WEBVTT - Latest from G20, Biden in Vietnam

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Richard Salama and I'm Brian Curtiz.

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<v Speaker 3>Here are the stories we're following today.

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<v Speaker 2>All right, we are looking now at Vietnam as if

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<v Speaker 2>it's formally upgraded ties with the US on Sunday, shifting

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<v Speaker 2>the relationship to the highest level of comprehensive strategic partnership.

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<v Speaker 2>President Biden said the US had an enormous economic opportunity

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<v Speaker 2>with Vietnam, making the comments during his first visit to

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<v Speaker 2>the country. Now, this does come as the US seeks

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<v Speaker 2>to make deeper inroads in the APAC region by offering

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<v Speaker 2>nations an alternative superpower to China. Speaking Hanoi, Biden denied

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<v Speaker 2>the United States is trying to contain China.

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<v Speaker 4>I just want to make sure that you have a

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<v Speaker 4>relationship with China that is on the up and up.

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<v Speaker 4>Squared away, everybody knows lives all about and one of the.

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<v Speaker 5>Ways to do that is to make sure that we

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<v Speaker 5>are talking about the same things. And I think that

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<v Speaker 5>one of the things we've done, I've tried into a

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<v Speaker 5>talk lestat about this from the last this six months

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<v Speaker 5>has been.

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<v Speaker 4>An opportunity to streathan alliances around the world, to maintain stoy.

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<v Speaker 2>Biden also told reporters that China's real estate industry is

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<v Speaker 2>facing problems, saying that President and Shijingping's plans for the

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<v Speaker 2>Chinese economy are not working.

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<v Speaker 3>Meantimes, sources say that Vietnam Airlines is entering an initial

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<v Speaker 3>agreement to buy about fifty Boeing seven thirty seven Max jets.

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<v Speaker 3>The deal could have a list price value of about

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<v Speaker 3>ten billion dollars. The actual amount after discounts is unknown.

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<v Speaker 3>In the deal, Vietnam's money losing national carrier would replace

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<v Speaker 3>more than forty older generation Airbus A three twenty one planes. Now,

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<v Speaker 3>this order is seen as something of a breakthrough for Boeing,

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<v Speaker 3>as Vietnam Airlines is currently an all Airbus single aisle

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<v Speaker 3>jet operator. We had reported back in June that the

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<v Speaker 3>airline was weighing in order for as many as fifty

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<v Speaker 3>Airbus A three twenty one Neo jets, and we haven't

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<v Speaker 3>been able to get in touch with Vietnam Airlines for

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<v Speaker 3>details on this. Whether or not that means that that

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<v Speaker 3>early report is no more.

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<v Speaker 2>Okay, let's move now to the sidelines of the Group

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<v Speaker 2>of twenty meeting, where Italy's Prime Minister Georgia Maloney told

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<v Speaker 2>China that Italy is planning to withdraw from the Belton

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<v Speaker 2>Road initiative. The most Joanna Won has more from Hong Kong.

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<v Speaker 6>Sources say Maloney spoke to Chinese President Chi Jinping about

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<v Speaker 6>Italy's withdrawal plan. Baloney also says she spoke to Chinese

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<v Speaker 6>Premier Lichang about the initiative, but a decision had yet

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<v Speaker 6>to be made. She's been taking her time before deciding

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<v Speaker 6>how to communicate her government's decision to exit from the plan.

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<v Speaker 6>Maloney fears trade retaliation after China's ambassador to Italy warned

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<v Speaker 6>of possible consequences. Baloney said the issue is sensitive and

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<v Speaker 6>she'll visit China in the coming months. In Hong Kong,

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<v Speaker 6>joined one Bloomberg Radio.

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<v Speaker 3>In other news, Ali Baba's former chief, Daniel Jong, has

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<v Speaker 3>decided to quit just months after agreeing to lead the

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<v Speaker 3>company's cloud division. Bloomberg's Bonnie Au has the story from

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<v Speaker 3>Hong Kong.

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<v Speaker 7>Jiang has taken on the role after giving up his

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<v Speaker 7>due duties as CEO and chairman of the group. The

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<v Speaker 7>latest move adds another layer of uncertainty to Ali Baba

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<v Speaker 7>as it navigates a complicated breakup. Ali Baba has said

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<v Speaker 7>it wants to operate as a true investment holding company

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<v Speaker 7>that means individual units can seek funding and list separately.

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<v Speaker 7>With John's departure, Eddie will will serve as acting chairman

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<v Speaker 7>and CEO of the cloud business. As to John's future,

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<v Speaker 7>he'll now steer a one billion dollar investment fund on

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<v Speaker 7>Ali Baba's behalf in Hong Kong. I'm Bonnie Al Bloomberg Radio.

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<v Speaker 2>We've got Treasury Secretary Janet Yellen saying she's increasingly confident

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<v Speaker 2>that the United States will be able to contain inflation

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<v Speaker 2>without major damage to the job market. Also hailing read

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<v Speaker 2>economic data showing a steady slow down in inflation and

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<v Speaker 2>a fresh influx of job seekers now trate as we'll

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<v Speaker 2>have We'll next have their eyes on a report coming

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<v Speaker 2>out this week which we'll be telling us a bit

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<v Speaker 2>more about US prices i e. US inflation. Bloom mo

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<v Speaker 2>Ox Denise PELAGREENI has a look what to expect.

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<v Speaker 8>Higher energy prices are expected to push up the headline

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<v Speaker 8>inflation number for August, with the month on month inflation

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<v Speaker 8>rate expected to rise to six tenths of a percent

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<v Speaker 8>and the annual rate quickened to three point six percent

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<v Speaker 8>from three point two. Take out food and energy, though,

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<v Speaker 8>and Bloomberg Economics's core CPI likely continued at only a

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<v Speaker 8>two tens of a percent rate in August, same as

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<v Speaker 8>last month's rate, making it the longest stretch of subdued

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<v Speaker 8>readings since early twenty twenty one. Now you're on year,

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<v Speaker 8>that core rate is expected to fall to a four

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<v Speaker 8>point three percent rate, down from four point seven. And

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<v Speaker 8>Bloomberg Economics also says with the job market cooling and

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<v Speaker 8>student loan repayments resuming, retrenching demand will continue exerting downward

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<v Speaker 8>pressure on inflation, and the Fed, according to Bloomberg Economics,

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<v Speaker 8>has probably already done hiking for the year.

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<v Speaker 3>Bloomberg's Denise Pellegrini with that report, Sorry just here, eight

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<v Speaker 3>minutes past the hour. It's time now for Global News.

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<v Speaker 3>C twenty leaders reaching compromise wording in their final statement

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<v Speaker 3>on Ukraine that gives both sides an opening to claim

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<v Speaker 3>a diplomatic victory. And Baxter has Global News in the

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<v Speaker 3>nine sixty news room in San Francisco.

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<v Speaker 9>Ed, Yeah, exactly right, Brian A. G twenty leaders reaching

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<v Speaker 9>the compromise. US allies had wanted stronger language condemning Russia

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<v Speaker 9>for the invasion that did not happen, and Russia can

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<v Speaker 9>claimed victory there because the US and allies also say

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<v Speaker 9>the statement contained strong language regarding the invasion. Now, US

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<v Speaker 9>Secretary of State Anthony Blincoln comment.

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<v Speaker 4>The leaders here all stood up very clearly, including in

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<v Speaker 4>the statement for Ukraine's sovereignty, for its territorial integrity.

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<v Speaker 9>I think the statement's a very strong one. But of

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<v Speaker 9>course there are detractors. Former UN ambassador and Republican presidential

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<v Speaker 9>candidate Nikki Haley on'sn says it was a win.

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<v Speaker 7>For Russia and China.

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<v Speaker 10>They're celebrating today.

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<v Speaker 8>I mean, what we should have had was Biden should

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<v Speaker 8>have really pushed hard to acknowledge what he acknowledged a

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<v Speaker 8>year ago that Russia invaded a pro American freedom loving country.

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<v Speaker 9>As for President, Biden focused on the Indo Pacific, having.

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<v Speaker 4>India cooperate much more of the United States, be closer

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<v Speaker 4>to the United States, Vietnam be closer with the United States.

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<v Speaker 4>It's not about containing China, it's about having a stable base,

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<v Speaker 4>a stable base in Indo Pacific.

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<v Speaker 9>And global warming. Biden saying bigger than nuclear attack.

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<v Speaker 4>There's a lot of line dog faced poniceps out there

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<v Speaker 4>about global warming, but not anymore.

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<v Speaker 11>All of a sudden, Oh realize it.

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<v Speaker 4>It's a problem, and there's nothing like seeing the light.

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<v Speaker 9>Biden also saying he feels China is weakened enough that

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<v Speaker 9>it won't be in a position to invade Taiwan, and

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<v Speaker 9>US Vice President Kamala Harris as a policy to cement

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<v Speaker 9>relationships in the endo PASIL.

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<v Speaker 10>For example, when I was in Tokyo last year meeting

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<v Speaker 10>with CEOs there about what we are doing to coordinate

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<v Speaker 10>around the semiconductor industry, what we are doing with South

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<v Speaker 10>Korea to the same extent, ensuring that with our allies,

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<v Speaker 10>we are strengthening the relationship around our common goals.

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<v Speaker 9>Now, Harris on CBS has heard here on Bloomberg, says

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<v Speaker 9>those relationships are very important. COVID cases on the rise

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<v Speaker 9>in the US, and doctor Anthony Faucci back on ABC

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<v Speaker 9>has heard on Bloomberg, says it will increase.

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<v Speaker 1>We're having an uptick in cases, which is being reflected

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<v Speaker 1>by an uptick about seventeen or more percent in hospitalizations.

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<v Speaker 1>There's no doubt that that is going on, and since

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<v Speaker 1>we're now at the end of the summer, it is

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<v Speaker 1>likely that that will increase as we get into the fall.

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<v Speaker 9>But says immunity is still pretty high over people who have.

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<v Speaker 1>Been vaccinated boosted people who've been infected. The chances of

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<v Speaker 1>this being an overwhelming rush of cases and hospitalizations is

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<v Speaker 1>probably low.

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<v Speaker 9>Fauci says boosters will be available hopefully before the end

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<v Speaker 9>of September, and says it is important to get boosted.

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<v Speaker 9>He also says despite all the debate and crying about masks,

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<v Speaker 9>they still do deliver a line of added protection. Global

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<v Speaker 9>News powered by more than twenty seven hundred journalists and

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<v Speaker 9>analysts in over one hundred and twenty countries. In San Francisco,

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<v Speaker 9>I'm Ed Baxter, and this is Bloomberg.

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<v Speaker 3>This is Bloomberg Deabreak Asia. I'm Brian Curtis, along with

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<v Speaker 3>Rashid Selamat, and our guest is Phil Palumbo, CEO and

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<v Speaker 3>CIO of Colombo Wealth. Phil. As we get started this week,

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<v Speaker 3>you just heard the news flow there from both our

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<v Speaker 3>look at business stories and also Ed's take on the

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<v Speaker 3>latest global news. What do you think will dominate the

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<v Speaker 3>minds of investors as we kick off this week.

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<v Speaker 11>I think the most important thing is investors are realizing

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<v Speaker 11>that China's weakening as an economy, and we'd say that

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<v Speaker 11>when we look at the property devaluation, that we're seeing

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<v Speaker 11>the trade war with the US, the tensions with the US,

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<v Speaker 11>which is severe supply chain changes. Now, a lot of

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<v Speaker 11>companies now are looking to diversify out, especially as the COVID.

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<v Speaker 11>The consumption story in China is very weak relative to

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<v Speaker 11>what they really need to get to on a consumer basis.

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<v Speaker 11>They are at thirty eight percent is the consumer relative

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<v Speaker 11>to GDP. In order to get that up, they have

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<v Speaker 11>to put money into the pockets of consumers. So I

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<v Speaker 11>think investors are recognizing that the infrastructure build out that

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<v Speaker 11>they did was overdone. That's not They're not going to

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<v Speaker 11>be able to do that this time around to really

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<v Speaker 11>jumpstart their economy. And because of that, I think investors

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<v Speaker 11>and I think are going to move away from China

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<v Speaker 11>and movement places like India. India is a much more

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<v Speaker 11>attractive country to invest in than China today.

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<v Speaker 2>Phil Okay, Sure, when we look at China itself, we've

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<v Speaker 2>moved to India a bit later on. But the thing

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<v Speaker 2>is that the household savings are actually up quite considerably

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<v Speaker 2>since twenty twenty one at the point being with what's

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<v Speaker 2>happened with property, it's taken away one of the biggest

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<v Speaker 2>growth engines, and so what the country's thing is arguably

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<v Speaker 2>having a structure shift. The thing is what's the new

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<v Speaker 2>engine of growth going to be and would that become

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<v Speaker 2>investable and that would perhaps be where you need.

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<v Speaker 3>To be.

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<v Speaker 11>In China. I just think that first investors have to

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<v Speaker 11>have confidence that they can get over this real estate

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<v Speaker 11>property issue that they're having, which is very substantial when

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<v Speaker 11>you look at the quantity of debt that's consumed, that's

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<v Speaker 11>that is that they have on many the properties in China.

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<v Speaker 11>I just think that investors are going to be skittish

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<v Speaker 11>to deploy capital there and until that's resolved, until we

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<v Speaker 11>see Chinese consumers spending like they should be and savings

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<v Speaker 11>not going up as you just talked about just now,

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<v Speaker 11>I think there's a lot that we have to really

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<v Speaker 11>think about before you see a lot of capital flowing

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<v Speaker 11>into China and you're seeing money leaving China and going

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<v Speaker 11>into Japan and other countries. So I think there's a

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<v Speaker 11>lot still needs to be done and reviewed before investors

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<v Speaker 11>state China series Again.

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<v Speaker 3>A moment ago, you said that India looked the better

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<v Speaker 3>option at the moment.

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<v Speaker 11>Why so, India has the first and most important thing

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<v Speaker 11>for countries go from developing into developed. It all comes

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<v Speaker 11>down to leadership and good policy making. And Prime Minister

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<v Speaker 11>Modi has done a phenomenal job since he's been in

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<v Speaker 11>office in attracting foreign investment into his country. The demographics

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<v Speaker 11>in India is much more attractive than China. They are

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<v Speaker 11>one point four billion people and the average age is

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<v Speaker 11>twenty nine years old. The average per capita income is

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<v Speaker 11>only twenty four hundred dollars, so there's plenty of room

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<v Speaker 11>to grow. And I would suggest that India is the

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<v Speaker 11>new China. So what China was thirty forty years ago,

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<v Speaker 11>India is today. And Mody is going all around the world.

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<v Speaker 11>He's doing a great job politically. Just at the G

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<v Speaker 11>twenty meeting, they put together this real important deals with

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<v Speaker 11>the Saudis, the US and the EU, which is going

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<v Speaker 11>to be tremendous for their country. So he's really doing

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<v Speaker 11>a great job that's going to attract money into his liney.

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<v Speaker 3>Yeah, Phil, I have to follow up on that because

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<v Speaker 3>obviously Mody is known as a nationalist, not so much

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<v Speaker 3>as a globalist. Are you saying that he can wear

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<v Speaker 3>both hats at the same time.

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<v Speaker 11>I think it is wearing both at the same time.

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<v Speaker 11>I mean, he is a nationalist, but he's definitely you know,

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<v Speaker 11>creating great, strong relations with many leaders around the country,

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<v Speaker 11>and you're seeing direct investments into the country. You're seeing

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<v Speaker 11>direct investments in infrastructure and renewable energy, and so you're

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<v Speaker 11>seeing a lot of things that are going on with

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<v Speaker 11>in India and his policies that are improving the growth

0:12:20.360 --> 0:12:22.600
<v Speaker 11>in You could see it in the growth of the GDP.

0:12:22.760 --> 0:12:24.800
<v Speaker 11>You could see it in where the market's trading relative

0:12:24.840 --> 0:12:28.040
<v Speaker 11>to other emerging market countries. Right, it's trading or it's

0:12:28.080 --> 0:12:31.600
<v Speaker 11>training at a higher valuation because investors are recognizing that

0:12:31.920 --> 0:12:35.400
<v Speaker 11>investing in India is a good investment in the long term.

0:12:35.559 --> 0:12:40.280
<v Speaker 2>The thing is phil it's very expensive. There's it's I mean,

0:12:40.559 --> 0:12:42.760
<v Speaker 2>that's what puts a lot of people off here. And

0:12:43.040 --> 0:12:46.760
<v Speaker 2>is that huge premium that India has enjoyed. If you

0:12:46.760 --> 0:12:50.200
<v Speaker 2>can argue that something which is likely to put people off.

0:12:51.440 --> 0:12:53.080
<v Speaker 11>It sure is right. So a couple of things we

0:12:53.120 --> 0:12:54.880
<v Speaker 11>have to think about. Number one is, you know, the

0:12:54.920 --> 0:12:58.360
<v Speaker 11>strong dollar relative to other currencies, right, So when you

0:12:58.400 --> 0:13:00.880
<v Speaker 11>look at the performance of the Indian market versus the

0:13:00.960 --> 0:13:03.160
<v Speaker 11>S and P five hundred, there is on the performance there.

0:13:03.679 --> 0:13:06.040
<v Speaker 11>So there are things that have to unravel before you

0:13:06.080 --> 0:13:08.880
<v Speaker 11>can make a direct investment in India from a public

0:13:08.920 --> 0:13:11.200
<v Speaker 11>stock market standpoints. I don't think you need to necessarily

0:13:11.280 --> 0:13:14.199
<v Speaker 11>jump in today because of overvaluation, but I do think

0:13:14.200 --> 0:13:16.720
<v Speaker 11>you're going to get opportunities where the Indian stock market

0:13:16.720 --> 0:13:20.880
<v Speaker 11>will retrace because of some currency risk perhaps or higher

0:13:20.880 --> 0:13:22.840
<v Speaker 11>interest rates all around the world. That's putting pressure on

0:13:22.840 --> 0:13:25.840
<v Speaker 11>emerging markets. So that pressure is going to create a

0:13:26.120 --> 0:13:28.440
<v Speaker 11>cheaper stock market overorld for India, and that's going to

0:13:28.440 --> 0:13:30.240
<v Speaker 11>be the opportunity for investors to jump in.

0:13:31.000 --> 0:13:34.640
<v Speaker 3>And you mentioned Japan, they've had a good run there too. Obviously,

0:13:34.640 --> 0:13:38.240
<v Speaker 3>the NYK one of the better performing major benchmarks in Asia.

0:13:38.960 --> 0:13:43.439
<v Speaker 3>A lot of investors cite some changes in the structural

0:13:43.559 --> 0:13:46.640
<v Speaker 3>nature of corporate culture. Are you in that camp?

0:13:47.559 --> 0:13:50.319
<v Speaker 11>Absolutely? So the corporate culture. The three major things that's

0:13:50.360 --> 0:13:55.520
<v Speaker 11>attracting investors is there increase in buybacks, dividends and selling

0:13:55.559 --> 0:13:58.600
<v Speaker 11>off non core assets. Those are three key areas that

0:13:58.720 --> 0:14:01.880
<v Speaker 11>will that there are tracking investors into their market that

0:14:01.960 --> 0:14:04.560
<v Speaker 11>I think is sustainable and you've see in supply supply

0:14:04.640 --> 0:14:07.439
<v Speaker 11>chain shifts into Japan as well. You're starting to see

0:14:07.679 --> 0:14:09.760
<v Speaker 11>real rates rise for the first time in a very

0:14:09.840 --> 0:14:12.800
<v Speaker 11>very long time. You yeld curve control, you know that,

0:14:12.800 --> 0:14:16.400
<v Speaker 11>I think they're going to start to remove that or

0:14:16.440 --> 0:14:17.959
<v Speaker 11>start a subside on that, and you start to see

0:14:18.040 --> 0:14:21.360
<v Speaker 11>rates move up higher, which will attrack capital to their

0:14:21.400 --> 0:14:23.840
<v Speaker 11>market overall. So these are the benefits that you've seen

0:14:23.840 --> 0:14:25.560
<v Speaker 11>with in Japan, which is a game change which we

0:14:25.560 --> 0:14:26.960
<v Speaker 11>haven't seen in a very long time.

0:14:30.160 --> 0:14:32.960
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