design your own data with xfinity mobile. it's wireless reimagined. simple. easy. awesome. >> very good morning. asia's major markets have just opened for trade. >> welcome to "bloomberg markets: asia." china struggles to contain the coronavirus as infections spread. ask for trade deal

negotiations to help cope. revenue,t slumps missing wall street estimates. >> the democratic presidential hopefuls face their big test as iowa voters head to the polls. we are live in des moines. japan and south korea coming online as we see asian stocks facing the longest losing stretch since late 2018. seeing a sighyet of relief. extending losses, the nikkei and the topix both falling further through their 100 moving averages. the yen returning to strength after slight weakness we had seen yesterday. atyear jgb yields sunk negative six basis points. south korea coming online. south korea vowing an all-out

effort to contain any economic impacts of the coronavirus. is moving-- kospi higher, closing flat on the day even though we have seen many other benchmarks across the asia region in the red. the same time, you see australia stocks and new zealand stocks relatively flat, the materials are weighing on the indexes. at the same time, you look at s&p futures, lower on the day, this after a strong showing overnight. we saw a rebound of 7/10 of one percentage point. we are awaiting the results of the iowa caucus. also, alphabet did report earnings. sales weaker than expected. that being the third largest company in the index is waiting tothe downside, -- weighing the downside. we are awaiting an rba decision later today. as you can see, the aussie

dollar, a tad lower, holding near decade-long lows. eyes will be on that rba decision. at the same time, the british pound a bit lower. this after overnight we actually saw the pound give up all the post-boe gains. there seems to be contention over the trade deal post-brexit early on after they did leave the union officially last week. as wellan see, the yuan weakening past seven. 10 year treasury yield still near that 150 level. a picture of risk off sentiment. thank you so much. china is preparing more steps to contain the economic and human damage from the coronavirus. 220 --th toll now tops 425, i should say. officials are said to be seeking flexibility on beijing's trade to the u.s., signing a phase one

mini-deal. the latest developments when it comes to this virus? how does it complicate this phase one trade deal we just got? year a reminder, the first of the deal in this phase one trade deal, china committed to $76 billion of american goods beyond what it bought in 2017. there are challenges for china to reach those targets given the demand and the spreading virus. they are hoping the u.s. will give them flexibility. u.s. officials say they have not received any requests yet. in terms of disruption to trade, sources say state-owned liquefied natural gas importers are considering declaring themselves unable to fulfill some obligations on delivery and that there have been logistical

issues. abilities, butor this virus more broadly brings back into focus u.s. and china tension with china calling out the u.s. for inappropriately overreacting to the virus without providing substantial help, pointing at the u.s. was the first to evacuate personnel from wuhan. the u.s. says it has offered top public health officials, but has not received any response from beijing. meantime, you have the u.s. centers for disease control and prevention working to get preparing as the disease could become a pandemic. >> we see policy makers coping with market implications. a gtv chart on the bloomberg showing that huge liquidity injection we saw in the previous section. despite these efforts by chinese

mean forhat does it their infamous gdp growth target? >> china is now evaluating whether to soften the economic growth targets for 2020 because before this outbreak, china's domestic economy was already slowly getting weak domestic demand, a crack down on debt, and that trade war with the united states. bloomberg economics was forecasting 4.5% compared to that 6% growth in the final period of 2019. the government is considering some measures according to sources, including increasing plan caps on the budget deficit to gdp ratio and selling more government bonds. we did mention steps the government has already been taking to cushion the blow to the economy. markets lower and borrowing costs. the pressure on the economy is expected to continue as a

reminder, two thirds of the chinese economy remains closed this week as several provinces continue to extend that lunar new year holiday. you saw trips made over the lunar new year drop by 73% to 190 million trips for the holiday last year as people are banned from traveling or have refrained amid the coronavirus. >> selina wang with the latest on the coronavirus. be sure to keep up-to-date with this developing story by running vrus go.ion headlines from the bloomberg news room as well as how specific companies may be exposed. vrus go on your bloomberg. lets the your first word news. >> china could lower growth targets for this year as part of a review for how planes may be affected by the coronavirus

outbreak. the economic goals are specifically announced that the legislative session in march. growth has been down slightly from 2019. sources tell us the government is debating a range of measures to support the economy. the coronavirus is hitting hong kong's economytumultuous 2019 dy protest unrest. reconfirm an annual contraction for the first time in a decade with a slump of 1.2 percent. further shrinkage in the december quarter let hong kong's economy in continued recession, almost 3% smaller than 2018. the city is lowering its full-year estimate for revenue in macau as the virus weighs on results. the bank sees revenue down 8% on the year having previously forecast a drop of 2%. revenue to drop in the first half of this year before rebounding by half that amount in the following six months.

ti remainsi confident in overall growth. over trade and fears and it will be difficult. the pound lost among g10 says a tradehe eu deal is on offer but only if the u.k. agrees to withdraw. boris johnson saying the u.k. will thrive. 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. this is bloomberg. >> turned to more analysis on the impact of the virus on the markets. that coronavirus still tops the news these days, how much impact will be see in market moves when it comes to the short-term hit asian equity

markets could still take? >> the thing is we saw a-shares during first day back yesterday and we have already seen some of the pullback. seeefinitely do expect to more short-term volatility. anytime you hear potential news of a potential cure for the virus, you might see some of the markets waiting out sharply. you see the numbers rising significant in terms of those affected as well as the number of deaths. that's going to see quite a bit of pullback as well. short-term, we are exciting to see more of it. the market right now has a price where coronavirus is linked to sars. sars really had an impact on the equity markets in the first quarter of 2003 in hong kong.

>> breaking news at the moment. panasonic rising the most since 2016. tesla's factory posting a profit. we have seen tesla's shares surging on this monday. panasonic makes batteries for tesla. panasonic seeing rising the most since 2016 after postedla gigafactory profit with tesla now surging 20% on this monday. let me go back to you. how company-specific can we expect moves in asia to be when we have such big macroeconomic factors and uncertainty because of the coronavirus? >> definitely we are expecting to see earnings hit for chinese companies. a lot of discretionary's, consumer companies, are going to take a hit in the first quarter.

a lot of factories are not opening. a lot of them, even if they wanted to do something, there is not enough facemasks to go around. ist we are also expecting the fact that the chinese government will soon potentially offer different stimulus together with the pboc that could potentially stir -- spur growth to help offset losses that we are going to expect to see during the first quarter of 2020. stimulus measures coming over the weekend. from the pboc, we will see on the other end of this viral outbreak more sort of fiscal and infrastructure. does that mean the selloff we saw in mainland markets is pulling the price level back in line with what we have seen in that week when mainland markets were closed, does that mean

mainland shares are looking at valuations at 12 months lows, looking pretty cheap and right for the picking? or is this too early to wade in? >> i would say it is too early. a share markets were one of the better performing markets in 2019. we could see more pullback. when compared to the hang seng index in general. expensive all more relative basis. the markets are still going to be more choppy and more cautious waiting for some potentially positive news. short-term, the there are some negatives given how strong the h-share market was last year. >> would you still be looking at a haven player as we wait for confirmed indications of where this next stage of the epidemic

goes? where would you be finding opportunities? careful inoing to be terms of the stocks we buy. when you look at -- even though they have corrected, they look attractive at the moment, we are somewhat skeptical. stimulus,see more more policy listening to help the consumer sectors in china, we are going to be careful. what you're going to focus on specifically are more the or theve plays underperformers that did not perform as well in 2019. some of these have already been oversold. you expect stops to start to to start totocks perform in 2020. that was ken wong. thank you.

>> later on, battered by protest, now threatened by coronavirus. hong kong retail sales can't catch a break. ♪

democrats in the iowa caucus are taking the first step toward choosing their candidate. our chief washington correspondent joins us from des moines. >> in under an hour we are going to have the caucus space opening

up. a lot of expectations for bernie sanders, perceived as the front runner. biden, atling out joe progressive versus centrist. expectations being managed by the staffers of all of the campaigns. should biden squeak out a victory, it would be a huge sense of momentum heading into new hampshire. should he finished in third, fourth, or fifth, that would be difficult for his candidacy. everyone has their eyes on ,uttigieg, wharton, klobuchar to see who may pull off an upset. they will get free media off a showing, plus the sense of momentum. they have to be able to pick up the phone, call their donors and say, i still have a chance to win. >> explained to us the process of these iowa caucuses. would beon is, what the threshold of support all

these candidates would need in order to be considered a legitimate candidate going forward? things getwhere interesting. you either win or lose. a can dive into the weeds little bit. in just under an hour, caucus sites are going to open. on the first round, individuals are going to go to their corners of the candidates they want. if they don't hit 15%, you go and you have to get rid of those folks. you have to make it to 15%, and that's where things get interesting and tricky very quickly. when they go to biden? would they go to buttigieg? andrew yang, another who has a grassroots effort. where would his supporters go? i can tell you just being here for the past couple of days, having reported on this, iowa caucus-goers take their job very seriously. that something you want to

see in a democracy. seekingbloomberg nomination for president, the founder of bloomberg news. stay with bloomberg for complete coverage of the iowa caucus starting at 10:00 p.m. in new a.m. in hong kong. the statee will carry of the union address plus the democratic response in new york. >> google could be coming under pressure. shares in alphabet falling after it missed on operating profit. ♪

>> this is "bloomberg markets." shares of google parent alphabet took a tumble in extended trading. it missed the wall street sales

targets. while it was the first time it disclosed ad revenue, that missed analyst estimates. youtube was supposed to be a growth stores for this -- source for this company. >> that is what google has been telling us, but they never pullback the court -- the curtain. down as much as 4% right off the bat. it extended its loss as we have gotten into the conference call. disappointment. revenue payments to partners, 36 -- $34.6 billion in the fourth quarter, less than projections of $38.4 billion. youtube touted as a source of growth raised questions about whether, perhaps, there is an overall slowing for this week revenue. sales ofdds generated 15.1 billion, up 36% from the

previous year. not bad. prescriptione paid is well below the $22 billion analysts were expecting. for google, this was the slowest fourth-quarter revenue read weakest in five years. the stock has been up 15% the past three months, so i got off to a good start, but this particular report could indeed raise questions about what is ahead. alphabet also reported cloud results for the first time, including a service that rents computing power. $2.6 billion, up 53% from a year earlier. they have been pouring money into the cloud. a lot of questions here. >> lots of questions over the --act of growing composition growing competition from facebook, amazon. >> there is at least one analyst

saying, is an overall slowing in at growth, or is it competition for online competitors? you are looking at the giant, amazon, it is interesting to note amazon has become a big digital ad rival, grabbing a lot of the more valuable shopping related searches. if you look at what they posted in the holiday quarter, their other division was up from 41% in the key holiday quarter. by comparison, google search and other was up 17% in the same quarter. you've also got facebook and online advertising giants as well, both alphabet and facebook focus very much on pressure they are getting in terms of regulatory issues as well and policing videos such as those posted on youtube. a lot of pressures, but there is a question about whether social media ad revenue is slowing.

>> thank you for that. let's get your latest business flash headlines. satya nadella poised to deceive 900,000 shares -- receive 900,000 shares this week. that is thanks to clout optimism cloud optimism. >> tesla rallies for a fifth day monday and the wave of a good news boosted investors. amid its best single day of gains since 2013. the move comes after panasonic says the joint venture became profitable in the last quarter thanks to tesla's rapid growth

in output. the bottom line is ahead of schedule. brand posted a double-digit sales growth, throwing a 30th anniversary party in china and europe. sales rose 10%. by the ux crossover. 14% gains in europe. next, theup coronavirus outlook for china's energy. good analysis coming up ahead of the start of trading in shanghai. drops across almost all commodities yesterday. ♪ ay. ♪

>> this is bloomberg markets. officials in china are hoping the u.s. will agree to flexibility on traded pledges as beijing struggles with the spread of the coronavirus. at least 425 people are known to have died from the virus with total confirmed cases surpassing 20,000. hong kong proposing more checkpoints to slow the spread of the virus. the government will shut points of entry. hasf carrie lam says china

already stopped issuing be says to hong kong. to hong kong.as an economic having impact abroad. sales slump over the lunar new year holidays, indicating retail is taking a hit. several leading operators safe by double digits as china visitors stayed away. china tourists make up a third of arrivals and more than that in consumer spending. a primary investigation of airbus and air asia has triggered the fall of the founder and ceo. he is stepping down for two months along with the chairman while the malaysian government claims air asia officials accepted bribes. both men deny wrongdoing. airbus reached a settlement with prosecutor surrounding claims it tried to illegally sway decision-makers.

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. this is bloomberg. >> asian markets mixed at the moment. the cost be rebounding. -- kospi rebounding. >> japanese stocks are off their lows of the day. ae nikkei down 3/10 of percentage point. the topics down less than 2/10 of a percentage point, led higher by gains in panasonic after the company did say it's battery business has turned profitable. that really helping us move higher, paring losses we had seen earlier in the day. the korean kospi near highs of the session. rebounding from weakness we had seen. take a look at the commodity

complex. immensereally just seen pressure, particularly in oil after people familiar with the matter told bloomberg chinese oil demand had fallen by 3 million barrels a day, 20% of consumption, the largest oil demand shock since the global financial crisis. brent crude oil below $55 a barrel. wti crude seeing a small bounce, still near $50 a barrel. f you market from the highs in 20%. both down more than after finally rebounding 13 straight days of losses. a small bed for gold as well, safe haven. let's take a look at the copper to gold ratio. copper very representative of cyclicality.

gold being your bastion of safety as coronavirus fears have spread over the past couple of weeks, we have seen this ratio tumble. gold. as it relates to that surge in 2016 was after the u.s. presidential election. right now copper is showing fears about the global economy. back to you. >> let's stay on commodities. i want to bring the senior commodity strategist. we have heard the forecast as to the decline when it comes to demand for crude out of china. sinopec drafting documents on cargo deliveries they don't think they will be able to maintain. how much of a concern is this for the global market?

>> a big concern. initially it was thought the restriction on travel and tourism would be the main avenue this would play out. the restrictions through the u.s. economy, we are seeing manufacturing impacted. that's going to impact commodity demand on a larger scale. at the moment, no one really knows how long this is going to last. is a lotre seeing now of refineries in particular scheduling extra maintenance and the like, which they normally do this time of year. seen quite a significant ,all in demand due to the virus the industry is ramping up for wait listing in demand.

this charto bring which shows a good overview as to what the bond market is feeling. we have not seen these levels since the european debt crisis. if you look at these levels, the virus has exacerbated the concern. this pushesorry back the economic recovery, potentially derails the u.s. recovery? >> absolutely. the year started positively. we saw a rebound in economic activity. it has been completely washed away. first half is that balance which the market was expecting could be obliterated, then we move into what everyone

thought was always going to be a period of stabilization. that could completely be mitigated by what we are seeing now. 2020 looks different from what we saw at the end of 2019. for us, it is the second half of 2020 which is looking quite difficult now. seeingonder we are copper continue its backward de despite the fact we have been more risk on in the equity markets. situation andhis the lunar new year in many chinese provinces continues, is

there any hope for a commodity, especially metals, when it comes to upside? if chinese factories are still reeling. it is difficult to quantify. inventory is relatively speaking had been low. there is some hope we will continue to see buying by chinese consumers. in hope that manufacturing and construction activity eventually picks up. certainly they are wary of holding too much at any particular time. be ank there's not gonna specific level of inventories they are going to hold. there are signs this is short-lived and we see that

.estocking concern q1 and q2 are going to be soft. >> thank you for your time today. we will have more analysis on the commodities market later on bloomberg. we will be joined by citigroup in two hours time. coming up, more pain for the hong kong economy. the latest retail sales numbers just ahead. ♪

>> this is bloomberg markets asia. impact our next guest says will not affect consumer confidence once it has run its course.

marketing agency based in shanghai. thank you so much for coming in. during the sars outbreak we saw retail sales growth for percent. will this be any different? >> this time will be quite different for a number of reasons. the economy is much larger than it was during sars. when we look at luxury and retail, they are a much more important part of the chinese economy today. that means it will have more of an impact. what we hope is it will peak in the next few weeks and we can get back to business as normal. >> when it comes to luxury spending, a lot of people go to the shops and they buy things off-line in physical stores. does this make the impact greater in the luxury segment as

opposed to other retail sectors? >> that is a great question. it is affecting all segments. at the moment in china, everything except essential services are closed. that means pretty much across the board whether it's coffee shops like starbucks or luxury shops, everything is closed. that's affecting the whole range of retail. when it comes to luxury, chinese new year is usually a season for people to purchase luxury goods. giftgiving has had a impact on this season, which has been a real shame for retailers. >> what can retailers do at this point? if you do promotions at a time like this, if you are quarantined at home, you are

probably not really in the headspace to want to spend. >> you are right. bands need to be cautious right now. if you are seen as too promotional, that can have a backlash. local brands as well as international brands, you have the likes of estee lauder and lg mh who have made important contributions to the red cross in china. same with key chinese brands. you have niche brands who are doing a great job offering through social media what their customers can do to stay safe and healthy. a real mix. at the moment, it's time for simple messaging, for sensitive messaging, and for making sure people are parking those promotional activities for the

future. >> how difficult will it be for the big brand retailers to recover given that, let's face it, the virus situation is just another thing that has proven problematic. we have seen hong kong retail sales, hong kong gdp consumption, consumer sentiment nosedive since the start of protests months ago. do you see a recovery on the horizon? i think there have been quite a few challenges in the region in the last six to eight months. the coronavirus is unfortunate. also in terms of timing for hong kong. but i think on the whole the region is resilient. when sars happened, there was a dip in retail, but it really did pick up straight after. what we are also seeing now is an impact on the travel industry

. the coronavirus is having a domino effect across the region when it comes to not just brandss, but hospitality and all the commerce and tourism that relies on chinese travelers. i think it is fair to say that isthe moment, no business is not suffering. this gtv chart on the bloomberg showing retail sales and the numbers of chinese visitors plummeting given the protests. we get hong kong retail sales numbers this afternoon in asia as all. tell us about the modern asian consumer as opposed to back in 2003 during the sars outbreak. is so muchumer today more sophisticated than during the sars epidemic. if you look at chinese consumers, they are incredibly well researched.

there's appetite for niche brands. across the board, chinese consumers have a huge impact on global luxury spending. by 2025, it is estimated nearly half of luxury spent is from chinese consumers. world3, the rest of the may be did not feel the impact so much when it came to fewer chinese travelers and shoppers. i think today it will make a dent across the world as well. >> that was reuter communications partner chloe reuter. we will be joined by morningstar investments for insights. let's take a look at how chinese

markets may open after the complete meltdown we saw on the return from the extended holiday. yesterday are bloomberg markets -- is in hong kong. the selloff we saw yesterday, just a handful of stocks in shenzhen. interviews.major ise we properly corrected or there pent-up selling to go? >> the latter. you have daily limits in china as well. the previous point you just mentioned, the conversation is shifting toward what the fundamental story is. yes, we still might have an adjustment, but on top of that, we are talking things like growth might be resolved lower as well. if you look at some of these earnings, earnings deadlines being moved back as well.

the fundamental story beneath alof ts is the shifting. i mentioned valuations are actually back to the lowest level since this time last year. aings are cheap, but cheap is fluid concept at the moment. markets?bout the rates what are they telling us? >> that is a more important gauge. if you look right now, you look at things like u.s. real rates, for example, the 10 year, that is below zero. almost the purest form of signaling of getting to the bottom. things were shaky coming into this. this is sort of the last thing the global economy needed. that is the back to the lowest level since the european debt crisis. go short on the chinese currency. there is more easing ahead.

five-year swaps, i think it is onshore, offshore, not sure, but that level since 2016, a big collapse yesterday. the rates markets are telling us the growth outlook is probably week right now and policymakers will need to respond to this in a bigger way than we saw last week. theesterday in the morning, drop in commodities at the open of the session was the first indication it was not going to be a fun day for traders. are we likely to see commodity suffer again today? >> no one knows. commodity markets come online and we will get the answer there. you are getting a lot of reports on the disruption they are expecting, how long that may be. they talked about the oil story yesterday. we dipped below $15 in u.s. crude. i guess that's what happens when

shuthut your port, you roads, there will be disruption to supply chains. inventories tend to build up. the yen gets things up. >> thank you so much for your thoughts. let us now get a quick check of the latest business flash headlines. to stepping up its campaign be kept off the black list of companies. providers haved told the fcc it would be expensive for them to replace e and huawei if ordered to do so. the agency made an initial are a that the telcos threat to u.s. national security. blackberry is ending its in a movep with tcl that may mark the end of the iconic smartphone. blackberry had been outsourcing the main work on its phones

since 2016. the chinese company says it will continue to offer support on till august 2022. cicc is leading the way for ipo underwriting. the value of deals in january surged compared to a year ago. companies raised more than $11 billion in the first month of the year. almost three times the figure in 2019. cicc captured a fifth of the market with china securities in second place. of course be sure to keep up with our top story to get up-to-date developing information on the coronavirus vrus going the function on your bloomberg. at how specific companies and stocks may be

exposed in areas that are affected. you can check that out at map the virus go. -- map virus go. and tomorrow we will carry president trump's state of the union address followed by the democratic response. that kicks off at 9:00 p.m. in new york. ♪

>> this say pretty exciting opportunity for investors. folding knife scenario. >> moving from strong developed markets and asian markets. >> it's time to go shopping. >> buy into this weakness. >> it's too early to make big decisions to buy. >> we expect near-term weakness. >> there is too much uncertainty at this point in time. >> it's not time to buy yet. this is something that needs to play out over a longer timeframe. it depends whether you think -- >> more panic selling. >> it is important to look at the fundamentals. >> some resolution of the virus -- some of our guests reacting to the market selloff as china returns from the extended lunar new year rake -- break.

beeneather that has stemmed in today's open. let's take a look at how existing markets are training -- trading right now in the wake of that. the nikkei 225 down by 0.4%. we have developing news on the coronavirus story. a cruise ship in europe quarantined. the kospi bouncing back. australia, a little bit of positivity going into the rba rate decision. the rba having contend with tourism and consumption aspects of coronavirus and travel restrictions as they impact bushfires as well. shery: it is all about the coronavirus headlines at the moment. mulling a second flight to bring citizens from wuhan.

the farm sector will likely take a hit from coronavirus. as. futures unchanged after cautiously risk on session during the regular session. taiwan futures higher. lowest level since october. weakenedore yuan is amid reports the u.s. and china could be seeking flex ability on that phase one trade deal. coming up, we will speak to citigroup's global commodity market strategist. i want to bring you all the latest from the iowa caucus. markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. "china open" is next. ♪

> 9:00 in beijing. 8:00 in new york. welcome to china open. >> we are counting down to the open of trade and in hong kong, these are top stories today. china struggles to contain the coronavirus as deaths rise. u.s. foray ask the flexibility. the outbreak putting pressure on macau. casino operators were already facing a slowdown. >> democratic