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tv   Bloomberg Daybreak Asia  Bloomberg  June 21, 2020 7:00pm-9:00pm EDT

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haidi: a very good morning. i am haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: i am shery ahn in new york. welcome to "daybreak asia." china's security law will override -- pro-democracy campaigners say they are preparing for jail. global coronavirus cases approach 9 million with 400 625 thousand people dead. apple is again enclosing some
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u.s. stores while pepsi shuts a food plant in beijing. sending a message to the white house. how tictoc users may have contributed to the low turnout for president trump in tulsa. haidi: let's take a look at how we are shaping up when it comes to the start of trading this monday morning in asia. looking like a pretty uncertain start as u.s. futures are .25inuing to drop at percent. nikkei futures trading in chicago down .4%. we have a bit of strength in the yen in fact. we had the dollar outperforming at basically every g10 currencies in the overnight session other than the japanese yen which is sitting at that high 10-60 handle. the are also seeing a slip when it comes to trading in oil prices after the market rose almost 10% last week on news
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that these output curves are continuing to work to break down the supply glut these concerns about a second wave of this virus resurgence are clouding the demand outlook and causing a bit more of a downside trading action when it comes to crude. we will be watching the aussie dollar as well, something we are seeing downside out. the kiwi and the aussie continue to sleep. australia contending with the potential fresh wave of cases has restrictions are being extended for that state, shery. shery: china confirming that its new national security law will allow beijing to override hong kong's independent legal system. that is shedding new light on a move that has stoked tensions with the u.s. and threatens the status of the top financial center. yvonne man joins us now. this is not the full draft, but some language has been released. what is a key takeaway? yvonne: the details of this draft bill have been kept secret
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up until now and this is what we are hearing so far from the news agency. it released snippets of this legislation over the weekend. the central government will have jurisdiction over an extremely small number of national security cases under specific circumstances. china will establish a new bureau in the city to analyze the security situation, collect intelligence, and lawfully handle national security cases and then hong kong will establish a new committee to protect national security. the chief executive will oversee this committee as well as appointed judges to handle criminal cases brought under the law, but ultimately, beijing will have the final say. and beijing's response so far, the push for this national security legislation in the national people's congress, has been a more direct challenge to hong kong's economy, and really has undercut the momentum that the pro-democracy camp has
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achieved over the past year, and the imposition of this now, of bill, does suggest that beijing will circumvent any hong kong institution that does not comply with their wishes, all the way from the legislature to the courts and to the chief executive. haidi: what have we heard from the pro-democracy camp in response? yvonne: right, well the path forward for them is still unclear. earlier this year, they were riding on fresh hopes that they could win a majority in the legislative council when those elections are held in september later on this year, and now, these fresh details do generate some alarm among the pro-democracy camp. we heard from fernando chong saying details made clear the communist party has the power to pick whoever they want to bring them to the mainland to face criminal charges. this lawhat, no doubt, will turn hong kong into a mainland city. we heard from a pro-democracy
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activist. he tweeted out over the weekend that this draft bill does undermine hong kong's legal system and essentially allowed the communist party to intervene at will. this is what he tweeted out. being one of that prime targets, i will be subject to tortures. therefore, i call upon the world to stand with hong kong and urged china to withdraw this evil law. we did hear from carrie lam over the weekend once again trying to reassure the public that this law will only target, she says, an extremely small minority of people. she continued to emphasize that the freedoms of the overwhelming majority of hong kong residents will be respected. shery: what details still need to be ironed out? yvonne: a lot of unanswered questions. the key one is, is this bill going to be retroactive as law? which cases will beijing have jurisdiction over?
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we are talking to a hong kong delegate of the chinese legislative body. rt hk that a chief executive will make a call on these specific circumstances that have been highlighted in extremelar and situations go beyond the control of the hong kong government or if the city is near the state of war. also, the definition of those ber crimes news to ironed out. what does it mean to crimes like secession, subversion, terrorism, and collusion? what are the maximum penalties for these types of crimes? it can range from three to 10 years and largely would be in line with hong kong's terminal laws but still, a lot of? out there. the standing committee will meet discuss more in beijing. this national security law, not
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on the agenda so far, but could be added last minute, which was what happened last weekend. if so, there is speculation that they could pass this national security law without a full draft being released before july 1, which would be the anniversary of the hong kong handover. haidi. man with the latest. and you can find more analysis on the proposed hong kong security law in today's edition of daybreak. bloomberg except for eyebrows just go to dayb on your terminals. it's also available on mobile in the bloomberg anywhere app. we will continue to discuss china's national security legislation in the next hour with our guest. still ahead this hour, the international monetary fund is set to lower its 2020 forecast this week, two months after predicting the steepest recession in almost a century. we look at an analysis with sarah hunter, next. ownapple may shift to its
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main processors, replacing those from intel. the senior analyst will be with us later. this is bloomberg. ♪
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karina: "daybreak asia." spain has been hard-hit by the pandemic but his lifting restrictions on visitors from the e.u., the shenzhen area, and the u.k. italy is preparing to seek a wider budget gap at the government draws up a reform plan to lobby for assistance to recover from the covid-19 knocked down. the prime minister will focus on infrastructure projects such as high-speed rail and may cut
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the at. they do not have the resources to cope with the fallout. singapore is positioning itself for the post virus world with a massive investment in innovation beyond the immediate support announced for struggling businesses. the government will set aside more than 14 billion u.s. dollars to support research and what it calls high-impact areas such as health and biomedical services. the investment is part of a five-year r&d plan currently being finalized. india's virus lockdowns saw oil imports slump in may by the most in more than five years. refiners received 50 million tons of crude, a 23 percent fall from a year ago, and the lowest monthly total since february 2015. india is the third-largest oil market in the world but insumption dropped by 70% april. refiners normally import 85% of their needs. 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.
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i am karina mitchell. this is bloomberg. haidi. karina, two months ago, the international monetary fund predicted the deepest global recession in almost a century, and this week, the fund is set to release another outlook that could be even worse. they weather that pandemic. hunter, in the same way that companies are throwing their arms in the air and being unable to give forward guidance pending on so many different factors over the next, you know, 2, 3, six months, is it the same for economist? doesn't the next step and the likelihood of the shape of the economy really depend on the second wave of infections that we are starting to see in some parts of the world? sarah: yes, that's obviously one of the key factors. and certainly, the situation is changing, and evolving very
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quickly. looking at the previous forecast they put out in april, i suspect we will see them downgrading places like the u.k., where it has been much worse than we previously anticipated, one of the worst impacted economies, and that is likely to come through in the gdp numbers. equally at the time, they were expecting the outbreak here in worselia, significantly than it has actually been. they controlled the pandemic here very well. we are seeing restrictions and starting to get back to normal. we will probably see an upgrade to the forecasted gdp for australia. so it is going to be interesting to see where they eventually end up. they could well downgrade their outlook for global gdp because some of the biggest economies are perhaps coming through worse than anticipated. the number of infections is really crucial if we get a second wave or not. the speed of the restrictions
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are relaxed and how comfortable people feel interacting in the economy and returning to normal, those will be the crucial drivers of the speed of recovery in any given economy and therefore in the global economy more generally. haidi: there has been the argument that in asia, we will see a quick. recovery. a lot of these economies were first in first out. gotten very lucky with the way it has been contained. how meaningful are those domestic recoveries when we do not have open borders for tourism, for the services sector, to really be able to recover? sarah: it is a good point. to some extent, it does matter because domestic demand is crucial for all the economy, but you are right. the reliance on global trade is an important part of what drives the outlook overall and
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is not going to be possible for there to be a complete recovery in any open economy before the rest of the world. is able to get back to normal. new zealand is a really good example of that. there economy, they will see it removed in our domestic restrictions. they managed to eliminate the virus. it was such an important part of their economy. it will be impossible for them to recover completely. yes, that doesn't really matter. having said that, there are going to be differences in terms of how economies come through. some will be more impacted than others and that is what we are going to see as the data comes through over the next few months. shery: a faster recovery means these economies will have to sooner thanmulus others. given how much they poured in in order to support their economies, how challenging will this be? sarah: navigating that sort of
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balance between the fiscal constraints and how you pay for the additional support, against the sort of inevitable slowdown at least that you will get once that support is removed is going to be the key for governments over the next few months as they move through that recovery phase. cannot maintain these programs indefinitely. they do have to be withdrawn at some point. when they are withdrawn, there is a risk that if it happens too early, there is a significant uptick in job losses. at the very least, it leads to falling income flows for households. and this is going to be very, very difficult. a number of politicians, we have been saying for some time that shutting down the economies, that was in some regards the easy part, and the hard part is going to be navigating the recovery and getting the timing right. inevitably, not all governments
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are going to get it right. it is almost impossible to expect that. they will have to be nimble in response to conditions quickly. if they see that things have gone too soon, and perhaps they will have to provide additional support as needed. that is the challenge. it is going to be one that will run for quite some time. this is going to be something that is resolved not in three months but 12, 18, even 24 month process. shery: we do get monetary policy decisions this week. we are starting in china with the announcement of the lpr, and of course, we do have new zealand, thailand, as well as the philippines. they are all expected to hold steady at this point. does it make sense to leave and preserve sums policy space -- some policy space right now? sarah: in general, we think that the philippines central bank will maybe go on against the market.
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in terms of leaving something in the back pocket, this is not something central banks usually do. you want to fight the problem you're facing right now, and it's no good leaving policy on the table, as it were, if it means in the current environment, that that worsens the size of the downturn they are looking at. we have obviously seen from a number of central banks -- they have gone some way. they have usually gone to the edge of traditional monetary policy in terms of interest rate cut and the majority of cases have implemented nontraditional policy in addition to that and we are starting to see some of the emerging market central banks looked to be the same, to go all the way in terms of where monetary interest rate cuts can take them and perhaps even beyond. it does not make a lot of sense to leave them on the table. they are looking at a substantial contraction output that monetary policy could at the very least help to soften the blow and coverage. we would expect that central banks will respond to the
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maximum ability in their current environment. it is the policy as much as possible to support activity. shery: sarah hunter, thank you very much for joining us today with your insights. more on the outlook for china. economist joins us in the next hour plus we will hear from our next guest. a resurgence of coronavirus cases may be under the way -- underway in the u.s. with record new cases in the sunbelt. a low turnout at trump's tulsa rally as he tries to reset his reelection campaign. we will tell you why. this is bloomberg. ♪
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haidi: a quick check of the latest business flash headlines. the collapse of car demand means daimler is preparing to cut more jobs.
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chlamydia say positions will go by 2025 with the outsourcing of i.t. and r&d services. in november, daimler announced an initial 10,000 job losses by 2020 with spending on personnel set to fall more than $1.5 billion. daimler had almost 300,000 staff at the end of last year. theendo is retreating from 77 billion dollar mobile gaming arena after disappointing results deflated its ambitions. two years ago, smartphone gains would be a billion-dollar business with growth potential. last month, he said he is not looking to release many new mobile applications and will now focus on the switch council instead. bloomberg's told softbank's chip unit -- ahead of its chinese venture after he set up an investing firm that would compete with its own business in the mainland. sources say he launched authentec to invest in companies that use technology. it is a common move for chip
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firms to help fledgling companies. arm limited and its investor already had such a -- resurgence of coronavirus cases may be underway in the united states with record numbers of new infections across the sunbelt over the weekend. that news comes as president trump's rally in tulsa saw crowds well short of expectations as they tried to reboot a campaign shadowed by tumult in the white house and nationally. pres. trump: despite the fact aat we -- i -- have done phenomenal job with it, i shut down the united states to very people infected but all from china, in late january, which is much earlier than other people would have done it, if they would have done it at all. i said hundreds -- i saved hundreds of thousands of live.
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s. shery: let's get started with coronavirus cases really continuing to rise in california, arizona, and other states. >> that is exactly right. in some places, like california, you can say the state is in its second wave of infections. it sort of peaked earlier in the spring. back to the come sunbelt. cases are rising to levels we have never seen before. it really seems like some of the state that reopened their economies early have taken it on andchin this time around that would include oklahoma, where trump was last night. also florida, which has been very aggressive in the opening. it's government is a victim by of trump. we are seeing increased hospitalizations in some states. it is not just more testing, more cases being found. one thing we saw on friday, apple announcing they were closing stores across four
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states that had only reopened a few weeks ago. it's definitely having an impact on retail and just on the general mood i think in the united states because a lot of people, including the trump administration, have kind of written this off and want to move on. it is not over. in the meantime, he may drop out of his attempt to become prosecutor. this comes after some controversy and some of the hurdles are looking fairly insurmountable at this point. ros: a really interesting story that ran from friday night into today. it seems like jay clayton has basically been a corporate lawyer his whole career and suddenly became interested in becoming that prosecutor for the southern district of new york, and he got the attorney general and may be president trump on board with that. from thepushback
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person he sought to replace and some democrats in the senate and elsewhere, just wondering what exactly was going on. is au know, it prosecutorial office that investigates crimes. investigated some of trump's allies. definitely an interesting thing there. it looks like, in the senate, lindsey graham, a key senator in all of this. he does not want the nomination to go ahead. things can still change. u.s.-china tensions continue to rise and attorney general william barr had something interesting to say that u.s. businesses may be part of the problem. yes. very interesting comments from bar. something you are not necessarily expecting to hear from an attorney general and it
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sounded more like what mike pompeo, the secretary of state, and peter navarro, the trade advisor, has said over the months and the years, about how american companies are hurting the effort to basically keep china down and keep u.s. ascendance in the world economy. saying that they are putting profits ahead of nationalism. you know, many times, they would think that companies, you know, that they tend to be multinational and have companies all around the world, and do not see themselves as targets of the nationalistic, goal. interesting comments. we will see if they have any impact. , our: ros krasny washington editor with the latest. coming up, china is continuing to confront a new spike in cases. the decision to suspend imports of u.s. poultry, next. plus, do not miss our coverage of the global summit, starting
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on monday. the biggest names across finance, economics, and investing will be joining us. this is bloomberg. ♪
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>> the beginning of asian trading here on monday morning, getting the weekly u.s. futures overnight after a loss of about six cents of 1% when it comes to trading on wall street on friday. the s&p down about half of a percent, extending earlier losses. nikkei futures in singapore seeing a downside, as we contend with the stronger yen. one of the apple formers in the g10 space against the -- one of the out performers in the g10 space against the u.s. dollar. crude trading at about two tents of 10%, about under $40 per
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barrel. a bit of a pullback as we are watching more cases coming out of parts of the u.s. as globally fears of a second wave potentially are eating into demand. china is suspending poultry foods plant a tyson in arkansas where hundreds of people tested positive for covid-19. a, what are the details on the suspension and implications for global meet imports? importers --m customs officials and china say -- tyson had announced some 13% of its more than 3700 workers have tested positive for coronavirus at its facilities in
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arkansas and they added that 95% of those who tested positive were asymptomatic. from exportseasing -- and experts from he plans around the world because of the virus. in the u.s., dozens have died and there has been an uptick also in brazil and germany. actionsntinues to take to suspend imports based on covid cases being reported and this could undermine china's promised agricultural purchases as part of the phase one trade deal with the united states, which was already under pressure before this latest move. i also want to point out that this decision is a complete 180 from a few days ago when chinese officials had said it was unlikely that food be responsible for causing this latest outbreak in beijing. chinese customs official said it is taking the advice of international organizations, saying there is a low risk of imported food transmitting the
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virus, and no food restrictions will be imposed, but we are seeing a rapid change from that rhetoric just a few days ago. meantime, pepsico shutting a beijing plant. what do we know? selina: they said they found a case at one of its pepsico china food processing plants after finding a positive case. they are conducting tests on all employees and they have quarantined 480 people even all of the people have tested negative for the virus. that the in a post affected food processing plant produced a small quantity of its potato chips, and the chance of the virus surviving the process is very low. the backdrop is that beijing is pulling out all the stops to try to present -- to prevent further resurgence of the virus in the city, which has now passed 200
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infections. beijing has more than doubled its testing capabilities to one million people per day, and authorities have said that almost 2.3 million people have been tested for covid in the past week. selina wang in beijing. next, apple's developers conference kicks off later monday as it prepares to shift to its own chips and away from intel. what else may be in store, coming up. this is bloomberg. ♪
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♪ is daybreak asia, these are the first word headlines. the international monetary fund has further downgraded its view of the world economy after predicting the deepest recession in 100 years. they warned that the new revision may be more pessimistic than april, when they saw a global contraction of at least 3%. -- some countries may have has the words of the coronavirus. president trump campaign rally failed to mobilize his base. news outlets say that just over 6000 people turned out on saturday, filling less than one third of the center, far fewer than trump aides had set for tickets. the campaign blamed radical protesters for blocking entrances, but officials said
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the demonstrators had little impact. meanwhile, president trump is letting to restrict employment visas that could affect up to a quarter of a million people seeking to work in the u.s. he told fox news that he plans to put curbs on several different visa categories, including the h-1b program for high skilled workers and l1 for managers within companies. he said there will be very few exclusions. china confirmed it will override the local system, stoking tensions with protesters in hong kong. central government will only have jurisdiction over an extremely small number of cases. china will open a security office in hong kong supervised by beijing. 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 am karina mitchell. this is bloomberg. shery: let's turn to apple.
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they will be holding the opening keynote for its worldwide developers conference monday, and the biggest announcement might not be the look of the max but what is inside. apple is set to announce of the chips will change with a shift from intel. joining us is an analyst. always great having you with us. when can we assume this in sourcing to start? >> thank you for having me. i think the earliest the outsourcing would start would be 2021. 14% ofccounts about and if notebook market, they were to actually in source and use their own chips, they would have to rely on tsm.
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it takes six to nine months to qualify tsm for new chips, and tsmc to see some benefits in the middle of 2021. big of a boon for taiwan semiconductors and how big of a loss for intel? >> we expect these kind of changes to be slow. tsmcis were to take place, would see incremental revenue as much as one billion u.s. dollars. it's only 1% of what we expect to generate for revenue in 2021, but it could perhaps scale up as we look into 2022 and beyond. the revenue upside is quite small for tsm? >> yes.
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the transitions are slow. this is a very complicated manufacturing, you have to manufacturing, and then you start with a slow migration. the earliest that would happen would be middle of 2021, and it would account for only 1%, but perhaps it would scale up and in 2022.oming more the point i'm trying to raise is transitions don't happen overnight. if this is announced and gets underway, how do you predict the political cloud over this? the optics of moving this to asia, away from intel, and how do you see that playing out is a complication for apple? >> sure. there are two aspects to it, the political or headline. obviously tsmc is in the middle
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of these trade wars between u.s. and china. one thing i want to highlight, there is no second choice or second source. if apple, amazon, microsoft, manufacturing to build out the next generation of infrastructure, they have no choice but to rely on tsm. the same for huawei and other chinese companies that rely on tsm for contract manufacturing. tsm is at the crossroad but in reality, there is no other option. if you look at intel, they are outsourcing more than ever. intel has announced publicly as early as six or nine months ago that they would prefer to outsource to key leading foundries like tsm. there is this migration to tsm because they have become the leading silica and conductor mena -- silicon conductor
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manufacturer. out light of headlines or political debate, i don't see a second choice. in my opinion, tsmc has all of the power. what about intel? they have long been able to maintain market position in the service-based, so what happens if we get the arrival of these macs? could this change the industry itself? or thefuture of intel u companies are no longer -- the future is about cloud infrastructure. if you look at intel, qualcomm, todia, they have pivoted offer their comprehensive portfolio of products for cloud infrastructure.
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related to intel specifically, perhaps they have fallen behind with silica and conductor and effexor impute -- silicon conductor manufacturing. in 2021 they will introduce their second generation of five nanometer and next year it will migrate to 10 nanometers. there is a wide gap between tsm and everybody else when it comes to manufacturing. this helps intel to focus and put more resources on allowed in the which will have higher growth than notebook and pc's together. haidi: obviously the first half of this year was unexpectedly strong for the chip industry given we sell pc application as well as data center demand surge with the
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pandemic and working from home. you expect that strength to continue? actually have published many notes on this. toactually don't see covid drive significant upside to cloud infrastructure. keep in mind cloud infrastructure is all about distributed infrastructure, it's about maximizing utilization. we see 20/20 to be weighted half, mostlyrst the cloud spending in the first half. i think covid created some disruption in the supply chain but i don't think a covid is going to lead to significant upside. keep in mind the cloud infrastructure relies on -- there is a lot of virtualization helping small and medium-sized companies to enable workers to work from home. it doesn't really require a lot of additional brick-and-mortar
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and servers and storage to enable that. is beginning to materialize and help cloud infrastructure to deal with this. haidi: i want to get last thoughts on huawei and how difficult it will be for them to secure supply given tightening restrictions and pressure from the u.s. have sought assurances, but will it get more difficult? >> i think if you look at what has happened with huawei and have beenon, they accumulating inventory since 2018. this has happened recently. i think they have been building inventory. i think the pressure for huawei is more about how the
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restrictions will sustain into 2022. i think they have enough components to support their networking and smartphone business through the next year due to the inventory they have been building the past two years. a tariff and challenges between the u.s. and china in terms of negotiating sustain beyond 2021, there will be an issue. near term, i don't see any problem. it's more of a headline, a political slogan, but in reality, they have been building inventory for two years. much forank you very your insight. okers may beikt behind the low turnout at trumps rally, as teenagers rsvped without intending to attend. that is next. if you are away from a screen,
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on can find analysis bloomberg radio, broadcasting live from our studio in hong kong. onten from our app and bloomberg this is bloomberg. ♪
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♪ breaking news out of south korea, we are getting trade data for the first 20 days of the month and export numbers
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are falling 7.5% year on year. imports falling 12% year on year. this is a smaller fall than what we sell for the full month of may. this is coming after a slide of 24% year on year in may of exports, now only falling 7.5% year on year, imports falling 12% year on year. it seems the trade numbers are starting to stabilize. in the may numbers, we have seen pockets of resilience with the demand for semiconductors gaining ground. a new generation of social media users may have played a hand in the lower turnout at president trumps rally in tulsa. -erses of teenage tiktok ordering tickets without planning to attend. areuencers and users pivoting to political causes.
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our reporter is on the line from san francisco. this is a really interesting story. do we know at this point how many of those no-shows at the rally were in fact these people who actually got tickets and just did not show up? that the people signing up with no intention of going to the rally may have fueled a lot of the bragging from the trump campaign about what the attendance numbers would be and what the data haul from the registrations would look like. the main intent from these fansgers and korean pop was to cause that bragging that would lead to the disappointment we saw yesterday that the attendance was much smaller than expected. admissioneneral rally, first-come, first-served. so they weren't taking sees from other people, imagine you are
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planning to go to the rally and hearing from the campaign that almost one million people have registered and you know there are only 19,000 seats in the arena. it may have discouraged people from coming. haidi: the opposition has declared victory, even though, as you say, it is hard to quantify the number of people that would have signed up and did not turn up, right? think there is i a long-term effect you may see. justeenagers and democrats, opposition in general who provided email addresses, phone numbers, etc. to the trump campaign, that will mess up their data operation. the campaign relies on rallies and those kind of sign-ups to develop advertising targeting on facebook and google. people are giving them false information about who is
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interested in the campaign and that could cause them to lose money. another thing that they thought they could accomplish with this message. shery: we have seen the younger generation turning to social media and turning their focus into a more political campaign. do we see this as more widespread or just this one instance? sarah: we are seeing it certainly in the wake of the racial tension in the united states following the police killing of george floyd. this is a thing that we have seen happen on tiktok where previously it was not a social network that embraced politics. they are now starting to warm up, especially u.s. politics, and allow a lot of the viral campaigns -- one of the
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campaigns on this rally for instance, teenagers would take a video of themselves dancing in front of a screenshot of the rally reservation and tell other people to do the same as a duet with them. viral chains cause people to sign up for the rally and showing friends they were doing it. it became a meme on tiktok. haidi: our technology reporter with that fascinating story. let's get a quick check of the latest business flash headlines. isrican at her -- airlines looking for new financing to shore up liquidity after the coronavirus. they have sold $750 million worth of shares in the same amount and convertible notes. they are offering $1.5 billion in senior secured notes and taking half $1 billion as a loan.
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u.s. carriers are down more than 80% from this time last year. state bailout is at rest after only 30% of shareholders registered to vote. toy needed a 50% take up this means lufthansa needs a two thirds majority to approve the plan. dubai eased travel restrictions for tourists from july 7. visitors will be required to present proof they are coping negative or undergo testing at the airport. until next monday, the emirates will allow foreign rather it -- residents to leave under the same conditions. shery: once get a quick check on markets. we are seeing kiwi stocks falling for a third consecutive session. they are down 8/10 of 1%.
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this week, we get the rbnz policy decision, unlikely to be any change. sidney futures under pressure, down 1.3%. same for nikkei futures, under pressure. we have a japanese yen seeing the biggest to we could gain since march on haven demand. we see a resurgence in coronavirus cases globally. last week, we had japan's key inflation gains continuing to fall in may. kospi futures higher to tens of 2%. drop againsteekly the u.s. dollar escalating korean tensions. not to mention we just got export numbers out of south korea. days ofr the first 20 june, exports fell 7.5%. this is a smaller decline than for the whole month of may, when
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it's all 24%. what is interesting is the divergence in exports to china and the u.s. exports to china rising 14 point 5% and exports to the u.s. declining 10%. you can see the diverging recoveries happening in those economies. also, some resilience when it comes to chip experts -- exports rising to .10% year on year -- over 2% year on year. as economies up, pent upthere could be consumer demand in search of an outlet. we will also speak with the aboutsor on her views china overriding hong kong security law. we also have the opening in sydney and tokyo, coming up next. asian markets looking to start
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the trading week on the back foot. this is bloomberg. ♪ this is bloomberg. ♪
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♪ >> welcome to "daybreak: asia." a straley a, japan and south korea have just opened for trade. chinap stories this hour, says it security law will override the legal system in hong kong. pro-democracy campaigners in the city say they are preparing for jail. global coronavirus cases approach 9 million with 465,000 people dead. apple is re-closing some u.s. stores while pepsi shutters a
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food plant in beijing. singapore planning for the post virus world with innovation beyond the immediate support announcer struggling businesses. shery: let's get a quick check of markets coming back online. we are seeing japan, the nikkei and topix losing ground. we have a japanese yen holding steady at around the 106 level, below the 107 level. we've seen a lot of strength for the japanese yen recently, just saw its biggest two-week gain since march we have some haven demand from a resurgence in global coronavirus cases. keep an eye on the japanese government bond yields markets are watching whether the boj will increase bond purchases, including superlong bonds what in announces its july plans.
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the kospi down. we got the first 20 days of trade numbers from korea. fall was expected and we had rising exports to china, rising semiconductor exports as well. supporting the trade numbers. when it comes to the korean won at the moment, we are seeing it weakening against the u.s. dollar and the korean won has seen its first weekly drop in more than three weeks on escalating tensions between the two korea's. haidi: we're continuing to watch developments in australia as we have restrictions extended because of another surge in cases. we're seeing downside when it comes to the start of trading in sydney, about a quarter of 1% lower. someone is saying the country
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when in a crisis in a better position than others. we will continue to watch the control, really in cruise control for the last 47 days. were seeing the aussie dollar faltering in early trade, along with weakness in the kiwi as risk pools back from this market. the aussie 10 year yield largely unchanged. downside when it comes to trading in new zealand as well. our next guest says volatility should continue to pick up as markets continue to digest a second wave. joining us is a portfolio manager. let start with our question of the day, the broader theme we are looking at when it comes to optics. itt kind of recovery, the shape or sector or geography, do you think the market is pricing itself for? i think based on the share price performance in the last month or so or two months the
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aw, certainly indicating v-shaped recovery is being priced in. and clearly some sectors have done more so, particularly those sectors impacted significantly during the shutdown have now gain in therice last few months. v-shaped seems to be the case but the question is, the path to recovery, whether it will be as smooth. it seems quite challenging to see some of those sectors continue to outperform. at the latestking note from j.p. morgan, saying discriminate buying would have done well in april and probably intimate as well, trying to get
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more selective. what sectors are stocks would you be looking at given the stretch valuations and return of volatility? jun bei: i think that's a good question. , in the lasttrying few months, trying to return to a new normal. essentially a normal world where the consumer, there will be a level of pent-up demand spent. but the consumer will be cautious given we are in the middle of a recession and the recovery road is going to be treacherous and long. for the sectors we do see immediate benefit, that will be discretionary but selective on what you pay for those names, because consumers will spend but they will falter. we will have to see more confidence, more indication of how that might last.
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we could see corporate to staff spending as well as consumer confidence improves, but that still unknown at this point. and in terms of the second wave, it certainly poses a lot of questions over whether some of that confidence will continue the quality sectors, health care sectors actually have been left behind, which we do see a bit of some ofity, just given those businesses will post some of the biggest profits. so i think it is a balanced approach in the market and be cautious. shery: to your point on corporate spending, how important is this part of the equation? we can have consumer sentiment, but when it comes to corporate and business investment, we really are not seeing the rebound we were expecting with corporate borrowing surging in the first quarter. how important is this part of the equation to really keep this level of the market sustainable? jun bei: i think it will be very
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important, almost crucial. at this point, a lot of jobs really, or employment, are kept there because of government support. and short-term stimulus. corporates need to gain enough confidence of sustained recovery from the consumer so they can then go out and spend and create jobs.obs than the -- then that will be sustainable and we will see the earnings for corporates sustainable. it is incredibly important to see them start feeling confident about the world. shery: given what we are seeing in the environment, it is not surprising, this gtv chart on the bloomberg, showing a rush for havens. , kinde seen this sort of of divergence in the bond and stock markets. is it time, given uncertainty,
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to take some profit across some of the parts of the stock market that look overbought at the moment? think thisah, i market, because of volatility, lends itself to be tactical in terms of portfolio positioning. you should take profit in companies that have done well. and earnings are probably going to experience a u-shaped or l-shaped recovery. for a lot of those businesses, earnings will take a long time to come back. the share price returning, you are lucky and some places. is incredibly active. active managers to outperform in this condition. haidi: what are your views as to
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where the u.s. dollar goes from here? forcing a return strength as there are concerns about a second wave taking hold. what does that mean for emerging markets in asia? jun bei: i think the u.s. dollars as well as confidence across the emerging asian markets are all about whether they will return to normal. if we will take six to 12 months, we believe we will slowly move toward a normal andd, slightly different, there is enough stimulus to support us there. in these spaces, you see opportunities for emerging asia to outperform the u.s. dollar, the weekend. weakenthe u.s. dollar to . pastquity market on the two recovery, but tactically you see some weakness across the
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asian market and strength in the u.s. dollar just on the potential short-term. take a longer term view, there should be a return to normal. shery: always great having you with us. thank you. big guest later today, goldman sachs passes -- asset management's manager. , all ahead, another guest chairman and ceo of the korean investment corporation. plus, singapore setting aside more than $14 billion to supercharge innovation. details on that later. this is bloomberg. ♪
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♪ here is one stock we are watching this morning, toshiba right now rising at the highest level since mid february after local media reports it plans to cell shares. -- they are planning to gradually sell their stake in a push to distance itself from the volatile semiconductor industry. they gained ground this morning, 2.6% to the outside, the highest level since mid february. are continuing to watch the aussie dollar, which is seeing more of an extended weakness, 6221 is where we are trading at the moment, as the rba governor is speaking at the australian corporate leadership form that kicks off this morning.
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it is held virtually. he was saying he would like a lower aussie dollar to help lift inflation and it is hard to argue with him that the aussie is overvalued. a few days ago, we were looking at the 77 level. when it comes to monetary policy framework, he says it's not time to make changes. it's not clear a better policy framework could be found and we are likely to see interest rates at current levels, and fact staying there for years. seeng it is likely we will threats regard us of the framework. yieldg of the rba in curve control in cruise control for 47 days now. bloomberg subscribers can continue watching, listening to that live on the bloomberg. you can find the other injuries from the week as well, some of the events you have missed out on.
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let's get the first word headlines. karina: coronavirus cases continue to rise around the world with total infections above 8.8 million, with 406 to 5000 people dead. cases and several u.s. states spiked with one infectious disease researcher warning about cases on the horizon. spain has been hard-hit by the pandemic but is now lifting restrictions on visitors from the eu. trump'se, president first post lockdown campaign rally failed to mobilize his base. news outlets at the event said just over 6000 people turned up on saturday, filling less than one third of the center, and far fewer seats than trump aides said had applied for tickets. campaign blames radical protesters for blocking entrances but reporters say the 100 or so demonstrators outside had little impact. china confirms its proposed security law for hong kong will override the local system,
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further stoking tensions with protesters in the city, and with the u.s. and other western nations. they say the central government will only have jurisdiction over an extremely small number of cases under what it calls specific circumstances. china will open another security office in hong kong supervised by beijing. north korea upping the stakes eoul in propaganda. despite and -- does announcing -- despite denouncing his , a liaison office was destroyed last week. 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. korea,staying on south the sovereign wealth fund boss says a potential second wave of
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coronavirus could cause fresh market turbulence because the central bank has few policy weapons left to deploy. that disruption to supply chains also means it will be living in a less globalized world. thatfirmly believe covid-19 is a paradigm shift. investmentlooking at relating to infrastructure and supply chain and health care. i think these already play a big part in how our lives will change. [indiscernible] we need infrastructure and to focus on these. toneed to pay more attention
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social factors. for the supply chain, it looks like less globalization. companies want to secure the mystical regional suppliers. -- secure more domestic regional suppliers. andre in an aging society we just went through a pandemic. things need to improve. , we will care more about the health care industry, especially biotech. haidi: how does that get threatened with geopolitical tensions with so much focus on tech, 5g, ai? is there a concern about the reignition of tensions, we just heard trump said a complete economic decoupling as possible between china and the u.s..
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>> china wants to set up their own technology world. builds. also trying to their own technology world. i believe that political tensions, it might be a one-time .vent after the u.s. presidential look for you might more cooperation rather than deglobalization. sense, the political tension might not be a long-term threat. haidi: obviously the first six months of 2020 were to know
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one's predictions. what are your predictions for the second half and what are the risks you are supposed to worry about for the next six months? >> i still believe that given such a strong commitment from , we canral bank overcome in the second half. but you have to be cautious and ifigh-level debt there is a second wave or second outside, the problem move -- is a policy [indiscernible] even a minus rate.
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i am not quite sure if we will have more market turbulence. the koreat was investment corp. ceo speaking to me earlier. he will be speaking at the global event. live coverage continues throughout the down monday with guests including steve schwarzman from blackstone, and others. david rubenstein will sit down with blackman -- bill ackman. coming up, singapore is facing calls to hold off its elections amid concerns about coronavirus. we will get the latest, next. this is bloomberg. ♪
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singapore is positioning itself for a post covid war with massive innovation over and above the amount already giving to -- to help the economy rebound. there are calls to postpone their general election. our reporter joins us from singapore with more details. when can we expect the date to be announced? michelle: any day now. we are waiting for a specific date to be announced. we know it will be a nine-day campaigning period typically, and then a cooling-off period. there has been a lot of pressure to put off not just her opposition parties but from a regional group, parties for human rights. they are saying we don't need to rush us, it is the middle of a pandemic, we just started phase two of the reopening and it is a fragile time and you don't need to hold the elections until
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april, 2021. the main ruling party has been saying there is a need to move forward to get this done, to get this going, but there is a little bit of a struggle to decide on a date. we know that south korea held general elections in april and seemed to do it fairly successfully, had robust participation, so there is a model recently to look at, but still no date yet. let's be honest, is not as though they are really in danger of losing, so what is holding them back? there are a lot of questions around the conduct of the election to make sure it is fair, especially given the parameters we have to be under right now. phase two of the reopening started on friday. that has influenced how the campaign will go when we get into that period. in groups ofgate five or fewer, and that will impact the rules around who can
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campaign. five or fewer can be canvassed for support in those groups. there will be no rallies, no shaking of hands, everybody is wearing masks and public still, it is mandatory. there will be no election night gathering. it's quite a bit friend. online -- it is quite a bit different. online contain -- campaigning will continue. there are some accommodations being made but i think the big fear for some people is that there is already expected to be a rise in confirmed cases, the government has acknowledged having people congregate in five or fewer, that's the price you pay, there will probably be more cases, but they're trying to keep it at a minimum and we will see how those numbers move forward and impact the timing of the election and how it is conducted. shery: tell us a little bit about singapore's plans to singapore in -- to supercharge innovation. talking about investments of more than $14 billion at this point. michelle: yeah.
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the two words i keep hearing and we have heard since the start of this is "emergent stronger," that has been there #in terms of the government's message in moving the economy forward. we got the last of the ministerial speeches on friday and yes, they are going to invest more. $20 billion toward research and typeopment in generation industries, health and biomedical, climate change, ai, in a five-year plan. they're deftly going forward with the message and they put a lot of money ford but they are -- money forward but they are doing even more. this is why they are the most competitive nation in the world to judge by recent polls. our reporter with the latest. next, what the future holds for hong kong after beijing confirmed it will have the power to override the city's independent legal system.
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this is bloomberg. ♪ you doing okay?
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haidi: let's get a check on the early check -- on the trading. comes to the it start of trading futures. .5%.about we have seen the kospi up with a decline in the south korean exploits. still showing declines there. down about .8%. we are hearing a comment, maintaining whatever that mullet -- monetary policy framework.
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thexpressed discomfort with levels of the aussie dollar, saying he would like to see it never. we are continuing to watch weakness when it comes to treating in new zealand as well. hasa has confirmed that it proposed a law that would allow beijing to override the system. it gives the government final say in interpreting the law with a small number of security cases. joining us now is the deputy head of the department. in addition to the standing committee being able to interpret the law as it pleases, there will be separate departments set up to handle such cases. how much of this is leading to a , given that wen know the interpretation when it
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comes to national security? >> thank you very much. understand that not justovers sovereignty but security and economic development. be fears that the erodeal security would the freedoms that distinguish hong kong from mainland china. there has been a lot of rhetoric law.d the to discern whether this is the case, to discern what exactly is the change in the nature of the relationship. to answer this question, we need
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to understand that back in 1999, theythey accepted that could accept it at any time, the liberal nature had already changed. from that moment on, we already know that. entirely on the interpretation. what i am trying to say is that it is not news. change is that it has drastically increased whereby beijing could use that power. wasre the security role
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introduced, beijing could only ,ntervene in narrow situations thereby allowing another interpretation. toopens up a window interfere in wide-ranging aspects of people's lives. the law potentially penetrates a and thectivities character. beijing saying that when he was the law frequently or arbitrarily, but it could. the key position is that we know that the judges hearing the case will have to be assigned by the chief executive. executive is
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accountable and appointed by beijing. there is going to be a national security office in hong kong and a national security commission in hong kong that would be accountable to beijing. influence likely to the execution, not just the interpretation but the execution of the law, both directly and indirect the. -- indirectly. haidi: could you give us some examples of how this could potential widen? we heard democrat saying that we are prepared to go to jail. we know that is the most straightforward implication, but how would it affect corporate law? think beijing has enormous
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vested interests. usednch is that it will be with a lot of restraint on the period.beijing in.e people really dial advocates are advocated -- advocates against sanctions on hong kong. the relative relief from this that a is that we know law is unlikely to be used to target businesses in the short run, however there is an important caveat.
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we know the definitions of national security in china is very broad. beijing did not fromin or shy away targeting individuals. protect itser to economic interests. law tomight use the detrimentally use the law against hong kong. that exposes the products on a large scale that affects the credibility. just to give one example. yousef: we do -- shery: we do have breaking news
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out of china. reporting new coronavirus cases. when it comes to the number of total infections, the total is of 236. this includes the nine local coronavirus cases that we are seeing in beijing. we have seen china blocking poultry from the tysons food plant where many workers have tested positive. the recent jump in coronavirus cases was after that two months. your train of thought when it comes to potentially, who could be affected? this legislation is being worked on in beijing. potentially in the beginning, we will not see businesses targeted, but we could see r&d targeted.
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include individuals in hong kong as they continue with financial research that could be harmful for some companies? could they fall within the criteria that could get them affected -- infected? is that there could where u.s.amples companies that are competitive to key enterprises of china. just from the experience of how security laws could be used -- it is not difficult to think of scenarios where it could be used against investors. definition of national security is still lie
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political willd change. businesses are not completely safe on this law. wille short run, the law not be used against investors. in the short run, beijing will not need to use the law, but it is all very difficult and volatile. especially with the u.s. china trade war in the background. post covidnow what world is going to look like. uncertainty of not knowing when the law could be used. it is worrying. in the long run -- in the short
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run i think it will be fine, but in the long run, the law is there and it could be used against them. shery: great to have you with us. coming up next, china reveals its key reference rate. we will ask what to watch. this is bloomberg. ♪
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daybreak asia. the international monetary fund has further downgraded just two months after predicting the deepest recession in 10 years. it might be even more pessimistic than april's statement. the only bright spot is the feeling that some countries might have passed the worst of the virus. planning to restrict employment visas for people seeking work in the last on puttinghe plans holds on several. will be very few exclusions. boltonall book by john is making more headlines ahead
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of its publication. he is reported to have said that he will not vote for president trump in november but will support joe biden instead. bolton said he would vote for a republican, but not trump. itself.s contrasting beijing originally stood back from the treaty, which regulates cross-border sales and conventional weapons, but beijing decided to sign on, following president trump's decision to withdraw. more than 100 nations have signed on so far. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. the pboc will announce its latest settings in the next hour.
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central banks in new zealand, the philippines and thailand are expected to hold steady, monitoring the impact on the economy. for them to move further down the road. great to have you with us. is this the right time for the central banks to hold steady and preserve some policy space? because hard to judge looking at the trajectory from may, they had a very visible lead. the pboc might opt to stay on hold and watch how it plays out for the next quarter. , we arether hand
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extension forig the rest of the year, fiscal deficit. it might take a little bit of a fax age of the margin. this point, i think it needs to be observed how fast it is acting. shery: what have we seen from the previous rate cuts? have they really helped to lower corporate funding costs at this point? thee are still waiting for first and second quarter reports. article lastued an week. it looks like they have been .eclining
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however, i think part of this was facilitated by pboc lending facility with a heavily discounted rate. brought down the average funding path by a lot as well. much of a concern is ?he latest not down in beijing the second wave across china and how much do you ask that way on the pace of the recovery? that is ase, negative, but i do not think anybody expected no second wave at all. it is a little early, although we do have some clarity but it is a little early to feel the impact of it. because of the much more rapid reaction in the lockdown and they carry out
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blanket testing for hundreds of thousands of people in the matter of a week. some reporting cases and of aging are very low. magnitudes smaller than the first one. a good sense of economic recovery. the impact where it is not down. given over to the rest of the country yet, fingers crossed. haidi: expectations for the yuan? looking atactually it strengthening versus the dollar in the second half of the year.
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marginally, monitoring using. switching to more visible. dollar, it is weakening as well. that forecasts a stronger yuan. about joining us to talk the low rate. we have more on china's economy ahead. see floody will not style liquidity injections from the pboc. shery: we have a little more clarity on what toshiba plans to do. they are announcing that they have most to teach it intention to remain in the in re business, after local media reported that they were going to gradually and toshibatate
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memory. a push to denton -- distance themselves, saying they will return most of the monetization there to shareholders and plans undertake proactive portfolio screenwriting. more to come. this is bloomberg. ♪
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haidi: let's get a quick check of the latest headlines. nintendo is retreating from the mobile gaming arena after disappointing results. saidears ago they smartphone games would be a billion-dollar business with growth potential. he is not planning to announce anymore and will switch to the switch consul instead. -- console instead. sources say allen move -- is a common move to help out fledgling companies. once seen as a rival to starbucks, it is to hold an etn following claims of fraudulent numbers.
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board members under threat include dependent director sean. he is part of the order committee. >> we have breaking news right now. thewirecard is withdrawing preliminary results of the first quarter of 2020. they are saying there is a prevailing likelihood that 1.9 billion euros does not exist. surrounding. ofy have been accused accounting irregularities. than $2o locate more billion, about a quarter of its balance sheet. they have now withdrawn preliminary results for the first quarter of 2020 and are
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withdrawing their culinary results saying there is a likelihood that the 1.9 billion euros does not exist. we have also heard on the that itne central bank did not enter its financial system. what exactly are they saying right now? are conducting their own investigation, but what he is saying, at the initial report is that none of the missing 2.1 billion from wirecard entered the philippines would support that perhaps that many does not exist. , he message to reporters said that these banks sent on friday that they did not have a
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andtionship with wirecard that a rogue employee falsified documents. saying that these financial of theseused the news major banks in the philippines in an attempt to cover their tracks. up missing funds which made a quarter of wirecard's balance to quitompted the ceo last week on that stunning news that billions had gone missing and could not be located. while we are hearing is that a document that appeared to show a rate was found to be bogus and possibly part of the fraud. what did we learn about the former boss and his shares in the company? ceo -- it is a
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stake that he financed by borrowing against the stock's value. this is a person close to the battery. -- batter. it plunged 72% after news that the money was missing became public. it triggered a liquidation of the shares pledged as collateral. with the latest in this developing story. with thee speaking head of research ahead of the market open in china. which sectors will need the chinese recovery. from thell be hearing asset management about options that investors have in the post covid-19 era.
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much more to come. this is bloomberg. ♪
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>> it is 9 a.m. in beijing and shanghai. welcome to bloomberg markets china open. we are counting down to the first trading session of the week on the chinese mainland and in hong kong. your top stories this monday. --na confirms its security will overwrite six systems in hong kong. pro-democracy campaigners say they are preparing. >> global coronavirus ces


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