Skip to main content

tv   Bloomberg Markets Asia  Bloomberg  January 26, 2021 9:00pm-11:00pm EST

9:00 pm
9:01 pm
>> it's just past 10:00 a.m. in hong kong. welcome to "bloomberg markets: asia." i'm david ingalls. >> i am haslinda amin. china delivers more signs that a recovery is on track. industrial profits rose for an eighth straight month in december, signaling demand remains robust. david: asia trades mixed as we speak, slightly better as traders await the fed's first decision of the year. jay powell is expected to repeat, no early change in policy. haslinda: the outlook for aviation in asia, airlines are
9:02 pm
hoping vaccines will bring a travel boost by lunar new year. david: that's a very good jumping off point to when you look at these markets right now. do we need to start rethinking many of the assumptions we had a few weeks back? when you talk about the recovery, we can't even talk about having the olympics in six months from now. what goes into these forecasts? how much of a degree of confidence can we attach to these, especially beyond six months or so? as you can see, these money market rates, it's your big story in china with your overnight rate hitting 2.9. that's the highest in about five years. the peak was in 2019. have a look at u.s. futures. in terms of valuations in the asia-pacific. we are at least at 15-year
9:03 pm
highs. government bonds, all the way down to china, this latest note out of bank of america where they are saying in a couple of years, we might hit a ceiling of 0.75%. it doesn't tell you a -- take a rocket scientist to tell you we are far from that market. the pboc, very much in focus, the comments that they are in no rush to remove stimulus, but they are also looking at risks, which means they might be tilting the other way as the economy recovers on the chinese mainland. let's get over to karina mitchell. she's in new york. karina: the imf is raising its forecast for global growth, betting the vaccine will offset the continuing virus fallout. mobile gdp will rise 5.5% in
9:04 pm
2021, more than its on october. the improving u.s. economy is seen beating expectations for the eu and u.k. in other news, the world health organization is stepping up its attack on rich nations over covid vaccines, calling on governments to ensure poor countries have access to shots. the renewed criticism comes as global virus infections top 100 million with the u.k. becoming the first european country to record 100,000 deaths. the who says wealth a governments must do more to help poor nations. hsbc says it is committed to hong kong and denies it has become a tool of the authorities in china. ceo noel quinn was fielding questions from british mps, saying the bank had no option other than to close the account of a local hong kong lawmaker.
9:05 pm
quinn says hsbc is trying to stay out of politics while doing right by its customers. >> if the question was, am i willing to walk away from hong kong, the answer is no. we are to committed as an institution through our heritage and history. we believe firmly in the economy and community, and we want to help it develop. karina: global news 24 hours a day on air and on bloombergquint take powered by more than 2700 journalists and analysts in over 120 countries. haslinda: let's get back to the market action. asian stocks saw their biggest slide into months yesterday. is it apprehension as we wait for powell and as investors mull over the situation with the virus and vexing? >> all of those things are
9:06 pm
playing a part. people are uncertain about what is the most important thing jumping on. people were probably a bit relieved seen the overnight performance of european and american stocks. it was much better than what we saw in asia tuesday. as you say, we are expecting a reassuring performance from the fed. short-term chinese rates are pretty high. the seven-day repo rate is trending upward. we are seeing a little bit of pressure coming into mainland stocks on the back of that. that is probably something we need to talk about a lot more, where china stands on monetary policy. david: do we have more clarity
9:07 pm
on that? i want to build on what you just mentioned. i think we can get a chart up of the 20-day moving average. the trend is still to the upside, but we have said -- have had some comments, looking at risk, but they are not going to remove stimulus as quickly as some people might be expecting. how do you interpret that? mark: from a traders point of view, it's a question of no smoke without fire. it's a very significant change, and traders are already taking that on board. you can see the interest rate swap market in china, rates are creeping higher. traders are starting to price in the fact that the pboc is probably shifting from last year where they were clearly in neutral policy.
9:08 pm
they certainly are not ready to raise official rates yet, but they clearly are thinking about the time when they need to have a slightly more restrictive monetary policy. one day, that means they are going to increase interest rates. i think one of the other things you can see is when the pandemic came last year, before that happened, china was in of the process of reducing leverage in the financial system. they put it on hold. they put a lot of measures to help the economy. it's not a big leap of faith to assume they want to go back to that. in some respects, you might argue that more leverage has come into china's financial system. for authorities to want to come back and reduce that leverage, it's something you would expect to see in the months ahead. david: as the economy improves, the underlying story is it is getting better in china, and
9:09 pm
they are probably only having this conversation only on the mainland. be sure to check out the work of our bloomberg markets live blog. i'm going to get to that sometime this year. real-time commentary on the days market action as it happens on your bloomberg. still ahead, we discuss the challenge of getting vaccines to the world's poorest countries, and the politics creating some hurdles. the duke global health information center is joining us to talk about this in our equality segment. haslinda: up next, chinese airlines are hoping for a turnaround in fortunes during the lunar new year holiday, but with virus numbers climbing, is that a flight of fancy? our analyst is next. this is bloomberg. ♪
9:10 pm
so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business. wanna lose weight and be healthier? it's time for aerotrainer. a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time. it allows for over 20 exercises. do the aerotrainer super crunch, push ups, aero squat. it inflates in 30 seconds. aerotrainer is tested to support over 500 pounds. lose weight, look great, and be healthy.
9:11 pm
go to aerotrainer.com. that's a-e-r-o trainer.com.
9:12 pm
haslinda: you are watching "bloomberg markets: asia." china is said to see lunar celebrations this year -- lunar new year celebrations this year. the ministry of transport estimates 1.7 billion trips will be made over the 40-day travel rush which begins tomorrow. that is up 15% from last year when lockdowns were in effect across the nation, but that is still down a massive 40% from 2019. for chinese airlines, that drop in demand is combining with falling airfares to cause a cloud over their outlook. according to jp morgan, flight activity has eased ahead of the holiday period at a time with a
9:13 pm
surge of movement. david: what does that mean, i guess, for equity markets? our next guest has a buy rating on chinese airlines. tuning us to discuss -- joining us to discuss is qualcomm's international travel analyst. we need to start seasonal. lunar new year is a big-time when one billion trips is typical. what are your expectations for this year? guest: unfortunately, with the resurgence of the pandemic especially in mainland china, i think this year's lunar new year will be disappointing for the airlines. we are expecting a rather large drop in demand from what we forecasted earlier, and all of
9:14 pm
this means that instead of chinese mainland traffic returning to what we saw in 2019, by january, february, we are expecting a full recovery by the second quarter or later. this is a much more delayed timeline than what we thought, and does this -- and this does mean chinese airlines will be trending lower than what we expected, as well. david: you still have a buy recommendation for all three. put that together with at some point you are going to have to revise these revenue forecasts lower. luya: we do have a buy recommendation, and we think in the long term, even considering the full year of 2021, we think the outlook for chinese airlines is optimistic. the only issue right now is it's a short-term thing. first quarter and into second quarter, we might see a little bit of a decreased performance in shares and revenue.
9:15 pm
but if we are looking at the full year, we are expecting vaccines by the full year -- second half. we are seeing a fast recovery at least in the mainland market. it's a much better picture than what we saw in 2020. haslinda: what about cathay, luya? given the on-again, off-again restrictions we are seeing in hong kong, it's still an issue. luya: we did upgrade cathay when we thought there would be more of a boost, at least from the vaccine distribution, and now we are seeing unfortunately that is a little bit restricted because of the quarantine measures. overall with chinese airlines, we think the full year for cathay pacific is better than 2020, and we are looking at the long-term potential. cathay is looking at a lot fewer
9:16 pm
competitors in the long run, and they also have very strong liquidity compared to a lo years -- peers. they are still very well-positioned. the only issue is that little bump we were expecting from vaccine distribution is going to be a lot lower due to the quarantine. haslinda: there is likely another bump, as well. crew quarantine. what does it mean for cathay's cash? luya: cathay pacific forecasted something like 300 million hong kong dollars on top of their current cash. to be honest, it puts them exactly back to where they were at the start of 2020 before restructuring. this quarantine measure erases the savings they made from the massive restructuring they
9:17 pm
undertook last year. it's unfortunate, but cathay pacific said they are looking into different measures. they are looking to schedule things so their cargo and passenger businesses will not be affected. the 14-day quarantine, the seven-day medical surveillance, a lot of it is impactful for a company whose staff has been cut down since last year. david: we are just flashing this on the screen. our guys at bloomberg intelligence are estimating, on liquidity, they are good through the end of april 2022. assuming nothing changes, of course, between now and then, there will be no need for cathay to raise any cash? luya: our current estimates do place at current liquidity, they have enough money until the end of this year. if we are looking at something like the market isn't recovering
9:18 pm
as quickly as the company hopes it might, we might look at more fundraising measures may be around the end of this year, but in terms of liquidity, they have enough until the end of this year and into 2022, as well. we are expecting vaccine distribution to gain speed. i would say that cathay has enough room to breathe in terms of liquidity. haslinda: the recovery has been slower than expected. people were expecting a recovery by summer. that's not going to happen. will that mean consolidation in the aviation sector? will these smaller players go bankrupt? luya: within a hong kong specifically, there aren't many smaller players. it's been a tough year for hong kong's aviation market. we've seen the smaller airlines
9:19 pm
cut down on operations or be absorbed wholesale. for hong kong, i don't know how much it can restructure and change, but for regional aviation, definitely there will be acquisitions. as it stands, the entire industry is essentially too big for the market right now. as a result, a lot of the bigger airlines with the bigger cash reserves, they will buy it from the smaller ones, and the smaller ones will exit the market or be acquired. we are going to be looking at fewer airlines to choose from. david: very quickly, i never thought i was going to say this. i miss eating airline food. when do you think the next time is going to be for that? luya: right now, we are all really desperate to get back in
9:20 pm
the air. my estimates for global travel, any kind of international travel, by the second half of this year in a hong kong, there might be some signs of a slow move into that area. there will be systems in place. hopefully, it will be fairly easy for people like you and me. haslinda: hoping against hope, thank you so much for your insights. plenty more ahead. this is bloomberg. ♪
9:21 pm
9:22 pm
haslinda: one company in focus as trading begins will be softbank after the announcement
9:23 pm
that the chairman of the groups japanese mobile unit is stepping down. we are joined by senior analyst anti-alive. is this a good or bad thing? >> i would take it as a positive sign that softbank is more aware of potential conflict of interest that he has an influential role in the parent company and the subsidiary. it could open more opportunities for executives to assume responsibility to look after minority investor interest. david: that's the big picture. in terms of day to day operations, i would even say medium-term strategy, are you expecting any changes because of this? guest: before this announcement,
9:24 pm
the company is quite easy with a lot of activities. softbank group has been paring down its stake in the subsidiary. they are pretty much done with the divestment. it's good to have some stability in terms of the ownership structure. this integration could be positive for the company in the sense that they can attract more smartphone users, and with all the government pressure in cutting mobile prices, integration can help softbank diversify its portfolio and alleviate pressure by expanding into internet services, as well.
9:25 pm
haslinda: what is the outlook for profitability for the unity? what will drive growth? guest: the m&a angle would be unique for softbank corp. also, kb b.i.. at the same time, even though he's no longer the chairman, he still has a lot of business ties with the vision fund. there could be opportunities for softbank to expand its enterprises. that's one of the growth areas softbank corp. has.
9:26 pm
david: anthea lai, talking about the change that might come for softbank. it reminds me of that cat's evensong -- cat stevens song. "son, it's time to make a change." we are about an hour into trading on the chinese mainland, the hang seng down about one third of 1%. watch what happens in the mainland on the back of this further withdrawal of liquidity. we will talk more about that in a couple of minutes. four basis points above zero. the yen has basically been stuck. it's very close to historic lows or near historic lows. we are slowly getting to the thick of earnings season in japan. the bottom two are scheduled to report earnings.
9:27 pm
here we go. 1/10 of 1% as we head into the break. there's plenty more ahead. keep it right here. this is bloomberg. ♪
9:28 pm
9:29 pm
david: welcome back. it is 10:29 in hong kong. 9:29 if you are watching us out of new york. we will get you updated on things happening around the world. anthony blinken has been confirmed as the new secretary of state, giving the long-standing biden aid the task of restarting nuclear talks with iran, restoring trust with u.s. allies, and confronting an increasingly bullish china and russia. the former deputy secretary was approved by 78-22.
9:30 pm
he has pledged a bipartisan approach to the job as america's top diplomat. staying on the subject, the new administration is warning it needs aggressive steps to counter what it calls unfair trade practices from china. joe biden's pick for commerce secretary gina raimondo is pledging to respond to policies that hurt american workers and review trump era strategy, but declined to be specific. her comments echo those of other biden officials. >> china has clearly behaved in ways that are anticompetitive, dumping cheap steel and aluminum into america, which hurts american workers and hurts the ability of our companies to compete. should i be confirmed, i plan to be very aggressive in helping americans compete against the unfair practices of china.
9:31 pm
haslinda: clashes erupted at the famous red fort in new delhi as protests against india's new agricultural laws escalated. reformers had permission to rally, but rising tensions a triggered passions and the firing of teargas. the home ministry suspended mobile internet services in parts of delhi with several subway stations closed. the government has proposed more talks moving forward. in vietnam, the country's choosing new leaders and laying out a new five-year plan and says closer ties with the u.s. are more important for growth and to counter the rise of china. the congress will announce its new lineup next month with the goal of making vietnam and industrialized economy in about 10 years. hanoi once growth of 7% and per capita gdp up $7,500. those were your first word headlines. has? haslinda: i'm looking at
9:32 pm
markets, dave. asian markets, treading water, investors waiting to see what powell says, whether he will give an indication or not when he will taper. down about 1/10 of 1%. the imf, cutting its 2021 china growth estimate to 8.1% from 8.2%, still a strong economic rebound. looking at the hang seng, up by about 1/10 of 1%. flip the page. in terms of the fx space, we take a look at the dollar ahead of the fed meeting, and the yuan is up more than 1.5% versus the dollar since december, boosted by china's recovery. dave? david: let's talk about that in
9:33 pm
china. that makes a great jumping off point when you look at the pboc and what they are doing, repeating their promise to keep risks under control in the country. let's bring in kathleen hays or to make sense of this. somewhat conflicting signals may be? on the one hand, he said one thing, but the money market rates doing another. how should we interpret these things? kathleen: i would say money markets are nervous because the chinese economy has picked up so nicely that they are figuring, isn't the pboc going to say, we need to remove stimulus? yi gang, he's the governor of the people's bank of china, said again that they are pledging they won't prematurely start removing stimulus. they want the economy to keep growing, and he also mentioned they are carefully managing debt risk.
9:34 pm
this is something that maybe isn't so new, but markets are nervous. let's hear it in yi gang's word. >> looking forward, our monetary policy will continue, and we will keep a dedicated balance between supporting the economic recovery, and at the same time preventing risk. we will ensure that policy consistent and stable, and we will not exit from supporting policy prematurely. kathleen: these remarks were prepared. he knew exactly what he wanted to say, but the day before, we saw stockmarkets selloff. we saw overnight repo rates at their highest since 2019. markets had that same nervousness. a pboc advisor was talking about
9:35 pm
the risk of asset bubbles with so much easy money out. this is what the markets are having to digest. could be $12 billion liquidity drain that was made close to the lunar new year holiday, could that have been a one-off technical move? yi gang is upbeat on the economy, saying he sees the economy returning to its potential, keeping policy in place to maximize employment. that part of his message doesn't sound like a central bank getting ready to remove stimulus anytime soon. haslinda: how about fed chair jay powell? will he sound the same message when it comes to tomorrow's policy meeting? kathleen: i am sure he will. in the last month or so, he has said the same thing over and over and over. he said in his own words, it's too early to even talk about
9:36 pm
exiting from the bond purchase, exiting from a stimulative policy. a couple weeks ago at a princeton university seminar, he said the same thing. he's warning central bankers, you've got to be careful. he says the fed is ready, thinks it's too early to exit. he will send the signals to let people know, and rich miller, putting together a lot of analysis showing, jay powell was part of the team in 2013 who wanted to start tapering bond purchases, followed by the taper 10 to that followed bernanke for so long. jay powell learned his lesson, and he's determined not to make that same mistake again. another dovish message at that meeting tomorrow.
9:37 pm
haslinda: we await what he says. kathleen hays, thank you. still to come, the world health organization urges rich nations to walk the talk on vaccine equality as poorer countries are left behind in the rollout. we look at what needs to be done in our equality segment. this is bloomberg. ♪
9:38 pm
9:39 pm
>> by the middle part of this year, we will get systems back to normal. the vaccinations will continue, and we will be able to accelerate our growth on the back half of this year. >> astrazeneca wants to get the vaccine to everyone around the world. >> we have the tools. it will disturb neither our lives, social or the economy. >> we have a political cycle over with, a new administration, an intense focus on getting us through the crisis in terms of what is going on with the rollout of vaccine. >> we have some advanced treatment protocols that most of 2020 we did not have.
9:40 pm
we have much more testing availability and more accurate testing, which in the most of 2020 we didn't. david: there we go, some optimistic tones from health and business leaders on this ongoing vaccine rollout, and as you can see from this graphic, it is very much a first world problem. a lot of rich countries are leading the story with the world health organization urging nations to walk the talk on vaccine equality. higher income countries dominate this ongoing vaccine rollout, that as the eu plans to double down and monitor its exports of vaccines made on its oil, including by pfizer and astrazeneca. haslinda: today, will poorer nations continue being left behind, and what impact will
9:41 pm
that have on recovery? two global health innovation sector director krishna joins us. back to nationalism, we have germany saying that europe should keep its own supply of pfizer. this is just going to get worse for the poorer nations. krishna: it is. we run the risk that what we have started to see around vaccine nationalism continues, especially if we see more hiccups of supply in the short-term. it's unfortunate to see what is coming out of europe. it is similar to what we saw coming out of india a few weeks ago. the government in india walked back any control of export -- back any talk of export control. haslinda: covax was meant to level the playing field, but it
9:42 pm
is not working out the way it was planned. krishna: covax is a complex mechanism, and we live in a world that is a bit disjointed. if you compare covax to the aspiration of the ideal state, it has been disappointing, but if you look at it relative to what the world would look like without it, it is serving a critical purpose with 190 participants at the table talking about mechanisms for global equity. i see covax as necessary for global equity, but in no way sufficient. we have to see covax be successful, and in addition, we have to see many more things happen for the global response to be successful. haslinda: give us a sense of the disparity in terms of access between the haves and have-nots.
9:43 pm
there are some reports that countries are paying a premium, and that can only happen if you are rich. krishna: it has moved young the point where we are beyond what the price may be as countries get desperate. we know 7 billion doses of vaccines have been purchased, and more than half have been purchased by a high income countries that have less than 1/5 of the world's population. as poorer countries become more desperate, they are starting to look for options beyond what we have good data for in terms of efficacy and safety in terms of different vaccine candidates. david: i wanted to follow up on that. are the non-western vaccine options necessarily the poorer quality ones? eventually, that is what developed nations cannot
9:44 pm
realistically reach at the moment. covax the critical question and answer is -- krishna: the critical question and answer is we don't know. we need a level playing field in access to the data on safety and regulatory reviews. the world health organization through the regulatory review process are going to play are really important role. so far, the pfizer/biontech vaccine has received emergency use listing, and a dozen other candidates are under review. especially with some of the indian, chinese, and russian-developed vaccines being important for global access, we need to see better data and transparent data on what they represent. our hope is that they will be high-quality quality vaccines that become available to many low and middle income countries. david: this conversation, a part
9:45 pm
of me is not surprised this is going to happen. how do we fix this, and i'll be straight -- can poorer countries expect rich countries to step up and help them? krishna: i think we should expect those that have more to step up. in addition to the strong humanitarian or ethical argument, we know there is a strong health argument to be made. if we want to save the most lives possible, it has to be equitable distribution. there is a really strong argument that high income countries that are going to have stronger economic recoveries, their economies will grow faster, more quickly if they allow for better and more equitable access around the world. whether you think it is humanitarian, health, or an
9:46 pm
economic lens, the answer is the same. do more to get vaccines out to the rest of the world. david: how much of this -- there might be a risk that of course we are likely going to see faster vaccine rollouts in higher income countries because things like logistics, execution, things run more smoothly in those cases. is there anything government in poor countries can do? israel has done very well. that they can emulate to hopefully mitigate this imbalance? krishna: there's a lot to be learned both in terms of what to do right. we should recognize that many low and middle income countries
9:47 pm
have handled this pandemic much better. this should be about global lessons learned, not just learning from rich countries to implement in poorer countries. whenever the vaccinations happen, we know a strong public health response is going to be critically important. we also know there has to be strong health system components in place to be able to distribute, especially out to the last mile. we know having equity as a driving factor of vaccination is important. what we have learned already from implementation in the u.s. is prioritization, while driven by equity as well as access, also has to be simple enough to be implemented at scale. we can't make this more complicated just for the sake of trying to get it exactly right. i think we have to figure out what is good enough, and go
9:48 pm
quickly. haslinda: the talk now is to get her to immunity, and you can only get that if everyone is vaccinated, including poorer nations. when will we see heard immunity? krishna:krishna: realistically, we are to-three years away, which is depressing but the reality. even if covax hits its targets for 2021, we are talking about a goal of 20% of the population immunized in low and middle income countries. we know that is not enough to reach hurt immunity. we are looking at 2-3 years of dealing with this pandemic. david: it's great to speak with someone like you, krishna. there is a sort of realism we need to get our heads around when we talk about this story i recall this movie "2012." i think it was john cusack
9:49 pm
trying to get on that ship. that's a conversation for another time. coming up, we hear from ceo grouped to on why the u.s. may be its own worst enemy in its tough stance on china. that's next. this is bloomberg. ♪
9:50 pm
9:51 pm
haslinda: dbs says u.s. measures against china have been counterproductive and have actually boosted beijing's trade position. their ceo discuss the global economic recovery, saying inequality will be in the spotlight for years to come. >> some of the steps taken by the u.s. administration in the last several months have been panicked. take the import tariffs. at the end of the day, the sum total of the import tariffs has ended up in a situation where the u.s.'s growth has only been reduced. or take a policy that prevents chinese companies from listing in the u.s. at the end of the day come if
9:52 pm
you want new york to be the financial market, you want more countries with access to the market. as you go forward, some of these counterproductive policies are moderated. i think that will be easier for countries and people in these countries sitting in the middle of this game to be able to calibrate and work equally with both sides. haslinda: as we look at the year ahead, what do you view as the biggest risk, and what do you view as the biggest hope? piyush: the logical issues around the pandemic are still out there, uncertain. the biggest hope is vaccines pull us through this very quickly. it's not entirely clear.
9:53 pm
if you are vaccinated, are you still a carrier? there are issues around that. i think a bigger set of issues is at a societal level. over the next decade, the issue of income inequality, the 1% and the 99%, has continued to become more and more important to people, but the pandemic brought it to the forefront. the people in the top 10% could benefit from easy monetary policy and rising financial markets and have done ok. the people who have to go out of their houses, have to go to work , the blue-collar workers, those working on a daily wage are not able to do ok. i think this tension is going to be one of the biggest tensions in the next few years, and
9:54 pm
particularly this year as several governments are winding back some support programs. i think this is going to end. how do we negotiate through the next year or two or decade? i think the third, it's been quite clear for the past decade that the issues around sustainability, environmental sustainability, climate and biodiversity, are beginning to be serious. the pandemic has made it clear you can't ignore them. something happens that is a tale event, the consequences are catastrophic. thinking hard about some of these, what do we need to do to becoming a less carbon consumptive society, what do we do about the biodiversity loss, that's a risk that will be at
9:55 pm
the forefront of people's thinking and minds over the next several months and years. david: that was piyush gupta speaking with our haslinda amin. market check at this point, we are smack in the middle of the lunch break in japan. about 30 minutes left of the lunch break in china. in terms of equity markets, fairly mixed, uneventful. the csi 300 coming off the lows of the day. still some red on your screens. haslinda: stocks are drifting today. pretty much the same picture for southeast asian markets. the sei is higher, but the jci lower by about 2%. the emerging market rally could be showing some signs of fatigue, as investors question
9:56 pm
the recent euphoria in risk assets. manila, currently down 1%. plenty more to come. stay with us. this is bloomberg. ♪
9:57 pm
9:58 pm
9:59 pm
♪ haslinda: it is almost 11:00 a.m. in singapore. welcome to "bloomberg markets: asia." i am a. david: i am david english. markets trading mixed. that is before the fed's first decision of 2021. jay powell is expected to repeat "no early change in policy." haslinda: a similar tone from
10:00 pm
pboc's yi gang, vowing not to end support to early. he says monetary policy will continue to support the economy. david: as india shows more tension, we examine the level of consumer demand for the country's largest meat company. red and green. if you had to pick two colors, those are your two options every day of the week. more of the former today than the latter, although it is mixed. futures are pointing to a little bit of an upside. 10-year yields, you can see the spread between $2.13. haslinda: the broader market,
10:01 pm
asian extending losses after posting its biggest slide into months. investors are watching for what powell might say from the fed's bond buying program the csi 300 index, in slightly positive territory, up 1/10 of 1%. david: certainly part of the market conversation is this ongoing conversation around the economy. do we have it right? one of the key questions is, when will the world return to pre-pandemic levels. the imf done some math. this is their projection by the end of this year. some countries more than others will be back. the majority of the countries on the screen you see will be nowhere near pre-pandemic levels by the end of this year. it has already happened in some places. more of the world will be back,
10:02 pm
but the key point is not all of the world will be back to pre-pandemic levels, even after 24 months from now. let's bring in a chief market strategist with ig asia. we've been digging into this economic backdrop that is improving, but it might -- might not be improving as quickly as many would hope. guest: good morning, david. certainly they know the kind of picture we are getting with the global recovery underway, there is optimism in the market. that is kind of going to be the indication for when to see the money be flowing. what you pointed out in terms of many developed countries going into 2021, we are expecting
10:03 pm
better performance from the likes of china. it will certainly be seen as a bright spot in the region. it doesn't so much change of the conviction we had going into the new year. of course, in addition, it's going to be gradual, to think there will be a point in his first half you might have to rethink some of those calls? >> it has to do with the resurgence is and how that is translating to economic momentum.
10:04 pm
that will be up for financial markets to gain earnings performance in the new year. we are going through this period in the start of the year where you have this peek out shining the previous to one's. if you look at the economic performance, across the u.s. and asia, china, these are holding up the recovery pace i think it's a bit of a reaffirmation for what we are seeing right now . you pointed out that the biggest most devastating issue remains the pandemic, so the likelihood of this mutation, we've seen the lockdown that could hamper economic opportunity. we are seeing the indicators coming through on the supply
10:05 pm
side. haslinda: the u.s. is booing sentiment, helping to sustain the rally we are seeing, but we are also expecting higher taxes for biden to pay for this spending that is expected. how balance -- on balance, how is this expected to play out? guest: this is an important point to look into. certainly for forward-looking markets, trading to that recovery theme, the biden administration adds to the equation. we can see it coming through from his selection of treasury secretary, janet yellen. i think the market is looking to
10:06 pm
we are going to see fiscal policy stay in on the supportive side. need to see that being passed down to the relevant parties of course, we have to talk about earnings. haslinda: what does it all mean for emerging markets, those showing signs of fatigue? guest: in terms of the emerging-market picture, we have seen quite a steep run for markets. i would point out if you look at the emerging-market index, for example, certainly into january of this year it has taken a steeper upturn.
10:07 pm
i think taking a breather is a bit warranted. in terms of supportive factors policy-wise or the vaccination route underway, we hope what we have seen in some of the programs, that will be the emerging-market benefiting from it. the direction continues to be one for reopening. there's a little bit of caution in terms of the trajectory. haslinda: thank you so much for your time. let's get the first word news with karina mitchell in new york. karina: the new administration in washington is warning it needs aggressive steps to counter what it calls unfair
10:08 pm
trade practices from china. joe biden's pick for commerce secretary gina raimondo is pledging to respond to policies that hurt american workers and will review trump era strategy. her comments echo those of other biden officials. >> china has behaved in ways that are anticompetitive, dumping cheap steel and aluminum into america, which hurts american workers and the ability of our companies to compete. should i be confirmed, i plan to be very aggressive to help americans compete against the unfair practices of china. karina: former president donald trump seems to be headed to acquittal in his second impeachment trial after only five republicans join democrats to block efforts to declare the process unconstitutional. the 55-45 vote serves as a proxy for the entire -- the verdict.
10:09 pm
republican rand paul called the result, saying the trial is dead on arrival. vietnam is laying out a new five-year plan, same closer ties with u.s. are more important for growth then just confronting the rise of china. hanoi wants growth of 7% and a per kata but gdp of $7,500. clashes erupted at the red port in new delhi as protests against india's agricultural laws escalate. rising tensions triggered clashes and the firing of tear gas some areas. the administration halted mobile service and parts of delhi. the government has proposed more talks.
10:10 pm
global news, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. haslinda: still had this hour, malaysia's top pension fund is esg. we will hear exclusively from the ceo on their plans for full compliance by 2030. david: we will be focusing on india and this exclusive interview coming up with the country's largest paint company. we will unpack the number later today, later this hour. that is all coming up. this is bloomberg. ♪
10:11 pm
10:12 pm
haslinda: the people's bank of
10:13 pm
china repeated its promise not to tie up its policy too soon while pledging to keep it under control. kathleen hays is here with the latest signal from the governor. he keeps saying this, and markets seem to think actions are speaking louder than words. kathleen: actions speaking louder than words. isn't that what everybody watches when trying to understand what someone means? yi gang has said the bank of china will not exit from stimulus prematurely. the pboc has been signaling this for months. the economy is recovering. he wants to make sure it stays recovering. what does that mean? we aren't sure yet. let's listen to what he said today. >> our monetary policy will
10:14 pm
continue, and we will keep a dedicated balance between supporting economic recovery, while at the same time preventing risk. we will ensure that policy is consistent and stable and will not exit from supporting policies prematurely. kathleen: preventing risk from debt? what would that be? too much liquidity, people taking too much leverage? here's why people are so focused on this. the people's bank of china yesterday came in and drained $12 billion worth of liquidity from the market. that is a regular operation, but it's unusual time for them to do it because it is so close to the lunar new year holiday, at a time when they would be adding liquidity. you can see the overnight repurchase rate. yesterday, it hit its highest level since 2019.
10:15 pm
the other thing that happened yesterday was that the pboc's advisor said he was looking at asset bubbles, the risk of that due to so much easy money in the chinese money market system. that is what adds to the sense that the pboc is trying to send a signal. that is why there is such a big question mark. yi said china is going to be reaching its potential growth rate sometime this year, the imf saying there rate is going to be over 8%. he said monetary and fiscal policy are going to focus on maximizing employment. they want to boost consumption. retail spending has been one of the weak spots in that recovery, but when you think of this market rout where he says he doesn't plan on stopping, it
10:16 pm
goes to show how sensitive bond markets are, the markets are broadly. david: what is going to happen with the fed? kathleen: not much. it's going to be all talk, no action, but the talk will be important. there is no reason for the fed to withdraw stingless. what jay powell and the press conference are expected to underscore is what he said at the last meeting, which is now is not the time to start exiting from all of this stimulus, mainly via its bond purchases. people were a few weeks ago talking about, well, do they need to find more bonds? j signal -- jay powell signaled that at a princeton university seminar a few weeks ago that the fed is far from meeting its goal . that is maximum employment and
10:17 pm
inflation at 2%. they are far away from that. he said at that same seminar what central bankers should be thinking about. the message is, be careful not to exit too early. as a result, a lot of investors, including bloomberg economics, say the fed is going to be on hold for a very long time, and in closing, jay powell was part of the group at the board of governors in 2013 that wanted to slow down the bond purchases, which led to the taper tantrum. chances are he does not want to repeat that mistake. haslinda: not thinking about thinking of raising rates. global economics and policy editor kathleen hays. don't miss our coverage of the fed decision on bloomberg tv, 2:00 p.m. in new york, 3:00 a.m. if you are in hong kong. plenty more ahead. this is bloomberg. ♪
10:18 pm
10:19 pm
10:20 pm
haslinda: malaysia's top pension fund said they have been routing the tech giant and see assets for future resilience. in a bloomberg exclusive, my guest told me that the country upon national lockdown has been a good thing for markets. >> from a markets perspective, it actually brought a lot of certainty or normalcy in a volatile market. there was a bit of a dip, and after that, markets stabilized. we all like certainty at the end of the day. to a certain extent, that assisted us. the good news coming from that, there is a time limit.
10:21 pm
we actually know there is a stop date, and it was more clearly spelled out. haslinda: are you not at all concerned about possible volatility? >> volatility is the name of the game when doing capital markets. the question is, how do we ensure the organization is in place with the right infrastructure to address any volatilities that happen in terms of managing risk or taking advantage of volatility that occurs. haslinda: you've talked about being a long-term investor. what is your strategy? give us a sense of what you may be interested in? guest: we'll look at the types of sectors that were able to
10:22 pm
take advantage of the co-food crisis. technology, key areas and social integration, creating meetings. what we are doing now, there is no need for me to come to the studio. technology companies actually use the cohesion network. things like uber benefited from the ability to deliver without having the social contact. those economies really benefited from that. we were also looking in terms of the infrastructure aspect. at one point in time, when you talked of technology companies, it was the sexy software or ai.
10:23 pm
now try to buy a market or device. it is so technology. software, chips for example, it's extremely exciting. those sectors benefited from covid. what if there is a crisis that comes up that specifically impacts technology? what is to stop a hyper virus in technology that would cut off
10:24 pm
all hardware? that would be another crisis. which sectors would then be able to profit from it? haslinda: we all came into 2021 with optimism about the vaccine rollout, which has fallen short of expectations. we have europe looking at a double-dip recession. in your view, what is the biggest risk in 2021? guest: the news of the vaccine brought about hope that at long last we can go back to the old normal, which i don't think is ever going to happen again. it's going to be the issue of who is going to get it first. we cannot ignore the supply chain. if some of your supply chain is not vaccinated or addressing the vaccine come it's going to impact your business. it cannot be a response from
10:25 pm
anyone economy. it's the true promise of globalization. is it going to happen, and is it going to be transcending the issues we used to face? the tension raised in 2020 between regional economy powers. haslinda:haslinda: our exclusive interview with our guest. time now for our morning calls. how do you feel? david: there is a ton of morning calls today. the reason i bring this up is because yesterday, i think it was cicc coming through. this supports that view because of the money coming through. part of this is underestimating the great wall of money coming
10:26 pm
through. watch what this might mean for 16 and a half. flip the boards. it's about to perhaps run into a wall. 13 basis from current levels. the second half of this year, we might just get a rate hike. have a look at what we have in terms of the yield curve. we do have some breaking news out of 7-eleven. let me figure out what we are talking about. it's kicking off its jumbo bond sale for its purchase of speedway. we don't have a lot of details, but it is looking like it is going to raise some debt to fund that transaction. once we have more details, we
10:27 pm
will get that for you. we are headed to midday, and we aren't done yet. stay with us. this is bloomberg. ♪
10:28 pm
10:29 pm
haslinda: counting down to the in the open. nikkei futures pointing to a higher open after a loss of about 1.1% yesterday. keep a watch on india's defense spending after china and india said they have agreed to push for an early disengagement of front-line troops along the contested himalayan border. and of course we will focus on india with the country's amit syngle.
10:30 pm
so keep it here on bloomberg. david: absolutely. let's stay on india because some big events are coming the next couple days. you have the agriculture minister speaking in davos. tomorrow is the big one, at the world economic forum. friday, gdp numbers coming. the economic survey is coming out on that day. this is your big one. get your hats ready, get your pencils ready for something. we might see a big number here. haslinda: it is a big week. including what we are expecting from the fed. german powell, will he, won't he give any indication for a tapering. mst i coming off of its biggest slide into months.
10:31 pm
strong numbers from microsoft. nikkei to 25 coming back from lunch break, up .2%. japanese stocks have risen 16%. that happened last year despite foreign strength. hang seng currently about .1% higher. softbank, determine stepping down from its mobile unit. this unit has been at the center of aztec empire. alibaba currently up by about 2.7%. the pboc governor saying the ant ipo could proceed if -- david: big names. arguably this is your biggest story.
10:32 pm
gamestop captivating market watchers. 640% surge since january. this one really wrecking short-sellers. even got the attention of elon musk in a tweet. fueling -- fueled by reddit chat rooms. if you are on this, you know who you are. here's the thing. a lot of what is happening there is not what is happening here. it has yet to make its way to the asia-pacific. let's bring in eric lam to tell us why this penny stock trade has yet to surface in this part of the world. eric: as you say, we have seen some really searing gains in the u.s. and a lot of really interesting moves. we have not seen so much that kind of impact on the penny stocks of smaller companies in asia. we did a quick analysis of 3000
10:33 pm
securities in asia with a market cap of less than $10 million, trading at less than one dollar u.s. the total return so far in 2021, only .1% as of yesterday. that is a far cry from the 36% median increases of u.s. stocks. so it is really not translating here so far. i talked to someone yesterday who suggested while agent investors have a reputation for being risktakers at the tail level, they may be preferring to take risks on more known entities. if you look at asia stocks over the past year they have outperformed the rest of the world and the u.s. so they don't necessarily need to be taking a risk on some of these really small stocks at the low-end of the market. haslinda: could asia see the same thing? what would it take? eric: certainly some of the
10:34 pm
dynamics in the u.s. that are calling this are outside of traditional markets. we are seeing the rise of retail interest fueled by online chat rooms, really popular chat rooms on reddit. there is proliferation of trading apps as well. we may be have not seen that kind of critical mass yet where you have a legion of retail traders that are all plucking it out of relative obscurity like we have seen with gamestop. if you look at the performance even at the top end of the 3000 securities we looked at, the top-performing stock was only about 200% so far this year. which is stellar but still nowhere near at one point the 700% increase we saw in gamestop. so we are quite a ways away from that yet. haslinda: asia cross asset reporter eric lahm. let's get the first word news now with karina mitchell in new york.
10:35 pm
karina: the imf is raising its forecast for global growth this year, betting the vaccine rollout and more fiscal relief will out -- will offset the virus fallout. it says global gdp will rise 5.5% in 2021, more than it fell in october. the improving u.s. economy is seen beating lower productions for the uri area -- the euro area and the u.k. it would match 2007 as the best in four decades of data. the bank of japan remains downbeat about the economy amid the virus. speaking in parliament, governor kuroda said the nation's finances are in a severe situation. he added the boj's bond buying program aims to achieve rice stability, not finance government debt. the government says the boj has done their utmost with easing but admitted it had not achieved its inflation target. hsbc says it is committed to hong kong and denies it has become a tool of the authorities
10:36 pm
in china. the ceo was fielding questions from british mp's telling them the bank has no option but to close the account of an exiled lawmaker under local law. quinn says hsbc is trying to stay out of politics while doing the right thing by its customers. >> if the question was am i willing to walk away from hong kong, the answer is no. we're too committed through our heritage and our history. we believe firmly in that the -- in the economy and the communities. karina: the world health organization is stepping up its attack on wealthy nations over coping vaccines, calling on governments to ensure poorer countries also have access to shots. the renewed criticism comes as global virus infections now top 100 million, with the u.k. becoming the first european country to report 100,000 deaths. the w.h.o. says wealthy
10:37 pm
governments must do more to help poorer nations. >> with every day that passes, the divide grows larger between the world's haves and have nots. in my opening remarks last monday, i said the world faced a catastrophic moral failure if it does not walk the talk on vaccine equity. karina:global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. haslinda: earlier we heard from speakers on the global response in the pandemic. >> europe invested billions to help develop the world's first covid-19 vaccines. to create a truly global, common good. and now, the companies must
10:38 pm
deliver. they must honor their obligations. >> china will continue to share its experience with other countries, do its best to assist countries and regions that are less prepared for the pandemic. >> some countries have even gone beyond and acquired up to four times what their population needs. and that is aimed at holding these vaccines. >> you will not get support in any country if you are giving away vaccines and the most vulnerable are not vaccinated. >> although this will be a very uphill battle, much more difficult than many think. david: just checking against the backdrop of the vaccine rollout, the latest markets will open up in asia today. india in a couple minutes. a little bit higher. on the other side of the break, we will have an exclusive interview with the ceo of a company that makes up 2% of the nifty index.
10:39 pm
amit syngle is coming up next. india's largest paint maker. all that is coming up, plus the open. this is bloomberg. ♪ this is bloomberg. ♪
10:40 pm
haslinda: in our india focus
10:41 pm
segment, we are speaking with a man who runs the country's largest paint country -- company. it reported a 62% jump in net income for the third quarter. joining us exclusively is ceo amit syngle. good to have you with us. the strong numbers pretty much a reflection of pent-up demand. can that momentum be built in the coming quarters? amit: thank you for getting me onto the channel. it is great to be speaking to you. we've had a fabulous quarter on the backdrop of a great festive season. but what we have seen is that going ahead, possibly it is something we can sustain in a strong manner. because human sentiment looks very, very positive. the news of the vaccine coming. we see more people entering shops and entering the markets. we also see the resurgence of the urban market, which were
10:42 pm
down. and that is something that is a strong phenomena, coupled with the fact that the construction segment in the housing sector is also looking up on the backdrop of big government support and low interest rates. so i think these all bowed very well for the coming quarter, and we are quite hopeful that going forward, we will maintain double-digit growth as we pull forward. haslinda: but some analysts are pointing to rising costs as a risk. take into consideration rising oil prices. how will that play out and how will you protect your profit margins? amit: i think the raw material has been quite inflationary. raw materials going up, oil, all going upwards.
10:43 pm
-- strongly in terms of how we look at our bottom line going ahead. we're looking at selling more high end, premium, luxury products, so that our product goes better in terms of what we are looking at one forward. we're looking at a huge amount of formulation and sourcing from quarter two onwards. in addition, we're looking at cost efficiencies coming in all our operations. given the fact we have large control in terms of the overall sourcing which we do, i think we are looking at ways and means in terms of how we can control this inflation. having said that, if inflation does not stabilize, we will look back at the market if it continues to grow and becomes unbearable with respect to sustaining the markets.
10:44 pm
david: it's not just you that's looking at the sector, and you are of course the leader. and the fortunes and treasures to be made within the paint business. we are talking about planning to put in capex $700 million the next few years. how do you intend to stave off competition and stay on top? amit: what we have seen is for the last two decades we have all the multinationals coming in india. whether it is sherman williams, whether it's companies -- all of them have come into india in a very big way. we also have close to 100 manufacturers of paint in india which are small-scale to medium scale. therefore what we feel the competition is always very strong.
10:45 pm
we've also seen a spate of infrastructure companies getting into the paint business. similarity to some distribution and marketing strategies in terms of their own business. however, as a leader, we're committed to growing the market in a very big way. our priorities are based in increasing the per capita business in india of consumption. in india, if you compare it with the world economy, per capita consumption is still very low. in terms of really growing that consumption and upgrading the market in a very strong way. our strategies are aligned in terms of looking large oceans of operation which are still in the market, in a large market. we feel today, we don't really feel the pressure in terms of all these people entering. we feel despite the fact they
10:46 pm
have entered the country, even in 10 years, they have not been able to cross even the sales of about $100 million u.s. so we feel today is not easy to enter the market. it's not something that is so easy to get into, and look at gaining the emotional, connect with the consumer. we also think the only route to this cannot beat pushing on people. you need to make the brand, and you want to make the brand emotionally connect with the consumer in a lot of ways. david: it does not seem you are very worried about competition. what would you put that down to, your dominant position? is that you are distribution method? and what about distribution moving forward? frankly, there's one billion colors of paint, but it's not a product that can be
10:47 pm
differentiated a lot with your competition. so can you explain a bit more, what makes you think you can stay on top of this? amit: we have had the same leadership since 1967 and we have a strong brand that connects with the country. as you said, what sticks is the emotional connection to the consumer. today, i think we have a very strong connect with the consumer. we have a staggering share. almost eight out of 10 people entering the shop will think of buying asian paints first. connecting with the consumer, looking at what the consumer really wants. and given the consumer in a
10:48 pm
manner the consumer would get a lot of delight in terms of all of our offerings. other than that, yes, as you rightly mentioned, we really embarq the latest technologies. we were the first -- [indiscernible] distribution and technology are strong backbones which give us a framework in terms of forecasting. from a supply chain standpoint, we're able to give the customer in the village looking at consuming the paint and bringing joy to his or her life. haslinda: you are doing well and india and sri lanka, bangladesh, but not in nepal. why is that, and what is a
10:49 pm
strategy to grow the market more? amit: we have been market share leaders in nepal for quite some years. last year was a bit of an aberration given the fact we had extended lockdowns in the country. and given the fact that there was some political uncertainty, and the economy was not doing well. it has taken a real toll with respect to housing and construction. however, we're seen in quarter three we have rebounded back in a strong way. and we're very clear that given our strength and the reach we have, given the technology we have, we will rebound in a very strong white and looking at a very strong next quarter and the year ahead in terms of going ahead. haslinda: --. david: we appreciate you making time for us today. all the best through this year,
10:50 pm
for you, your workers, and the industry. right. coming up, the big bank handing out 00 -- the head of one u.s. firm is not so lucky. this is bloomberg. ♪ is bloomberg. ♪
10:51 pm
10:52 pm
david: let's talk about a topic, a favorite topic for many people, not all. bonuses. bankers at goldman sachs and morgan stanley are reportedly set for the biggest bonus bumps across the region. citigroup may receive a smaller compensation. let's bring in our senior editor talk us through these. what are the main drivers behind what looked to be hefty increases in pay? >> it is all about yields. we saw almost a 90% bump last year. morgan stanley and goldman both led that. they were also leaders in m&a work. the bonuses will likely vary across sectors with the biggest payouts expected for bankers who work in technology. the trading side has been really
10:53 pm
busy as well with the bonus pool rising at about 20% at morgan stanley, for example. haslinda: is it happening all banks in the region? jonas: i mean, no. we're seeing much smaller increases at the more traditional commercial banks. jp morgan and citigroup are seeing much smaller increases in their bonuses. banks are looking to somewhat temper payouts. they are mindful that it does not look good to have massive paydays during a very difficult time for many people around the world right now. haslinda: senior editor jonas bergman. well dave, no big bonus for the goldman ceo david sullivan. the board slashed his package to around $17.5 million to make amends for the firm's criminal
10:54 pm
role in a scandal. david: yeah. putting that into context, you do get very big paychecks across other big heads of the banks. as you point out, it's because of this penalty. if it was not fo rhtat -- for that, his pay would have been flat. $27 million to $17.5 million. yeah, it is down about $10 million, but it is still $17.5 million. haslinda: not too shabby. advance market devices gave an forecast reflecting stung demand for its chip and progress against rival intel. they expect first quarter revenue to come in over $3 billion and sales to jump 37%, both big beats on wall street estimates. they have made big gains on its
10:55 pm
more successful rival intel, by outsourcing production. microsoft jumped in late trade after second-quarter sales rose faster than forecast and demand for cloud services and tools for stay-at-home workers. revenue any december period topped $43 billion. that is microsoft's 14th quarter of double-digit revenue growth. personal computer sales -- starbucks rebound in china continues even as its home market lags behind. global same-store sales fell 5% and the fiscal first quarter, worse than the average forecast of 4%. u.s. sales by the same amount, while a 5% rise in china beat expectations. despite global weakness, same-store sales across the board are not as poor as in the previous quarter. american express slumped after
10:56 pm
admitting it will not meet profit expectations unless the economy markedly improves. net income is seen at about $5 a share, well below the $6.90 analysts were pricking. but it could hit $7 if economic metrics improve. they have set aside billions of dollars for loans amid the pandemic. david: you know what? it does not seem like i will meet my monthly obligation, but i think i am sharing too much. your markets as we head into the lunch break in hong kong. some pressure, especially in southeast asia. the vietnamese stock index has been really under pressure for the most part. malaysia the sole bright spot. also coming up on bloomberg television, stay tuned for a lot more insights in the year ahead. leaders and finance including blackrock, ppg, interviews
10:57 pm
coming up later today. that is it from us. daybreak middle east is coming up next. thank you for joining us. see you tomorrow. this is bloomberg. ♪
10:58 pm
10:59 pm
11:00 pm
>> this is

17 Views

info Stream Only

Uploaded by TV Archive on