tv Bloomberg Markets Asia Bloomberg June 14, 2020 10:00pm-12:00am EDT
fears of a second virus wave. beijing shuts a leading market has infections spike. cases are climbing in tokyo and across the united states. haslinda: the hong kong government admits china's new security rules may not conform to traditional common-law practice. insists thingsty will be better in the long run. just before the data comes through from china. having a look at markets -- let's look at the data. just coming out and now, seeing a drop of 13.5% for the month of may. line with what economists were expecting and. showing some signs of improvement on the consumption chart -- side. year on year, it looks like contraction is narrowing. looking better when it comes to retail sales. property investment year to date, also dropping .3%, which
is slightly better than economists were expecting an better than the previous month. leasing property investment looking better. fixed assets investments, also a drop of 6.3%. aonomists were looking at drop of 6%, but the trend seems to be better than the previous month. i guess it continues to show that this could still be an uneven recovery we are seeing in china. uneven recovery but a broadening of china's recovery, as well. we heard new home prices, the most in six months. that is a good sign as the economy reopens. we are seeing how home prices in terms of growth has accelerated. easing on credit, helping a lot. just to recap, retail sales, -2.8%.
retail sales, still contracting, retail sales have collapsed. consumers are pretty cautious when it comes to coming back to spending. beijing and other chinese cities are giving up consumption vouchers to its people. they encourage them to spend in the fiscal month of the year. retail sales slumped 16% nationwide so as long as retail back up, it could be a hindrance to the recovery china is looking forward to. industrial production year on year coming in at 4.4%. the survey was expecting 5%, so slightly short of expectations. 3.9% before. rising for a second month since the outbreak, adding to early signs of a recovery. it will be slow, challenging. the improvement in industrial production suggests government stimulus is having some effect, although support remains modest when you compare that to the rest of -- a lot of other countries in the world.
yvonne: take a look at chinese markets. it looks like we are slightly off the lows of the session. -- orhuge uptick from reaction, i should say. the chief economist is the fintech arm of jd.com. thank you for joining us. i don't know if you were listening to the data. industrial production numbers, missing slightly. 4.4%, but expected, retail sales were basically along with consensus of a drop of 13.5%. tell us your initial take on the data. >> i think the problem is the weaker sales. no clear sign of recovery in retail sales, so it is quite clear that production has
resumed, recovered pretty nicely, but the consumption as well as investment is lagging behind, so it is the lack of demand that is the main problem of the chinese economy right now. industrial production numbers, this was still not as great as economists were expecting, of this momentum continuing on the factory lines. a 4.4% print. is it a deflationary recovery you are seeing? whenhina sustain this domestically, it is looking quite weak when it comes to demand. shen: that's right. there has been nice recovery in april, but with no demand, especially from the consumption side and trade side. then there is pressure for producers.
that will restrain their pace of recovery, so that is the main problem. production -- without demand, production cannot recover continuously. ppi, -3.7%, look at and very clear there is deflationary pressure from producers. sharply 2.4% only and it was 3.3 in previous months. exerted of demand deflationary pressure on producers and consumers. some headline out of hong kong, hong kong disneyland will reopen june 18. it has been much anticipated.
we talked about retail sales earlier on. what would it take for retail sales to pick up, because as long as it doesn't, it will be a setback for the recovery. cities givingseen out vouchers to encourage citizens to pretty much spend. has it got to do with rising unemployment? yeah, it is true. there is a rise in unemployment rate, so china is already above 6%. that is the verified chinese standard. we see resumption of some factories and people started to there is quite a lot of restrictions on service consumptions. for example, restaurants and stimulus has not opened in china and there is a lot of constraint on the consumption side. that is why the beijing government has unleashed -- it
started only in june. the data we have seen is in may, so there is a lot of stimulus measures that haven't materialized for june. looking forward, it is good news hong kong will resume disneyland and china, as well. beijing, maybe there is more service venues that will be reopened. that will be good news for consumption, but given the uncertainty regarding this pandemic, there is still a cautious mood on that. haslinda: how much will that way on demand and consumption, given what the vice premiere said over the weekend, that the risk of the spread is very high? think stilleah, i -- especially what we see in beijing, there are a lot of risks and even though the chinese government has already
-- the people's congress has fiscal andounced monetary stimulus package, but without the recovery in consumption and especially the exports and factories, there is a lot of pressure. theirannot step up production and that will affect employment. that income growth is lagging behind. that is all a lot of problems. every thing will depend on the dynamics. thene: when it comes to employment numbers, i'm seeing 5.9% unemployment in china. you take europe, unemployment is at double digits. the u.s. has a jobless rate of more than 20%. why do you think that jobless rate has stayed relatively stable in china? is it reflective of what is on the ground? there is a unique
situation in china because in survey in thethe many area, so the issue is migrant workers in the rural area, they didn't go into the city to work. those people are not counted in the survey, so there is maybe and thatod issues makes the chinese number actually lower than other countries. you mentioned the consumption story. digits, you have an credible data. what are you seeing when it comes to consumption patterns? some shifts that are the longer term impact on the consumption story in china? the story isthink
very strong and very clear is that people moved to online to buy things. this is e-commerce online shopping has become very popular. there is very strong demand because of the pandemic, people stay at home and stay order step through the internet. that is why a couple of years ago, compared to just three or four years ago, the share of 24% ofshopping doubles total retail sales. that is very significant. a bubbly one of the highest in the world -- a bubbly one of the highest in the world. -- probably one of the highest in the world. --n the fresh food has been we are seeing phenomenal growth and that used to be difficult to sale vegetables online, but now, it has become very popular. there is strong growth.
what assumptions are you making about the outlook for revenue and profitability for smes in china? jianguang: i think that is the most vulnerable path of the economy and the government ordered banks to lend to smes. the central bank even gave loans at zero interest to small and medium-sized banks to lend to smes in china. study, 10,000 smes, the financial accounts and ery vulnerable situation there. especially the service sector, and many shops are still closed. income, i think 40% of the companies probably will face
a solvency issue if they don't have income for three months. that is why the government tried ,o save those companies ordering landlords to suspend rent payments as well as injection for bank loans to those companies. haslinda: thank you so much for your insight. shen jianguang, jd digits chief economist. let's get the headlines. china is scrapping most of its lockdown restrictions as it hopes to reopen its economies, although one of -- tourism remains restricted by travel ban's. most businesses and some schools will be a lot to reopen after the government reported no locally transmitted cases for more than two weeks. nighttime curfews are also being lifted. cases are being reported in latin america with daily highs recorded in mexico chennai, and argentina.
another 17,000 cases were added in brazil sunday, bringing the total number of infections to nearly 900,000. brazil now has the highest number of fatalities in the world behind the united states after surpassing the u.k. over the weekend. france is to speed up the in aning of its economy televised national addressed, president macron says france is ready to turn the corner and the coronavirus after more than 30,000 deaths. bars are opening in paris and all schools will resume next week. the french economy is expected to shrink by about 11% this year. the bank of japan opens a new two-day meeting later monday and is expected to leave policy unchanged as the coronavirus weakens an already struggling economy. analysts say the boj will leave rates and asset purchases as they are as they assess the impact of measures currently underway. sources inside the banks a policy makers don't see a pressing need for major changes
at this point. global news 24 hours a day, on-air and online on quicktake and twitter, powered by more than 2700 journalists and analysts in more than 120 .ountries i'm karina mitchell. this is bloomberg. ahead, esttill investing, more than $30 trillion worldwide. chinese companies are missing out on the action. we will tell you why. yvonne: next, beijing shuttered the cities largest fruit and vegetable market and locked down nearby housing district. more on what is stoking fears of a resurgence in the virus outbreak. this is bloomberg. ♪
beijing, where a wholesale market has been shut and nearby housing district locked down after dozens of people tested positive. a district level official has been fired and others are under investigation over the outbreak. let's get the latest from our beijing bureau chief. we had the vice premier saying the risks of spread are high, what is the situation? the cluster is growing. they've tested over 10,000 people in the market and are also going door-to-door. basically, aggressive contact tracing trying to find anybody who's been to the market. there are about 100 cases so far, the biggest test of china's containment strategy so far, especially in the capital has beijing has been opening up travel to a couple of other countries. the secondt would
wave look like? he mentioned parts of the city are shut down right now. is it going to be much different than what we saw during the first wave? to what extent does this delay the consumption recovery story? sharon: it is a bit hard to tell because they are really going hard on the contact tracing in the last testing so it depends on how many cases they uncover. all indications point to the numbers going up significantly as they test aggressively, but right now, the government has refrained from locking down beijing the way it has other places when other clusters have emerged, like in wuhan. travel is still alive domestically and also -- allowed domestically and in other provinces, which wasn't the case in other outbreaks. i think the government is trying to take a more measured
approach but i could see that quickly changing if numbers start sliding. yvonne: we will continue to watch that story. sharon chen, on the ground. business activity will certainly impacted by the marketplace that has been shut down and parts of the city. another black man shot in atlanta fueling the debate on use of force by police in the united states. we have more on that. this is bloomberg. ♪
dozenore than three people were arrested after protesters set fire to the restaurant where the shooting happened. schneider, joining us for more and tell us, what is the latest. jodi: what we saw over the weekend is more protests, largely peaceful, across the u.s. somewhat around the world, but particularly atlanta, thinks got heated after the shooting. the wendy's restaurant where the shooting took place became a focal point of that protest and there was a fire set. it became quite heated. the police chief resigned hours after the killing and the officer was fired, yet there were crowds all weekend after that occurred. that was one place we really saw a lot of these protests begin. across much of the country in the u.s., the protests were peaceful.
haslinda: besides atlanta, what have been other u.s. hotspots for the protests? jodi: they really have been spreading. we've seen many cities and towns even across the u.s. have protests. hundreds of protesters were in palmdale, california. they were demanding an investigation into the death of a 24-year-old black man, robert fuller, found dead wednesday near city hall hanging by a rope from a tree. authorities said it appeared to be a suicide, but it did raise questions and there were protesters. seen protests in big cities and smaller towns. people are all coming together to call for investigations into killings like that that happened seenorge floyd and we've calls for changes, particularly in how police department's are run and managed. in some cases, calls for the police department to be disbanded and rebuild. -- rebuilt. yvonne: we've seen protests go on for weeks all around the
world. what is the world reaction from the big world leaders, including the likes of prime minister boris johnson and president trump? jodi: we haven't heard much from president trump, expect -- except twitter where he continues to tweet but there was talk of addresses to the country as protests haven't gone away, but we haven't really heard from the u.s. president. we did hear from prime minister johnson over the weekend, who denounced angry white counterprotesters, many of them who chanted slogans and some giving nazi salutes. they were clashing with police in london, some said they were protecting monuments targeted, famously the statue of winston churchill, who johnson has described as his own personal hero. we heard from president macron in france, who said the statues to historical figures would remain untouched. france won't erase any names from its history, though he did
say the country would be uncompromising with racism and anti-semitism and discrimination. we are hearing from some world leaders, but not much from president trump. haslinda: jodi schneider, there. latest business flash headlines. american express has won approval to start bankcard services in china, the first foreign to transact in the market. the pboc granted license to local joint ventures after approval two years ago and the system must be up and running within six months. the move comes amid rising tensions between beijing and washington. newa east end is planning a airline to tap into your area and expects a rising tourism. the carrier would be the
majority shareholder in the airline with other backers including the government's of hainan as well as trip.com. the filing makes no mention of asian a -- agent a, the owner of the airline. haverms of markets, we concerns in the market after a choppy start for asia where the emergence of new virus cases in china and the u.s. the vice premier said the risks are high for the outbreak. the msci, currently down .2%. futures ended u.s., pointing to a lower open, dropping below friday's intraday low. u.s. stocks recovered friday, but all three major equity gauges fell for the week on concern of the pace of recovery following months of letdown. the bloomberg dollar index, .1% upward. those indexes,t
haslinda: it is 10:29 a.m. in hong kong. i'm karina mitchell with the first word headlines. the latest data from china shows the economy is recovering, though not as fast as some expected. the expansion continue last month, accelerating industrial output leading the way as consumption remains in contraction. 4.4% froming rose year earlier, below forecast while retail sales fell more than predicted. australia's prime minister has been outlining the details of a so-called project to kickstart the economy. about 50 billion u.s. dollars in infrastructure projects will be
brought forward, providing approximately 56 thousand jobs. the project include the melbourne, brisbane rail line which will be completed as originally planned. recordre looking at a andcit this year and next, not just because of record covid-19 expenditures. revenues have taken an equally large hit. the fallout from the coronavirus and concerns about a no deal brexit have cindy u.k. economy collapse to levels not seen in years. gdp in april was back where it was in 2002 after plunging by a record 25% in february. the u.k. economy is expected to recover, but is still facing one of the for -- worst recessions in the developed world. toreports say the campaign
remove carlos ghosn has the head of nissan began nine months before his arrest in may 2018. he always maintained he was set up. executives began a plan to force him out long before his public fall. we are told the effort was motivated by opposition to his plans to move nissan closer to partner renault, with some seeing a chance to overhaul the alliance. global news 24 hours a day, on-air and online on quicktake on bloomberg, powered by more than 2700 journalists and analysts in more than 120 mitchell.a this is bloomberg. let's look at markets. chinese markets, still digesting the slew of data we got, which basically shows when looking at retail sales, industrial production, they did miss expectation, but marginally. ongoing, albeit it may take longer for china to get to full speed. take a look at markets. it seems we have regained some
losses and we are back to slightly flat when it comes to csi 300 and shanghai composite. the unemployment rate staying at 6%, helping the equity sentiment. h shares lower, offshore renminbi, and the off. a thirdar is rising for straight day. those are the boards. when it comes to asian stocks, we bounced back from the lows right now, but you are looking at the likes of jakarta, up .4%. we are watching the peacock in the philippines. we are down from 3% with news of , foundlippine journalist guilty in a libel case. seen as a test of press freedom, the journalist has been critical of the president duterte. afterutures, lower 1.2%
the bounce friday and nifty futures, slightly lower today. it seems like asia fx, the likes of the aussie dollar are -- losses but the rupiah seems the exception early in the session. declines. is leading the hong kong dollar, we are watching because of the intervention for a sixth day to defend that. we are on the strong side of 775 -- 7.75 and we see a bond rally given the risk aversion. slide onntinuing that demand concerns, the six-week rally into an abrupt halt pretty much last weekend. we could see more risk aversion. beijing, locking down yet another market and its neighboring compounds on the back of a second wave of virus concerns. we heard beijing closed its biggest market in parts of the
city. the risks are high for the outbreak to spread. walking down yet again, neighboring compounds, taking precaution to make sure it has everything under control. we are seeing the second wave not just in china but the u.s. and other countries, as well. that remains a concern for the market. havey offices traditionally invested in logistics and retail, but with economies experiencing a shock from covid-19, some of the sectors hit the hardest, offices had district -- shift strategy and diversify. our next guest runs a family office she founded 20 years ago. the ceo of access of asia. members are some of the world's largest family offices with collectively $1.2 trillion in investable assets. good to have you with us.
family offices have struggled in expectations, nine out of. 10 have failed to meet expectations. . some have failed to meet expectations. traditionally businesses like --els, airlines, anything families that use the technology. the businesses are more resilient. factories, e-commerce, delivery. when you talk about a change in strategy, what are we seeing? are they more risk-averse? are they adding to risk given
the rally we have seen in the equity markets? ha: i think firstly, they have to defend their own businesses. families had technology, think about diversification. many are powered. construction,e digital economies, and technologies. hedge funds have been reluctant to embrace this rally. they haven't really bought into the story the resell side -- trent.side is on do you think the skepticism is founded? aradhna: i agree. there has been so much sexual
damage done to business economies around the world. in the u.s. alone, would have millions out of work. how can that translate to a rally within weeks? we are not even out of the woods yet. we are seeing second waves of covid around the world. i think families are resilient. they certainly understand. i certainly share the family offices you that this healing will take some time and therefore, nobody should be jumping into any markets quickly. yvonne: tell us about the bull predictions you are making for family offices, you mentioned the shift into the next generation of tech, southeast asia, india will become the biggest gainers in investment allocations and china is going to take a pullback. what is driving the narrative? asia, theistorically,
first was china. that is where the action was. it was the engine of the world. there was nothing that was not great about it, but covid-19 has changed all of that. we will see demand shifts. we are going to see supply chains shift, so we are seeing families looking to invest in vietnam, e-commerce in asia, or tech in india. frankly, markets lightbank s -- thabangladesh. why do you remain bullish on hong kong real estate given trends? with the u.s.-china trade tensions and rising concerns in hong kong, the wealthy in hong
kong are possibly considering investments elsewhere. so why remain bullish on hong kong real estate? that's a good question. we like many of the families are a hong kong story. we always joke among ourselves and say where do we have to go back home? is no seriousness, there place like hong kong with such a ool.rse work p there will be some departures, in the whole organic growth the next five to 10 years will make up for more than that. i think the confidence has been solid in the resilience in the hong kong sector -- property sector. i saw the markets fall 50% and frankly, we made quite a few
investments at that time, but we are coming off protests and covid-19, and if you look at real estate prices in hong kong, than 8% not down more -- we have seen an eight not -- 8% to 9% drop in commercial prices. that is amazing. day,nda: a question of the how do you think hong kong will? -- assets this year? .ow will this play out how do you see the situation in hong kong impacting asset classes this year? think it is going to be an impact and thinking about how to deal with that, hong kong
-- i feel the market will be very vibrant. of thebeen a beneficiary trade tensions, so we will see a number of -- i think it was j.d.. we see amazing ipos in hong kong. hong kong becomes the exit strategy for china stories. i can't comment on real estate because that is what we look at. you will see pockets of interesting opportunities. we went into the revitalization of office spaces and have been working them into affordable offices for small business. that has been influenced by covid-19 in a big way. you just have to look for opportunities. , the cio aradhna dayal
of family office regal board asia. i want to recap the lines on the situation in beijing. they are looking at locking down another market and neighboring compounds, so this is another second market or perhaps there is a threat of a spread of this wave wen, the second have seen in beijing after we saw a cluster of cases in the city that has been linked to the fruits and vegetable market and one of the big parts of the city. that is certainly the big focus and what equity markets are dealing with right now, the narrative of resurgence in infection cases, not just in beijing, but the u.s. as well as other parts of the world, like korea. we are seeing a pretty muddled start of the week when it comes to your risk assets. chinese markets are basically trading between gains and losses but are generally lower. it seems they are looking past the data we got out of china earlier this morning, as well. coming up, more from bloomberg's
did not release retail inflation data for the month of may, nor factory output data measured in the index of industrial production for april. let's bring in our senior asia economics reporter. latest dataith the out of india and what does it say about data collection globally? isunfortunately, this something we have seen elsewhere in the world and what the statistics industry has said in a familiar refrain is the field calls they usually conduct to collect data have been difficult in the covid era. they don't have the confidence in the release for may, april and may. this is something we are going to have to deal with for a while. , you shouldn't take comparisons for the current months to previous months right now and we should wait for more data in the coming months.
is something that even in normal times, if there is a blip in the monthly data, we should take a few months to get a full a picture. that is something we will have to deal with. it calls to mind other problems we have seen elsewhere around the world, u.s. jobs report being one of the high-profile issues for the jobless benefits over each week not matching what we've seen in the monthly data. there are several reasons for that around survey collection as well as the different questions they have to ask, folks responding and the response rates and difficulty collecting the data, and separately, inommerce, we've seen a boom the region on e-commerce. that is something that is hard to track even in normal times, but even more so right now as we are trying to collect data in different ways to get a full of picture of what is going on. seeing the china data today, is weak, he data, the bank indonesia, boj meeting.
what are key highlights, what is top of mind for you? michelle: the china data, reported pretty big misses. across the board, missing expectations generally on retail sales. that will be key to watch going forward as people are expecting perhaps a contraction in the second quarter. we will be looking at tdp, but most on my mind are two rate decisions, monetary policy decisions out of bank of japan. we don't expect a change in interest rates, but bank of japan trying to head off bankruptcies, keep solvency at a maximum, and maybe expanding lending facilities they have out there. that might be the big announcement how to bank of japan. on thursday, we will get bank indonesia. bloomberg economics expects a 25 basis point cut, given the rupiah has provided more stability. it might give policymakers room
reappointment of the city's first female stock exchange chief. laura cha spoke to bloomberg on what she thinks is the biggest change in the last five years. diversity is very important. is is very important, -- esg very important. we are in a unique position to not only talk the talk, but walked the walk and impose these quality and disclosure requirements on the company's listed on our exchange. it is true that role that we can promote diversity, etc. women representatives on the board on our index companies. i think we still have a long way to go and there will be improvement, but i hope it will be faster. >> there is a big difference
between companies taking esg or betweeny principles, complying and committing. --with hkex,a would you consider rules and requirements for companies to get listed on the hong kong exchange? would you be willing to put those women's? -- minimums? laura: any time we have a rule change, we have market consultation. areof our rule changes subject to market consultation. type open with each consultation, we get more buy-in to bring some real change against the markets wishes -- not work. i don't want to put something completely mandatory, but the i'm talking about small-market operational change to the big market policy changes
like having voting rights, always consulted very widely, taking into consideration market participant views. i very much hope that esg will be along the same way, there is market by in -- buy-in and we are taking the lead to make sure we will have it rolled out rather than taking the box exercise. david: are those conversations happening? laura: i think it is happening. in our realm, we are talking to stakeholders. that is an issue we emphasize and speaking of stakeholders, stakeholder capitalism is an issue we are trying as a part of esg. haslinda: hong kong exchange chair laura cha speaking with bloomberg. headspine journalist who a periodical that has been
critical of the president has been found guilty of libel. asiaberg news southeast reporter joins us. it seems like it has set a dangerous precedent in the philippines. >> yes, it does. it is the first time journalists in the country have been found guilty of online libel, and it was a case that was retrospectively enacted against her, as well so what will have a chilling effect on press freedom in the philippines and also on the social media users who are critical of the government. how has maria responded to all of this? >> she has been her brave and articulate self, i think. she said it was a blow to her and the news organization, but
wasn't unexpected. she is facing seven other criminal charges including a legit taxation and a legit foreign media ownership violations. she has been down this road before and she says she is going to stand up against any kind of attack against press freedom. she potentially faces 12 years in jail. has the government taking any other media organizations? think ressa and her colleagues were sentenced to up to six years jail, but they can post bail and appeal the ruling. we've yet to see what is happening with that. on your question about other media organizations, last month, the philippines largest broadcaster was ordered shut by the government after its permit
lapsed. the government can still choose to grant another permit if it ants, but it does seem to be pattern emerging of some pretty harsh actions by the government against media organizations in that country. yvonne: that was our southeast asia government editor. i want to clarify, ressa could face up to six years in prison according to discharge. looking at markets, before we go, we are looking at a pretty down session today although we are off some session highs. chinese stocks have basically bounced back to that flatline right now but hang seng till seen pressure, down 201 points. the shanghai composite down .1%. there is a fear of a second wave of cases. they've shut down another neighborhood and market. we will follow this headline but plenty more to come.
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fears grow up a second wave. beijing shocks the leading market as cases climb in tokyo and across the united states. rishaad: new revelations in the carlos ghosn affair. the senior nissan executives tried to bring him in months before he was first detained. asian markets mostly lower, retreating on the second wave concerns. beijing closing its biggest market in parts of the city come a locking down another market in neighboring areas. the risks are higher. the vice premier says data in china, restoring confidence. industrial production falling short of expectations but shows continued momentum. 0.5%,ci asia index down the csi 300 down 0.2% on the back of that data although it is off the day possibly. the hang seng lower by 1%, the
day, down for a third samsung among the laggards. the kospi has been an out-performer, up when he won percent, heading for its biggest advance in 10 years. up 0.5arta index percent, and out performer in a down market. indonesia will use qe as long as it is needed to overcome the pandemic according to a report citing the finance minister. bank of indonesia says it is expanding its shortened trading hours to prevent overcrowding on public transportation. down 3%.st laggard, the biggest drop since mid april. stocks, and consumer holdings by overseas filipinos fell in march bigger than estimated. the sct and the singapore sti, down at this point. markets,the currency
the dollar coming back again. this is where we find ourselves, the dollar index up a fraction. we see the yen which remains on the 107 level, looking at the 6, 7 .08. what we have is the dollar going up. there is the possibility of a second wave and that is affecting markets. at -- at the australian dollar, it has weakened against its american counterpart, down to a chinese court sentencing in australia adding to the political and trade tensions between the two countries. this is the oil market, brent crude, new york crude all the way down, looking at s&p, the futures contract 1.2 percent down. a nifty right there on the futures contract in singapore, seeing weakness. oil falling after its first weekly drop since late april down to the fresh coronavirus outbreak in china.
this is because of the fear and concerns about a second wave of infections taking place and taking hold, perhaps threatening what we are witnessing, which is economic recovery. it is those fears of the virus, growing in beijing, that the wholesale market has been shut that we have reported, nearby housing locked down, dozens of people testing positive. a district official has been fired. others are under investigation over the outbreak. let's get to beijing and join our bureau chief. what do we know thus far after the outbreak in that market and the people who visited the market? know that there have been nearly 100 infections reported over the weekend, originating from that market. but now, the government has said have discovered cases linked to the first cluster in another market in a different district, and they have locked down 10
nearby residential compounds. right now, they are in the process of aggressive contact tracing and mass testing. they are going door-to-door knocking on doors, trying to figure out if anyone or their relatives or family members have been to the market and are testing everyone they can find. it looks as if they are still trying to take quite a measured approach to having shut down transport links like they have with other outbreaks, like what happened in wuhan and the northeast. i think as the cases are set to rise, given the amount of testing being done, we can expect that they will ask -- act quickly as the numbers spike. oflinda: we got a raft economic data out of beijing in the past hour. what is the main takeaway? see a bit of an improvement in industrial production, but the problem is, the consumption recovery that
china is banking on with the second wave we are seeing in knowng, this outbreak, you , the risk is that we go back to what it used to be in february or march. that could derail any nascent recovery. haslinda: our beijing bureau chief sharon chen. let's get the first word headlines with karina mitchell. thailand scrapping lockdown restrictions from today as it looks to reopen the economy. one of its biggest earners, tourism, remains restricted by travel ban's. some schools and businesses will be allowed to reopen after the governor and -- the government reported no local transmissions. curfews are being lifted. record covid-19 cases reported in latin america with daily highs in mexico, argentina, and chile. 17,000 cases were added
in brazil sunday bringing the total number of infections to nearly 900,000. brazil has the highest number of fatalities in the world behind the u.s. after surpassing the u.k. over the weekend. the bank of japan opens a new two day meeting later monday and is expected to lead policy on change as the coronavirus weakens a struggling economy. animists -- analysts say the boj will leave rates and asset purchases as they are as they assess measures underway. sources say policymakers don't see a pressing need for major changes at this time. new reports say the campaign to remove carlos ghosn as head of nissan began nine months before his arrest in 2018. he always maintained he was set up. executivesior nissan wanted to force him out before his public fall, motivated by opposition to him -- to his plan
to move nissan closer to renault. global news -- global news 24 hours per day, on-air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. u.s.ad: still to come, the officials sharing a report on the social and financial impact of covid-19. catch our discussion with a company head of wellness. markets: next, as bond get a reality check of the recovery, where an investment company sees opportunities in fixed income. this is bloomberg. ♪
are losing steam as rising pos have a second wave of the virus driving investors to haven bonds. the fed isn't helping the cause. the outlook on u.s. growth auspice -- prospects have slowed. 10 year yields hovering around 0.7%. our next guest thinks helps of a -- hopes of a v shape recovery is out of the question. we have a second wave of the virus. this is a good time to be accumulating exposure to pretty much long duration bonds. i'm not sure if this is a second wave or some of the countries are still dealing with the first wave. but that is besides the point. i think what is becoming abundantly clear is that this will stay with us for a long time. i think what the fed essentially
has done is, it has transcended guidance considerably and we expect this to be the case in the next meeting. from our perspective, the fed has, i think we can see them a little higher or say -- staying roughly where they are but we don't expect yields to be substantially higher anytime soon given the fed actions, and also the recovery, which will have come of this crisis will .ave a very long tail what is your estimate for 10 year yields by year end? some people say 0.88. omar: that is a good number but i don't know if we will be there. it is hard to say. what my stance is, it will probably be a little higher. the reality is, in terms of the bond market, there are two considerations. one, from our perspective, it is
practically impossible to have a v shape recovery and you have -- when you have measures like social distancing and a economy or large segments of the economy operating at or below capacity. that will weigh on yields. the other thing is, we don't see any change or substantial change in terms of the fed policy. where will the yields be exactly? we could see them a little higher but we will continue to see yields very well anchored. so probably sub-1%. yields,: the hunt for forcing investors to look at riskier corporate bonds. bankruptcies are at the fastest pace in 10 years. surely, this isn't how the markets should be functioning. case of the high credit quality, for the investment segments, i think the
massive driver has been monetary from thearticularly fed, which is for the first time buying outright investment grade corporate bonds. there is a disconnect, to your point, in terms of the rate and where the markets are. i think the markets going forward, particularly the riskier assets, will be less jubilant. for the ig market, that market is well positioned. it is in a sweet spot outright by the regulators and by monetary policy. it has a credit quality to be able to withstand the shock. there will be a surge of yield after all of this settles down. i think that market performance will continue to be strong. looking at the fed's funds report, if you go deep,
you begin looking at what has happened, for the first time in 30 years, non-financial business debt is greater than household debt. are there lots of zombie companies out there? how do you avoid them if you are looking for fixed income assets, separating the wood from the chaff? omar: the short answer is, yes there are zombie companies in the making. having said that, some markets which are more dynamic than others, the u.s. being one of there are zombie companies and investors will discriminate against that and they will not be zombie companies for long. the analogy i refer to is investors are starting to think in similar markets terms, some of the zombie companies we saw in japan after the bubble. i don't think that analogy will
hold. i think you might see it for a while because monetary policy and fiscal policy is bridging the whole economy for a while, but i think this crisis will have a long tail. no bridge can be long enough to effectively keep the companies afloat for long. do the credit section? i think there is an easy answer for that. you have to do your homework. the thing i set on your show a yearme, this is not for taking bets. there is strong return in the versions we saw so far. between asset classes and within asset classes. i think that will continue to be the case for the foreseeable future. rishaad: and that's it, isn't it? you have that situation, then of course what happens with the
macro side of things? we have the possibility of inflation, most people say it is too early to talk about it and we should be talking about deflation before getting into any semblance of inflation. this would also result perhaps in i suppose a double-dip, if what comes to pass happens. what does that mean for you as an investor? the short answer for us in terms of inflation is, we don't see inflation coming back anytime soon. those who are in the sit ononary camp they the fact that supply chains have been so disrupted -- based it on the fact that supply chains have been so disrupted because of covid-19 and the trade wars and trade friction that this will affect prices. we think this will be more than overwhelmed and offset i the fact that economies will be operating at substantially below capacity.
the long and short of it is, i don't think there is any inflationary concerns in the foreseeable future. what that means for fixed income markets is, monetary policy will continue to be accommodative, alter -- ultra-accommodative and qe will become a global phenomenon. rishaad: where is the juice? where will you find the juice? are people looking for yields? what is the deal? omar: the juice is being squeezed. i think the easiest juice is at thislly, is gone point. we will continue to see some opportunities in ig and emerging markets, in high yields, but that is not really a major move. from now on we will continue to see some decent performance, particularly when it comes to investment grades and segments within the emerging-market, but
again, this isn't a year for b eta, it is a year for credit selection. i think the easy money has been made this year and from now, it is going to be more a grind type of thing as opposed to markets shooting up again. just one more question, speaking of high-yield, indonesia is the in asia.ield player do you keep piling in? when do you stop? omar: indonesia has been a relatively good story. i think, we have some concerns about the fiscal space that indonesia has. and the fiscal discipline. i think this will be key in terms of the investor appetite. i think investor appetite has continued to be a relatively strong, after a strong wobble back in march. be moreeds to
confirmation from indonesia in terms of having fiscal discipline and i don't think we will see at any time soon. indonesia will probably fare better than some of its peers, like india and so on. but i think in terms of upside, from now, it is probably a bit more limited compared to what we saw over the past three months. slim from pine bridge investments, thank you for your insights. more protests in the u.s. as atlanta police are accused of disproportionate use of force resulting in the death of another black man. details, just ahead. this is bloomberg. ♪
atlanta has become the focus of the u.s. protests against racism , with the city's police chief resigning following the shooting and killing of a black man at a drive through. editor.t more from our what is the latest on the death of this man? >> i have to say, this has been something that has re-sparked protests certainly in atlanta, and it has gone to the bigger question in the days and weeks after the death of george floyd in minneapolis, which is to say, we have black men dying at the hands of police officers, oftentimes white police officers. a lot of this footage, caught on video. this one was caught on surveillance camera. it has really galvanized what is now a global movement, and you so -- saw in atlanta a lot of anger. that wendy's was burned down.
people were outraged. the police chief resigned. atlanta's mayor was on tv saying it was unacceptable, that everyone needs to do better. it is really re-sparking more calls for change. looking at new legislation aimed at reforming law enforcement, that is starting this week. what do we know about that? that is on the federal level. certainly on the state and individual city level, you have started to see some smaller pieces of legislation make it through in terms of tactics, changes. louisville band no knock warrants after someone was killed that way. you see small things. but we are talking about the federal level. this will be a little bit of a difficult one because there are some smaller things that everyone can kind of agree around, but a lot of the things that some of the protesters have really been calling for are on
the larger level, like removing a shield that police officers use in court cases when things go wrong that allows them to basically have impunity if they were acting within the course of their duties. changing that is now a redline for the republicans, but it is one of the protesters' central demands. you are starting to see, even before legislation gets written down in some cases, on the republican side, you are starting to see these red lines get drawn that mean that sweeping things might be difficult. we will see because the political movement in america has heavily shifted over the last couple weeks. rishaad: thank you very much, derek wallbank joining us. let's get you to the latest business flash headlines. hertzpt car-rental giant has one approvals to cheryl --
sell shares to raise cash although the company admits they could be worthless. this was given the green light by a bank. they hope to capitalize on a share rally run. stock was up 37% at the close on friday. american express winning approval to start bankcard appearances services in china, making the foreign payments network allowed to process transactions on the mainland. the pboc, granting this after initial approval to years ago. the system must be up and running within six months. the move comes amid rising tensions between beijing and washington. taking to the skies, china eastern has a new airline on an island. this is a free-trade area amid unexpected rise of tourism. the carrier would be the majority share line in an airline with other factors -- other backers.
this filing next no mention of hna, the indented owner of hainan airlines. haslinda: looking at the markets, asia off to a choppy start. the emergence of new virus cases in china and the u.s., china heading for a lunch break area beijing, closing parts of the city. the vice premier saying the risks are high for the outbreak to spread but data out of china last hour, were touring -- restoring confidence in retail sales which fell short of expectations, but showing pretty much a broad-based recovery, taking shape. china's economy continues to recover in may, accelerating. industrial leading the way while consumption remains in contraction. the csi 300 index, pretty flat come off its lows for the day, 3999. the jobless rate falling 5.9
haslinda: it is 11:29 a.m. in singapore and beijing. here the first word headlines. the latest data released from china shows the economy is recovering, although not as fast as some had expected. expansion continued last month with accelerating industrial output leading the way, even as consumption remains in contraction. anufacturing rose 4.4% from year earlier, slightly below forecasts. retail sales fell a little more than projected. newing is facing a coronavirus outbreak that's almost100 -- that saw
100 infections over the weekend. a market and houses have been locked down after the biggest rising new cases since mid april. most involved people who worked at the market or who had been there in the last few days. a district level official has been removed. beijing says the risks of a second wave are high. australia's prime minister has been outlining the details of his so-called shovel ready project to kickstart the economy. around $50son says billion u.s. dollars in infrastructure probably -- projects will be brought forward, providing 66,000 jobs. this includes a rail line which he says will be completed twice as fast as originally planned. recordre looking at a deficit. this year and next. and not just because of record covid-19 expenditures. revenues have taken an equally
large hit. haslinda: north korea is threatening military action against its southern neighbor as cross-border relations saw -- sour rapidly. kim jong-un's sister says the next move against seoul will come from the army as tensions arrive -- tensions rise. kim says it will be better for the north to take concrete action rather than respond by diplomatic statements. rishaad: the chairman of the hong kong exchange was caught off guard by china's decision to impose new set -- new national security laws in hong kong but remains supportive. to davidn talked ingles about the bill. people, therey was no early indication that it
was. but having said that, i think it was a good sign. >> it was a surprise. >> it was a good thing, the decision that came out was a good one. >> in what way? >> it provides clarity, and it will ensure future stability because as you know, we have gone through what we have gone through last year, there was a lot of uncertainty of, you know, about the law and order, etc. i think certainly, this created clarity and stability for us to move forward. >> what do you think would be the biggest misunderstanding based on the information we have now? on why people are concerned about it? frankly in your view, they shouldn't be concerned about at all? >> as you said, it is too early. we don't have the details yet. but based on the information we widely,far, it is not a and the central government
officials have said it is only a very small group of people that this was targeted at. other than that, the rest of us are waiting for the details to come out. it,because nobody expected there is an element of surprise probably that created a little uncertainty. >> why is it that businesses feel they have to pick a side? >> i believe that now, in this current geopolitical environment , many companies are finding it and difficult to navigate, especially for companies that operate in multiple jurisdictions. each company will make its own decision, and will make its own position. i think it will be up to the company to decide what will be best for them. >> in terms of concerns that you have heard from institutional investors, what would those concerns be? frankly, at the end of the day, how does the government and how
does the business community address those concerns and hopefully lay all of that to rest? >> first and foremost, it is a matter of confidence. by the time the detailed regulations come out, which i believe will address some of the thatrns, people will see it will not affect the core values of hong kong. the core value being the rule of law, a fair and transparent integrity of the market, and a level playing field where everyone is treated the same. >> ipos are coming. it will be a big week this coming week. obviously, apart from jd.com, do you expect more names coming for the rest of the year? >> we have a pretty healthy pipeline. i can't talk about names or numbers, but we do have a healthy pipeline and we hope to get to number one again this year. >> compared to last year, i know you can't give exact numbers but it will be better than what we had in 2019?
>> i certainly hope so. >> the deal with msci, tell us about that and the rationale behind it and when can the markets expect the tangible fruits of that agreement to be able to come as investment tools? suite, ithe product is the effort of our entire team plus the governments support. it is part of our strategy to expand into index product derivatives across -- outside the equity that is our core part of our business. so 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. we know that it will be, because these are very attractive product, 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. that is laura cha speaking with bloomberg. hong kong seems to have avoided the wave of capital outflows. anecdote --rowing anecdotal evidence that the city's rich are hedging their bets by opening offshore bank accounts and applying for alternative passports. let's get more from our reporter. what are you finding? mentioned,y, as you we have seen some anecdotal evidence that there are people starting to think about worst-case scenarios and what a good plan b might be defending on what happens in the markets ahead.
thats alluded to in interview, the national security law, the government is trying to calm concerns about what will come out of the law, but there is lingering concern at the moment and growing in some areas, where they are fearful that they won't be able to get their cash out of the city, so some people are looking at opening offshore bank accounts, moving money to other locations. in some cases, thinking of moving their families somewhere else especially if they have young children, thinking about where their kids might go to school. there are lots of things that people are looking at as maybe exodus not necessarily at the moment. politics,turning to hong kong's legislature has important elections coming up in september and there are growing fears a number of pro-democracy lawmakers could get disqualified even before the campaigns start.
>> that is another central catalyst in the coming months that we will be looking at. we have some really important elections coming up in september for seats on the legislative council, the local government in hong kong. what is at stake is for the .ro-democracy party groups if they are able to wrestle majority control, they will be able to control the agenda for the local government and in fact, they would even be able to potentially force carrie lam to step down if for instance they vote down her budget proposals twice. that is obviously what is at stake for the election, but it is possible they might not even get to the contest thing of the race. -- contesting of the race. there are concerns that potentially anyone who opposes the national security law, the incoming law, may be disqualified from the race. that would just about cover everybody who would be campaigning on the pro-democracy
side. we have heard comments today from government officials that the new national security law may not apply retroactively, but of course, we are talking about campaigning over the next couple months. rest assured, it will be an intense campaign. there will be concerns about what they would do going forward. not discounting what was done when thiso what -- law was implemented. haslinda: still to come on the show, we hear from the head of wellness at a company as an insurer really just -- releases and import him -- a report on the social impact of covid-19. highlights are ahead. this is bloomberg. ♪
rishaad: people have become more worried about their finances since the onset of covid-19. however, they are feeling more positive about family and work life according to the global health service company cigna. they had a study that looks at the pandemics effect on people's well-being. let's get more from dr. dawn soo, head of wellness. let's kick things off with surprising findings. what is the biggest surprise for
you? i think the biggest prize probably is around the positivity around people's work and home life. a lot of our respondents indicated that while they are worried about their finances, they are surprisingly feeling really positive about their work and family situation, possibly because of the working arrangements that have been put in place since the onset of covid. it surprises me that people were more happy. asy don't feel as isolated many would have naturally assumed with lockdowns prevalent in large parts of the world. dawn: that is correct. we have also seen a decrease in feelings of loneliness. a lot of participants have said actually, the interpersonal relationships have improved, all of which are surprising. interestingly, it is the markets
that have experienced the toughest lockdowns, like the u.k., spain and uae, that have shown the greatest improvements and a lot of the trends. news.not all bad that has been really positive. is,aad: the other thing thinking about always on, these days you use your phone, always in contact with the office. in times of working from home that is probably even more the case. tell us about how that has played into this. dawn: we have been doing this survey for over six years now. , this always on culture has been there. with flexible working situations becoming more prevalent, people are reporting flexible working doesn't necessarily mean less working. most of them are look -- working longer hours than they would if they were in the office.
the good news is, because we are now better able to manage our , how weis more flexible want to plan it. people are reporting beverage -- better job sectors faction -- satisfaction. reasons include the ability to be home and look after their partners and families, but also improved communications with colleagues, whether remotely or on videoconferencing or by call. all of that is good news. that said, i would still encourage employers to be time,l that during this providing adequate mental health support is important because physically, being distant from colleagues and people you normally are in contact with can be difficult. some individuals are better set up for home working than others. so when it comes to evaluating how long flexible working could go on, it is important to remember that we are all
different and different employees will require different support to enable them to be productive during this time. to that point, when you look at virtual health, have attitudes changed both for the employers and the employees? yes. digital health, including telehealth and virtual consultations with doctors and psychologists, is something we have been pushing for the last couple years. but i think covid has really accelerated the adoption of a lot of these technologies. we have seen some of the surveys that, the majority of individuals across markets have virtualling to try out consultations in place of traditional face-to-face consultations. , our telehealth
utilization rates have gone up six fold since the beginning of covid. we think this is a permanent shift in consumer attitude towards digital health and it will stay and we should influence the way we evaluate how we finance health care solutions moving forward. it is all positive. we havend of the day, to make sure individuals get access, whether it is for generic health support, drug deliveries, or mental health support. these are the top three reasons why the individuals will use virtual solutions versus the traditional methods of access. newinda: we talk about the normal. what are the expectations of this new normal? it is going to mean different things and -- to different people. from the onset, working with teams will change. today, individuals who don't normally work from home have been forced to, and given how
long this may potentially go on employers, --e employers using flexible working arrangements as an ongoing arrangement as opposed to one that is temporary. we will see a shift. i think the greatest difference we will see is that health care trends. digital health has received a great boost from covid. virtual consultations with gps, specialists, organizing for drug delivery, seeing your psychologist online, is going to become a lot more normal than it was pre-covid and all of this will be here to stay. with that, i think as insurers, we need to look at how we provide benefits and coverage for customers, employers will need to ensure they provide the right collaboration and communication tools for employees to work from home, and also to figure out how they would provide a lot of the mental health or workplace
support they normally do on site. insurers like cigna, what are the services that are being considered? we have always provided customers with the ability to visit their doctors remotely. we provide coverage for that. that doesn't change but we are looking at expanding the scope. so we include not just general practitioners but also specialists, health care professionals like physiotherapists, psychologists, in some markets today we are already providing our customers with drug delivery services. we are expanding their supplies of medication to ensure they continue to get access during this time. or generally, we are looking at how we can adjust our offerings to enable employers to support employees virtually. putting online a lot of the off-line and in-person services that we provide today.
onhaad: i want to pick up that whole thing about the new normal. 13% more people believe life will never be the same again. do you think there is a change in employees, or employers, i should say, with how much more they are comfortable with the way things have gone in the last few months? yes, i think what i would say to that is, we are all learning and we are all trying to figure out what works. i think previously, because of covid, ongoing, employers have had to make certain adjustments to the way we work and the way we interact. some have adjusted more than others. i think moving forward, all employers and ourselves, really, are looking at what is the most effective and productive way for people to continue doing the
work they do, and if we have the right infrastructure, the right culture in place, we will enable -- be enabled to perform. we are still in the early days. most employers i think have been surprisingly pretty confident at their employees being able to do the work they need to do even remotely. i think employees have adjusted. from what we have seen in our survey, most of us are pretty resilient and have leveraged technology to help us connect , andfriends, family coworkers. in the coming months, we will see more changes and people adapting in new ways. but i do think a lot of the trends we see today will stay post-covid. rishaad: thank you so much for joining us, from cigna international markets. indian markets started their
trading day. a little weakness there, not surprising. some of these financial related stocks are adding drag. motors, 2% -- 2.5% down. they are expected to report a sizable net loss. no surprise there, given that there is really no automobile demand. reliance on the way up marginally, a sea of red as we investing 850 million dollars in geo platforms, getting rather crowded with a lot of other companies doing the same. let's have a look at what we have on the way. new evidence that could support carlos ghosn's claims he was set up by his former subordinates at nissan. our exclusive scoop is next. this is bloomberg. ♪
cooperate with prosecutors on the charges against carlos ghosn has been speculated about. the allegations against him, which as you know include breach of trust, stating his income, they date back years in some instances. thosesaid it was beyond allegations, that this was a takedown motivated by plans he had in play. the information we gathered, which includes emails between nissan executives and details from people who were there at the time, for the first time really show what heightened sense of anxiety some executives had at carlos ghosn's plan to deepen the alliances between mitsubishi and niche on -- and nissan and details the plans to reorganize their relationship with renault, which they are in alliance with. rishaad: the question is, why is this emerging now? how does it impact nissan
looking ahead and that alliance they have with renautl, which is at the epicenter of what is happening? growing was dissatisfaction at the alliance having sway renault over the japanese company but not in recent years. the emerging electric vehicle space, it has been quite a long time now since carlos ghosn's arrest. he escaped in that stunning escape by private jet to lebanon, so the trial is looking very remote, at least on japanese soil. we feel that the people who are more comfortable to talk about this now, we think are looking in the rearview mirror. .his could be destabilizing we learned of a memo sent by the
former head of the ceos office at nissan to the ceo the day before carlos ghosn's under -- arrest before they -- where they laid out a plan calling for the termination of the agreement that covered that auto alliance with mitsubishi and renault, and toked about renault's right nominate key executives and restoring nissan's right to buy shares or takeover renault. the alliance is already severely tested with the pandemic and the is within the auto industry. there is more evidence of that distrust feeling things -- fueling things. rishaad: thank you so much for joining us. markets, this is where we are. seeing declines right now, chinese markets also lower
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