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Protesters And Police Clash Violently At A University In Hong Kong; Reportedly, No International Marketing For Saudi Aramco As The IPO Nears; Airbus Snaps A $16 Billion Deal With Emirates. Aired 9-10a ET

Aired November 18, 2019 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:19]

JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE and here's your need to

know.

Hong Kong Standoff: Protesters and police clash violently at a university.

A Roadshow Less Traveled: Reportedly no international marketing for Saudi Aramco as the IPO nears.

And a tall order - Airbus snaps a $16 billion deal with Emirates.

It's Monday. Let's make a move.

A warm welcome once again to FIRST MOVE. Great to be back with you. A happy return for me, slightly less happy returns on Wall Street right now

to begin a fresh trading week.

Take a look at futures, they've softened over the past hour or so. It's now looking like a pretty flat start to the week some consolidation here

after the major averages finished at record highs last week makes sense to me. We saw the Dow closing above 28,000 for the first time ever. Fresh

stimulus and trade hopes, I would argue, some of the main drivers.

What about on the trade front? Well, U.S. and China trade negotiators talking over the weekend. China says they had quote "constructive

discussions." Nothing from the White House, but the economic adviser to the White House, Larry Kudlow reiterated that they were close to a deal on

Friday despite reports that talks had hit fresher snags.

And President Trump is warning that he will raise tariffs substantially if a deal doesn't happen. Either way, it seems China isn't waiting around.

The Asia stock market session was supported by an unexpected cut in short term lending rates from the Chinese Central Bank - that raising hopes that

their benchmark lending rate will soon be cut too to help stimulate borrowing.

In the meantime, take a look at what we're seeing for Hong Kong stocks right now. They're rising in the Monday session following an almost five

percent fall last week, a relief rally perhaps for investors. But there's certainly no relief from the ongoing student protests at the Polytechnic

University of Hong Kong, and that is our first driver today.

Anna Coren joins us now from Hong Kong. Anna, great to have you with us. Just looking at pictures right now, I think illustrates the story we've all

been watching over the weekend, too. What's the status of both the protests in the university and more broadly, the protests that you're right

in the middle of right now?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Yes, Julia. Okay, yes. Another petrol bomb going off. We're right at the front line with the

protesters who are having these running battles with police, the riot police, probably a hundred meters in that direction. They were firing

multiple, multiple rounds of teargas and we're expecting them to retaliate at any moment.

But basically, these people have taken to the streets because of the 100, 200, 300 -- we just do not know how many people are trapped inside

Polytechnic University which is a few blocks from where we are. They have been under siege, if you like, for the last 48 hours.

We were there yesterday. We went onto the campus and we spoke to the protesters who said we are at war with the Hong Kong Police, with the Hong

Kong government and that this is the last fight, if you like, as far as the universities go.

And that is why they are staying there. The police have called on them to surrender. All the people on campus will be arrested unless you are a

journalist that has been specified by police. Everyone will be arrested. And the campus has been cut off. There is no way in, no way out. These

protesters are hoping that they can divert the attention of the police, the resources of the police, but that is not going to happen.

Instead, we're just seeing messy, you know, violent protests, petrol bombs, police retaliating with teargas and rubber bullets. This has become a

daily occurrence now, Julia, on the streets of Hong Kong, one of the world's largest financial centers, as you well know.

[09:05:01]

CHATTERLEY: Yes, I mean, these are just astonishing pictures to watch, and you right being in the middle of it here, Anna, you said they are using

terminology like this is war. And we have seen this now escalate particularly in the last week or so in terms of violence. Do the

protesters that you're talking to, are they afraid of a more stringent crackdown from the police here or maybe even from the Chinese side from the

mainland here intervening, too, are they afraid of that?

COREN: They are certainly concerned about police using live ammunition and if anything, the police have said as much in the last -- well, we're going

to move with the protesters. They have said that if threatened, if their lives are threatened that police will use lethal force.

They've also said they'll use long range assault rifles that we have seen at many protests and instead of using non-lethal ammunition, they'll use

live ammunitions. So this is a concern, a real concern for protesters, but I was learning that the medics on campus yesterday was bracing themselves

for --

As for the mainland elements, we know that obviously, the triads and people who are very pro-China, we've seen those clashes. Absolutely. But you

know what? It's not even necessarily the Mainland, its people here in Hong Kong who are very supportive of the Hong Kong Police and of the Hong Kong

government.

So it is really dividing society here in Hong Kong. You would have thought with all the violence, Julia, that people would have -- their support would

have waned for the protesters. It hasn't. A recent poll found that 80 percent of Hong Kongers support what is happening on the streets of Hong

Kong, which is extraordinary. They don't condone the violence, but they support the movement.

And the question is, Julia, where does this end? Where does this end? We are almost six months into these protests that have been happening weekly,

if not daily, and they just does not seem to be an off ramp at this moment -- Julia.

CHATTERLEY: We will keep asking the question. Anna, stay safe there. Anna Coren for us there, joining us from Hong Kong. All right, let's move

on to our next driver now.

And so Japanese mega mergers. Softbank announcing plans to merge Z Holdings, formerly Yahoo Japan with the messaging app Line. It's a $30

billion deal that would create a tech powerhouse in Southeast Asia. Paul La Monica joins us with all the details.

Paul, I was in Singapore last week and we were talking about when Southeast Asia would generate a kind of powerhouse that would rival the likes of

Silicon Valley or what we see in China and here we are. Talk us through the details.

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, this might be it, Julia. Line is a popular messaging app in Japan and other parts of Asia. It went

public on the NYC a couple of years ago. I was there the day they went public. They had a lot of cute stickers, bears and what have you and Line

shares surged last week on speculation this deal would happen.

The CEO of Z Holding saying today that they don't want to necessarily replace, you know, companies like Google and Facebook, Amazon, large tech

companies from the U.S. because he talked about how he loves his Kindle. And you know, he loves YouTube, talking about Google and Amazon products

there.

But they need a viable competitor in Asia, an Asian company to these tech giants. So that is why these companies plan to merge and the hopes I

think, is that it creates a formidable Japanese rival to the American tech giants. Obviously, a lot of Chinese tech companies are significant

powerhouses in Asia as well.

CHATTERLEY: Yes, I mean, I was just looking at Line having 164 million users across Japan, Taiwan, Thailand and Indonesia. It really does

strengthen Yahoo Japan's presence in the mobile space in particular. It's going to be quite fascinating to watch how this one goes.

I also want to ask you, though, in this space, and this is also an interesting one, the CEO of T-Mobile is stepping down when his contract

expires. Some new speculation last week that he could replace WeWork CEO Adam Neumann. Interesting development in the last few minutes here --

Paul.

LA MONICA: Yes. This is. And there are ties to Softbank here as well because Softbank controls Sprint. Sprint and T-Mobile are hoping to merge,

having gotten regulatory approval to do that. John Legere who is very charismatic and very quote "worthy," he tweeted this morning saying he is

not going anywhere.

So he didn't specifically deny the WeWork speculation, but he says that he is planning to stay on the company's Board, that this is a smooth

transition plan that they've had in place for a while now because Mike Sievert, the COO is being promoted to CEO of T-Mobile and it would appear

that Legere who will remain on the Board isn't going to be giving up the magenta for, you know, WeWork anytime soon. But obviously a lot remains in

flux, I think.

[09:10:17]

CHATTERLEY: Watch this space, we think. Paul La Monica, thank you so much for joining us on both those stories.

LA MONICA: Thank you.

CHATTERLEY: All right, let's move on to our next driver. Saudi Aramco is scaling back expectations for its upcoming public offering. Reports say

instead of courting global investors, it will rely on investment from the Middle East region instead.

Matt Egan joins us now on this. Scaling back international roadshow expectations, Matt, but also scaling back the anticipated size, at least

compared to what the Crown Prince wanted initially. Talk us through the details on this one.

MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, well, good morning. Welcome back, Julia. I think you're right. This is another example of how this

really monster IPO has repeatedly been scaled back by Saudi Arabia.

Originally, this was supposed to be a $2 trillion valuation for Aramco, raising $100 billion that could be used to diversify Saudi Arabia's economy

and listing on a marquee exchange like New York or London or Hong Kong.

Now, what they're doing is they're targeting a valuation of up to $1.7 trillion, raising $25 billion and listing on the Saudi Stock Exchange.

Impressive, but certainly dialed back.

And as you mentioned, the roadshow has reportedly been canceled. Plans to have that in Europe, that's not happening right now. That means they're

going to have to rely really substantially on wealthy Saudi investors.

I think that this is all a reflection of the real obstacles facing the Aramco IPO, everything from the climate crisis to questions about Saudi

Arabia's -- their human rights record, as well as of course low oil prices. All of that is weighing here.

But of course, we are still looking at a potentially record breaking IPO. As you can see on the screen, at the high end of the range that they are

targeting, it would be raising within $25 billion that would surpass the record that was set by Alibaba. Also the $1.7 trillion that would knock

off Apple that would make Aramco the world's most valuable public company, which is appropriate because it's also the world's most profitable company.

So those are really impressive, but I don't think that they should be popping the champagne yet in Riyadh. That's because, you know, what we saw

with WeWork, that rapid collapse of the WeWork IPO shows that these mega IPOs are not over until they are.

CHATTERLEY: Yes, it's funny when you scale back your IPO expectations and you're scaling back the size that is greater than their largest alternative

competitor, which is Exxon-Mobil. So this is a real monster company and especially when you have an IPO size that is so narrow, it takes tends to

suggest they are confident of reading the top end, reaching the top end of the range.

But as you say, no cigars or champagne right now. Watch this space. Matt Egan, thank you for that.

EGAN: Thank you.

CHATTERLEY: All right, next driver. Emirates has ordered 50 Airbus jets at the Dubai air show, a purchase worth $16 billion. Clare Sebastian joins

us on this story. Not the only win actually for Airbus at this air show. Talk us through the details of this one.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, this was clearly good news for Airbus, but a muted celebration in a couple of ways. One

because this was a formalization of actually a bigger plan from Emirates. They had announced a kind of informal commitment to buy 70 wide-body jets

from Airbus back in February, so this is a smaller order.

And it also sort of formalizes the decision by Emirates to slash its order of the Jumbo A380, a decision that actually led Airbus to stop producing

that plane.

So a little bit of a muted celebration, but overall, a pretty good set of news for Airbus. They also got another order from Air Arabia for 120 A320

family planes. The airline will essentially triple its all Airbus fleet with that order. That's the low cost budget Emirates carrier. So a good

day for Airbus.

We also got an update there, Julia, on the 737 MAX. Stan Deal, the new head of Boeing Commercial Airlines saying they're making progress, still

targeting December certification and January to begin training perhaps.

CHATTERLEY: Yes, and that's the challenge, isn't it? When we were speaking on this show, when I was in Dubai to the Emirates CEO and the

challenge simply of finding alternatives to those MAX jets for Emirates and the challenge to their growth plans that that presents.

He said next year. Boeing saying end of this year.

SEBASTIAN: Yes, this is the conundrum for Boeing going forward. I think, there's a couple of questions out there, not just when will the F.A.A.

certify? When will the other regulators certify? There's no guarantee they will all certify at the same time.

Meanwhile, the U.S. airlines, Julia, at least Southwest and American have pushed out their flights until early March. That will mean that this

grounding has now extended basically over an entire year, much longer than many had expected and the costs continue to mount.

[09:15:11]

SEBASTIAN: I will say though, at the Dubai Air Show, Boeing wasn't entirely left out of the order book with the 737 MAX. Sun Express, which

is a Turkish leisure carrier, they exercised an option for ten 737 MAX 8 planes, so a much smaller order for Boeing, but still something.

CHATTERLEY: Yes, absolutely. I wonder what price they paid for those. Clare Sebastian. Thank you so much for that.

All right, let me bring you up to speed now with some of the other stories making headlines around the world. North Korea says it's not interested in

any more meetings with the United States. This comes a day after U.S. President Donald Trump tweeted a message to Kim Jong-un saying, see you

soon.

North Korea's Foreign Ministry released a statement saying meetings with the U.S. are quote "useless to us."

Several people have died in protests in Iran after the government suddenly increased the price of fuel. Demonstrations have spread throughout the

country and are now in their fourth day. Some are peaceful such as this one in the southwest.

But in Tehran, there are some violent scenes, too, with street battles between protesters and the Iranian government forces. In this video, it

appears security forces could be firing live ammunition.

Washington is gearing up for another critical week in the impeachment investigation into President Donald Trump. Eight U.S. officials will be

testifying, including some emerging as a pivotal figure, the U.S. Ambassador to the E.U., Gordon Sondland, who appears on Wednesday.

"The Wall Street Journal" disclosed e-mails Sunday that showed Sondland kept Trump officials in the loop on the push to get Ukraine to investigate

Joe Biden and his son.

All right, we're going to take a quick break here on First Move, but still to come, no further cuts for corporations. The British Prime Minister

Boris Johnson delays tax breaks as the election campaign heats up.

And profits despite protests. Singaporean banking giant, DBS remains resilience. I speak to CEO Piyush Gupta about Hong Kong, the challenge of

low rates and their ongoing digitization.

All coming up. Stay with FIRST MOVE.

(COMMERCIAL BREAK)

[09:20:24]

CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange where U.S. futures look set to pull back a little bit from record

highs in early trading. As you can see, I'll actually call that flat. We're expecting fresh records for all the majors just a short while ago,

but we seem to see a little bit of cautiousness speeding, and European stocks have also pulled back in the past hour or so with losses of around

half a percent, as you can see for the DAX and the CAC 40 over in France.

We also of course saw Asia stocks managing to eat higher during the session. Fresh stimulus helping over there. China cutting short term

rates again. This specific rate for the first time in four years.

Other Central Banks to watch this week, South Africa and Indonesia meeting this week to discuss rates, too, so perhaps fresh stimulus flowing from the

region as well.

What else are we watching? Well, Washington gearing up for a second week of televised impeachment hearings. Eight witnesses will testify over the

next three days including the U.S. Envoy to the European Union, Gordon Sondland, a key player in the Ukraine allegations.

Greg Valliere is Chief U.S. Policy Strategist at AGF Investments and he joins us now. Greg, Happy Monday, and great to have you with us. Eight

different witness testimonies this week for viewers, for voters here in the United States to wade through. It feels like the Democrats are sure

they've got enough evidence for impeachment, the Republicans say it's all a sham. Are these testimonies changing public opinion in any way do you

think?

GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: I don't think so, Julia. Last week, I thought there was some very credible

testimony and some very credible evidence. I don't think it moved the needle. I don't think it moved the needle in the Senate, where you're not

even remotely close to enough votes to convict.

Maybe Sondland and others, maybe down the road, John Bolton will have a really big impact. But for now, while it's gripping theater, it's not

really moving the needle.

CHATTERLEY: And that's kind of the key point for investors here, I think, too, when you look at this. They are saying fine. The House Democrats

will impeach; the Senate, Republican-led therefore won't impeach, so like the Mueller report really, we just ignore it. Is that your take, too?

VALLIERE: Yes, I think so. How ironic that on the opening day of the hearings, the Dow Jones finished at an all-time high. I would make the

point, Julia, that the by far the bigger story is China trade.

I still think we're not there yet. I still think they're haggling over tariffs and as long as there is no trade deal, I think that's overhanging

the market. If we should get a sign of a breakthrough in the next few weeks, the market I think could go even higher.

CHATTERLEY: Do you think the holdup here is what we've been talking about all the way through? Just the thorny details and trying to get some

accountability from the Chinese as far as the United States is concerned, and the rollback of tariffs. Or do you think both sides are looking at

individual politics in each other's nations, whether it's the impeachment debate in the United States or the Hong Kong protests for China here and

going perhaps, we've got more leverage than the other side here?

VALLIERE: I think it's increasingly the latter. It is the political impact of Hong Kong, of an upcoming election in the U.S., and I'd make this

point as well. I think the level of acrimony, the antipathy between the two countries is really becoming quite striking.

The rhetoric from Trump saying they are cheaters. The rhetoric from the Chinese as well saying they won't give in on certain points. I think we've

gone beyond just the factual arguments to something deeper, and the hostility I think is not going to subside.

CHATTERLEY: The President has once again threatened to ratchet up tariffs and the Chinese are hanging on in there and saying, look, as part of this

Phase 1 deal, we want to see the roll back of tariffs here. What happens to the markets if one, we don't see a Phase 1 trade deal this year and two,

if the President of the United States follows through on his threat, naturally raises tariffs here?

VALLIERE: Well, if there's an impasse or even an increase as you suggest, I think it hurts Trump's reelection prospects. It hurts them in the

Midwest with farmers. It hurts him with small businesses.

I think we're getting to the point now where Trump has to know that this could be an albatross for him in the election.

CHATTERLEY: An albatross. The question is, does he recognize that and follow through? Greg, I want to talk to you about the possible entry of

Mike Bloomberg, billionaire Mike Bloomberg.

VALLIERE: Yes.

CHATTERLEY: Into the debate, he apologized for previous policy over the weekend, which has caused a lot of debate. You point out in your note and

it's a great one today that everyone is apologizing.

Elizabeth Warren apologizing for comment she has made. Joe Biden. What does that mean for voters at this stage and the Democratic field in

particular?

[09:25:23]

VALLIERE: Well, it's really easy to be cynical to have Mike Bloomberg who defended stop and frisk, just until recently, and then you saw the polls

and he got the reaction from the left among Democrats who hate stop and frisk, so he flips.

I mean, I think if that has the sincerity level, roughly comparable to Prince Andrew, in terms of an apology that just didn't quite ring correct.

I don't think this helps Bloomberg at all.

CHATTERLEY: What does this mean for the Democratic field though? Because there are those who say his entry if it's only to offset some of the more

extreme policies of Elizabeth Warren, if he can neutralize her in some of the debates, then perhaps it's job done and he pulls the Democrats more to

the center. Would you agree with that?

VALLIERE: It could be, but the activists in the party I think resent Bloomberg, a Wall Street billionaire coming in at the last minute. I'll

give you a contrarian view, and that is, I think Joe Biden has righted the ship.

He had a pretty good Town Hall on CNN a week or so ago. He is making a pretty good campaign speech. We'll see on Wednesday night. I think all

eyes will be on Biden and if Biden holds his own and does pretty well, I think most democrats are going to conclude maybe reluctantly, that he has

the best chance in the general election of beating Trump.

CHATTERLEY: Oh, it's going to be an interesting week in U.S. politics.

VALLIERE: Yes.

CHATTERLEY: Greg, great to have you with us.

VALLIERE: You bet.

CHATTERLEY: Greg Valliere, Chief U.S. Policy Strategist at AGF Investments. Thank you for that. All right. The market opens next. Stay

with us. We're back after this.

(COMMERCIAL BREAK)

[09:30:00]

CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley from the New York Stock Exchange and that was the opening bell this morning. A pretty

flattish start for U.S. stocks, but we did see a record close of course, in Friday's session. Investors are hoping for some new guidance on trade

negotiations as we've just been discussing, perhaps.

The Dow finishing above 28,000 for the first time since Friday. The S&P 500 chalking up its six straight week of gains. The NASDAQ riding for a

seventh straight week. I believe we're only seven percent away from 30,000 and the Dow, I just mentioned there, that's at this point in time. I

couldn't help myself.

Earnings from the major U.S. retailers will be a big driver of market sentiment for the next few sessions, too. Reports this week include Home

Depot, Target, and Macy's as well.

Well, let's move over to London now because party leaders are making their election pitches to British business at the Annual CBI Conference.

The U.K. Prime Minister kicked off an annual industry event by reversing earlier promises to cut corporation tax further. Meanwhile, Labour's

Jeremy Corbyn argued that it was nonsense to say his party was anti- business.

All right, let's get the take of Rain Newton-Smith. She is Chief Economist at the CBI. Fantastic to have you with us, Rain. Let's talk about the

Conservatives first, what do you make of the decision by Boris Johnson not to provide a further cut to corporation taxes here and save the money and

give it to the NHS? Bad for business?

RAIN NEWTON-SMITH, CHIEF ECONOMIST, CBI: Well, look, I think when I talk to businesses around the country, the thing they're most concerned with

around business taxation is about business rates. That's the rate that businesses pay on property. And that's actually what's holding back

business investment in the U.K.

So if we're able to use some of that money from corporation tax to fund our public services, and to make sure that we can reduce the overall burden on

business from business rates - that could be a win-win. It could help to boost investment in the U.K., help our growth over the long term and help

to fund our public services.

So I think if we use the money from that corporation tax well, I think businesses will be reassured, but they'll really be looking to see that the

government delivers on business rates and not wider burden on business.

CHATTERLEY: I want to flip now and talk about some of the policies that Jeremy Corbyn and the Labour Party have proposed and I just looked at the

CBI's response to that. You like the idea of working more on apprenticeships and supporting that part of the economy, but just to

directly quote you guys, " ... false instincts for mass nationalizations and forcing inclusive ownership schemes on to thriving businesses does

little more than frighten off investors from backing the U.K. with pensioners and savers having to foot the bill."

That's a pretty feisty response to Jeremy Corbyn.

NEWTON-SMITH: Yes. Look, I think -- yes, I think some of the things that have been really important that the Labour Party have announced over the

past couple of days has been around apprenticeships. They've said the apprenticeship levy can be used more flexibly; that we can make sure that

that focuses on retraining and re-skilling, particularly on the move to a low carbon economy. That's certainly something we support.

But the mass renationalization is a real challenge, and I think the announcements we saw on BT over the past weekend, it just leaves businesses

thinking who is next? We all know that we need to deliver that ultrafast broadband to all households in the U.K., but that's going to take money

from the private sector. It's going to take money from government and it needs to be the two working together, not at loggerheads with each other.

So we just need to see a different tone from the Labour Party.

CHATTERLEY: Jeremy Corbyn said, look, we're not anti-business. Would you disagree based on that policy?

NEWTON-SMITH: Look, I think if you look at any one policy in isolation, I think the renationalization policy is really challenging for business. I

think if you've talked to anyone in the water industry, in the energy sector, privatization has delivered huge benefits for consumers and it's

just not clear how renationalization is going to deliver what the Labour Party are setting out to achieve.

But look, we can work with the Labour Party. We've worked with them in terms of their policies on innovation, on business rates, on the move to a

low carbon economy. The Labour Party has some really interesting policies about how we get more energy efficiency in our homes and that's such a

critical part of our move to a low carbon economy.

So we can certainly work with them, but the policies they have on renationalization are really challenging for business.

[09:35:09]

CHATTERLEY: I wanted to talk to you about the Liberal Democrats here as well. We're going into a stage now of debates. And we've got a debate

tomorrow in the U.K. between Boris Johnson and Jeremy Corbyn. The leader of the Liberal Democrats is not included, and that remains the only remain

party here as we head into the elections. Is that a frustration for British business here that actually we're not seeing the views of the de

facto remain party represented on the stage here?

NEWTON-SMITH: Look, I think you know, who gets represented on those debates is one for the broadcasters. I think having a broad church and

getting some of the other parties out there on a platform is really important.

I think the Liberal Democrats, yes, they are standing on a platform for remain, but there are also so many other policies that they've put out

there. There's a huge policy they have about adult retraining, which I think is really interesting about giving everyone in the country 10,000

pounds not to spend before the age of 25. But really thinking about how you learn throughout our adult lives. That's something the CBI is really

interested in.

So what we hope with all parties is that we look at the policies they're putting out. That we assess what they mean for the economy, what they mean

for business, and how they help all of us and hopefully, we'll have a healthy debate. I think that's what we can hope for.

CHATTERLEY: You know, all the way along since the Brexit referendum, we've been talking about the sheer level of uncertainty with the ongoing delays

and just trying to get a Brexit deal and the political agreement agreed.

Rain is the best outcome here simply now to rule out any form of no deal and simply see a Brexit deal agreed. Is that what's best for business and

then we can talk about the policies beyond?

NEWTON-SMITH: Well, I think there's two things that businesses are really looking for. Absolutely, we need to avoid a no-deal Brexit. That's

something we've always said, and I think if we do get a deal, we don't want to be faced with another cliff edge in the summer or later in the autumn.

So what we're saying to all politicians is don't box ourselves in. Let's make sure we take the time to negotiate the best possible deal and that's

the second thing, we want a deal that works for all nations in the U.K. - that works for all sectors. We need to have a really close trading

relationship with our nearest neighbor. That's about harmonization of rules. It's about how people can move across borders.

We want the best possible deal across all sectors and we want whoever is in charge to really push hard for that deal. That's what businesses want to

see. We want to see the economy at the heart of these negotiations.

CHATTERLEY: Let's hope the politicians are listening. Rain Newton-Smith, CBI Chief Economist. Thank you so much for joining us on FIRST MOVE today.

All right, we're back after this. Stay with us.

(COMMERCIAL BREAK)

[09:41:09]

CHATTERLEY: Welcome back to the show. DBS is Southeast Asia's biggest lender and they pleased investors with their latest quarter's results.

Despite some challenges in the region, and of course, the impact of ever lower rates, profits jumped 15 percent to $1.2 billion.

Well, I had the opportunity to sit down with the CEO, Piyush Gupta in Singapore last week for an exclusive interview and we talked through what

I've been doing.

(BEGIN VIDEOTAPE)

PIYUSH GUPTA, CEO, DBS: Well, yes, we were quite pleased with the quarterly results. We had, you know about 18 percent bottom line growth on

the back of 13 percent top line growth, and given the general lack of confidence around the world and the trade tensions and so on, that's a set

of numbers we are quite pleased about.

But as you alluded to, it has been quite broad based, and that's where the resilience really comes from.

Consumer businesses have done OK. The commercial book has done well. Transaction banking and wealth management businesses have been fine.

And then to cap it off, like many of the globals, we had a strong trading quarter and that helped as well. So it has been fairly broad based.

But let me hasten to add, the interest rate environment is obviously not favorable for banks as we go forward. Three rate cuts by the Fed, that

does create some headwinds, and therefore that's something we're going to have to negotiate through more carefully as we go into next year.

CHATTERLEY: You said the lack of confidence globally, is that the big risk here? Because we went through a period during that quarter where we were

talking about inverted yield curves and recession risk and we're already seeing a global slowdown. Is the biggest risk perhaps here that we talk

ourselves into a more material slowdown?

GUPTA: Yes, I would agree with that, and I think there are two, maybe three drivers of that in the short term. One is obviously the U.S.-China

issues. I think that creates a lot of concern. Frankly, the confidence impact of that is more real than the real impact of that. It's just

everybody's in a funk as a consequence of that.

The second I think, is the negative interest rate climate. I think we've, you know, got to a stage where the efficacy of lower interest rates, and

what they're supposed to do i.e. stimulate demand and stimulate investment. That's not working anymore.

People talk about pushing on a piece of string. My view is actually it's more severe than that. It's not just that it's not effective. It is

actually having a reverse psychological impact because people are saying, you know, given a negative environment, I don't know what to expect, and I

don't know what to do. So that's creating its own set of challenges and concerns.

And then finally, I think there's the bigger issue of, you know, protest movements around the world. I think this income inequality, inequity, the

masses versus, you know, the elite. We are seeing it in Chile and Ecuador and Bolivia and country after country. There have been a slew of these,

and that's creating some, you know, anxiety as well.

So I would agree with you, I think, you know, financial markets have a strange way of talking themselves into a funk. And unfortunately, the

feedback loops are such that then does trickle into the real economy, and that is a risk.

Now, the flip, if you do get some sort of a trade deal, this can turn on a dime. And so confidence is a strange animal, so you can suddenly find

everybody is getting more euphoric, and, you know, things could look a lot more pleasant as well.

(END VIDEOTAPE)

CHATTERLEY: We also talked about the protests in neighboring Hong Kong. DBS says its business in the city is resilient. It represents around 20

percent of group revenues just to give you context, but Piyush said that he is optimistic, too, about Hong Kong's future. Listen in.

[09:45:08]

(BEGIN VIDEOTAPE)

GUPTA: First of all, you have to recognize that while it is 20 percent of our revenues in the last decade or two, the bulk of the business is China.

So Hong Kong tends to benefit from Chinese activity and Chinese flow.

And so the question you have to ask is, if Hong Kong has a problem, does it mean Chinese business disappear? And if the answer to that is logically

no, then all it means is that that business will get dispersed and get done elsewhere.

So it could move to Shanghai, it could move to Singapore, it could move to Tokyo, but it's not like Chinese companies will stop accessing the capital

markets, the Chinese companies will stop trading because of the Hong Kong problems.

So that gives us a degree of resiliency because the business is to a large extent China driven business.

The domestic Hong Kong business could get impacted. Retail sales will be down, wealth management confidence will be down. But I think I see two

possibilities. In the short term, I think there will be a problem.

The two possibilities. One, is just hope. Hong Kong is very resilient. If you look at Hong Kong history over a hundred years, it is a very

entrepreneurial country and the capacity to bounce back very quickly is enormous.

But the second thing that's happening, which is structured is integrating Hong Kong more and more into the greater Bay Area. The Greater Bay Area,

you know, has got -- you know, it is nine cities plus Hong Kong, Macau, you've got Shenzhen and Guan Xiao. It's got 71 million people. It's

collectively the fifth largest GDP in the world.

They have linked it by road. They have linked it by bridges. They are putting the train connections. They are letting people move to and fro.

So it's increasingly becoming a large megalopolis, and I think Hong Kong's long term success will come from the fact that it will really serve to

anchor large parts of this region, the Greater Bay Area Region, so that gives me a degree of confidence about Hong Kong's future as well.

CHATTERLEY: Even if we see in the short term, perhaps a curfew imposed; if we see a greater involvement from the Chinese Mainland, you're saying this

is a short term escalation of tensions of the political pushback and perhaps people push back that we've seen. But longer term, it's need and

its necessity is already established.

GUPTA: That's what I would say. And I think, again, I do think that the short term issues are real and ideological issues are not easy to resolve.

But I do think in the long term, given China's size and weight and the need to be part of a bigger system, I think things will play out okay.

And I've got a lot of people who point out that, you know, Hong Kong used to be 25 percent of China's GDP in 1997. Today, it is three percent of

China's GDP. Therefore, you know, to see Hong Kong as being an integral part of a Greater Bay Region. That's not unrealistic.

(END VIDEOTAPE)

CHATTERLEY: He also said if we pulled out of a market every time there was short term volatility, they wouldn't have grown the business that they

have, which I thought was a very important observation at this moment.

But we also discussed the importance of digitization to improve the customer experience, but also what happens to traditional forms of banking

as more and more players enter the space with alternative e-payment solutions for example.

This year, DBS was named by the "Harvard Business Review" as one of the 10 companies in the world that have made the most successful transformations

over the last decade.

(BEGIN VIDEOTAPE)

GUPTA: I think, you know, technology is changing everything. And that almost a non sequitur, but if you think about every other industry, you

talk about, you know, Kodak and Borders and all of the usual stuff, which industry has not changed. Now, our own industry, you have to believe is

the most transformable industry because we don't manufacture anything.

We're not making the car. We're not making a refrigerator. Our business is about information and bits and bytes. That's all there is. So you

should be able to transform it quicker than anything else.

In fact, to me, it's a surprise that it's taken so long to transform.

CHATTERLEY: That takes money. It takes money to transform.

GUPTA: It takes some money, but sometimes also people's psychology and so on. However, I think more than anybody, the Chinese players demonstrated

that you could completely reimagine the industry.

So what Alibaba and WeChat et cetera have done is extraordinary. They -- in fact, that's how we started our own digital journey about six years ago.

We saw what Alibaba was doing, and it scared the daylights out of us because the ability to acquire customer, the scale to transact instantly,

to write credit differently. There is the $200 billion fund in, you know, 10 months, the fastest growth ever, micro insurance. So they're doing

financial services in a completely different kind of way.

[09:50:00]

GUPTA: And it just seemed to us that there is no reason why anybody can't do it. The technology is available. Most of it is open source. Yes,

there's a culture issue and you go to work and grasp with the regulatory realities, but it can be done.

And that's the excitement and the energy you're seeing in most of the countries in Asia. Interestingly, the regulators have been very, very

positive and constructive about driving this process. So they're bringing in the FinTechs. They're bringing in the banks. They're running national

projects.

The KYC digital identity, unified payment interfaces, national trading platforms, the governments are part of this. So there is a whole slew of

activity that is happening around the region, but all focused really on one thing. You can change the customer experience, and you can change the

customer experience in ways which were unimaginable 10 years ago.

(END VIDEOTAPE)

CHATTERLEY: Thanks very much there to Piyush Gupta, the CEO of DBS. All right. We are going to take a quick break here on FIRST MOVE, but coming

up, Mustang galloping into the electric car market. All the details after this.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE with a look at today's "Boardroom Brief." Ford Mustang is cleaning up its act announcing its first all-

electric SUV called the Mach-E taking on Tesla.

The car will have two electric motors, one to power the front wheels with another powering the back. Ford CEO James Hackett told CNN about the long

road to this announcement.

(BEGIN VIDEO CLIP)

JAMES HACKETT, CEO, FORD: Before we commissioned that work, I went to talk to Bill Ford, who I kind of hold in high regard as the Mustang sold the

company. He owns 35 of them himself. He has grown up with them, and I said, Bill, you know, I'd like -- my instinct is let's run with this and he

agreed, but we both kind of said we want to see it executed before we finally adopt it.

We did a hybrid escape. We were one of the first actually, like in 2000, and you know, I wasn't here, of course, but I think it got abandoned

because there was premature acceptance of those kinds of products.

But this is the first all battery electric, but you've got to know in your background, Thomas Edison and Henry Ford were colleagues and they built an

electric vehicle first 116 years ago. They just didn't take it to market.

(END VIDEO CLIP)

CHATTERLEY: Now, a top of the line car needs in A-list face to match. So enter a Hollywood star, Idris Elba. The actor is fronting Mustang's

publicity campaign, and he told CNN about his own personal history with Ford.

(BEGIN VIDEO CLIP)

IDRIS ELBA, ACTOR: My experience with Ford goes back a long time. I basically worked at the company for two years. I was on the assembly line.

And this is just before I became an actor, I really wanted to be an actor and my dad said, look, great, but make some money. Come and work with me.

I did. I wanted to anyway, it was great.

I did two years in the night shift which is tough. But it allowed me to sort of like be, you know, audition in during the day; go into a sort of

get my dreams off the ground.

(END VIDEO CLIP)

[09:55:09]

CHATTERLEY: So Idris Elba is keeping ford in the family, but he's lost out on something else. The actor has been dethroned as "People Magazine's"

Sexiest Man Alive. The torch passed on to singer John Legend this year. But Elba isn't giving up so easily and may have found a loophole in the

logic at the title. Just take a listen to this.

(BEGIN VIDEO CLIP)

ELBA: I'm doing okay. You have to understand. It says the Sexiest Man Alive, as long as I'm alive, I'm still the sexiest, right? So there you

go.

(END VIDEO CLIP)

CHATTERLEY: Peter Valdes-Dapena may have been prompted to ask that question. All right, let me give you a look at what we're seeing for U.S.

markets at this moment.

A slight slippage as you can see. Three-tenths of a percent down for the NASDAQ. The S&P 500, two-tenths of a percent, too. So pulling back

slightly from those record highs hit on Friday.

We'll continue that thread on "The Express," but for now, that's it for this show. I'm Julia Chatterley. You've been watching FIRST MOVE. Time

to go make yours. Have a great Monday.

(COMMERCIAL BREAK)

[10:00:00]

END