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tv   Bloomberg Daybreak Asia  Bloomberg  June 14, 2020 7:00pm-9:00pm EDT

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♪ haidi: good morning. we are counting you down to asia shery: major market opens. welcome to daybreak asia. our top stories is our -- markets face an uncertain start as fears grow of a second virus wave. beijing sheds a food market as an spec as infection levels spike. --di: new revelations emerge
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senior executives started trying to bring him down months before he was first attained. governmenthong kong admits china's security rules may not conform to long-time practices, but the stock exchange insist things will be better in the long run. >> i think this certainly creates a clarity and stability for us to move forward. let's take a look at the monday morning markets. a tepid rebound after we had the biggest route in about 12 weeks on the back of that retail-fueled surge we saw in valuations. this is what we are seeing when it comes to s&p futures, down about 1%. chicago nikkei futures also lower. positive,ures in the still indicating a downside of about .2%. then stocks trading at
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lowest in about two weeks. kiwi stocks, trading underway. after we heard a contraction when it comes to the services industry and a bit of a pullback when it comes to the aussie and kiwi dollars. risk very tepid across the board. let's turn to those fears of a second virus wave in beijing. china probing officials in the second largest food and vegetable supply center shut down after dozens of people tested positive for covid-19. let's get more with our correspondent from beijing. could this be the start of that very dreaded second wave of infections in china? >> certainly that is the fear and the concern for officials is this is happening in china paschi capital. china'sould -- in capital. it does threaten to turn into a second wave. we have 57 new infections as of
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june 13, that number is likely to have risen substantially. the majority of those infections in beijing are linked to the wholesale food market, which is now being shut down, the city's largest wholesale food market. state media is saying that they and the virus was detected did d by ahopping board use seller of imported salmon. sequencing suggests the buyers came from europe, and authorities say at least 10,000 people linked to the market will be tested over the next few days. they have locked down residential areas near the market. restrictions across the city have been ramped up on the back of this outbreak. the governor is investigating officials linked to the control of the virus in those areas, so we will meet -- we will wait for more details on that. it is a test on the system china
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has put in place to try to curb any second wave which includes tracing and testing. haidi: this underlines may be the fragility of the recovery. tom: this is backward looking data for the month of may. it is expected to show the country's gradual economic recovery is continuing. seentrial production is rising 5% in may, which would mark the strongest expansion this year. it is expected to be bolstered by the start of reopening of some of the economies like the u.s. which helps power the industrial sector in china. retail sales are another important data point. they are likely to remain in contraction with a forecast drop of 2.3 percent. that would mark an improvement from a roll and boosting consumption is a key priority for the government. they have been handing out coupons to entice shoppers to
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get back out and spend. in terms of fixed asset investment, that is expected to have declined at a slower pace in may. contracting by about 6% compared to more than a 10% drop we saw in april. the government has been ramping up infrastructure spending and that has seen support as well. the data will be out around 10:00 a.m. local time and because of the virus out rake, it's all going to be online with a press conference. the virus reflecting the release of this data today. a preview of those domestic activity numbers. you can get more on the resurgence in beijing and the other thing you need to know to get your monday going. bloomberg subscribers can get that on your terminals and it's also available on the bloomberg anywhere app. we will have more on the outlook and thests from ubs
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syntactic arm of what's get you to karina mitchell for the first word headlines. karina: the fallout from the coronavirus and concerns about a new dealbreaker -- no deal brexit have seen the economy collapsed to levels not seen in 17 years. worries about relations with the eu found jd found gdp in april 25% after plunging a record in february. u.k. economy is expected to recover, but it is facing one of the worst recessions in the developed world. meanwhile, france is going to speed up the reopening of its economy monday. in a televised address about president emmanuel macron says france is ready to turn the corner from coronavirus after more than 30,000 deaths. restaurants and bars are reopening in paris and schools will resume next week. the french economy is expected to shrink i about 11% this year. a $4 is to announce
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billion stimulus auto program with a plan for the vital tourism industry later this week. the two sectors account for almost a quarter of the nation's gdp with cars making a fit the ball exports. both sectors have been severely hit by the pandemic with the spanish economy expected to shrink by as much as 15%. bank of japan opens a new meeting later monday. it is expected to leave policy unchanged as the coronavirus weakens an already struggling economy. analysts say they will raise asset prices as a test the impact of measures underway. sources inside the banks a policy makers don't see a pressing need for changes at this point. global news 24 hours a day on air and on quicktake by bloomberg powered by 2700 analysts in more than 100 countries. still ahead, 10 ghana equities forcefully you stephen
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glass on what he calls the inconceivable things happening in markets. emerges to evidence support the claims of a set up. we will get those details next.
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has alwaysos ghosn maintained he was set up and now there is evidence that could support the claim. our managing editor joins us now. what are the key discoveries in these documents, what is the context of his downfall? >> it has long been suspected himselfrted by ghosn that this was from nissan it self. from the information we have
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gathered which includes emails from executives and people who were there at the time, fourth -- for the first time, it really ways that out. it does not litigate or relitigate charges against him, but it does give some indication there may have been a motivation for why they cooperated with allegedors, why the miss doing from the alliance partner from nissan for many decades. we found the top executives, including the former head of the chief executives office and the aboutmself were worried plans to further consolidate of the alliance as early as february of 2019, almost a year before he was eventually arrested. this only coming out now? >> this story has been months in the making. reportingen a lot of
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--nissan and there's been why they have cooperated and the allegations that are quite separate to this, why the backing that the company and executives in it gave to the tokyo prosecutors. this fills in some of those gaps about what they were worried about, what top executives at nissan were worried about. they did not want further consolidations and tieups between the automakers in the alliance and they were worried about their own fate in terms of reaction to what was a steadily deteriorating financial balance sheet for the company. going what does it mean forward for nissan in this alliance issue? >> this could potentially requite destabilizing. we learned of a memo sent by the
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executive to the former ceo the day before going, he was laying out plan calling for the termination agreement that garners what is -- that -- that governs what is the alliance and gives renault certain power over nissan and the right to buy shares or even take the company over as well as the scrapping of their right to nominate key executives like it's coo. we know renault was kept in the dark and that has had some fundamental ramifications. coming at such a pivotal time, the auto industry and a huge pressure from the economic slowdown brought by the pandemic and more long-term pressures from this pivot to electrification, they need cooperation as much as they can at this time. shery: which is interesting
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because it seems they will be cooperating even more than previously planned. what happens to those key players in this saga? are eitherthem working at nissan or have retired. the former ceo who was quite , with the the time head of nissan was concerned when those allegations came down. he himself left the company into number with his owns scandal. he remains at the company, doesn't speak, but has been pivotal in the internal investigation. emma o'brien, global managing editor with the latest on nissan. breaking news out of china -- beijing has removed this at -- a district level official for the
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resurgence of the virus. relevant personnel in the district of beijing are under investigation. this for the handling of the coronavirus outbreak. a saw beijing shutting down key market and locking down near districts, reporting 50 new cases, the largest daily increase since mid april in beijing. now we are learning china's probing officials after this resurgence of the virus and they have removed district level officials for the second wave in the capital. coming up next, stephen glass joins us to discuss what he calls the inconceivable events. this is bloomberg. ♪
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>> the and tally, the conditioning is very deeply embedded in this market. >> you don't think this pullback is materially worse? >> i think yesterday, while the market was due for a pullback, i think the tone was probably too harsh. >> if you think of where equities bottomed out and how fast and explosive they rebounded, they got overextended. the monetaryo with policy. >> for a time, it seemed like every thing was going to rally because the fed was behind you. now have to be more cautious. the fed is behind you but they are not going to rescue everybody. not everybody is going to make it. >> even with the policy response, it's going to take a while to get back to the long-term growth potential of the u.s. economy. sharpis not going to be a v and it's one subject to --
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ounce back may not materialize. guestssome of our remarking on the wild end of the last week and markets. our next guest says we've seen some inconceivable things from market and economies from around the globe, from talk of negative interest rates to evaluations sales from to share a bankrupt company. let's get more from stephen glass. great to have you with us. theave seen it hurts to get green light raising cash, even saying they would warn buyers at the stock could become worthless. what is this telling us about the environment of rick -- of risk-taking at the moment? inconceivablean volume of risk taken at the moment. absolutelyely fab --
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flabbergasted. but itit is going ahead, does make sense. i look at rings like the startup that hasn't sold a single car and has the same market cap as ford. tesla has twice the market cap of gm and ford combined. apple's market cap is approximately the same as your entire australian market. these are mind-boggling things in a lows resulted interest rate environment. we have seen they are probably going to take some gearing in their funds, so these are things that have not happened before. are getting a lot of it is creating some inconceivable things happening in markets and they don't relate with what's happening in the underlying economy.
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ofwe are in an age uncertainty, severe uncertainty, and i worry about where this is leading us. is that saying we should be more conservative investing in the markets and position yourself more defensively now? steven: absolutely. should always be invested in the market -- don't try to pick the market. if you do that, you miss out on the 40% rally since mid march up however, it is imperative someone is conservatively conditioned, that means empties that have generated free cash flow that are growing, that have strong balance sheet and a reason for being. importantly, being diversified, it seems like there has been in the age of risk on, people have forgotten the importance of diversification. there is a herd mentality toward fan stocks, which are wonderful stocks but they are exceptionally expensive and crowded.
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you need to marry valuation and growth together, and if you don't do that, you are taking up too much risk. and i make or break you, don't think that's a good idea. it's time to start up the conservatism in the four bed -- in the portfolio. as extraordinary as it seems, is just the function of a free market because you can't say the market hasn't been completely transparent. is it a good think that it can go ahead and do this, given it has openly said yes, your money coming or stocks may be worth nothing at the end of all of this steven:? it is a good thing that they can do it, it's a bad thing that people are prepared to get involved. we believe in free markets, but in the current market environment, risk on is like taking a whole lot -- taking a
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case of beer to the aa meeting. you should be able to drink if you want to drink, but maybe that's not a good place to do it. i do think people should be able to do what they want to do, but this is not something you necessarily should be doing. much of these too examples of people taking on risk and in many cases, it is these investors investing in these kinds of stocks and they should be allowed to do it, but they are taking on risks many of them are not familiar with. just because it's easy to participate in the share market and you think you are good at it, it doesn't mean you can do it through all the environments and that doesn't mean it's always a good idea to get involved. the kinds of things we think people should be looking at now hold things like u.s. health insurers which are cheap and have a reason for being network affect, fantastic businesses. i can't say it's a crowded
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trade. things like dollar tree, we get this great bifurcation between the rich and the poor and at the end of the day, people are going to have to go to discount retailers. just a quick number to give you a sense on how wide that gap has become -- the fed recently disclosed the richest 10% of the u.s. hold 90% of the equities. so we have these low interest rates and asset classes, but it all going to the rich people and most people are not experiencing that. so we think this makes sense and we bought shares in one of the biggest companies involved in debt restructuring. if you think there's going to be evenbankruptcies, i don't think -- there are more bankruptcies. if you want to play it, here's an established company that is cash-generative, that has a reason for being, and is not crowded because it does not have
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the. calm at the end of it. the at the end of it. taking these risky positions is not the smart thing to do. haidi: usually we are talking about over exuberance and the mainland chinese markets. does that mean we have seen the scale up slower? the loss is about half last week. they present better opportunity? steven: there is no doubt that e.m.'s provide the best opportunity. they are forecast to grow about 6% over the long-term and then you have a market at 1% or 2%. so there's no doubt that is where the opportunity is long-term, but one has to be careful in the short-term and they have to be able to hold through the short-term.
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for's are not as prepared covid. it's hard to shut down and economy where people live day by day and often live in very tight quarters. that's where we are seeing massive growth -- in brazil, india, nigeria, russia. all of these economies, except for china, presumably, and there are a lot of questions over that data and we saw the spike in beijing, but to go back to it, it is very tough for e.m.'s in this environment. when the economy slows, they slow more and covid is going to be a shock to them. vulnerablem.'s look in the short-term, but there's no doubt someone with the fortitude to hold for the long term, e.m.'s are where you want to be. shery: we appreciate your insight. we are listening to the s trillion prime ministers speaking in what is his state of
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the nation address at the moment. he is saying australia faces a record deficit this year and next. we are expecting scott morrison to give details of the further $1.5 billion when it comes to infrastructure spending, the fast tracting -- fast tracking of some projects to help get out of the covid-19. almost snapping 29 years of recession-freak growth as of this year's result of the pandemic related lockdown. this as we continue to see restrictions lifted in parts of the country. bloomberg subscribers can keep watching at live go. you can also find the other big diary entries. lots more to come. this is bloomberg. ♪ when you say what you're in the mood for,
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closed itsjing has largest food and vegetable market and locked down surrounding houses as coronavirus cases in fears of a second wave of infection. authorities reported the largest daily rising cases since mid april with more than half locally transmitted. those local cases involved people who worked at the market or who have been there in the last few days. is expectedustralia to announce new infrastructure spending to kickstart the economy in the post-virus era. the prime minister will lay out plans across the country with the equivalent of a billion u.s. dollars being allocated to
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shovel ready projects. he says he wants most part of the australian economy back up and running by the end of the month. a new report says that campaign frommove carlos ghosn nissan began in 2018. he is always maintained he was set up. nissan executive began plans to force them out before his public fall. movingre opposed to his nissan closer to renault. north korea's threatening military action against its southern neighbor as cross-border relations our rapidly. kim jong-un will's powerful sisters is the next move against soul will come as tensions rise over a wave of anti-north korean propaganda from the south. kim says it will be better for the north to take concrete action rather than respond by diplomatic statement. local news 24 hours a day on air and on quicktake by bloomberg
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powered by more than 2700 analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. shery: fears of a second wave of coronavirus infections in the united states are sweeping across states emerging from lockdown. with new york governor andrew cuomo threatening to reimpose shutdowns to avoid a dark place if social distancing violations continue. our bloomberg editor is on the line from d.c.. we heard from sector terry mnuchin that another shutdown was out of the question, but given state governors are the one with the authorities to shut down their states, could we be headed in that direction if we continue to see this second wave? >> i think you would have to take it state-by-state and even city by city. houston, texas is one city that has thought about re-imposing the lockdown. i think it may not be the last when we hear of an weeks and months to come.
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in places like new york and new jersey, they really crushed the coronavirus curve. they shut down their economy tightly and took them down to quite a low level. but if you look at texas, florida, arizona, tennessee, over 20 states were coronavirus ores are on the rise again hitting new peaks for the first right.nuchin is probably a national move on this come about i think you have to watch arearefully because there some troubling trends as well as positive trends from the coronavirus situation. what are we hearing, given we are hearing about ask leading cases in 20 states? what is the response from white house officials? >> president trump his closest on fromve really moved
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worrying about coronavirus. the white house task force headed up by vice president morning, we heard from larry kudlow, his economic advisor, and he was bullish on the economy. he is typically bullish and talked about a strong surge in the fourth quarter and even says 80% of small businesses are back running again. he has said in the last few days, within a month or two, every business will be back. it is hard to prove that at this bullish viewpoint contrasts with jerome powell. it was an interesting double take on tv when we had kudlow saying at the end of the year unemployment would be below 10% and we had the fed governor saying it would be 8%. maybe 8% to 10% is the sweet spot.
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officials have moved on and they don't seem to be focused on the caseload. shery: when it comes to the economy, we have to read between the lines. when it comes to unemployment among black americans, it's the highest level then more than a decade and topping that for white americans. what we are seeing, that trump bump has not benefited most americans. >> that is true. there was an interesting survey this morning that basically a majority of americans say they have not benefited financially from president trump's term. if you look at an indicator like market, if you look at comingmployment rate, into the coronavirus pandemic, maybe you would expect to see numbers there, but it points to the fact that gains in the the wealth had been
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concentrated in surkin -- in certain segments. we've heard a lot in the past few days and weeks from state officials and others about as the economy recovers, they would like to see it become more inclusive. about policy ideas behind that. but it may be that we have come to a tipping point where policy will either be more inclusive as wealth is accrued on a more equal footing. we will have more perspective on the virus pandemic ahead with a harvard mobile health institute director in the next hour. coming up, emerging-market currencies see their winning streak snapped. this is bloomberg. ♪
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shery: let's get a quick check on the markets and bring in sophie from hong kong. below. futures falling 3000. qe stocks still healthy. thed see steep losses on 20th anniversary of the joint declaration between north and south korea.
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overall, we are sitting upright mixed start to though we that brings a bunch of policy decisions and trade data across asia, including india may numbers which are expected to asw a slight rebound lockdown's ease across india. thailand is further relaxing its virus curves, but virus fears are ramping up with a research and infections from beijing and tokyo and 22 u.s. states. currencies this morning switching out the boards, although we are seeing qe receiving earlier losses. the yen trading steady, below the 50 day moving average. let's get a snapshot of the dollar in early trading ahead. ahead of jay powell's speeches, the gauge of the greenback, the dollar index after ending a
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losing streak, not able to break that 100 level. treasury futures edging higher, implying a drop around to basis points. we are going to stick with emerging markets currencies as well as stocks, coming off their first weekly decline in about a month. let's take a look at the chart on eternal showing emerging markets which have enjoyed that they and now we are seeing impact falling below that 200 a moving average it broke through earlier this month. joins us now on the line from singapore. right to have you. two of your topics are from that space, talk us through that logic, given that these are the countries that a lot of people are concerned will bear the front of the second and third
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wave of infections. . top region, we do , but we are bullish talent, employing external valuations, especially that comingsee down. if you look at the idr corrected, we estimate it has recovered only half of the positionince april and for investors, if you look at year to date portfolios, it is about 8.5.
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back andthat will come that sentiment is getting better and the benefits forecast indonesia account deficits to same as for india, and that looks attractive and that is why those two currencies are the best peaks in the region. what about the other side of the equation? the dollar weakness. fed policy not really going anywhere and at the same time, questions over the economic recovery. lemon: we feel bearish on the medium-term and in the short overstate theo
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economic recovery, but we do hask fundamental support appreciated significantly. to help offset the deterioration. there is also uncertainty around the presidential election, which can be a major factor itself. our outlook is cautious. we expect the dollar to it's actually one of the top picks. will that depreciation help the korean won? it remains under pressure as we
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continue to see the risk off sentiment playoff in the markets, but it has gained ground. lemon: yes, we are. the korean won is one of the currencies we are bearish on and we like to use it. the korean won has a high correlation to the dollar and we drive it depreciating to the currencies underperformance in the medium-term. with the rebound, to attract any meaningful inflows, at the same pension as itonal starts to look forward to asset allocations. that would be another $20 billion of flows.
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the portfolio outflows are 40 also, sond from mps the korean won would be under pressure. we have seen for an implode -- inflows provide support for the yuan. it may provide a boost for the remedy -- for the renminbi. how will all of these factors balance out? as the u.s. election campaign season approaches, we expect the dollar to remain fairly well contained. look at the domestic chinaentals, such as the interest rate gap with the u.s.,
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this will offset the political tensions. return, we won't have exposures that have historically been more -- given their economic exposure to china and correlation. we haven't seen any big bang measures from the government authority. the lending credit data suggested things were stepping up, but you are anticipating more rate cut or the equivalent in terms of liquidity injections? yes.: we expect another 50 basis point cut in q3 or the equivalent amount of liquidity injection. in rates in q3.
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as long as the supply is largely physical signals, bewe can -- the purpose will stabilizing market expectations rather than authorizations. , thank you for joining us. coming up, more from bloomberg's exclusive interview -- her thoughts on esg investments. this is bloomberg. ♪
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haidi: some breaking words from china and now -- the vice mayor is speaking with regard to the second wave of coronavirus cases. over the weekend, we saw the closure of the biggest wholesale fruit and vegetable market in beijing after a cluster of cases , dozens of people at that market infected, the vice premier saying the risks are high for the outbreak. officials acted swiftly in terms of shutting down the market and placing nearby neighborhoods
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under a strict lockdown. we saw the corruption watchdogs theng with relation to situation, saying they failed to prevent it from happening. we are now hearing from the vice prayer that the risks are high for the outbreak to spread. that outbreak was in terms of the genome traced to a european strain, suggesting this was perhaps an imported case, but we are just getting those comments about the severity of this second wave of infections we are now seeing in the chinese capital from the vice permit. hong kong approving the reappointment of its first laste stock exchange -- month. what she sees as the biggest change in the last five years.
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>> diversity is very important. esg is very important. at the exchange, we have a responsibility and we are in a unique position not only to talk the talk but walk the walk and impose these disclosure requirements on the companies listed on our exchange. it is true that role we can etc.te diversity, what i have not been able to see is the women representatives on board on our index companies. i think we still have a long way to go. there will be improvements, but i hope it will be faster. >> there's a big difference between companies with diversity principles between complying and committee. those are two very different things. with the power that you have in that position, would you
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consider putting rules and requirements of a certain degree for companies that should get listed on the hong kong exchange ? would you be willing to put those minimums in? laura: every time when we have rules change, it is very much a buy-in. all of our changes are subject to market consultations. i hope with each consultation we get more buy-in to bring in some new change. i do not want to put something completely mandatory. with the rule change, i'm talking about small arc it operational change to the big votingchange like the right. we have always consulted widely, taking in market participants view. i hope esg will be along the same way, that there is market buy-in and we are taking the
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lead to make sure we will have it rolled out rather than just taking the design. we are in our realm of talking to our stakeholders, that is an issue we emphasize. stakeholder capitalism is another thing we are trying as well. laura cha speaking exclusively with bloomberg. american express has one approval to start bankcard clearance in china, making it the first network to process local currency transactions in the mainland market. the pboc granted a license to amex apostle local venture after initial approval two years ago and the system must be up and running within six months.
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it becomes amid tension with beijing and washington. china eastern is planning a new airline to tap into a planned free-trade area and expected rise in tourism. the carrier would be the majority shareholder with other backers including the government as well as another airline and the finding makes no mention of the indebted owner of the airline. aramco is moving ahead with its purchase of a saudi chemical giant with block rates of $70 billion over the weekend. more than 2 billion shares changed hands on sunday as aramco buys into the holding of the kingdoms's investment fund. it is a key part of aramco's plan to expand from oil production into chemicals and other sectors. the richest man in asia has added more backers to his
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ever-increasing roster of investors. tpg will take a $600 million stake in geo platforms, around 1% of the company. it's the digital arm of reliance industries and has sold about 22% in stakes to buyers including facebook, kkr and silver lake, valuing the company at about $65 billion. the state bank of india is seeking to recover two guarantees from a struggling tycoon reportedly worth $158 million. he has had an offer for guarantees over reliance in patel. and been bailed out before has until thursday to file a reply. let's take a look at asian markets and how they are trading.
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this part of the world, we had u.s. stock, a tentative rebound after falling the most in 12 weeks on friday. new zealand, gains about 1% and robust trading there is quite a pullback which comes to trading in the kiwi dollar. sidney futures, lessening, still setting up for a muted start to trading. that market trading at the lowest we've seen in about two weeks. nikkei futures off by about .4%. we continue to see weakness across the korean won as well. the oil store, we have a couple of key meetings when it comes to opec -- that technical committee -- technical meeting extending that decline with signs of a fresh outbreak in china. that shut down in beijing, shutting -- causing concerns on the demand side of thing. shery: coming up, a preview of china's monthly activity data
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-- the market open in sydney next. this is bloomberg. ♪ you doing okay?
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♪ >> good from bloomberg's global headquarters in new york. i am shery ahn. >> and i am haidi stroud-watts in sydney. welcome to "daybreak: asia." uncertain start as the virus shows a second wave. infection levels have spikes. and the aussie dollar.
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bloomberg is told that nissan executives tried to bring down carlos ghosn. the cities a stock exchange insist things will be better in the long run. i think there is a clarity and stability for us to move forward. shery: we are getting the latest coronavirus numbers out of china. that market was shut down over the weekend. tana reporting 49 additional coronavirus cases june 14. 36 new coronavirus cases reported in beijing. shutdown of the market and a lockdown of nearby neighborhoods as well as they contend with the second wave. we also just heard and we would like to correct what we said earlier, one of the vice
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premiers of china speaking via a statement. we misidentified who made the statement, it was one of the vice premiers who said they had a state council meeting warning about the spreading of the coronavirus as a result of the cluster at wholesale market. epidemich risk of the spreading, and they need to step up when it comes to contact tracing and epidemic control. let's get to the market action with sophie. there are worries of a second wave not just in china but other parts of the world, driving the risk aversion we are continuing to see. sophie: we are seeing caution back in the picture, given we are seeing a tick up in cases. tokyo with its highest count since may 5, 47 for the city on sunday. we are seeing japanese stocks edge lower. the nikkei to do five extending
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losses for a third straight day, while the yen is trading in a seven zone. there is a tick up of infections ahead of the central bank decision on tuesday. they seem to be standing pat with more stimulus expected to follow the second extra budget from friday. this morning, the finance minister said there will be 30 in southeas projects korea. we are seeing the korean won trading against the dollar. the sydney share markets opening lower as well at the start of a staggered open and the aussie dollar losing ground at mid 68 levels. the prime minister warning this morning of a record deficit this year and next for australia as trade ties with china are strained. ahead of china's may activity
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data, checking on the offshore yuan, at 7.09 amid risk off moves because of the emerging virus cases. harder hit ifs virus woes unfold harder. -- let's check in on nissan this morning. the stock extending losses for a fifth straight day, basically wiping out gains in the month of june. the carmaker focused on new information, shedding light on an internal campaign to remove carlos ghosn, more drama for the carmaker which could face more credit action this week. let's get more on a cautious start to the week with our strategist in singapore. mark, we continue to see the rise of storages across china, not so much in the u.s.
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not surprising we are seeing downsides in the market, but could we see a reversal when we get eco-data out of china today? mark: that should help. we should get data concerning , reopening economy well. most sectors are starting to look like they are not may be completely normal but improving back toward a more normal environment, and that should be reassuring for people in asian markets in particular. we saw a reasonable finish to asian equities last week, particularly china. it will probably be a wobbly start considering futures, china should be able to help things out. i think when people look at the situation, beijing has lockdown part of the city, we just had a warning, as you mentioned, from the vice premier in china saying this could spike, but at the moment, the numbers are still relatively small and they have
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reacted quickly to lockdown a key part of the city. at the moment, people can probably be reassured that china is acting fast enough to stop the spread from getting too much. that will probably start to filtering during the day and people should get more reassurance. >> does that mean we don't see a weakening in the yuan as a correlation with the second wave? seems all behaved since the end of march. we had a brief spike where it got close to 7.20 on offshore yuan, but it reversed from that. the core range for the dollar yuan has been 7.05-7.15. there's no reason to think it will be outside of that. it has been expensive to short the yuan, and that is something
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traders will watch quite closely. the forward juncker of is steep and that's where most speculative traders will be using to finance their position. there is a consideration. yuanu want to attack the at the moment, you need a fast-moving environment and a lot of moves coming through quickly or the cost of shorting it will be quickly wiping out any profits you might see. that is not happening at the moment. we don't really see the constant flow of bad news coming out of china. but the data that comes today will probably health -- help offset the situation. the yuan will not move that far. pbocn depend on the keeping volatility down in the short-term at least. >> let me get to the question of the day -- how will hong kong stir assets this year? mark: it's a different picture from a year ago, when the street
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protests came to the fore. people were very uncertain about what would happen with hong kong. we sell the stock market go down quite a bit during that time, underperforming a big part of asia. one year later, china introduced a new security law as well and they seem to be tightening up in ways that are keeping the street protests to a minimum. the bottom line is that hong kong equities in particular are relatively cheap in relation to the rest of asia, probably on a global basis as well. the fact that you got stability in the hong kong dollar, there shouldn't be as many of the disruptions that we've gotten used to over the weekend last year. people can start to focus on the relative book value they see in hong kong, which is quite low. with companies reestablishing their networks with asian markets starting to reopen.
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with china the biggest contributor to hong kong as well , reestablishing its economy there. peoplet as bad as some have been worried about for hong kong. we should see a gradual improvement in hong kong assets. as long as the hong kong managerial authority sticks to its normal situation of geeking -- of keeping the hong kong dollar study, and everything points to they will continue to do that, they are not giving up on the peg, the outlook for hong kong is better this year than last year. >> our strategist mark cranfield. you can follow more on our market lives blog. onecan get a rundown with click and there is commentary and analysis from expert editors. still ahead, more on the outlook from hong kong and an exclusive conversation with a chairman. why she is supportive of china's security bill despite the sharp
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moves. next, second wave fears sweep through china and beijing puts the blame on local officials. we get the details, next. this is bloomberg. ♪
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♪ >> you are watching "daybreak: asia." new reports say the campaign to remove carlos ghosn ahead -- as head of nissan began nine months before his arrest. carlos ghosn maintains he was set up and says that executive plan to force amount before his public fall. we are told effort was motivated by the opposition's plan to move closer to renault with some looking for chance to renew the reliance. cross-border relations are souring rapidly between north and south korea. says theun's sister next move will come from the
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army as a tensions rise over a wave of anti-north korean propaganda from the south. kim says it would be better for the north to take concrete action rather than respond by diplomatic statement. the fallout from the coronavirus and concerns about a no deal brexit has seen the u.k. economy collapse to levels not seen for 17 years. lockdowns and worries about relations with the udp -- of the recordthe gdp plunge a between 5% in february. -- record 25% in february. it is in one of the worst recessions in the developed world. thailand is scrapping most lockdown restrictions starting today as it looks to reopen its economy, but one of its biggest earners, terrorism, remains stricter by travel ban's. businesses and some schools will be allowed to reopen after there are no reported cases for over two weeks. global news 24 hours a day on
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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. china has reported 49 new virus cases as fears mount of a second wave. in beijing,ses are many linked to a market that is being closed and a vice premier is warning of more contagion. john, we are hearing reports that china has removed some district officials. john: that's right. beijing is taking a pretty hard line on how things are going. there is a lot of concern that infections will continue to spread in beijing. we even had a cancellation of a press conference to release economic data this morning. they want to take all measures possible to prevent any spread.
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we also heard from one of the vice premier's earlier this morning talking about the great risks beijing faces with even more spread of this cluster. think my you know, the economic impact has been great. you see that across the world. china has been ahead of the curve in terms of reopening and this is threatening that. there's a lot of concern about employment, a lot of concern in thenvestments, and if heart of china's political capital we have this outbreak, if that doesn't get under control, i think the implications are great. heard about some progress on vaccines. some state run companies wanted to travel overseas to get inoculated. with two vaccines and of
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element, is there anything new on this front? john: one company has a vaccine that shows good results. there has been another set of orcines that have advanced, are getting close to the phase three trial, where there is a broader use of them in a larger population. china has made a lot of advances. is of the hurdles, faces because they've been so good at containing infections, it is actually quite hard to do the phase three trials in china. some of these companies are going abroad to canada, for wheree, for a population there are still infections spreading locally. always appreciate your time, john. you can get more on china's virus concerns in the late addition of quote a break -- "daybreak." you can get it on the bloomberg anywhere app.
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this is what we are tracking for the start of trading. we saw the rebound when it came to u.s. stocks on friday after the biggest drop in 12 weeks. a mixed future. nick a two to five off a tense of 1%. asia-pacific trading the lowest in a fortnight as we see a reality check play out, particular with a new cluster in beijing and a number of states in the u.s. facing a second wave of infections as well. the korean won trading weaker ofin, that sustained loss four tens of 1%. a bit of a recovery on the u.s. dollar, most of that g10 group. u.s. futures up i about a quarter of 1%. shery: even before the beijing outbreak, china had been looking , leading a recovery from the virus. we will discuss this with the ubs head of asia economics on the raft of china data out just
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hours from now. this is bloomberg. ♪
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♪ haidi: investors are weighing the latest economic data from china as beijing idols new infections. -- battles new infections. retail sales will continue to lag. let's discuss that with our guest. the central government can turn on the taps when it comes to lending and get factories back online and invest in infrastructure, but they can't really push people to spend if they don't want to. wang: that's right.
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i think that depends on obviously the relaxation of mobility restrictions, if people feel comfortable to go out, and also if they feel comfortable about future income. thatecent data suggest consumers are gradually coming back, and we expect continuing recovery in retail sales even though it is lagging the hind things like industrial production and construction, infra structure and so on. is twofold in what you just said, what could prevent the consumer led rebound in china. theis that we are seeing second wave with the cluster in beijing. that has shut down economic activity and consumer activity in a large part of the capital. also the jobless rate. we have heard it could be as high as 20% unofficially. wang: yeah.
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the impact of covid-19 on the economy was in the first quarter. -- people were not working at the end of march. the number greatly diminished by the end of april by more than half, and that number should continue to decline in may as well. numberunt of people, the of people who are no longer not working by the end of may will probably decline more. that means income is also recovering, the jobless rate coming down as locals go back to work. in beijing, i think the second wave is a concern for the global economy and in china. in beijing, they had shut down the food market and elsewhere. [indiscernible]
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tens of thousands have been traced and isolated. it is not anything like february and march. trends of domestic activity continue to recover. shery: what about the risk that despite the fact that you don't have mobility restrictions, people might change the way they think about going out, eating out, social distancing measures, and change the fundamental behaviors of people, eventually affecting consumption? wang: absolutely. i think that's probably one of the long-term impacts, that people remain reluctant. -- of economy more crowded, before the crisis, before the virus. restaurants and travel will take some time to recover. retail sales, our expectations
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for may is recovering, but still year on year, a minor decline. construction and industry production should have your near growth. we are looking at i.t. growth. it will be an uneven recovery. online sales, online entertainment should continue to be much stronger, but off-line entertainment will be weaker. shery: talking about long-term effects, where will we see the biggest impact of rising trade tensions, protectionism around the world, the decoupling between the u.s. and china? addedi think covid-19 more -- it is an additional factor for that decoupling already happening. is the biggest risk probably going forward.
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that companies are getting pressure from their government on the supply chain. people see [indiscernible] trade tensions rising as well. the data continues to show strength in china much better than expected. chinaand may, exports and were -- compared to a year ago. there's also a benefit of producing in china where it is first in, first out in terms of the virus control. i think there's going to be, again, some companies staying in
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china or moving or at least at the moment, maybe not in a rush to move and some companies continue to think of decoupling going forward. how much of a concern is the output gap when it means for employment data as well as the prospect for exporter deflation essentially? for the output gap, i think one of the longer-term covid-19 shows a great recession across the world, even though china is rebounding somewhat. the global demand will remain week and even in china itself, consumption recovery is slow. uncertaintyorporate and they will be reluctant to invest even with unprecedented monetary easing across the world
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and even with stimulus measures in china. we expect corporate capex spending to decline this year year on year, even with government infrastructure support and properties staying resilient. sorry, what was the second question? haidi: exporter deflation. [laughter] wang: exporter deflation, yes. i think in the interest of the overall global demand weakness, of course we have commodity prices coming down, and that has translated into deflationary pressures. that said, i think there is a tech cycle going on around the world and memory chip prices are rising. in the last few months, we've seen strength in exports of electronics out of china but also out of taiwan and korea as well. that's another thing. sorry, we have to
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leave it there. thank you so much for joining us. next, the latest on the nissan drama, carlos ghosn always has said he was set up. we look at the latest evidence. ♪
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♪ ghosn always said he was set up and now there is some evidence that might support his claim. reed stevenson led the reporting on this. there might have been a methodical campaign to oust him. what did you find out? heard from various sources of information about what you just described, a campaign that began around february of 2018 up through november 2018 when carlos ghosn was arrested. essentially starting with concern over his push to seek a
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closer relationship with renault and nissan. and then later as the date of the arrest near to conversations internally talked about how nissan would seek to essentially seize the opportunity by his removal to redefine its relationship with renault, its partner of 20 years. makingt of a global auto alliance with mitsubishi motors. haidi: where are we at when it comes to the main players in this drama? reed: yes, so, one of the key people here is harry nada. he was head of the ceos office. he has a cooperation agreement with prosecutors and really led a lot of the investigation into what carlos ghosn did. he was also integral in what i
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just described, the relationship with renault. he is still at nissan. carlos ghosn made a dramatic escape last year and is now essentially an international fugitive in lebanon. a few other people, executives and others, have had to leave the company as a result. for different reasons. and also, greg kelly, a board member of nissan also arrested, he is still awaiting trial in tokyo. been changes to the partnership with renault, but given this seems to be at the heart of the conflict, what does it mean for the reliance -- the alliance? reed: the alliance continues. they forged a new agreement in march of 2019 and just last month reiterated their
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commitment to work with each other. and given the global pandemic and the drop in demand for new automobiles across the globe, they need each other more than ever. in fact, if they work out synergies, which they are, they should be able to get through this. robust it remains how each auto company on its own can remain given the pressures on the business to the topline and bottom-line. haidi: our senior editor reed stevenson there with the latest installment on carlos ghosn and nissan. let's get to the markets. sophie cameroon is looking at a mixed picture to start the trading week in asia. in the region led by the kospi off 1/10 1%. it will be a data heavy week for
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the asia-pacific. china's monthly activity numbers today and indian trade and the boj kicks off a decision on tuesday following -- followed by taiwan and indonesia. indonesia, they have said that qe and other policies will be used as long as needed for global economic recovery, was second with concerns on the rise, including in tokyo. the nikkei to do five off this morning. move pushing treasuries higher with a 10 year 67 basisling to about points this morning, and the bloomberg dollar index extending gains for a third straight session. check out the korean won, leading the decline among asian currencies within an index tracking emerging currency is continuing to fall after tracking the first weekly drop in a month. the aussie dollar falling with of offshore yuan, 7.09 ahead china's data. hang seng futures lower ahead of
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the open in hong kong. we have some news to digest from local media this morning, including a report that limits that limitsrings -- on social gatherings could be changed. there could be talks held by the government in the next few months ahead of a proposal to be submitted to the legislative capital. of the honghairman kong a change was caught offguard by china's decision to impose new national security laws in hand -- in hong kong, but remains supportive. >> i was, like so many people, because there was no early indication it was. but i think having said that, it was a good sign. >> that it was a surprise? >> that it was a good thing, the decision that came out was a
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good one. >> in what way? >> i think it provides clarity and it ensures future stability, because as you know, going through what we went through last year, there was a lot of uncertainty about law and order, etc. i think this certainly creates the clarity instability for us to move forward. david: what do you think would be the biggest misunderstanding based on the information we have now and why people are concerned about it? that frankly in your view, they should not be concerned about it at all. laura: i think it's as you said, it is too early and we don't have the detail yet. but a stone the information we widely far, it is not a -- and roman officials have also government a -- and officials have also said it is only a small group have been targeted. i think the rest of us are waiting for details to come out.
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so theody expected it, element of surprise probably created a little bit of uncertainty. david: why is it that businesses feel they have to pick a side? laura: i believe in the current geopolitical environment, many companies are finding it very difficult to navigate. and especially for companies that operate in multiple jurisdictions. each company makes its own decision and will take its own position. i think it's up to the company to decide what will be best for them. david: and an terms of the concerns you've heard from institutional investors, what would those concerns be? and at the end of the day, how does the government and the business community address those concerns and hopefully lay that to rest? laura: i think first and foremost, it is confidence. by the time the detail regulations come out, what i
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believe would address some of the concerns, people will see it will not affect the core value of hong kong. the core value being the rule of law, a fair and transparent the market,grity of and a level playing field where everyone is treated the same. david: ipos are coming and it will be a big week. do we expect a lot more names for the rest of the year? laura: we have a healthy pipeline. i can't talk about names or numbers but we have a healthy pipeline and we hope to get to number one again this year. ivid: compared to last year know you can't give exact numbers, but will it be better than 2019? laura: i surly hope so, yeah. -- certainly hope so, yeah. david: talk about the rationale between -- behind the msci and
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when we can expect that as investment tools. product, it's a really the effort of our entire , plus government support. it is again, part of our productsto expand into outside of equity, which is our core part of our business. again, it is very much part of our strategy and it is a big win for us, through our hard work, and we believe it will be successful. thesew it will be because are very attractive products and we have a good working relationship with msci. the products will come out gradually, hopefully soon, maybe later this year. not all at once, but in batches.
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laura cha speaking exclusively to david ingles. next, the likelihood of a second wave of coronavirus infections with our guest. this is bloomberg. ♪
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>> this is "daybreak: asia."
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beijing has closed its largest fruit and vegetable market and locked down surrounding houses after the largest daily rise in new covid-19 infections since late april. most cases involve people who work at the market or had been there the last few days. a district level official has been removed after the resurgence, with beijing saying the risk of a second wave spreading is high. covid-19 cases are also reported in latin america, with daily highs recorded in mexico, chile and argentina. in brazil, the total number of infections are nearly 900,000 brazil has the highest number of fatalities in the world after the u.s., after passing the u.k. over the weekend. meanwhile, france is speeding up its reopening. president macron said france is ready to turn the corner from the coronavirus after 30,000
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deaths. restaurants and bars are reopening in paris next week. the french economy is expected to shrink by about 11% this year. and spain is to announce a $4 billion stimulus on monday with plans for the tourism industry later this week. tourism accounts for almost a quarter of the nation's gdp. both sectors have been severely hit with the pandemic, with the spanish economy expected to shrink as much as 15% this year. 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. shery: for more on the global buyers outbreak, -- global virus outbreak, we are joined by our guest. right to have you with us. we continue to see more reports of infections not only in the united states but also in china.
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in beijing, the dreaded potential second wave hitting more economies. what are governments doing wrong, or is a second wave pretty much inevitable at this point? >> thanks for having me. right now, i would say many countries are still dealing with the first wave. certainly china got over its first wave and much of western europe and spain, other countries were able to get past. america is still struggling with the first wave, brazil, latin america. africa has not even li bin hit yet. it is slowly growing. take the virusto much more seriously than they are doing. especially countries not doing well, still not taking it seriously enough. we are still in the first wave but the lockdowns are starting to ease. here in the united states, for
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example, with states opening across the u.s., did they do enough to control the outbreak and -- or are we not there yet? in the u.s. you see is basically the federal government, the u.s. federal government has abdicated any leadership role and has said every state has to figure this out on their own. president trump doesn't want to be involved in managing the virus. what that means is some states are doing a good job and working slowly and carefully building a good testing infrastructure, and many states opened to early or without a good plan, without much testing, and they are starting to suffer in terms of a large increase in cases. how effective is contact tracing when you have large gatherings almost inevitable in the next few weeks? ashish: i think large gatherings
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in general, if you can avoid them, they are not a great idea. they fuel disease outbreaks. contact tracing is a really important part of disease control. it is harder to do with large gatherings. even if they are not perfectly effective, they are still useful to do. i have encouraged policymakers under every circumstance, if you can invest in contact tracing, it is almost always worth it. haidi: it is interesting, it feels like markets and a lot of health care officials are under the belief that we will have a vaccine sooner rather than later. some saying they think we will get a vaccine by the end of this year. how likely is this a false hope given how long we know it takes other vaccines and develop meant? -- development? ashish: typically vaccines take 5-7 years. i think we will have a vaccine
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relatively quickly. to me, the most optimistic scenario that is still grounded in reality is sometime in 2021 and probably closer to the midpoint of 2021. we may have identified a vaccine but there are some any complexities to producing hundreds of millions of doses and assuring people it is actually safe so they give it to their children and elderly parents. this idea that by november and a summer we will have the data and everybody is ready for a vaccine i think is a lot of wishful thinking, and i think under the best of circumstances, it is probably the second quarter of 2021. shery: there's also a lot of hype about antibody test. i have some friends who have done this and tested negative. is it worth going into a coronavirus clinic to get tested for antibodies? do we now know more about what immunity it could provide?
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ashish: [laughter] this has been more hyped than i know what to do with. antibodies are very helpful. it gives you a sense of how much diseases in a community. for the average person, is not clear whether it is useful. poor of antibody tests are quality. so if it is a positive you don't know if it is a true positive. we are still learning what a positive test means in terms of immunity. i have not been encouraging my colleagues and friends to get one. i think we need a better understanding of what these test are telling us before we rush out and get them. a final word on vaccines, picking up on what you said. there are real concerns and doubts over efficacy and safety by the time we get it right, because even if we get one by the middle of next year, a lot of people are concerned that corners have been cut. if we listen to what authorities are saying and they are saying we are not cutting corners, the are conducting trials in
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parallel, why wouldn't they do that for every other drug underdevelopment? we know how expensive and unprofitable that your bang of time can be. why wouldn't they be doing -- timefitable that period of can be. why wouldn't they be doing that with everything? we started human trials before animal trials and that's usually a level of risk we would not undertake in most circumstances but we were able to do it because we were in the middle of a pandemic. there are also financial risks we are willing to take moving from one phase to another and another. i think coming out of this vaccine, future vaccine develop and probably will get faster and shorter, but i believe that the most important and best way to bring the pandemic to a close is not just to have a vaccine, a vaccine that has been tested well enough that people feel confident in not just its
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effectiveness but it's safety. oft requires a large number people being inside a clinical trial following them for long enough that people feel like they know what the vaccine is doing. shery: giving the trends you are witnessing right now across the united states, are you expecting to see more states or a few states at least reimpose a shelter-in-place order as continue to see more infections? ashish: this is of course what we want to avoid, having to shut down in shelter-in-place again. the problem is, many states opened to fast and are seeing a very rapid growth in cases. they have no plans for how to curtail and slow down that spread. at some point they might find themselves in the unappetizing situation of having to shut down again. i hope we don't get there but i am worried it will happen. harvardhat was the
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global health director. as a oil taking a slide second wave of the virus fans concerns on a recovery for demand-side. opec-plus is preparing to review the state of the market this week. we look at the crude patch, next. this is bloomberg. ♪
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shery: a quick check of the latest business flash headlines a new island planned on -- a new airline planned on an island. a would be the majority shareholder in the airline with other backers including the government and city as well as others. the filing makes no mention of hna. the richest men in asia has added more backers. a $600ity firm will take million stake in the geo platforms. in stakesld about 22% to buyers including facebook, kkr and others, valuing the company at around $65 million. aramco is moving ahead with the .urchase of sabic
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more than 2 million sawtek shares changed hands on sunday -- sabic shares changed hands on sunday. this acquisition is a key part of aramco's plan to expand from oil production into chemicals and other sectors. oil trading lower monday morning in asia, extending last week's decline as there are fresh cases of coronavirus in china and the u.s., futures coming to an abrupt end as of last week. su keenan the latest. the fed warning also stoking the markets. su: robert kaplan said he believes there are a lot of worries about the oil economy recovery. itsbill market snapped longest strength -- streak since
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2018. closed itsas beijing largest fruit and vegetable supply center and locking down dozens of people associated with the market tested positive for the virus paired there is concern about the second wave and we are concerned about the u.s., florida in particular with a sharp increase in cases. there seeing a real halt in fierce rebound we saw in wti oil and also brent, above $40 and a bit of a retreat. there is concern about whether we take another leg lower as we kick off the new week. active drilling across the u.s. fell for the 15th -- 13th straight week. the lowest level in almost a decade. china to the pressure was was also patchy. haidi: we have a bloomberg survey of traders -- shery: we
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have a bloomberg survey of traders sang some believe we will never return to pre-pandemic levels. su: at least a third of those surveyed say they don't think it will happen. there's a lot of concern and most traders do not think -- think it will be much below last year's levels. we could be stuck in this range between $35 and $45 per barrel for west texas, and it depends on how many additional buyers pan out in the u.s.. that plays on whether we have an increase in demand or not. adding the pressure on crude oil last week, we saw a record withdrawal in one of the largest etf's and oil market. shery: su keenan with the latest on oil. paribas discusses the market outlook as fears of the second wave grows. plus, j.p. morgan asset management's rebecca chung joins
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us. will the market stay on the back foot? we will discuss. this is bloomberg. ♪
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♪ >> is not like a.m. in beijing and shanghai. i am tom mackenzie. looking to bloomberg markets china open. ingles in hongid kong. markets are nervous as coronavirus cases spike. the top market in beijing is closed. a second wave of infections is coming. new revelations emerge in the carlos ghosn affair.


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