins us now. some of the lockdowns might have --ked but we were topping talking at the top of the hour that global cases have top 7 million after just 6,000,001 week ago. max: it depends on what -- itsive border control
depends on which lockdown you're talking about. new silent, aggressive border control. cases around the world maybe they were later to take action. states, patchwork ranging from areas like new york that had quite a successful prolonged lockdown to others that opens back in april and they are still seeing spread of the virus. took a less aggressive stance and is now seeing the unfortunate result. there is a hybrid -- wide disparity of results that will keep the virus around for some time to come even though some have it under control. haidi: when you talk about the reopening, that is not all created well. new zealand you have a lot of space and careful observation of social distancing. thedoes that contrast to
challenge is city like new york density ofrms of population and pressure on public transport? max: it is entirely different. centers for disease control in the u.s. put out guidance on returning to work that suggests people not take public transit and that's not possible in new york. reopen ais possible to city, we have seen it in south korea, china, other parts of the world, when you have a certain amount of virus circulating, it takes a lot more effort to keep individual cases from turning into outbreaks. is going about this in a cautious way with a staggered approach where in the initial phase which could last a month, only a few businesses, types of
businesses. while there will be more ridership on subway, it will be dramatically less than what we are used to in the past. so the question is how you manage, when you start getting millions of writers each day -- riders each day and that is when goodave to hope to have distancing measures. i walk into a building every day and they take my temperature, but i could be asymptomatic and just not showing symptoms. what are we doing to combat asymptomatic people? do: the only thing you can because of the fundamental way present either not showing symptoms or slow to show symptoms is do your best to have contact tracing so you catch the
asymptomatic cases by identifying them through the contact that infected someone. otherwise all you can do is wide surveillance testing at a level that will be very difficult over time to maintain. so it is really developing the ability to track down the sources of infection and reach out to people and target testing. temperature checks are more or less theater. screening will be low. so it a broader surveillance effort. haidi: we have talked about the herd immunity and if we know
antibodies give a meaningful .evel of immunity max: in the early days we had no idea on the degree or existence of acquired immunity. suggestsdone so far there will be some degree. it will vary person-to-person depending on immune system and extent of infection. we do not know how long it will last. that will take following people for months or years to get the sense of how long it lasts. immunity is if the probably durable, we are nowhere near herd immunity anywhere in the world. from antibody studies we have,
which might overrate the number of infected people because tests are not always accurate but we are looking at the heaviest hit places in the world. forherd immunity you look 60%, 70%. getting that level of infection is extremely deadly. it is not possible to achieve without a vaccinated -- without a vaccine. your: we always appreciate news. even if you are the bearer of bad news. let's get you to karina mitchell. officer charged with killing george floyd entered no plea. vale is $1 million. he knelt on towards next for almost nine minute.
democrats want -- for almost nine minute. -- minutes. european central bank says they expect the single market economy to shrink by almost 9% before recovering in 2021. worst recession for decades hammered by the virus. traders slow down. weak economy. needed.kers will act as >> i welcome the european parliament called toward an ambitious european response. a strong framework. ecbcan rest assured the the continue to support recovery with all appropriate
measures. rising in korea with the north saying they will close down contact with the south. alks are scheduled through liaison office but the calls have been going unanswered. the north released new pictures of kim jong-un over the weekend. arrestng demands for the of a man who is accused of that lednd corruption him to the top of the conglomerate. he is charged with using a legal means to ensure his succession. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. saysr: still ahead, trump
expect the safe haven demanded the u.s. dollar so strong in march will return to at least the same degree. no doubt we have been surprised by the rally and risk currency and the extent of it over april and may. to findat, it is hard when monetary policy is so loose but we are concerned about the potential overshooting in currencies. in the coming months we will have to absorb a great deal of negative economic data and the corporate earnings reports to really test of the degree of optimism that has undermined the
dollar. haidi: stephen roach wrote a piece called another crash and the dollar, saying what he calls the exorbitant privilege is coming to an end. is this an existential moment for the dollar given what is going on with the u.s. economy, the handling of coronavirus, and increased geopolitical tensions everywhere? this has been foretold many times. i don't see it in those terms. i think it is more the case of how do we look at the second half of the year, does the u.s. .ave a second wave restrictions have been so easy -- so uneven across the country
and that could hamper the recovery and make the u.s. dollar less appealing. there was a lot of pressure on the fed to take more action at a time when other central banks were enjoying the rewards of the containment of the virus in their country. yeartentially later in the there could be dollar weakness but in terms of losing reserve status, i think that is a really china is story that looking to to reduce dollar reliance. think: curious what you is the biggest driver of the dollar at this point. fed intervention or perhaps taking back some safe haven the dollar was perceived as having march 23?
what is the biggest driver of the direction of the dollar at this moment? >> risk appetite. the loss of the safe haven demand. we were trying to look at the parallels, we looked at the , it didl crisis of 2008 of 2009.d until may pardon me, march. it took a while for the u.s. dollar to lose the safe haven demand. this time the dollar most squeeze where we had the pound under pressure in of themarch 16, head 23rd, a key date. within 24 hours the fed announced a high range of
reopening of banks so they were better prepared to make dollars available. i think that has been the key factor. going forward maybe we could get monetaryore relative thecy and the driver but weaker dollar is helping their export side. i grew up, might textbooks told me that yen was the safe haven. how is this changing the way we view safe havens? the big dollar push we saw in safe havens, is yen still holding status as the primary safe haven? >> that's a good question. i think the order of safe havens
has been shoveled slightly in the last 10 or 20 years. franc and yen fairly clear as the first and second choices with the u.s. dollar further down but in 2008 or 2009, the dollar got a lot of safe haven. it was not number one. it might just be in this environment of the bank of japan running for so long, the yield -- just arol different investor behavior. money coming out of japan is less likely to come home in times of crisis so there is a structural change, although not a radical shakeup of safe havens. haidi: we always appreciate your
helor: president trump says will discuss ideas to revamp police tactics even after demanding the law and order approach to the protest of the death of george floyd. he has criticized democrats over calls to defund the police. our reporter jordan has the story. byyou think this new tactic gentlesident calling for handling, do you think that strategy will work? >> i can tell you what has not worked for him is what he has been doing up to now, which is hammering away at the law and order approach. you have seen his poll numbers
bidenn compared to joe who saw his numbers go up. he was down in houston today the his family -- with family of george floyd before the funeral. he is trying to capture voters who are concerned with what they saw in minneapolis but it really goes against the president's instinct. in 2017 that police should not trip -- should not treat suspects gently. we will see how long this lasts for trump. haidi: the defund the police movement has gained traction and now we see trump trying to link that with joe biden. joe biden has said he is open to the idea of making police funding conditional. what do we know about this? democrats in congress
introduced a bill today that would take some of the money the federal government gives police conditional on if they were adopt reformsey and it will make it easier to sue or prosecute officers who abuse or killd to suspects. this is a step further than what the president is supporting. the white house press secretary not the white house would be in favor of making it easier to prosecute officers. year, big an election differences between trump and biden on this issue but not much optimism in washington that something will get done on police reform. taylor: you mentioned that it is
an election year. what do you think the president needs to do between now and november? joe biden is leading a lot of polls. >> it will be a choice for the will try toether he get to the middle and wingback independent voters -- when back back independent voters by monitor -- moderating his or is he will continue to pursue his base and hammer law and order and appealed to the conservative supporters and ramp up turnout among his core supporters and sacrifice the group in the middle. up until now he has pursued his but campaign strategists are worried about the numbers they are seeing.
they are trying to urge him to go in a different direction. it goes against his instincts and what he has said in office for three years. we will see if he takes their advice. haidi: jordan with the latest. let's get you a check of the latest headlines. car sales rose in china for the first time last month and five years. tesla rallied above the record close. they have raised ahead in china to resume production in shanghai. they have cut prices in the mainland. the oil and gas company is negotiating a restructuring of their loans to take a majority of the equity in bankruptcy. chesapeake owes $9 billion and
is debating whether to keep interest payments to next week. tesla electric will decide whether to launch lawsuits over the payoff scandal by next week after report found former executives involved in the issue failed to comply with rules. had cash and gifts from the former deputy mayor of a town that hosts a power plant. next, the south korean court rejecting a request for an arrest. we will look at tech manufacturers and what comes next in the dragged out legal process. lots more to come. this is bloomberg. ♪
haidi: another milestone for u.s. stocks as the rally continues. s&p 500 wiping out the losses for 2020. let's take a look. sophie, what are we watching? >> let's start with the big picture look at brought gains we see in asia. they have been trading at a steep discount to make an attractive entry as economies reopen. 60%retionary adding nearly at the start of may followed by
materials and industrials. health care and energy getting ground. ndx 15 marginally higher this morning after turning positive for the year and nikkei futures in singapore pointing to gains continuing in tokyo. ramping up with performers. japan's mega bank stock had a five day rally as relative cheapest at into a lower. kospi recent rally as we watch as reaction to north korea they bring diplomacy to a standstill. bring --gains monday seven day gains monday.
stall.d see optimism rejected demands for the arrest of a man who is accused of bribery and corruption in a merger of two affiliates that led him to the top of a conglomerate. what are some of the latest developments? >> the court announced early that they had a hearing that lasted more than eight hours. waiting in a detention center and went back to his house and the court explained the reason for the [indiscernible]
this is a pressure relief of the after allegations of bribery and corruption. the court implied they acknowledge allegations made by they prevented lee from returning to jail in have to bring up stronger arguments in an upcoming trial. haidi: what comes next in the process? facing charges of stock manipulation and violation of laws that stem from a 2015.versial merger in andung denies allegations
requested an outside review panel last week to test the validity of the indictment by prosecutors. .here is a meeting thursday the panel will make an assessment and recommend accommodations to prosecutors in the coming months which deglaze -- delays any indictment by prosecutors. they will continue to investigate lee and they might reapply for the arrest warrant or if under pressure from public opinion they could bring lee to trial. taylor: what does this mean for samsung? >> for them so far it has been business as normal.
stock prices have not been affected much before the pandemic but in a statement of the weekend they say they are in crisis and business has been but there is uncertainty to current difficulties with the pandemic and trade wars. in addition to heightened uncertainties they are trying to boost their image of lee and corporate reputation. it will be important to have a better image for public opinion that might sway an upcoming indictment and trial. impact.he reputational next, investment in australia is about to get more difficult. we will talk with the top m&a lawyer and what it means for
day quarantine for anyone entering the country. the government says it is vital airlines -- the government says it is vital but airlines say will devastate them. he reports in indonesia say they are in their worst cases -- new reports in indonesia say they are in their worst a number of cases. almost 90% expect incomes to drop. has announced $50 billion. u.s. and russia will open talks agreement about an that is going to expire in a year. it withnts to expand china but beijing says they are not interested. it would be the first time in five decades the u.s. and russia
have no formal nuclear agreement. environmentalists and russia are working less months oil spill in 29,ria that happened may 20,000 tons of oil and booms have been placed in rivers but there is evidence the oil pass through first. russian authorities only learned about the disaster by social media. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: mna volumes have passed economic --id the economic shocks of the pandemic. australia and the u.k. are tightening up.
sandy mak joins us. in terms of opportunities you are seeing is there a concern about the outlook of dealmaking in australia is subdued compared to other jurisdictions because of geopolitical tensions? differentia is no than other jurisdictions. mna volumes have dropped across the board and fundamentally value differentials and difficulty make things difficult to strike things in the current environment. haidi: what sectors are you seeing opportunities? most companies just want to get through this. enormous amount of restructuring opportunities await on the other end. sectors,k different telecommunications on health
care have fared much better in the current environment. you still see m&a deals going on in the sectors. --er sectors like treasure travel and leisure have been affected on the type we are seeing is distressed. we are seeing green shift in interest from clients and if you had to pick a jurisdiction that has done really well in the lowis and is likely to have risk from a second locked down i would say it is australia so i am hopeful to the mna of returning to a more normal level but time will tell. global head ofan mna said he is starting to see signs of green shoots of recovery. i wonder if you fold that into some of the cross-border deals. today we are getting rumors of astrazeneca. is there opportunity -- appetite
for cross-border deals rather than domestic deals? >> i think cross-border m&a and australia has been the way we do deals. australia is reliant on foreign investment for capital and opportunities and are experience is the inquiries we are getting are from jurisdictions like the whereeurope, and china they are starting to think about areas where there might be opportunity for investing value. taylor: how are they going to be financing some of the deals? looking at the equity market, here in the u.s. it is closing back in your own record highs. do you find a lot of -- year on record highs. you will find a lot of these with equity? howare you thinking about the companies find a lot of the deals? specific to the
type of transaction but it is a combination of cash and equity for various reasons will be attractive. debt financing and acquisition financing remain available. a greater focus by banks and australia on the covenants and credential regulation and oversight they need to incorporate before they are able to provide acquisition financing so a good relationship with your banks is key. in terms of equity, financing with equity and script transactions were you issue shares to buy shares i think will become popular because the value differentials make it difficult for target to come to an agreement of where the cash so it might fit
close the differential. haidi: where do you see the likely acquirers? we've been talking about the deep pockets of private equity for years and i think they are still there. likely to come back at some point and the question will be when they jump back in and how they filter through the opportunities in a way that mitigates risk for them. i think we will see lots of pe and investment funds when the market starts to turn, which hopefully will do soon and they will set up and take interest in mna again. recoversia is likely to quicker. is it more likely we will see asian companies looking to the likes of the u.s. and u.k. for targets and will they run into
hurdles of greater restrictions? >> i think asia is one of the jurisdictions we started fielding calls from and it is coming up faster because they started earlier so they will look to foreign targets. policy settings of various countries will play a role in where people decide to put their money. taylor: diving deeper with us while we have time on the types of sectors. m&a,h care, mn day -- where do you see sectors where 2020 could be the year? >> health care deals ongoing and new deals popping up. telecommunications appears to be another one. thating technology-based likely of the global pandemic will have shifted human behavior that will attract interest.
consumer behavior will change dramatically because of the pandemic. people who might have previously paid a lot of money for gym happyships might now be to exercise outside. when investors are looking at where to invest, i suspect they will take into account a lot of changes in consumer behavior we have seen as a result of the health crisis. sandy, thank you was always. after 88 billion dollars of investments to the first phase of the crisis, john we will read growingis aware of the risks in china admitted simmering trade tensions. he spoke explicitly with bloomberg.
>> i think you have to be thoughtful about what is going on between the u.s. and china. economicthese massive superpowers and so many things are into court -- intertwined. i was on a call the other day and we were talking about supply chain and part of it we get from china. as a result, you have to be thoughtful about that. i would say -- i am going to push you. people might misinterpret what thoughtful means. does thoughtful been change? >> i think thoughtful means you have to make certain changes you have to make sure changes lesson dependency. if you don't you do it at your
own peril. advocatingwould be for companies to lessen independence. it does not mean cut it off. but it means the risk manage. sense. makes we do not know where this is going. but it is possible that the battlefield may extend from where it is now, trade, technology, security and it could extend into finance. trump has effectively threatened that it might or will. what if that happens? you could think of all kinds of reprisals the chinese might take, perhaps for good reason. are you worried your capital might become stranded there? >> i do, little bit.
you can wargame a bunch of different scenarios and tons of -- in termshappen of what might happen but i think you have to consider what might be some of the most profound andges that could occur adverse outcomes. that relationships and economic activity effectively freezes between the u.s. and china. do i believe that will happen entirely today? low likelihood. a higher likelihood that was. but i think it is low. so you have to worry about level of investment and how much value you have as an investment organization and what you are flowing to china. if they get stranded or frozen and you cannot get your money
out, that has significant implications. so we are thinking of those things. i'm not suggesting that we are there but i think we are evaluating a bunch of risks that if we ended up having come i of it like a blackout on the relationship with -- having, think of it like a blackout on a relationship with china. we are taking actions to try to think about how we would risk manage around that. haidi: that was john speaking exclusively with eric on bloomberg front row. coming up on china open, more impact on u.s.-china trade 9:00 a.m. in hong kong and 11:00 a.m. here in sydney. lots more to come. this is bloomberg. ♪
taylor: the auto industry is getting back to business and gm ceo has a unique insight running the company with more than 160,000 employees. general motors has worked to have a minimal amount of sales go to rental plates. we focus on other types of commercial business and the retail customer so that will
have an impact, but not a huge impact for us because of the level we had gotten to from a rental car company perspective. >> tesla has a market value higher than anyone else's in the u.s. will electric cars be an important part of the future? >> absolutely. before the crisis hit, we had investors, dealers, employees with an easy day where we took through technology from a battery perspective. we were launching it next year, the battery platform and we will take multiple models off of that. andnnounced the gnc hummer that cadillac will be a lead brand for developing and selling electric vehicles. we believe in all electric
future and we believe the transition will happen over time. brands value and luxury so we have to make sure we are providing options for the entire marketplace. we are really excited. i think this is one of the most exciting times as we transition to electric vehicles. >> do you expect in 10 years or 20 years gm will produce only electric vehicles? >> i think it will take longer than that. it will happen over years and decades when you look at the transition that needs to occur. there are 250 million cars in the u.s. car park and transitioning me them -- transitioning that will take time. when you look at use cases, affordability, that's why we are working hard to make sure we are in a leadership position with battery technology so it is available for everyone. it will happen. >> you have announced you are
producing an electric van at some point in the future. automobiles orce a different part of what you are doing? a limited business now in commercial vehicles and we see that as an opportunity as companies look at their carbon footprint and environment told changes they will make -- environmental changes they will vehiclesing commercial that are all electric will be important and we think we can provide a good value inflation with the cost of ownership. we see this is a huge opportunity. motorse look at general and the overall u.s. economy, are you comfortable the economy can come back and you can do well this year? i assume you will not sell as many this year as last year. >> we think the market will be
down this year in the u.s. but i think it is early to tell how it will rebound. there were different factors. throughnue to sell even the early months of covid, and we are starting to recover but we are not back to where we were . we think it will be down and it depends on how successful we are in making sure we keep covid maintained and we do not have a second spike. we have planned for a variety of scenarios. hoping for the best but planning for something conservative. that was the general motors chairman and ceo. coming up, morningstar auto analysts join us to discuss the latest number out of china showing car sales have rise -- risen for the first time in 10
♪ haidi: welcome to "daybreak: asia." i still you, japan and south korea have just opened for trade. stories, asian stocks such arise after the s&p wiped out its losses for the year, the dollar falls for an eighth debuted oil is little change in early asian trading after news outputudi arabia was -- curbs.
and hong kong is back in business with ipo's the rage again. be heavily said to oversubscribed. tolor: let's get straight the market action. we do that with sophie. how is it looking? tokyo, kicking it off in stocks stalled after the nikkei saw a six-day game, the benchmark off about two tens of 1%. the ined to rebound, study after an overnight jump and the dollar with losses. indicator of the economy. let's check the opening in seoul. the kospi extended its rise for an eighth straight day. reaction in peace talks as north korea is readying
to cut off communication with the south. firming below the 1200 level against the greenback, trading at a march 11 hi. stocks modestly extending gains after turning positive for 2020. aussie shares higher after the long weekend. -- after a dayng game. see operations in south america face virus related disruption. chile has had 84 cases. futures maintaining slight gains while iron ore in singapore stalling, the rally above $100 looking increasingly stretched given the headwinds. gold around 1700 after a
three-week the klein and rent opening higher by about 1%. on oil.turning bearish the opec deal seems to already be priced in. haidi: let's look at what to buy and what not to buy at this stage. at ones a fund manager of asia's largest independent asset management firms. what to buy and what not to buy -- you look at the euphoria across markets at the moment and you would not think that parts of the local economy are in a deep hole. we had the s&p for the s&p 500 on a day we saw the u.s. declared as having entered a recession in february. how do you manage defined value or safety at levels like this? is an i think this unprecedented kind of situation we are dealing with for the first part of 2020. i think first of all, there have
been a lot of expectation changes on the development of covid-19 and the resurgence of economic activities. forave been trying to look companies or sectors that are havetically driven, relatively un-disruptivable business models. with a lot of unknowns we are dealing with, despite the normalizations of economic activity still on track, there are a lot of unknown factors we have to factor in. with that said, i think a stone what we have been focusing on, there has been quite a bit of exposure we have had in the portfolio that have that kind of character. are more having
online business, dealing with domestic consumption related consumer goods, or even the health care sector in china. robustbeen looking despite that there has been a bit of disruption from covid-19. we are looking at the bottom up perspective. fairlyf companies are not disrupted. haidi: what kind of health care names in particular? we seen in the last couple of weeks in particular, there has been a targeting of health care names in asia. it is either a success or not depending on the drug being developed. what do you see as being the survivors out of the pandemic euphoria we have seen in the space? frank: this is a good question and it depends on how we look at the sector. months, there2-3
have been some beneficiaries of health care names that benefit from covid-19. produce blood products that help boost immunity. some health care names dealing equipment-19 related such as the temperature gun, the parts that produce -- the briefing machines. the share price rallied quite a is during covid-19, but that not driven just by a single event. long-term, we are looking at how the policies are approval infoster innovative areas. i think there are a lot of chinese health care or
innovations that are having a in the nextine 12-24 months time. we are seeing more a stable policy. this is still the case that the are fosterings new drugs from innovation perspective. i think the sector will be able to benefit from the existing policy. taylor: one of the august challenges for bottom-up investors is trying to figure out what a company is worth, especially in a post covid-19 world where a lot of companies have been pulling forward guidance because they don't know what sales earnings will look like in the new world. how do you figure out what a bottom-up valuation looks like when the companies themselves are not even sure what their sales could be? frank: this is also a very good
question. under this kind of situation where this is continuing, it's hard to judge companies from the valuation perspective. but i agree with you in the sense that there has been a lot of expectation changes, especially on a company's earnings. covid-19, you have to work much harder to assess quality. how the business is affected, and what drives the recovery from the pandemic and lockdowns. studies not massive only on the company level, but analysis on the upstream and what are themes,
trends, what are the lockdowns? -- looking at a lot of sellthrough numbers. at the online chat room and what the particular factors are doing. thehis point in time, , therewe are looking at is a large degree of disparity regarding earnings expectations. ifstill have a belief that we study harder and understand the business models, how they recover from the lockdowns and overall how they are doing, we think we can find some good value companies. people tend to be more conservative during this crisis scenario.
been an area that we think the estimate has been more conservative than we thought. haidi: really appreciate your time. at valuend manager partners. we are getting breaking news when it comes to the trading of samsung. we are seeing samsung electronics gaining after the court rejected the application for the heir apparent's arrest. this is not necessarily the end of the saga. we could see more developments when it comes to these applications, but we are seeing after aup about 2.2% court rejected the prosecutors's request to arrest lee. a bit of certainty that investors were lacking. china sellll ahead,
♪ taylor: your watch -- karina: you're watching "daybreak: asia ." the police officer charged with noling george floyd entered plea during his first appearance in court. derek chauvin is accused of murder. democrats want sweeping changes prosecute easier to law enforcement. meanwhile, environmentalists and russia are warning less months
-- withl in siberia about 20,000 tons of oil into local waterways. activists say there is evidence the oil has passed through. again on thesing korean peninsula, with the north saying it will close down all contact with the south. the two sides normally scheduled talks through a liaison office. the south's request have gone unanswered. there were pictures of kim jong-un on the weekend presiding over meeting. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. let's look at south
defense after north korea said it is cutting communications with the south, shutting down the liaison office by noon tuesday, as well as other official communication lines. seen and airline parts manufacturer gaining. take a look at the stoxx and in companiesstocks that benefit from ties between the south and north. be sellinge will their iconic downtown san francisco headquarters and moved to oakland. this as the california power giant moves toward bankruptcy. i know how expensive it is to live in san francisco and i was curious how much rent they could save by moving to oakland. it might not be much, but it is $1 billion, which is what they
are seeking from the sale of their headquarters. an interesting move. pg&e moving to oakland to reduce costs. very interesting. they will return the net gain of the headquarter sales to customers. the world health organization says transmission of coronavirus people not showing symptoms is very rare. our chinato correspondent, selina wang. what else is the who saying? they are saying the transmission of covid by people not showing symptoms is very rare. contradictsding earlier research that suggested spreaders could play a significant role in transmission. the new england journal of
medicine warned that transmission by seemingly healthy people is -- pandemic control. a journal published the first peer-reviewed analysis of the impact of public health measures and it suggests the toll of coronavirus would've been vastly worse without lockdowns and other public health measures. they say they prevented about ,alf a billion covid infections including in china and the u.s.. they say lockdowns have the clearest benefits and travel are less-- but impacts clear in the u.s. haidi: what about the latest developments when it comes to the second or third wave of outbreak we have seen in japan and the latest lifting of restrictions in new zealand?
the government is aiming regulate a system to the nighttime entertainment district. infections in tokyo were coming from nighttime entertainment. venues. cramped ideal vocation for the disease to spread. that's why you are seeing a new focus on testing in these areas. in new zealand it is very different. strict inbeen very combating the virus, and it's one of the few nations that appears to have eradicated the virus, at least for now. has eased social distancing requirements after no new cases.
the prime minister says remaining restrictions except for control keeping the virus out, are being lifted. the master travel, public gatherings and large sporting events -- domestic travel, public gatherings and large sporting events are allowed. went for a total nation strategy. it had one of the most stringent lockdowns in the world, ordering everyone to stay at home, and only allowed essential services to operate. taylor: this also comes as new york city started opening today. on the subway, where masks are required. what else do we know about the global reopening we are starting to see? it is summer, but what happens in the fall? going: new york city is back to business with as many as 400,000 people returning to work. as the country slowly starts to reopen, public researchers say
there are possibilities for another resurgence in cases in areas that don't have adequate contact tracing and public health measures in place. we are seeing the pressure of eighedic reopening w against potential spread. this report from the who provides some comfort that asymptomatic cases are not the primary source of the spread. blasts next, iron ore past the $100 mark. will the metal hold at that level with mounting disruptions? that is next. this is bloomberg. ♪
$100 mark. -- surged past the $100 mark. had many workers catching the coronavirus. on the line we have our commodities reporter in melbourne. how long are we likely to see the elevation of prices as a of supply concerns? ores you say, we saw iron cross the threshold of $100 per ton at the end of last month and it advanced about 5% monday. prices are the highest since august of last year because of the supply shocks out of brazil. suspend operations because more than 180 workers contracted covid-19. as you mentioned, the key question is how long will that
continue? some estimates are that it could be a couple of months. morgan stanley see prices likely to hold at $100 per ton for the next two months. part of the reason is it's not clear how long valle's operations will be suspended. placeh and's could be in until a further court deliberation or until valle satisfies safety inspectors. expectations of price gains can continue. the key unknown is given the situation unfolding in brazil, will other operations be affected as well? taylor: you cover the supply side, what about the demand side? how long does china keep buying? david: that is a key part of the equation. seen really strong demand from china, not only as the economy has rebounded, but even through the worst of the
coronavirus pandemic, iron ore has held up because of the strength of china's steel industry. ,hat said, in the medium-term there is expectation that demand will cool off and prices will revert. market hadiron ore been expected to shift into a surplus in the second half of this year and that may be delayed a little. but certainly, there are expectations that before the end of the year, we will see iron ore back in a glut. we had this morning from a bank in australia that the rally looks stretch and they see headwinds coming for the steel industry and expected downward pressure in the coming months because of cooling demand. haidi: what about the corporate sector? died as worker in chile a result of contracting covid-19. david: absolutely, as you
mentioned, a worker died as a result of the virus. one thing we will see and one thing the chilean government said we will see is more supervision. the deployment of additional supervisors to make sure some of are implementing safety protocols. the question for the market is whether any of that will shake out. most of the largest mines in chile, they are key producing nation. we haven't much come off the supply side. the biggest copper mine in the world, they've managed to produce more and april compared to a year ago. that's even with a reduced number of staff as it puts into play some protective measures to reduce the spread of the virus. i think people will watch the copper market that so far it doesn't look like we've seen too
much impact from the virus. stringer, our senior commodities reporter. let's get some of the business flash headlines. an energy company planning for bankruptcy, giving control to senior lenders. the oil and gas company is negotiating a restructuring that was the holders of a so-called bilo loans take the majority of the equity in bankruptcy. toy are debating whether skip interest payments due next week during negotiations. and an electric company will decide whether to launch lawsuits on its payoff scandal next week. former executives were found that they failed to comply with the rules. they took about $3.5 million from the deputy mayor of a town. next, the world bank says the global economy is set to shrink the most since world war ii with
♪ we know that in the u.s., the s&p 500 has erased its losses for the year. for more on if this is translating to optimism overseas, we go to sophie. sophie: asian stocks are looking mixed but the region could clinch the best run of gains since january 2018. are supported by a shift into cyclical plays. in sydney, stocks rallying. they are set for a six-day of gains led higher by banks, up 4% on supply disruption risks for
iron ore. to the north in korea, they are looking to cut communications with the south. shares gaining after a court samsung'she arrest of vice chairman. turned positive for the year. the nikkei with a six-day gain. a drag on tokyo stocks, edging toward 108 in the face of dollar weakness. training and a three month low. curvery yields with the continuing flattening ahead of the fomc decision. new york crude below $39 per barrel. keeping an eye on developments with the noc, saying an armed group had entered an oilfield. pandemic related
shutdowns globally will continue to take a bite out of global growth according to the latest numbers from the world bank. global gdp is seen shrinking more than 5% this year while emerging and developing economies will see a decline of two point 5%, the worst performance since data began in 1960. our economy reporter has more. what does the world bank see as being a unique problem facing emerging markets right now? message: it's a similar as we've seen from the imf since the early days of the crisis, would be disproportionally affected by the crisis. they have a deeply integrated supply chain and are much more vulnerable in relation to global trade downturn, and depend on a lot of foreign financing. despite the good news in the markets today, they will continue to struggle to keep a risk on mode and attract foreign
investors and keep financial system stable. alllast is something we are dealing with, the tourism sector. , a loter services sector of these economies are disproportionally dependent on those. we'll take a long time to recover, especially if you see lockdown easing's continue but travel remaining tight. taylor: looking at emerging-market -- what do the emerging market countries do to offset these negative effects? michelle: it's tough. if you look at the world bank range of scenarios, it is a pretty wide range, 4%-8% around the global economy contraction this year. the more positive scenario or negative scenario, a lot of it depends on the virus come a but also removal of control measures. it will be a tricky issue going forward and especially for ems, how do you remove those measures without endangering constituencies or risking a
second wave or other things that will further spiral out of control? secondly, again, going back to the financial system, ensuring financial stability. worldwide stimulus, we want to make sure it goes to the right place and everyone is getting liquidity to keep things smooth. comes certainly when it to households hurting, indonesia is a prime example. we have new data on monday showing the economy in indonesia is in the worst shape since at least 2004. the policy response, how has it been when it comes to targeting households? michelle: this survey was interesting. indonesia was criticized early on for skepticism around their numbers doubt they were -- numbers that they were slow to report, cases and deaths from the virus. especially interest hotspots. there were challenges. when the survey, 80 6% reported a decline in income and about
81% said the economy was bad or very bad. not really surprising. what was surprising was the approval. they seem to be much more approving of the policy response now than even a month ago. just 26% said they disapproved of the policy response versus last month with 54%. you've seen a gradual exit from a more than two months lockdown in indonesia. they are slowly getting back to religious services and retail. $48 billion in stimulus has been rolled out. i think some people have welcome to that. over half agreed with the move to ease restrictions. in the end, the president's approval ratings are still 66.5%, in the able among most leaders right now. -- enviable among most leaders right now. almost 2000 deaths but they seem to have things under control in the view of households. haidi: all right, our reporter
in singapore. we are getting an alert across the bloomberg when it comes to the suspension of trading in cathay pacific. air china's a spinning trading in hong kong alongside the suspension of trading in cathay pacific. china's biggest big holders are in cathay pacific. we will be watching what news will be coming out prompting the suspicion of trading of cathay pacific, the conglomerate, as well as air china. coming up next, the outlook for china's auto sector and analysts. he joins us with the ada's numbers as -- he joins us with the latest numbers as car sales rose in china. this is bloomberg. ♪
devastate operations. the european central bank says expect the single market economy to shrink by as much as 9% this year before covering modestly in 2021. the euro zone is entering its worst recession for decades, hammered by the virus come a trigger slow down and a general weaker global economy. the ecb has,'s to cushion the blow and christine lagarde says policymakers will act as needed. >> i welcome the european parliament's call for an ambitious european response. i count on this house and this community to provide a strong and effective financial framework. at the same time, you can rest ,ssured that the ecb will within its mandate, continue to support the recovery with all appropriate measures. willa: the u.s. and russia open arms control talks later this month but the sole
remaining agreement is to expire in less than a year. the treaty ends in february and president trump wants to expand it to include china. beijing says it is not interested. if talks collapses, it would be the first time in five decades the u.s. and russia have no formal nuclear agreement. and a court insole -- in seoul, south korea has rejected a request by prosecutors to arrest samsung's lee. samsung has ordered an independent review on the indictment. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. three stocks we are watching going into the china open, cathay pacific and air
china. there has been a trading halt going into the market opening, pending the release of inside information. about 75% stake in cathay pacific between swire and air china. we have seen aviation regulators and china cracking down on cathay pacific alongside the theational issues with decline of travel into hong kong with protests and the pandemic impact on travel restrictions internationally. there has been increasing speculation about potentially the takeover for air china for cathay pacific. we will have to continue to watch and see as all three stocks at the moment are in a trading halt. china rose sales in last month for the first time in almost a year. evidence that the world's largest auto market is
rebounding from the coronavirus crisis and the trade war with the u.s.. is our us from hong kong analyst, ivan. is it ok to say the worst is over and demand is back? ivan: thank you for having me. china's auto to sales, we've always been on the more optimistic camp. inch is why the may pickup demand is within our expectations. the rebound in sales was driven by a combination of government ofmulus and a release pent-up demand from february and march. forecastinge are auto sales in china to drop i around 5% for 2020. which means we continue to see growth over the next seven months.
taylor: how much of a factor is discounting? i am wondering if they are able to sell cars at full price or if they have to discount to get them out the door. what have you seen from the price dynamics? ivan: when it comes to discount rates, we noticed the discount rates that most of the automakers have been offering this year have narrowed compared to last year. behind the reason narrowing has to do with the fact that we are seeing a little inventory shortage, especially , thehe japanese branch factory shutdowns in february and march. haidi: do you expect to see the continuation of popularity when it comes to tesla on the ofnland, given the absence
-- given the cut to production? is itthe thing with tesla premiumtially the only there.maker out given tesla is in such a dominant position in the space, it is natural to see strong sales growth. we will see as, lot of rollout of new ev models from other premium brands like bmw and mercedes. i think the rollout of the more premium models by other brands will pose a challenge to tesla later this year and for many years going forward. haidi: do you see a meaningful change on the consumption side? even asen talking about
economies restart and reopen, you see more people opting to buy cars and drive themselves for social distancing and to feel more comfortable on the commute. is that something likely to play out? ivan: i think so. if we look at the short-term impacts from the coronavirus, we have seen a drastic decline in auto sales in february and march, we saw a 60% decline in sales. as china gradually comes out of the pandemic, consumer sentiment is putting pressure on near-term demand, but this is where the government stimulus comes in. theffering subsidies, government is effectively bringing back some of the demand that would have been lost. the point you brought out -- brought up is also correct. given the heightened anxiety over using public transportation, some of the consumers are going out to get a
car earlier than they would have , prior to the outbreak of the virus. sales on look at auto a more long-term basis, which by our definition is a 5-10 year time horizon, the aggregate auto demand should not change from coronavirus. the main driver behind long-term auto sales in china is community economic growth. we don't really think long-term economic growth will be noticeably altered by coronavirus. we think economic growth will pick up in 2021 and continue to grow at a decent rate for the years afterward. make accidentsr over here, we always book guests in anticipation of news we are bound to get, and this was
definitely planned. i want to ask you a question we are getting on cathay pacific, swire pacific, and air china. those stocks have been halted announcement. you cover cathay pacific. any thoughts on whether air china could be taking over the company? what are your thoughts on cathay pacific? ivan: there have been rumors about cathay pacific potentially restructuring their business, specialist -- specifically on the cap they dragon -- cathay dragon side. i think this could be an announcement of restructuring. there's also the possibility that they could be raising cash from major shareholders such as air china or swire. possibilitye is a
of a takeover from air china but it is quite remote. haidi: is it remote? we've seen air china over the last decade quietly amassing a 30% stake. you have the ringside view as to how the chinese aviation authorities have been cracking down on cathay pacific. we know about the tensions between hong kong and the mainland wanting to assert more control. not make sense that a takeover would be inevitable? ivan: i think the tension between cathay pacific and the mainland aviation regulators reached a high point back when thategulators announced potential restriction of cathay pacific in chinese airspace. actiony took appropriate and the pressure has been relieved.
ance then, i've not seen escalation in tension between cathay pacific and the regulators. and when it comes to whether air china would raise the stakes, i think air china might want to raise the stakes, but the point comes down to where swire is. that swire hasry had with cathay pacific, i don't think swire will be selling out its complete stake in the airlines. i think there will still be in ownership structure where we have air china and swire. we will not see a complete takeover by other party -- either party. haidi: indulge me a moment. what would it mean for the cathay pacific customer in your view of the stock if such a restructuring or takeover would
happen? , i think from the consumer perspective, things are not really going to change much. i think we are still going to have the premium cathay pacific dragonand i think cathay will get reorganized but focus mostly on china bound routes. thehe bottom we will have budget carrier, hong kong express, that serves mostly the hong kong to japan route and hong kong to southeast asia routes. i guess for shareholders, we think cathay pacific right now is slightly undervalued because of the recent, the outbreak of coronavirus and the halt of air traffic. the protests in hong kong also played a part in the share price pressure.
but i think most of these issues in the laterlved part of 2020 or early 2021. that is the main reason why we think cathay pacific is undervalued at the moment. all right, ivan su for us. we appreciate your time. we are continuing to wait for news out of cathay pacific as we see that stock as well as swire inific and air china halted hong kong pending inside information being announced. the, hong kong may have led he -- the world last year -- the measures to increase liquidity. we will talk through those next. this is bloomberg. ♪
speed --ter joins a joins us. what are some of the challenges as we've seen the capital market hold up better than the broader economy? concern is hong kong's turnover is relatively low peers, and its. is unclear whether the u.s. will impose further sanctions and how the political turmoil will turn, if it will deter dollars from flowing into hong kong further. taylor: what has the hong kong exchange done to increase liquidity? lulu: the hong kong exchange has turnover rate and liquidity has always been an issue and they have done a lot to improve that, including, if you look at the secondary listings, they were approved in a matter of weeks. the exchanges also trying to push a cut back in the number of ipo'sor the settlement of
, which could free up some short-term liquidity. it is also discussing whether to allow corporates to have voting rights, which could attract portfolio companies that alibaba and tencent have invested in. haidi: another interesting aspect is with these restrictions and a potential clampdown of chinese companies in the u.s., we could see a surge of returning home companies. what are the likes of the new listings likely to do in terms of boosting confidence at least? lulu: that's a great question. hong kong's status is probably more important than ever for hong kong right now, especially with the proposed senate bill that could delist some chinese tech stocks in the u.s. that would make hong kong the only avenue for china to have global investor capital.