haidi: a very good morning. i am haidi stroud-watts in sydney. we are counting down to asia's major market open. sophie: i am sophie kamaruddin. welcome to "daybreak asia." president trump steps up his attacks on china. fears grow about a humanitarian catastrophe in india as coronavirus cases soar with the

fallout to spread beyond the walls largest economy. as the brexit bluster ramps up, why boris johnson's threat is leaving most economists and traders unruffled for now. haidi: let's take a look at how we are setting up when it comes to the asian trading session this tuesday. u.s. markets remain largely close for the labor day holiday and this is how we are shaping up when it comes to the futures session, looking like we could get some positive momentum going into the resumption of trade. s&p active futures up .7% after the s&p closed at the lowest level since august. we have the tech selloff really continue until full force on friday and will have to see whether that resumes when trading resumes later on this week. the nikkei 225 is up by .3% when it comes to the future session as we get the leadership race in japan officially kicking off dollar-yen pretty steady. 106 and a. we have the dollar rising

against every g10 peer. the u.k. is getting closer to that no-deal brexit scenario. new york crude settling below 40 u.s. dollars and continuing to see slippage in the asian session as well, sophie. donald trump has ramped up his anti-china rhetoric, vowing to sharply scale back u.s. economic ties with china. pres. trump: we will end our reliance on china once and for all, whether it is decoupling or putting in massive tariffs. we will impose tariffs on companies that desert america to create jobs in china and other countries. if they cannot do it here, then let them pay a big tax to build it someplace else. we will prohibit federal contracts from companies that outsource to china. to maketrump is seeking

china an election issue and portrayed joe biden as a lackey of beijing. derek wallbank has more. this a rhetoric, is dream for china hawks in the u.s.? derek: well, it is fascinating that donald trump would say the word coupling when you're talking about china. that is something that even if it is rhetoric, it is something that you have to pay attention to because what donald trump is outlining here is what he plans to do over the next four years if he is reelected. the biting campaign is coming back and saying essentially that these are just words from donald trump. is noting campaign necessarily losing sleep on the idea of donald trump outflanking biden- the biting can -- campaign is not necessarily losing sleep on the idea of donald trump outflanking them. he was still trying to get that phase one deal, you know, over

the line, and then right after, it was over the line. there was a little bit of tit for tat here but what you are seeing is another manifestation of the idea that being tough on china is going to be a massive election issue on foreign policy. biggest be one of the foreign policy issues in the u.s. election. the last point i want to make on that real quick is that a lot of people have had this underlying assumption walking into the u.s. election that whatever was going to happen in terms of rhetoric, trump wanted the market to be superhigh, so he was going to ease off in some way on china because that is what his ultimate goal was. what we are seeing two months before the election is that it seemed like both candidates have assessed that their best option is to take a tough on china

line. of gettingerms tough, we are also seeing a change in tone when it comes to in china.l of visas this has affected a number of american news outlets in china including bloomberg. we are hearing this morning that australian news outlets have pulled their journals out of china as a result of these concerns over security and safety. derek: yes, that is right. what you are talking about here these passes that allow you to get your resident pass, that allows you to work for 12 months, instead of getting 12 months, you might be getting two months or things might be a little bit more complicated than they would be otherwise. this is stretching back to something that china assesses that the u.s. is making life harder for journalists in

america, and so, what they are looking to do here is have a little bit of reciprocity on this and give the trump thenistration limits to number of chinese journalists that are in the united states, and a lot of the ones that are are therefore state-owned or state-controlled kind of outlets. they ares limited, threatening very specifically to respond in some amount of force. the thing that is difficult here is that for years and years and years, the u.s. has assessed it is better off to have these folks in america, these chinese journalists in america, they say even though they might be state-controlled outlets, even having them here give them exposure to what is going on in america that is better. the trump administration, it's ,ossible, is reconsidering that

and again, you know, this is one of those things. you see these fractures in the u.s.-china relationship on all sorts of issues and they manifest in bigger and bigger and bigger ways. indi: derek wallbank singapore with the latest. let's get you the first word headlines. the e.u. warned boris johnson over his latest plans for brexit. the european commissioner president, ursula von der leyen, responded to threats. sets a deadline. trade talks resume this week. the pound fell as much as 1% against the dollar. taiwan's exports surged to a record. shipments from taiwan rose by 8% last month from a record high of $31 billion. that was more than the most bullish of estimates and it saw

a gain of less than 1%. fears are growing over human and economic crisis in india which now has the world's second highest number of coronavirus cases with over 4 million infections. it has already suffered the biggest growth contraction among major economies with gdp falling by 23% in the second quarter. globally, cases of covid-19 are at more than 27 million with 890,000 deaths. the reserve bank of india is setting new rules for lenders looking to restructure loans that have turned bad because of the coronavirus. they now need to consider financial parameters such as liquidity and debt servicing ratios. the central bank identified 26 sectors at risk with carmakers, aviation, and tourism at the top of that list. still ahead, we are counting down to the latest key economic data out of japan this hour, including second-quarter gdp which is likely to be revised. we will rate those numbers as

they come in but we look at why m investors might need a new playbook for the rest of the year as laggards start outperforming. state street macro strategist emily weiss joins us next. this is bloomberg. ♪

sophie: there is an emerging markets shift underway. there are signs of laggard -- matlack guards are starting -- are starting a phase of outperformance. joining us now is emily weiss, a macro strategist at state street. we have em laggards starting to outperform but is economic growth encouraging enough to sustain the advance? in china's trade report, we saw exports looking resilient but

that was at the cost of em competitors that have been hit by the pandemic. emily: i think that really is key to seeing further performance. for investors to fully commit to emerging markets, they need stronger growth expectations, and that can come through either revival of the global trade cycles to countries that are not able to get that demand really sometically, and there is spillover effects, or you have to have long-range fiscal policies domestically that are able to boost consumption and provide a little bit in these more trying times. what we have seen over the last few months is that it really has been that growth differential you mentioned that has been driving what emerging markets outperform versus the old which has not as much been enough of a factor given the risks that still remain. governments face a delicate balancing act. in india, the former b.i. that relief for

the government -- from the government has been meager and that the strategy to conserve resources for future stimulus is self-defeating. in his outlook, that has yet to improve, and government borrowing may exceed $164 billion, but the rupiah is asia's best performer. are you looking beyond the near-term when it comes to india? emily: right now, we have an immediate issue, the pandemic and the ultimate aftereffects, that are still being dealt with, and they are still very real. india became one of the countries with the second-most cases of coronavirus, so certainly, it's not soon enough to say we are on the others have this pandemic. given that, i think in the immediate term, we are still looking favorably among governments that are able to provide that stimulus. views i want to get your in terms of your constructive calls on india and indonesia in that em space. i want to throw out this chart

that takes a look at the india 10 year which had one of its best weeks we have seen in years. the rba fueling the rally, capping just a great week. we have seen that play out across much of the em space, this of course as we have record low situations across much of the developed bond space. jp morgan assets saying it is time to stop making get rich bets on bonds. when things go wrong, things can go wrong very quickly? emily: there certainly are always concerns about that, given history, however, i think one thing that is important to watch this time around tends to be more on the inflation side. we have started to see some inflation pressures reappearing, notably some higher than expected in mexico, even russia. we are seeing that resurgence in inflation. it's not yet a concern for me given you expect somewhat of a bounceback after we have this sort of drastic deflationary

force, but if that continues, that's obviously a concern. based onntioned, also, how much governments are able to issue debt and how much investors are willing to buy that debt if they are there for an extended time to deal with the economic recovery. quite staggering the kind of mindset investors are having to adjust to. you take a look at debt markets, where capital preservation is a cornerstone, and everyone is thinking central banks have our back at the moment and nothing can go wrong. you look at stocks and tech and valuation metrics are being cast aside as well. what is the right approach? if you don't want to miss out but still want some level of conservatism or value in your portfolio. emily: at this point, we are starting to look at where we will outperform outside of the areas that have already outperformed so far. ,ech and the em equity side

china is having one of the better performance year to date. when you have investors more comfortable after we did not see the volatility that might have been expected in august, we are starting to feel more comfortable extending out the higher carry market, so you mentioned areas that have traditionally lagged from this move that are catching up over the last month. india and indonesia stand out in that regard. it's may be the environment looking a little overdone on the dollar move weaker. we started focusing more interregional plays, looking to take advantage of those trends in order to may be a look at some of the countries that have outperformed like china, south korea, taiwan, areas vulnerable to the global demand, looking to pick up quickly, looking for a relative value catch-up. they are not quite seeing that same outperformance. appreciate your time as

always. emily weiss, state street macro strategist. coming up next, the worst place to get the coronavirus. putting on track to overtake the u.s. as the worst hit nation. we will get the latest. this is bloomberg. ♪

haidi: india is adding new coronavirus cases faster than any other major outbreak, meaning it could rapidly overtake the u.s. president trump says the u.s. could approve a vaccine in october. let's get to our guest for more on the latest. what would this mean from a public interest perspective? >> if you are to look at it, there's many public health officials and scientists that have expressed concern that the fda is under pressure from the white house to approve a vaccine before trump faces reelection in november. because of that, americans might be unwilling to receive a shot

if they believe it was rushed to market based on the campaign timetable. he is hinting it could come in in october and that is ahead of the november election so we could end up being back to square one if no one is willing to go out and get the vaccine. there is a new study released in hong kong that shows covid-19 patients may have prolonged viral infections even with the absence of symptoms. what are the implications? >> basically what they are saying in the study is the virus may continue to infect and replicate in the digestive tract after clearing in the airways and that is according to a study being done. basically what they are saying is this virus spreads mainly through respiratory droplets, virus laden discharge from the mouth and nose, but since the first weeks of the pandemic, scientists have actually been

saying that infections of the virus -- in the stool of patients that may play a role in the transmission. you might be feeling better from throatg and perspective, breathing fine, but that does not mean your digestive system is not impacted by this and it might still be in your system a few days later. in the -- haidi: meantime, india surpassing brazil as the second worst hit country. it seems almost destined at this point overtake the u.s. in the numbers. is there any sign that the curve could flatten out? divya: at this point, it does not look like it. they added more than 71 thousand people that died from the virus in india. they recorded over 90,000 cases overnight. that is massive. it does not look like the curve is steepening at this point. unfortunately, it's not looking

good for india at this point. , thank you.a balji russia's health ministry says the first batch of the so-called sputnik five coronavirus vaccine has been produced in the general population. health officials outside russia have raised concerns the shot was approved even before clinical testing had finished last week. bloomberg spoke with the ceo of russian direct investment fund, which is backing the vaccine. >> we saarbruecken announced -- we saw britain announced that. you have to understand technology. on thehnology is based virus vector which is an approach that has been proved safe over the last decade. -- vaccine since 1971, so it's very different

from other approaches. -- ofly do we have great course, it's great and right that russia registered it. we have forced registration trials of more than 40,000 people in russia and saudi arabia. you mentioned those other countries. how many other countries have expressed interest in buying and how many have signed binding agreements? one billion doses that will be announced starting from this week. where than 20 countries who would like to pursue it and countries who want to pursue it understand it's a bit different. for example, the financial approach has been studied a lot. approaches have zero long-term studies of long-term

effects including possible increase of -- cancer and infertility. we are confident most of the countries want that in their portfolio. we are not the only ones doing this. it's also johnson & johnson. there's no question that the vector is by far the most researched, safe, and prevent technology in more and more -- and more and more countries appreciate that. >> anymore countries that have reached out to get doses of this vaccine? >> we are in some discussions with european nations but they had quite a bit of focus on the market. we understand there will be -- some of the producers about those vaccines. i don't want to repeat too much. those vaccines -- no long-term research. the clinicalall of trials. just been approved. politics prevents some of the countries to work with pressure,

but most of the country, latin america, middle east, asia, incredibly strongly. we will produce more than 300 million doses of our vaccine in india, very strong international partnerships. do you know if president putin has been offered the vaccine, and if so, has he agreed to take it? and theoscow's mayor defense minister, similar ages to president putin, have taken the vaccine. >> i don't know. it industry minister, i took with all of my family, including 74-year-old parents. we are confident in the vaccine because we know the platform is incredibly safe. for example, one of the criticisms, people say it's only 76 people, and astrazeneca did 1000 people. if you look at astrazeneca, they gave two short regiments. short onesy do two

going forward. if you use it, then russia could give four times more people the push that astrazeneca did. there are lots of details. people who understand the lands are confident in the vaccine. we are supportive of many vaccines out there but it's important that they check the long-term consequences and they are thoroughly studied as you said before they get approved. our guest speaking to matt miller and anna edwards. let's get you a quick check of the latest business flash headlines this hour. the founder of netflix says working from home has no positive effects and make it harder to debate ideas. he says his workforce will not have to return to their offices until a vaccine has been found. he expected that workers will spend at least one day a week at home. hastings says remote working is particularly bad for international relationships. jp morgan is doubling the number of investment bankers coming back to its new york and london

offices as wall street inches back to pre-pandemic work arrangements. wantsnking giant dealmakers to be at their desks on any given day. jp morgan's staff will be allowed to work from home on a one week on, one week off basis. new zealand reported a drop in passages of around 57% on year for the month of july despite being one of the countries to most successfully tackle the coronavirus. exporters have been shot. domestic flights limited. new zealand's revenue from passenger traffic was down almost 87% on year. just ahead on "daybreak asia," the brexit roller coaster continues as the year-end deadline looms. the u.k.'s chief negotiator is demanding realism as talks drag on. we will get the latest, next. this is bloomberg. ♪

sophie: breaking lands from japan when it comes to the economic front. we do have the decline in japan's household spending deepening, off by -- on a yearly basis. deeper contraction that we saw in june. this is rising virus cases which seem to be a drag on sentiment. slowing retail sales that we got in july. some optimism of bloomberg economics is recovering this month on government relief yet -- cashor cash earnings earnings falling 1.3% on a yearly basis in july after we

saw the drop moderate in june. let's discuss the data as well as japan gdp figures in the latest hour with yes per coal -- with our guest. let's get you a check on the first word headlines this hour. president trump has taken another shot at china as rhetoric rises in the u.s. faces decoupling on tariffs from the u.s., and american companies will be banned from winning federal contracts. china is raising the stakes and reports plans to launch a global data initiative of its own to counter washington's latest restrictions on chinese tech. pres. trump: we will end our reliance on china once and for all, whether it is decoupling or putting in massive tariffs like i have been doing already, we will impose tariffs on companies that dessert america to create jobs in china and other countries. if they cannot do it here, then let them pay tax, build it

someplace else, and then send it into our country. we will prohibit federal contracts from companies that outsource to china. haidi: china has been accused of delaying the renewal of press credentials to some journalists working for u.s. media outlets including bloomberg. cnn, wall street journal, and getty. an official tweeted that applications are being processed and reporters will be able to live and work in china while that happens. the holdup is seen as a countermeasure to restrictions placed on chinese reporters in the u.s. leader --n opposition official, in berlin and is said to be responding well to treatment. the german military says he was poisoned by the nerve agent. angela merkel has promised a coordinated response for european union and nato allies and is threatening to pull out of the gas pipeline project. the men accused of killing critics of jamarcus o'dea -- jamal khashoggi have escaped the

death penalty. five of the eight have been given the ultimate punishment. that was commuted after his son said he had forgiven them. saudiggi was killed by agents istanbul. europe issophie: telling boris johnson not to tear apart the accord he struck a year ago. u.k. prime minister is ramping up the spread to walk away from the e.u. at the end of the year without a new trade deal in place but the roller coaster ride does not seem to be interesting. our managing editor, mark cudmore, is on the line, seeing it daddy early in asia, this after it extended its losing run overnight. the longest losing streak since june, but the specter of a no-deal brexit, not really seeing anxious return for investors. storyi think this is a which has board investors in many ways. if you are outside the u.k., and it is not affect -- directly

affecting your life, it seems like this saga is never ending. this is a cliff edge moment. yet the u.k. economy is rambling on. there are some important things to note. it is normal and on in a poor state. the u.k.'s set to see one of the largest contractions of any major economy in the world this. it has still got a structural current account deficit and it has already got extremely easy monetary policy. there's not much else they can do. low yields are not a good combination for the currency, especially when the economy is slowing down. what i am trying to say is that, overall, the fundamentals for sterling are looking pretty negative anyway. it is just that we have completely priced out the brexit risk premium. the positioning is balanced in the currency. brexit is back in the radar and people will feel comfortable getting back short the currency as we get to these brexit negotiations. it will still keep on being a roller coaster. it will not just be one way negative.

haidi: looking ahead to the start of trading proper in asia, are we expecting to see a buy the dip, follow the leader session? mark: that is the $1 trillion question. certainly, that is what we saw in europe as the initial take. i think it is very important to see how the u.s. session trades more than the asia session. that means after the labor day -- the retail investor in the u.s. copes with the fact that tesla did not join the s&p 500 as expected, how they cope with the weakness in the tech sector in nasdaq. related trade, that will squeeze more positions. probably see the dollar short squeeze a little bit. we have to judge it by the end of the week and probably not so quickly on the monday session that was impaired by the holiday. where will we be by this time tomorrow? it's a lot less clear.

cudmore with his views. we will get more insights when it comes to the brexit negotiations in the next hour of "daybreak asia." we will be joined by the director of the institute of global finance at the university of new south wales business school. coming up next, a two-year high. we will get an outlook on commodities, next. this is bloomberg. ♪

sophie: let's get a snapshot of how markets are shaping up this tuesday morning. s&p e-minis gaining ground, up .1%. nikkei futures were on the event. typically gains for tokyo as they kick off the election campaign for the ldp party. patch, oilodities extending to retreat after saudi cut prices to asia. check out copper futures continuing to edge higher as the baseetal surge comes after china reported a third straight month of imports above 600,000 tons. let's cross to david stringer for more. copper at a two-year high despite the hit from coronavirus to global economies. what is driving those gains? >> that's right.

copper registering its highest close yesterday in two years. looking for further gains. you can read that is quite an optimistic signal more broadly, yet not only do we see chinese import data underscored with very robust demand but we are also seeing rising exports out of china, which points to a recovery elsewhere. it really does look like a positive signal more broadly for the global economy at this point. chinese copper imports in august, they were down a month earlier but they are still the second highest on record and we have really seen those volumes elevated in recent months as authorities borrowed more infrastructure projects which need more of the metal. look at want to take a gold. what are investors looking at this week of prices that edged lower in the overnight session as we saw the rally in european equities? is this rally looking a little

bit tired at this point? david: i think that is right. we have kind of seen gold trading somewhat sideways for the past number of weeks. investors really struggling to assess the impact of some positive economic data against the potential and the impact of some of the rising spots of infection and rising number of cases of coronavirus in some areas. there is a focus this week. we will see the european central bank meet on thursday. obviously, we have seen the federal reserve come out and talk about the policy framework that tolerates higher inflation. a lot of eyes on christine lagarde and what she has to say on thursday. that could be a potential focus for gold investors this week. haidi: our energy and commodities senior reporter, david stringer, in melbourne. australia has $200 billion lng push has been undermined by climate issues, amid ambitions

to become the largest natural gas exporter. tony noonan told us what all of this means for a revival in energy demand and the shift towards more renewables. >> short-term, there's absolutely uncertainty. i think what is key is that if we step out over the longer-term time horizon, i think the trajectory we are on with the energy transition remains the same and we see, particularly for australia, tremendous opportunity for us here. we are really well-placed with renewable resources we have got. the sun shines, the wind blows, and i think we have a great opportunity as a nation to be able to build a renewable energy system that works for customers, ones that are reliable, affordable, but also one that's clean. haidi: the government has really been pushing its message for a gas-fired recovery from covid-19. is that the right messaging, do you think, and do some of these hurdles created by covid-19 and the pandemic create further challenges for renewables

investment or at least create excuses to set that back? >> we see gas as being a really important part of the energy system, particularly today, but also into the future. is the perfect partner for the long-term switch to renewables. the reason being that when the sun is not shining in the wind is not blowing, we need to be able to have other products and gas provides a great partner to that. likewise, so does pump hydro. the focus on gas and the desire as a country to make sure gas is an important energy source for us in the future is an important one and certainly one that we support. amount ofgnificant spending has happened in the past 12 months. what is attracting you to spending down under? >> we are really fortunate that we have a wonderful natural portfolio in our country and our

focus is on making sure that is as competitive as it possibly can be to provide that important fuel for customers globally, but in addition to that, we do see the opportunity to help the transition of our energy system for cleaner sources at what we have been doing in australia is investing in both our lng and gas businesses but also into power and renewables because we see that as being the future of the energy system, but most important, we see that is what our customers want long-term. sophie: the transition towards renewables in australia has not been without its challenges. when you compare the experience to other comparable nations, what can be done better in australia to facilitate that transition? i seei said before, australia as being extremely well-placed because of the natural attributes we have here to be able to create a renewable energy system that actually works for our customers. i think the most important thing

is that we do not bank on any one solution. it will require multiple solutions that seamlessly integrate. what is important is for the supply-side to be able to work closely with governments but also to work with customers to ensure that all of those options are made available, that we continue to invest in future energy systems but we also do it in a way that ensures that it works for our customers. it has to be reliable. it has to be affordable. there's been a lot of speculation in the media you are looking to sell off infrastructure assets related to your lng exports asset. can you share with us how far along that process is? >> there's lots of speculation around the common facilities for us within our plant. i am not in a position to comment other than to say that the project itself is a really important asset for us and i think that our decision earlier this year with our partner,

petro china, to continue investment in the arab project -- it speaks for itself about our view of gas in queensland. haidi: for our viewers, i need to ask you about the prelude. this is a $17 billion facility that has not shipped cargo since january. can you give us an update on how the repairs are going, and when do you expect a resumption there? >> prelude is a really important part of our portfolio and it is an important investment and it is an investment we have taken with a multi-decade time horizon that goes with it. we are in the process of hydrocarbon restarts for prelude but it's a process that we will make sure we do right and we will make sure we do safely and it will take as long as it takes to do those two things right before we bring it back up again. sophie: still ahead, we are watching out for the gdp figures out of japan this morning.

we will discuss the outlook for the economy and the leadership race with wisdom trees japan ceo next. if you are away from the screen, you can find in-depth analysis and the days newsmakers on bloomberg radio, broadcasting from our studio in hong kong. this in via the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. this is bloomberg. ♪

haidi: japan's ruling democrat party started to campaign for a new leader on tuesday. sugahould he do ceva it -- is seen as the front-runner. there is expected to be a dire set of numbers. let's wrap this up with iesco coal -- jesper cole. is it a foregone conclusion that suga is the man to take over from shinzo abe and markets are sanguine about it? you have seen the stability in the yen as well. >> yes, absolutely. i think suga wants the job. he has done the right were of building the consent -- work of building the consensus in the ldp. japan has a very stable government with consistent economic policies in the

post-abe era. of policyterms continuity, that is something markets have expected and are welcoming. is the studyga hand, but can he do anything more where abenomics has failed? jesper: that's exactly the key point. you know, you will see the restart of a proactive gross policy. a big focus on industrial consolidation. japan has an industrious structure that's too fragmented, too many players, and m&a activity -- tax incentives is the thing that's very close to heart.n's he is now going on about setting up a new ministry, a ministry for digital and cyber, and that

will be very exciting because there's a lot of outdated i.t. equipment. it can upgrade to the digital age very aggressively if the new prime minister has that symbol. in terms of the capability of the japanese economy to be able to return to the pre-covid size, we are just getting the breaking numbers when it comes to the gdp print. japan second quarter gdp coming in at a contraction of seven point 9% quarter on quarter. that is marginally better than estimates of a contraction of 8%. when it comes to an annualized basis, we are seeing contraction of 28.1%, more or less in line with expectations. the current account surplus also coming in as well. ascourse, the gdp is ugly, we expected, given we saw the lockdown as well as a decimation

of services for tourism and retail, so my question going on before that is whether there is a capability, structurally, for the economy to return to its full potential without some of these difficult structural reforms, laborforce reforms, immigration reforms we were talking about earlier. jesper: absolutely. when you look through the the april, june quarter, and then the rebound in the current quarter, this is a japanese economy that can grow between 1% to 1.5% and it's very business to know investment expenditures. corporate japan, whether it is for large companies, smaller and medium-sized companies, there operating their capital stock. with the new prime minister, industrialing on consolidation and on digital upgrading, i think that the business investment expenditure side of the index will be the source of continued strength in

japan over the next couple of years. 's reforms -- suga business investment dropping by the most in 2010 in the june quarter and that flags the downward revision we saw in the latest gdp prints. jesper: again, right now, with the covert stock, we would know what happened. the issue is, again, the structural trend that japan is going for. you know, i think that whether you speak to the leaders of hitachi corporation or whether you speak to the leaders of some of the small and medium-sized companies, the ability to upgrade their capital stock, to move to the digital age, is there. they have lots of cash. if you get added tax incentives from the government, which i certainly expect under par

seester suga, you will it growing -- prime minister suga, you will see it growing under the next couple of years. sophie: turn into the consumer side of the equation, we got july household spending data listing for a 10th straight yearly drop but the massive support programs that are in place, do you see those working? what is the outlook for the consumer in japan? jesper: for the consumer, the good news is that the structural shortage of labor does actually create a bit of a buffer in the sense that right now, of course, you have the increase in unemployment, you have the government support programs here in japan coming through, but structurally, there is a shortage of labor, a shortage of skilled, and as a result of that, i expect the increase in wages are actually going to be relatively strong, may be

running at a rate of around 1.5%. haidi: are there concerns when it comes to the foreign relations side in terms of what kind of direction suga is likely to take? shinzo abe is shoring up the u.s. alliance. how crucial is that in an increasingly bifurcated world when it comes to trade? jesper: it's very interesting because suga is all about the domestic business community, about the domestic economy. the foreign affairs part, you know, the defense part, that's really something that he would outsource to younger politicians like the current defense minister. the one thing that i am personally very focused on is actually the relationship between japan and india because of course, you know, the u.s.-japan relationship, the japan-china relationship, let's just be honest. these are very dense and well

trodden and well analyzed, you know, and well staffed relationships between countries, but where prime minister abe made it difficult, he brought india into the foray. it will be interesting to see the japan-india relationship mature further onto to the next prime minister. thank yousper koll, so much. a quick check of the latest business flash headlines. samsung has won a deal to provide 5g wireless solutions to verizon in the u.s., a big win for the business. the contract is valid through the end of 2025. the deal marks one of samsung's biggest contracts. it decided to take on the likes of ericsson, nokia, and huawei, which is battling u.s. sanctions. isancial times says ab invev replacing carlos brito. he led the brewing giant through

a series of takeovers as it transforms into the world's largest -- outside candidates are being considered. he has been ceo for 60 years. apollo global and lone star is set to be finalizing their final bids to buy a supermarket chain. walmart, which owns the grocery business, called for second-round bids by early september as it looks at business in the u.k.. it had $10 billion in any sale. they submitted bids earlier this year. coming up on the next hour of "daybreak asia," global join us to talk investment strategy and how he is positioning. next inet open is japan, korea, and australia. this is bloomberg. ♪

sophie: welcome to daybreak asia. major markets have just opened for trade. looking at gains as traders look tech draft. threatening to decouple the economic relationship. and japan's ruling party is

contesting for a new leader. take a look at the open in tokyo. ising .4% while the yen holding steady around 106 levels. numbersg the latest gdp that it was slightly worse than originally estimated. just gaining ground here. it officially begins their campaign for a new leader. hard-line stance. we are waiting on the finance ministry to release its monthly budget report. one 400 points after a simple lead rebound with chipmakers benefiting from challenges. firming ever so

slightly back above 1188. more relief is on the horizon. planning the possible sale of dollar and euro bonds. korean bond yields have been pushed higher. haidi: let's take a look at how we are setting up in this art of the world. cash trading taking place in sydney with a gain of just above 1%. increasing concern about the deteriorating relationship between australia and china. two journalists have been forced out of china. they have arrived in sydney after a diplomatic standoff where police arrived at their homes, demanding interviews both reporters for nationals -- national security issues this

comes after we had the story about the australian journalist working for the state media. attained for almost weeks now. we will continue to watch the fallout for that. -- detained for almost weeks now. we will continue to watch the fallout for that. questions a lot of about what happens when u.s. markets return after the long weekend. a portfolio manager at investors is joining us out of hong kong. where to be go in this market? fundamental perceptions when it comes to value metrics and bond market functions are being tossed out the window. the are starting to see that selloff. you see this as an opportunity to enter? >> indeed. we believe that the economy

continues to recover. in central bank is still panicking mode. we do not expect to draw with -- liquidity from the market anytime soon. the second quarter, they start to pick up as well. it makes us believe that allocating to equities is still the right way to go about it. momentum was too strong. valuations look a little expensive. if there is a market correction, it makes sense. how much -- haidi: how much em opportunity d.c.? dollar weakness has not helped but it broadens em equities. ethics value and market --

historically, the em has done well when the euro weakens. trigger to remain stable. in either case, given the fact that the em recovery appears to be on track, along with what we are seeing -- sorry, go ahead. sophie: i did not mean to interrupt. please continue. iswhat i am saying essentially getting money out of funds.rgency market everything combines together. a pickup in inflation expectation. they should do well.

sophie: sorry. i just wanted to turn to bonds really quickly. where do you stand when it comes to bond space? >> i'm saieh. say that again, please. -- sorry. say that again, please. sophie: i seeing pitfalls in bonds -- are you seeing pitfalls in bonds? that is one of the reasons why equity looks more promising. on the fiction side, we are advocating lower. limitede fact that is in buying sovereign bonds, it

has shifted to preventing -- reducing volatility. sophie: will this spread further? >> i'm sorry. that was not clear. say it again, please. sophie: turning to corbett bonds lens, we are likely to see investors with or money in that space. our they going to bashar they going to compress further? they going to compress further? >> yes. they are at historical low averages. we think investors will continue to buy them at the shorter end of the curve. with theintaining

intention of getting the care yield. will you continue to see futures spike going into the november election? is this a risk for the markets? a delayed election result. biggest from the outcome analysis. we found that it does not really make a big difference whether you get a democrat or republican. you contestk is if the election results. --had an episode a few week years back. markets do not like that. this market, despite equities

,re at an all-time low -- hi the risk is higher than what they were earlier this year. the rates are significantly higher. election outcomes are accepted, it does not really matter whether you get a new -- blue wave or a red wave. [indiscernible] sophie: thank you. still ahead, brexit negotiations reach a critical point this week. the instituterom of global finance. tensions between washington and beijing on the rise as president trump makes china a central election issue. the latest is coming up. this is bloomberg. ♪

sophie: you are watching daybreak asia. johnson over his latest plans for brexit. johnson has said -- set in october deadline. the dollar1% over overnight. has the in india, which second-highest number of coronavirus cases with over 4 million infections. it has suffered a major growth contraction. morelly, cases are now at than 27 million with 890,000 deaths. from a coma in berlin and

responding well to treatment. angela merkel has promised a coordinated response to the european union and nato allies. of killingused jamarcus og have -- jamaal from --i have escaped he was killed by -- escaped from death. the china rhetoric vowing to -- with china. president trump: we will in our alliance with china once and for all. we will impose tariffs that --

tariffs. if they cannot do it here, let them pay a big tax to build it somewhere else to send it into our country. we will prohibit federal contracts from companies that outsource to china. haidi: president trump seeking to make china a key election issue. president trump is really trying to draw a contrast between him and what he says joe biden platform towards china is. contribute tothis what we see between the u.s. and china? >> a lot of this is campaign rhetoric right now. we are in a crunch time with the campaign. is trying to portray

best defender of america's interests versus china. there is not a decoupling in that sense, but what his administration has done over the , protection and selling off american data from the chinese, which we saw with tictoc and we chat. if that is extended, that could have an even bigger effect on decoupling down the road. in the tit-for-tat between the u.s. and china, beijing had to delay credentials . what is the latest sherry? -- here? >> that is what was said yesterday. it looks like the chinese government is trying to get

there ducks in a row, in case -- themp administration trump administration put the chinese journalists on 90 day visas, so the next time they are up for renewal is early november. letters,getting telling them, you can work in the country until november 6, which coincides with that time period, but it looks like they are lining up for some kind of tit-for-tat response. the foreign ministry said they would still want to work with u.s. journalists, but it hinges on what the administration does, and how talks go, going forward. we are seeing condemnation from foreign correspondence, responding to the news this morning.

heard about reverter -- reverting. chinese police wanted to speak to them as people of interest. how much does this contribute to the deterioration? and the lack of potential coverage by foreign journalists, globally? than thene, even more fact that china is changing the case hass -- this really spooked beijing because it involves security and it could lead to a situation of arbitrary detention, like we have seen with the two canadians

who were taken in. this led to what appears to be an extraordinary diplomatic where they were taking embassy.n the we are not clear what this is about. the australian tv anchor that was taken in not long ago. connected. abc has not said exactly what he was questioned about. it did say it involved his reporting in the country. hurtinly, it will negotiations.

it will spook the wider community in beijing. the government managing editor in hong kong. kicking off the leadership campaign. we take a look at the challenges ahead. this is bloomberg. ♪

sophie: japan's ruling democratic party officially starts its campaign for a new leader in the coming hours. comes as final second-quarter gdp numbers show a slight widening in the economic contraction. tokyo, what are the chances of a surprise in

this upcoming election? >> that is a good question. unless there is an unexpected event cropping up, we are less certain to have prime minister man asall day's main prime minister in the coming weeks. this really favors lawmakers in the party over the rank and file membership. in that case, the factions within the party, which are very powerful, maneuvered behind the scenes. guaranteed toless push through. there will be a series of debate and speeches and press competences over the coming week. they will have a chance to make a different choice, if that turns out to be the case. haidi: we had the second-quarter

gdp, quarter over quarter. about thethat tell us prime minister? is there anything within the toolkit to be able to supercharge the economy? >> i think it certainly shows the task is larger than what we thought. the otheror revision way is obviously gone. the worst contraction on record. sayings that he wants to continue with the fiscal policy already in place, but he said, if it is needed to keep companies going, he is prepared to go even further. what is in the toolkit is hard to see, but he would be willing to spend more money to keep

companies on the go in the coming months. haidi: let's get a quick check of the latest business headlines at this hour. a billion-dollar deal to provide 5g wireless solutions to verizon in the u.s. it is a big win for the tech giant. the deal marks one of their biggest contracts since it decided to enter the business. u.s.are now battling sanctions. doubling the number of investment bankers coming back to new york and london offices. wants many giant other workers to be at their desks on any given day. jp morgan staff would be allowed to work from home on a one week on, one week off basis. makes a harder workforce

not have to return to the office until a vaccine is found. working is particularly bad for international relationships. has startedl times the process to replace its long-term ceo who plans to step down next year. series of takeovers as they transform. has been the ceo there for 16 years. to buy thefinal bids marketing, according to a report in the telegraph. walmart had called a second been by early september. it could fetch around $10

billion in any sale. they admitted their early bids earlier this year. sophie: let's take a look at the market action this tuesday. asian stocks are edging higher with australia's leading the gains. staying below 6000 or there about. it makes up most half the aussie benchmark. hitting gains for a second session. japanese stocks are rising with nikkei adding .4% as they kick off their campaign for a new leader to further economic growth, a key priority. it was worse than initially forecast. let's check on commodities this morning. oil is continuing to repeat --

retreat. they are adding risk when it comes to supply demand dynamics. you had crude hovering around 40. copper features are gaining .round we are seeing appetite in china increase. gold slightly under pressure this morning. this as investors with the projector he of growth with some signs coming through of recovery picking up and economies like china, following the numbers that we got. the new epicenter of the coronavirus. the surge encases and what it could mean for countries. this is bloomberg. ♪

haidi: this is daybreak: asia. president trump has taken another shot at china as election rhetoric rises in the u.s. he says beijing faces decoupling or massive tariffs and companies will be banned from winning federal contracts. china is also raising the stakes. >> we will end our reliance on china once and for all, whether it is decoupling or putting in massive tariffs, we will impose tariffs on companies that

dessert america to create jobs in china and other countries. if they can't do it here, let them do a big tax to build it somewhere else and send it to our country. we will prohibit contracts from companies that outsource to china. haidi: china has been accused of .elaying the renewal however an official tweeted that the applications are still being processed and reporters will be able to live and work in china. the holdup is seen as a countermeasure to restrictions placed on chinese reporters in the u.s. taiwan's exports surged to a record aided by suppliers to huawei rushing before the u.s. ban on sales. monthnts rose by 8% last with a record high of more than $31 billion. that was more than even the most bullish of estimates.

india is adding new coronavirus cases faster than any other major outbreak. that puts the country on pace to surpass the united states. jody joins us from hong kong. what is the situation in india and why are cases exploding there? >> what we are seeing there is, as you noted, adding a huge number of cases a day. more than 80,000 confirmed infections per day. inot of this is happening the vast hinterland, where more than 70% of its 1.3 billion citizens live. reservoir.h a fast the cases are growing at a very rapid rate. seeming inevitable that india is going to overtake the u.s. in

terms of cases. the prime minister is facing criticism for not doing more to help state and local officials fighting the virus on the front lines. if they don't stop it and try to put in place social distancing measures, cases are going to explode. but at the same time, these measures are worsening and economic contraction that is already among the most severe in the world. so it is a terrible choice for local officials. haidi: given what is expected to be a prolonged outbreak, what are we seeing from the are b.i. in terms of lending structures in the country? b.i. is trying to offer some guidance. basically saying that lenders have to consider financial parameters such as liquidity and debt servicing ratios while they

prepare a restructuring plan for accounts that have turned bad. 26 sectorsfied affected by the pandemic that can be offered a resolution. bankseally had to allow to alter the terms of loans for these cash-strapped borrowers. and of course this is expected to get worse with the cases now exploding there. why are cases rebounding in singapore? >> singapore is seeing this resurgence in migrant worker dorms, where they had declared that they had cleared this. although the risk of a wider contagion does appear to be small at this point, they had some investigations and contact tracing data show that there were recently confirmed infections.

that brings them to 12 in the past week. in the city state, they've gwen dulled to just dozens of cases following this serious lockdown at efforts to test, isolate, and treat high risk foreign worker community. they think the risk of this wider contagion is small, but it does show that continued difficulties faced by nations around the world as they try to curb the disease. japan recently experienced its largest wave of cases and we are seeing that in south korea as well. haidi: senior international editor jodi schneider there. coming up next, the return of the no deal brexit. shery ahn is joining us next. this is bloomberg. ♪

johnson's threat to walk away from the e.u. without a trade deal is leaving economists and traders unruffled for now. even sterling investors are less bearish than they were. let's get some analysis from the

director of the institute of global finance. chiefcross, the u.k.'s brexit negotiator, he's demanding realism from the e.u. little progress seen this week. what are the biggest hurdles? negotiations, as we know, it is not going well. i think the u.k. is putting pressure on the e.u. officials because they are demanding certain issues which are not in the spirit of the actual shoulddum, that the u.k. be free to walk away from the e.u. and not abide by certain rules of the e.u. i think issues such as state aid and fishing at the moment is part of the stumbling blocks. but at the same time, accepting

some of the e.u. rules with regard to environment, labor, these issues are becoming difficult for the u.k. to embrace. sophie: concessions from the e.u. on issues like state aid, that might not be enough for the u.k. he indicated that he is optimistic about a deal being met. what is the low hanging fruit that perhaps negotiators can come to terms with? >> basically i think the key issue is whether the european union is willing to create an environment for free trade within the two blocks. we've had too many rules imposed on the united kingdom so that the u.k. will have some flexibility as a sovereign nation. i think that is the issue that the e.u. is saying, because the

u.k. is such a large trading partner, we can't treat the u.k. like canada or japan, when they have free trade with the e.u. i think they are some of the issues slowing down the process. deal too you expect a be made? what we've seen with the pandemic, the global economic slowdown, the impact of that makes it difficult for either side to walk away from this. >> that is true. psychologically, the market is not as strong as it should be and the global economy is not doing very well. at the same time, boris johnson is saying he wants to have a good deal, otherwise no deal. obviously the two sides could significant amount of

goodwill, but at the end of the day, i think they should be realistic and come to some kind of compromise. as to whether it is going to happen in mid-october or drag on in november, i think it is wait and see. haidi: are we likely to see much movement when it comes to subsidizing of certain injuries -- industries? >> i think that is a complex issue. subsidies, in other words, the rightants to have its own to subsidize its own industry, whereas the e.u. is saying, i don't want you to subsidize your industry or other sectors so that you become more competitive and you can export more if you like to the european union market. i think that is something that the e.u. has been insisting

substantially. with regard to fishing, i think they could come to some sort of compromise. it is not as complicated as state aid and subsidies policy. sophie: what is your assessment of the u.k.'s internal market bill, which could risk these negotiations? something that is that i think, i wouldn't think the u.k. should take any risk, but the whole idea is that the u.k. wants to create a seamless function in trade with england, scotland, and northern ireland after the u.k. leaves the single market. calledpart of what is northern ireland protocol, northern ireland is subject to the e.u. code of customs when it comes to agriculture as well as

manufacturing. any goods going from northern ireland to the rest of united kingdom is subject to tariffs if there is no deal, and i think the u.k. is trying to see whether they can remove that barrier, so that northern ireland will remain a seamless part of united kingdom. but this is not in what has been agreed, if you like, in october last year. i think that is something that the parties this week are going to really think through, whether they can walk away from an agreement. we are now seeing boris johnson put an international treaty on the table. is this level of frustration that we are seeing because they don't see the e.u. side of

negotiators taking seriously their ambitions for independence? >> yes, i would say so. i think they are trying to signal to the e.u. that the e.u. cannot simply determine the outcome of these negotiations and the e.u. should also consider and respect the referendum outcome and the spirit of the referendum to ensure that in the long run there will be good relationship within the u.k. and the european union. pressure on ang number of fronts. director of the institute of global finance at the university of new south wales. we appreciate your time as always. asing up, jumping as much 119%. the chinese bottled water giant has emerged as the hottest for

recent investors. but are we looking at a growing bubble? this is bloomberg. ♪

a chinese bottled water giant has jumped as much as 119% ahead of its hong kong debut,

emerging as one of the hottest ipo's ever. more food and beverage players are joining in, reportedly planning their own listings before the end of 2021. our economist argues a bubble may be brewing in the space with institutional investors also jumping on board. fu spring been so popular? >> part of it is retail participation. they did a clever game. [indiscernible] the helps explain why retail subscription -- but more importantly, the industry has received very high valuation in mainland china.

some point it is going to go on to the connect and mainland investors will come in. haidi: so we are looking at lofty valuations even when it comes to professional money managers. do you see the rally continuing? >> it all depends. china's industry is on fire this year, partly because of the market. year to date, they have raised 2 trillion yuan, and all these professional managers, they care about earnings and predictive cash flow. that is why we are going to the food and beverage industry. but the thing is, if you considered the signature, the bond yields have to be lower. like a 10 year yield is up to the level that we saw back in

january before the virus. it all has to depend on what happens. if the yield keeps on rising, i'm afraid this rally is going to end pretty abruptly. sophie: the space is looking more and more crowded. >> yes, absolutely. all these stocks, how much flow is there? why theps explain valuation is so high. it is getting very crowded. valuation is so high. it is very common for companies in this sector to trade at above 50 times full earnings. that is very expensive. haidi: bloomberg columnist julie wren joining us. theng a look at australia, country's lng push has been hampered by lockdowns.

earlier, shall australia chairman tony noonan told us what he thinks that will mean for revival in energy demand and a shift towards renewables. short-term, there is absolutely uncertainty. if we step out over the longer term, i think the trajectory we are on remains the same. we see particularly for australia tremendous opportunity for us here. we are well placed with the renewable resources we've got. i think we've got the opportunity as a nation to build a renewable energy system that works for customers. . haidi: the government has been pushing its message for a gas-fired recovery from covid-19. is that the right message? do some of these hurdles create further challenges for

renewables investment, or create policy excuses to set that back? being a reallys important part of the energy system. it is the perfect partner for the long term switch to renewables. when the sun isn't shining or the wind is not blowing, we need other products. and gas provides a great partner to do that. so does pump i drove and things like battery storage. the focus on gas and the desire as a country to make sure gas is an important energy source for us in the future is an important one and one that we support. shell'sturning to investment in australia, what is attracting you to spending down under? fortunate thaty we have a wonderful natural gas analogy portfolio in this

country. our focus is on making sure that is as competitive as it can be. that, we do see the opportunity to help in the transition of our energy system to cleaner sources. lnge been investing in both and gas businesses, but also into power and renewables. we see that as being the future of the energy system and what our customers want long term. sophie: the transition towards renewables in australia has not been without its challenges. when you compare the experience to other comparable nations, what can be done better to facilitate that transition? >> as i said before, i see australia as being well placed because of the natural attributes we have to create a renewable energy system that works for our customers.

the most important thing is that we don't bank on any one solution. it is going to require multiple solutions. i think what is important is for the supply-side to be able to work closely with government, but also to work with customers to make sure those options are made available, to continue to invest in future energy systems, but also do it in a way that ensures it works for our customers. there's been a lot of speculation in the media that you are looking to selloff infrastructure assets related to your queensland lng exports. can you share with us how far along that process is? >> there is lots of speculation for us within our plant. i'm not in a position to comment other than to say that the project itself is a really important asset for us. i think that our decision this

year with our partner to continue investment in the aboutt speaks for itself our view of gas in queensland. viewers, i need to ask you about the prelude lng facility. this is a facility that hasn't shipped cargo since january. can you give us an update on how the repairs are going and when you expect resumption? >> prelude is a really important part of our portfolio and it is an important investment. it is an investment we've taken with a multi-decade time horizon. we are in the process of hydrocarbon restarts. we will make sure that we do it safely. it will take as long as it takes to do those things right before we bring it back up again. tony noonan. before we handed over to

bloomberg markets china open, look at how markets are trading in asia. stocks are snapping a three-day decline. we will be focused on trump's decoupling rhetoric. the kospi being led higher by chipmakers. samsung clinching a 5g deal with verizon. the asx 200 adding more than 1%. now consumer and financials. among the gainers on the nikkei, tech shares are bouncing. the pace of recovery has been better than expected. softbank continuing to slide, falling to a july 2 low. nissan shares under pressure. the carmaker has hired banks for eurobonds. and those shares are gaining ground after the brewer announced details for share

sales, the proceeds of which will go to paying down debt. we are going to get more market analysis over the next hour. b.n.p. paribas global head of markets forex and global investment portfolio manager will take us into the china open. that is it for daybreak asia. our markets coverage does continue. this is bloomberg. ♪ so you're a small business,

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>> is not :00 a.m. in beijing and shanghai. welcome to bloomberg markets china open. >> we are counting down to the open of trade in the chinese mainland and hong kong. president trump sharpens his pre-election rhetoric against china, saying he will curb economic relations and bar companies that do business there from federal contracts.