Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240714

Last years revenue went through china. Alibaba moves a step closer to a share sale in hong kong. The impending offer could raise as much as 20 billion. Shery lets get you started with a quick check on how markets closed. The s p 500 finishing at the highest level in five weeks. The nasdaq, the highest level in a month. Reversingtors yesterdays office to gain ground in yesterdays session. Most were in the green. They were led higher by Energy Stocks. Take a look at wti. Wti prices gained as much as 4. 5 at one point. Apparent attacks onto tankers on two tankers building up the tension in the persian gulf and leading investors to get worried about supply around oil. And we saw now on crude, jumping 2 in the last two sessions. U. S. Futures at the moment unchanged. Lets see how we are shaping up to the asian markets. Sophie this friday, were facing a mixed session with type and commodity sectors in focus. Get activity data from china later this morning. Investors will be watching to see if they can avoid the big sses we saw in mi in april. That is expected to have held near recent post. 2 , have the nzx 50 off set to snap a threeday game. We are watching oil and shipping companies as well on geopolitical tensions. Carryingattacked, methanol for mitsubishi. Theight to safety, eyeing 13. 50 level. 1400, an hit billionaire trader says prices can move towards 1700. Gold is his favorite trade for the next 12 to 24 months. Paul thanks. Lets check in on the first word news with ed ludlow. Ed the Trump Administration says it is still awaiting a response from china about the potential talks at the g20. Theres warning of the consequences of a noshow. He has threatened to raise tariffs if talks do not happen. Larry kudlow says a balanced deal is not possible because of the current unbalanced relationship between the u. S. And china. Organizers of this weeks mass protests in hong kong are calling for renewed demonstrations on sunday. Hundreds of thousands gathered, protesting against the governments controversial extradition though. Student movements, labor unions, and business groups urged them to hold public discussions. Foreign secretary Boris Johnson have taken a huge lead in the race to become the next leader and therefore Prime Minister. He won more than twice as much support as the runnerup, jeremy hunt. Seven candidates advance into the second round with three eliminated. The next vote takes place on tuesday. Youe. U. Is warning the next can that relations could be threatened if the government withholds 50 billion of exit payments. It money forms the basis has not been approved by the house of comments. Boris johnson says he will refuse to pay up unless the e. U. Agrees to better terms for the split. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ed ludlow. This is bloomberg. Aul thanks lets get back to our top story. The United Nations says apparent attacks on two oil tankers are under investigation, but the u. S. Is already blaming enron. The truck yvonne iran. They admit it is not clear if the explosives were from the Islamic Republic. Governmented states says the Islamic Republic of iran is responsible for the attacks today. This assessment is based on used,igence, the weapons the level of expertise needed to execute the operation, recent attacks on shipping, and the fact that no proxy Group Operating in the area has the resources and proficiency to output such a high degree of sophistication with such a high degree of sophistication. Paul there are all bank joins bankow derek wall joins us now. No hard evidence to back up those claims. You heard mike pompeo talking about some of the evidence the u. S. Says that it has. Photos of mine damage to these tankers just off the coast of iran, and it bears mention, really, that some of the way that the u. S. Is describing this is not here is our evidence. This is bit of financing that links the ron iran to it, more an absence of evidence that it could be anything other than iran. You can take that however you want to take that, but it is sort of like who else could it this point . It is a critical shipping lane where a ton of global traffic that is going between asia and europe has to go. As you can see in the graphic on your screen, a neighborhood that has a bit of conflict to it. Iran on one side, saudi arabia and the emirates on another side, and so, theres been some tension there. This is an area that the u. S. Has said very clearly that it was going to use its resources to ensure that shipping lanes stayed open. Shery there was some hope that the u. S. And iran might talk. Prime minister abe trying to build the diplomatic bridge. How did that pan out . Derek not good. Not good at all. In fact, both iran and the up verytates have set high levels that there no time for talks right now and that they are not ready to talk and they do not think talks with even the appropriate. You have that from the very top. Donald trump came out and said that he does not think that wants to make a deal, so does not think that iran wants to make a deal. Said that asmeini well. Even though theres been a lot abe,vertures not just from but from other folks, trying to diffuse the situation, there is a continued escalation. The u. S. Military presence to fleet is always in the region. There are additional personnel moved into the region in recent weeks. And this is a continued escalation that i think people want to try to keep in check before it becomes something bigger, but given the opportunity to maybe, you know, pass messages between the leaders and all of that sort of , as shinzo abe wanted to do, so far, from the very top lines publicly at least between iran and the United States emphasis publicly there has not been much appetite on either side. Shery thank you so much for that. Our bloomberg, Senior Editor in singapore. Still ahead, our interview with a deputy secretary, stan. His thoughts on the suspected tanker attacks. Tol up next, we will speak the head of Global Markets for australia. His thoughts on the u. S. Economy and the future of the fed. This is bloomberg. Shery we have breaking news. The u. S. Central command issuing a statement that saying on the strait of hormuz attacks, the apparent attacks near the persian gulf, it is saying there is no interest in engaging in the conflict in the middle east, saying a war with iran is not in our strategic interests. Of course, we have seen the u. S. , the Trump Administration, blaming iran for the attacks we have seen near the persian gulf. Tankers. Ks on two we have seen secretary pompeo saying iran has rejected a diplomatic outreach by japan, and we are also seeing that the u. S. Must month expedited last month expedited a group to the middle east. We have seen reports that uss mason is en route to the scene of the attack on those tankers. Saudiowned by a broadcaster. They are saying that uss mason is en route to the scene where there were those apparent attacks on two tankers. They are saying there is no interest in a new conflict in the middle east. Lets continue this discussion because the u. S. Market reaction was very different to these apparent attacks. Stocks seemed to shrug off concerns, but oil surged by more than 4 during the session. Su keenan has been wanting this. All to do with supply concerns. Su we did see the gains in oil pared a bit. However, this time, there were pictures that a lot of traders could see and that may have juiced the reaction. Brent oil surged. A rather large gain for the history of the way we had the oil move recently. If you look at a five day chart, west texas intermediate, largely treated and used in the u. S. You will see the chart of the u. S. Spike andan intraday it came down to a 2. 2 gain by the end of the day. We are seeing oil trade lower in extended trading so it is interesting on some of these reports. Take a look at the video, if you will. And, you a cell phone know, full pictures of this that were able to see and may have influenced the reaction. Oil markets reacted to what they saw. One for fully a manager said. He said there is a potential for this type of action to overrule and become more important in terms of the fundamental than supply. Big picture if you take a look at the year to date of oil, you will see that supply concerns really have been weighing on oil of late. It is down some 18 from the peak. In terms of analysts that have been looking at this, a lot of commentary. Some are pointing out that the u. S. That precarious eight did not really provide u. S. Secretary of state did not really provide any evidence. Reduced shipments of oil because of u. S. Sanctions. It would hurt them as well as anyone else. Theres real conflict and who is behind this. However, there is a view that this could add a lot of attention to the upcoming opec meeting. Paul. Paul that is not surprising to see Energy Stocks leading the Broader Market higher. It was not just that attack. Investors got a greater focus on the weak jobs data as well. Su weaker than expected jobs data. Perhaps the fed cuts rates or as to that. Take a look at the markets snapshot. If we can get the market snapshot, there we go. Energy stocks were probably the biggest source of strength in the s p 500. Oil is trading at the lower so that has been a bit lower. Quickly to the stocks, the Energy Stocks got pretty big gains, and mainly the drilling, the expiration stocks, up in a big way. Very su keenan, thanks much for that. Lets get a little bit more on how this may drive the markets. Bring in toby lawson, head of Global Markets. Thanks for coming in today. The big story of the day, the apparent attack on the tankers in the strait of hormuz. We have a chart showing the wti after being unloved, now climbing out of technical territory. Where does the Oil Price Head now . There are so many variables come on their arent there . We have seen that since april. Oil has fallen off a cliff, into the 50 year market. It probably would find some support around there. Shocks likegenous this particular incident saw initial reaction and then tapered somewhat. People think supply could be impacted by some of this increased tension. You have to factor in other geopolitical risks like venezuela, for in. Oil might find itself finding a bit of a hedge even in the lower Global Growth profile. A commodity like oil can act as a hedge. Paul this geopolitical risks you mentioned is another factor for the fed to consider as well. We have this. We have the yield curve doing interesting things. Equity markets seem to have already priced in a couple cuts. It is the fed getting back to into a corner here . Toby i think you are seeing the want i think they do not to move quickly. If they can, i think believers are in the right spot. The u. S. Economy is showing signs of heat, but it is growing. We are expecting it to slow intimate next year to the end of the cycle. But the fed do not necessarily want to pull the trigger now. If you like they are being forced by the exogenous shock of trade they feel like they are being forced by the exogenous shock of trade. Shery if we do not see a cut, will we see a pullback in the market . Toby i think equity markets, if you look at stocks, are still up 10 to 15 for the year so theres downside and equities. Risk off with sovereign bonds holding a big move in treasuries even overnight, getting down to sob 2 10 on the treasury. On the to sub210 treasury. But the data in the u. S. , we get retail sales and Industrial Production tonight, that will be interesting to watch. Our forecast is not too bad. The fundamentals are still reasonable in the u. S. Shery we have heard from paul tudor jones, talking about his playbook, first rate cut 101. At some point, short the dollar. You can see that gold has really been surging very close to that 50 level. You can see that chart. We are near that level. That in theseen past five years. Those this make sense now that we could be headed into that easing fed easing . Toby gold is interesting. It has underperformed as a hedge asset for a long time. On that basis, we are starting to see gold moving, which suggests people are buying into it independent of the u. S. Dollar trade. If you look at that technically, it looks interesting. Paul tudor jones said it is worth having a good look at. If you expect the fed to ease quicker and more vociferously than they had, u. S. Dollar weakness as a hedge ultimately against expectations of tension and riskoff. Gold is probably one were looking at quite closely. Head, toiete generale be lawson. Thank you so much for joining us. You can get more on the tensions in the gulf of and you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. This is bloomberg. Berg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. Organizers of this weeks mast protest in hong kong are calling for renewed demonstrations on sunday. Student movements, labor unions, and business groups have urged the government to withdraw the extradition bill. Stephen engle is in Central Hong Kong now. Set the scene for us. What is happening . Obviously, as you can see behind me, the protest has shrunken down to a few select people early this morning on a friday morning ahead of the weekend. They are calling for a large rally on sunday. There is an assembly here on monday, so it is a bit of a calm right now. Three protesters, if you want to call them that come are singing christian songs right now to the remaining Police Officers behind me. There are eight or nine Police Officers back there, and just four singers with protest songs. All the roads around admiralty are open. The city is open for business. Yesterday, some of the luxury shopping malls over here were closed all day. That likely could be open again today, but all bets are off caps on sunday, and the organizers are rallying or calling for more people to rally. The police assembling but we are not sure if it has been approved. There are confined around. The protesters want people to know that, you know, please do not shoot the protesters. They took a lot of heat on wednesday for using rubber bullets and tear gas and pepper straight spray anything bad and beanbag projectiles against the protesters. U. S. Lawmakers meanwhile throwing their support behind the protesters. Sorry. i am having a very hard time hearing you. We over the main highway and the singing is drowning me out. Let me clarify some of the comments coming out of washington because this is potentially a very significant development. If u. S. Congressional leaders are considering revising the special relationship the u. S. Has with hong kong. They have a 1992 u. S. Hong kong policy act that congressional ly,ders acting bipartisan and from both chambers, are sponsoring a bill that could of the, you know, review status that the United States has with hong kong every single year to approve hong kongs merits, special treatment, and that could one of the provisions of the bill. It could freeze the assets of any individuals that forcibly extract people from hong kong, a. K. A. , the extradition bill. It could deny visas to individuals that extradite people forcibly from hong kong, so it is a potentially very Serious Development from the United States, and obviously, more pressure on the chief executive. He took a phone call from jeremy hunt, who encouraged her to listen to the concerns of the people and preserve hong kongs right and its high degree of autonomy. That is what sets the scene on this friday morning. I am sure more to will start coming to this covered walkway bridge on a thankfully more sunny friday morning. Chief north asia correspondent stephen engle, thanks for joining us there from Central Hong Kong. We will have some big guests joining us to look at both sides of hong kongs extradition debates through the day, including the chief secretary, and expresident , and a nonofficial member. And a digital founder. We willoming up next, speak to the u. S. Department of energy deputies carry. His thoughts on the suspected tanker attacks in the strait of hormuz. The Trump Administration has already blamed iran for the attacks although there has been little evidence and source is now saying that was a conclusion based on intelligence sources in the absence of any better explanation. Plenty more ahead. This is bloomberg. Ed this is daybreak asia. I am ed ludlow with the first would headlines. The u. S. Is blaming iran for apparent attacks. The Trump Administration says at least one ship was struck by is notbut admits it clear if it was actually from the Islamic Republic. Iran has rejected any role in the attacks. Conflict with the ron is not in america iran is not in their strategic interest. Responsible for the attacks in the gulf of oman today. Intelligence,on the weapons used, the level of expertise needed, similar iranian attacks on shipping, and the fact that no proxy group has the resources and efficiency to act with such a high degree of sophistication. Ed the man accused of two Mass Shootings in christchurch in march has entered a plea of not guilty. He faces 51 charges of murder, 40 of attempted murder, and one charge of terrorism. He appeared in Christchurch High Court by have video link from a via videocurity link from a maximum security prison. India has evacuated 300,000 people from western coastal areas ahead of the arrival of a powerful storm. The cyclone has been headed for Gujarat State and may have glancing contact. It has winds gusting at 180 kilometers per hour. Pakistan has issued warnings with years of heavy rain and dust storms. Hsbc says the pay gap between its male and female employees in the u. K. Is improving, but there is still a difference of about 55 . 61 year ago. The disparity in bonus pay shrunk to 70 . Companies with more than 200 u. K. Employees are 250 u. K. Employees must report differences in hourly wages. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ed ludlow. Shery we are less than half an hour away from the market open. Lets get a check on what talks to watch. Sophie. Sophie this friday on the tech front, we will be gauging reaction to broadcom cutting it Sales Forecast. The companys rather component maker the huawei ban alone is expected to it is seen hurting profits for Japanese Electronics parts suppliers. Is forecasting a ¥25 billion drop. Pressure. A 1. 5 billion dollars stake in the company. The activist fund is calling on sony choose been off it to me spin offr unit to its semiconductor unit. The nikkei reporting the company is to automate 4000 jobs by the end of fiscal 2020. Plus, alibaba, one of its holdings is said to have confidentially filed for a hong kong ipo. Softbank that an indian ridehailing start up. We will be watching the reaction to the tanker attack in the gulf of oman. One of the ships was a japanese operator. While the earnings impact is likely to be limited, the incident may draw attention to geopolitical risks for methanol. Shipping related Companies May move today, including south koreas hyundai merchant marine. One of them received a distress call. Paul thanks. Afterhoursbled in trading as they cut the fullyear revenue forecast. Reporter, ian king, has the details. What other reason to the cut . Have beenis what many concerned about, what the huawei with theled effect of the trade war, would begin to hurt earnings. Today, we got very strong evidence that it is more than just concern. It is absolutely happening already. 2 billion projected sales have gone away over the next six months for broadcom. They also supply components rapidly and samsung. Tell us about the impact on the Broader Market. Ian the two are tied together. The thing they got asked was is huawei . T answer was absolutely not. They said, across the board, their customers are cutting inventory, concerned about what the impacts might be on the markets. Market customers include samsung, apple, and also, you know, the Data Center Companies such as google, amazon, so obviously, very concerning the Broader Market as well. Shery yankee in san francisco, our Bloomberg Technology u. S. And the conductors and networking reporter. Plenty more to come. A conversation with the u. S. Energy secretary. This is bloomberg. Asiascounting down to first major market opens this morning. Japan futures up. 25 after two sessions of losses for the nikkei, coming on the back of u. S. Stocks finishing at a fiveweek high. This is daybreak asia. I am shery ahn in new york. I am paul allen in sydney. The Trump Administration is blaming iran for a parent all caps on two oil tankers an apparent attack on two tankers in the gulf of oman. Lets discuss this with kathleen hays. Kathleen. It isn kathleen interesting. Here i am in tokyo, joined by a very special guest who is in the right place at the right time to speak to us. Thats Dan Brouillette. Thank you for joining us. Dan it is great to be here. Kathleen what an interesting 24 hours this has been for you, the energy market, the United States government, and others. Mike pompeo gave a press conference and he said evidence is pointing towards iran on the attack. Kuwait says it is too early to tell. What can you tell us now to tell us now . Dan i cannot because i am in tokyo, but i fully suspect secretary pompeo as well as john bolton and others in the National Security council have reached that conclusion based on intel they have seen over the theirew, so i trust judgment on this, but i look forward to getting back to washington to learn more. Kathleen what is the likely reaction . Iran past, during the iraq war, the u. S. Government escorted tankers through the strait of hormuz. Dan that is a decision for dod. We will wait to see what secretary shanahan and others say. It may be that the United States chooses to do that. At the department of energy, we will be focused on the market themselves and theme of the reactions are. Kathleen what do you make of the reactions . Selling back . Is it too early for the oil market to tell . Is it just because there are so many inventories . So much supply out there . Veryyou are seeing a Resilient Oil market. We did see some increase in market last night in the pricing. Roughly 4 , but it came right back down. We areat tells you is seeing production members across the world meet the needs of the world demand. I do not know if you follow the most recent report by our own information administration, eia, but they are suggesting u. S. Production will increase through 2019 and 2020. Producing as much as 30 Million Barrels per day in 2020, and i think that brings a wealth of stability to the market itself. Kathleen how disruptive could this get . Not owning these attacks. We do not know what will happen next. Just a month ago, there was another tanker attack, so i think it has everybody on alert. If this continues, how bad could this be for the Global Energy market . Dan i think what you are seeing is a stable market. We could replace much of the oil we would lose from any disruption from iran or even other countries in the world, be it venezuela or others. We are in a very good position worldwide with regard to oil production, so whether iran will continue its malign behavior is really for them to decide, but i can tell you from an oil market for active, we are less concerned about those activities than we were 20 years ago. Kathleen certainly a good position to be in. See something continue that is Something Else i would like to ask you. What type of reaction are you expecting for some of the Big Oil Producers like saudi arabia, russia . Dan they have an upcoming meetings later this month in june and they will decide what they will do with regard to their production numbers. Reporting suggests they will continue in their production numbers at the current levels, but that is a decision they have to make and they will make later this week. But what we are seeing in the marketplace is countries like saudi arabia and others are reduced production and others are setting up fill that gap. So that gapup to and that brings a lot of stability to oil markets worldwide. Kathleen asia is very dependent on oil. There is a certain significant amount coming from the strait of hormuz. Have you had any discussions . The you are in tokyo, about potential impact, about the u. S. Was wants, and what it could mean for the asian region . Dan unfortunately, i have not. I will go up pretty early. I really need to get back to washington to get briefs on the intel community. , ihleen speaking of asia want to get on this question of freedom gas. Know, to do with, you natural gas. Dan lng. Kathleen but in the midst of energyionist tariffs on bars like china, mexico, and germany, what kind of how important can the u. S. Be seen as the supplier of lng if they will be these unexpected move s by the United States . Dan we have some very good partners. Qatar,tors from australia, and others. The United States is a very reliable producer of lng. Seeing is an expansion of the demand for lng. In asia in particular, japan, south korea, china, to some degree, very Strong Demand for lng, and that creates an enormous opportunity for producers in the United States. With regard to the tray conversations that are ongoing, the leaders of our respective countries have a very good and respectful relationship, and i bet there will be a trade deal announced in the next few weeks, months, or near future. What were seeing now is very little impact on the production of lng in the United States as a result of the conversation between china and the u. S. When you look at the demand in other parts of the world, particularly south korea, the numbers are handling. We so probably approximately three times the amount of lng to south korea and china. Than we do china. Kathleen speaking of trade tensions, the trade war, people are counting on Chinese Investment in new american export projects, right . To get lng around the world. Is there any concern that that could be dampened . Or that the chinese will have less dizzy at them . They are less enthusiasm . They have their own steps to take against the u. S. , against u. S. Companies. Could this be on their list and are you concerned about it . Dan not at all. Were seeing export facilities built in the United States. We saw a facility in louisiana. The president attended an event hosted by energy in louisiana. An artist facility. This one facility has the ability to supply 25 of all of the lng imports to the e. U. In 2018, so it is an enormous facility. We will see those types of Investments Continue in places like mexico. They are being considered in places like baja, mexico. We are seeing import facilities being built in places like germany. The German Government announced they will invest 500 million in two facilities to import lng from around the world. Kathleen speaking of china and back to iran, theres some concern they will not fully comply with u. S. Sanctions on iranian oil exports. Is in full if china compliance, and if they are not, what do you take steps did you take . Do you have other tools to enforce this when the relationship is on shaky ground . Dan sanctions and tariffs fall to a different department. On thosefer to pompeo matters with regards to compliance. I do not know the answer to your question. Regard to other countries around the world, we are seeing very good compliant around the world. Japan in particular. Others have complied with u. S. Requests to reduce purchases of iranian oil and we will not continue for the time being. Kathleen you talk about the ability of the Global Energy market. The u. S. Part of it. Theres also a big concern about global demand. Been so manys indications that if the trade war continues and if it business to dampen investment, if it creates so much uncertainty and market volatility that it will economy down sharply, all Central Banks are very wary of this now. What happened to global oil flows, and weu. S. Slows . Dan you are seeing transitions and shipping movement within the market itself. The u. S. Economy is moving. Jobs are being created at an enormous clip. We are seeing places like asia and europe perhaps slow down slightly, but that growth will come back very shortly, and when it does, so will demand for oil. Youre seeing dislocation or shifting. I do not know for your seen slowdown and recession just yet. Kathleen how concerned are you . If these kind of attacks continue, if we see continued turmoil in the middle east, particularly on the strait of hormuz, what will this mean for energy from now to the end of the year, over the next year . Could see the we big spike up and prices that would not be good for a lot of people . Dan it is hard to see the huge spikes we saw 20 or 30 years ago. The past,ed about in opec is a different opec than it was 30 years ago. Isir influence on the market certainly important but not as influential as it was 30 years ago. While we are concerned about some of the activities we are seeing in the middle east, particularly in the strait of hormuz, where you just reference, we are not as concerned about it as we were just a decade ago. Kathleen shipping insurance rates, that everything, do you sxpect insurance rate rising . Dan yes, there will be some premium increases coming. Kathleen Property Industry . Dan problem for the industry . No. Right now, with pricing of oil being what it is, you know, companies have become much more efficient than they were even five or six years ago so i think these costs can be absorbed pretty easily. , thankn Dan Brouillette you so much for joining us on bloomberg television. Feel free to come back. We would love to hear from you when we know a bit more about what is happening. Thank you so very much. Dan brouillette, Deputy Energy secretary from the United States of america. I will send it back to you now. Shery kathleen hays, thank you so much for that. Do not forget to tune in for our special conversation with yi gang. Once the interview saturday at 9 00 a. M. Hong kong time. If you are watching from new york to the friday at 9 00 p. M. This is bloomberg. Shery breaking news. Mission to the United Nations, now issuing a statement saying that it categorically reject the u. S. Allegations rejects the u. S. Allegations when it comes to the oil tankers attacked. U. S. Ambassador saying it rejects the allegation. Alibaba is already one of the worlds most valuable companies and look set to raise a lot more money after making the Worlds Largest ever Public Offering in new york. Bloomberg learned alibaba has filed confidentially for a listing in hong kong. It could become one of the citys biggest ever share sales. Selina wang has more. So far about the new listing plans . Hasna we learned alibaba already filed confidentially for a listing in hong kong of 20 billion, but this of course is not finalized yet. Alibaba had roughly about 30 billion of cash as of march, but this does provide a diversification of funding as well as a liquidity boost. This company has expanded far much deepermerce, into online retail, entertainment, and deliveries. Is putting pressure on margins. This could diversify some funding away from its competitors like tencent and help provide some of this costly subsidy worth. This also comes against this political backdrop of u. S. China trade war, it increasing hostile environments in each of the countries, and provides a contingency plan for alibaba indicated he was investors become even more anxious about global anxieties and could have a better valuation in hong kong. Paul what is the significance of the listing for the Hong Kong Exchange . Selina this is really hong kongs chance to get the one that way. If you remember that alibaba york up listing in new after it failed to persuade the hong kong regulators to relax some of the restrictions. The Hong Kong Exchange has revised some of their previous restrictions and allow dual Class Companies to list. It would be one of the largest listings ever and it could be a catalyst for future Tech Companies to list their in the future. Paul thanks very much. Our china correspondent in beijing. Lets review the market open in japan, south korea, and australia. Sophie kamaruddin. Athie we are taking a look a potential uptrend for asian stocks with tech and commodity sectors very much in focus. Well get japanese sector output and monthly activity data from china later this morning. Investors will be watching to see if the chinese numbers can we sawhe big misses in april. That is expected to have held near recent lows. Taking a look at some of their things we have got very much on the radar, taking a look at gold very much in focus today. We are seeing an advance given the flight to safety over the concerns of the gulf of oman taper attack. 1350 levelring the which it has not been able to break. If it can hit 1400, prices could quickly move towards 1700. Which hasook at oil, jumped out of oversold territory, as you can be on this chart in the bloomberg terminal, and it is headed back for the shortterm moving averages. Spreads have rebounded after slumping on wednesday. Shery thank you. Lets get a quick check of the latest business flash update. Tesla has failed to win exemption from terrorists tariffs on the model three. The company appealed for help saying the duties would raise teslas cost and hurt profitability. The u. S. Trade Representatives Office denied the waiver, saying the components are related to the made in china 2025 program. Paul japan display is likely to miss the friday deadline for a bailout with investors in china and taiwan will in discussions company with the company about terms. A deal is expected before the end of the year. They want agreements sooner and are looking at alternative arrangements. It cutisplay says more than a quarter of the workforce and scale back the struggling mobile business. Shery coming up, we will speak to our guest. Later, former hong kong chief secretary will join us. This is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Is inim paul allen sydney. Asias major markets are about to open for trade. Shery from bloombergs Global Headquarters in new york, im shery ahn. Sophie im Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Paul our top stories this friday. 2 tankers come under apparent attack near oman. The u. S. Points the finger at iran and says war is not in americas strategic interests. Oil climbed to a low after concerns about weaker global demand. Shery we assess the health of the chinese economy as new data measures the fallout from the escalating trade war. Lets get you straight to the Market Action with sophie in hong kong. Sophie it is a tepid start to the session. Downside. The nikkei 225 and the topix this morning. The yen is looking firmer, trading at 108. We do have jgb looking like site moves this morning. Lets take a look at the mood in seoul. Kospi is under pressure. Bob come cutting its Sales Forecasts. Lets check in on the integrated. The asx 200 with a muted start. To thesie dollar moving downside ahead of chinese monthly activity data. We see the kiwi dollar taking a hit after ugly pmi data from new zealand. The currency falling to fresh eightmonth lows on pressure for more rate cuts. Lets check in on commodities. Oil giving back some gains we saw last night. It did jump about 4. 5 on concerns about geopolitical risk. Also moving to the downside. Gold continuing to advance. As 1350 level is in focus the breach above that level can help keep momentum. Have not seen a break above it in about five years. Lets look at some movers. I want to highlight japan. Changeooking at little after sliding about 12 thursday. We saw an early move earlier in the session. Now, no change. Chinese companies are unlikely to meet a deadline to meet it. Lets look at other stocks on the move this morning. Lets check in on sony. We see sony gaining ground, up 2 . T even as they face pressure on the third point, which says has a stake in the company. Checking in on softbank, moving slightly to the upside. Alibaba reportedly confidentially filing for a listing in hong kong. Softbank and a ridehailing start of are preparing to move into uber territory. The nikkei is reporting the country is adamant for 4000 jobs. We are checking on mitsubishi backed chemicals. Down about 2. 4 this morning. The Company Operates one of the ships damaged in the gulf oman attacks. While the impact is likely to be limited, the incident may drive tensions and geopolitical risks. Paul lets check in on the first word news with ed ludlow. Is the Trump Administration still awaiting a response from china about potential talks at the g20. Its warning of the consequences of a noshow. The president wants to meet xi jinping and has threatened to raise tariffs if talks do not happen. A balancedw says deal is not possible because of the unbalanced relationship between the u. S. And china. Organizers of this week mass protestss in hong kong are calling for new demonstrations sunday. Hundreds of thousands rallied outside the Legislative Council on wednesday come up rotating the government protesting the government. Union leaders and business groups urged the government to withdraw the bill and hold public discussions. Former u. K. Foreign secretary Boris Johnson has taken a huge lead in the race to become the next conservative party leader. Therefore, Prime Minister of the first round of voting. He won more than twice as much support as the runnerup. Into candidates advanced the second round, with three eliminated. The next vote takes place tuesday. India has evacuated 300 thousand people from western coastal areas ahead of the arrival of a powerful storm. The cyclone has been headed for them. It may make glancing contact. System is packing winds gusting at 180 kilometers per hour, and may bring ac surge of two meters. Pakistan also issued warnings of heavy rain and dust storms. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im ed ludlow, this is bloomberg. Shery back to our top story. The United Nations says the attacks on 2 oil tankers near the straight of hormuz are under investigation. The u. S. Is blaming iran. The Trump Administration says at least one vessel was struck by mines, but admits it is not clear explosives were from the Islamic Republic. The u. S. Government, the Islamic Republic of iran is responsible for the attacks that occurred in the gulf of oman today. It is based on intelligence, the level ofsed, the l expertise needed for the operation, a recent attacks on shipping, and the fact that no proxy group in the area has the resources and proficiency to act with such a high degree of sophistication. Shery Derek Wallbank joins us now. Mission came with a statement that says it rejects the allegations. What washington what is washington basing its allegations on . s mission to the u. N. Says it rejects what it claimthe u. S. unfounded , with regards to these attacks. That is important. Iran had been accused by the u. S. Of being behind this. Some of the evidence mike pompeo outlined, they were talking about some preliminary stuff, videos, pictures, things of that nature. There are u. S. Assets on site. The u. S. Bainbridge is on site. U. S. Ships were quick to respond. The fifthly, one of the u. S. Largest Military presences is based in that area. They have been quick to respond. In terms of public stuff, it gets harder. One of the logic points pompeo was laying out was the commission by omission. The idea that iran is probably responsible because it is right next to them and no one else in that area is even possibly up to the ability of doing this. It was sort of the logic that he laid out. It is really tricky here. While,covered this for a one of the hardest things is you do not see all of the evidence behind the scenes here. The u. S. Is not quick to necessarily put out some things that may or may not be classified. It is very likely that as we react to this and traders are trying to price oil and figure out new risk threats, we are operating in an Information Age cemetery here. Paul there was also hope before all of this that the u. S. And iran may get together for talks. Is that looking more remote today . Derek very much more remote. I dont think you can see it. It is past the coverture of the earth on the horizon. Both have said at very high levels that thanks, but no thanks,. Iran made a statement at the top levels that said we appreciate shinzo abe coming to town to talk about this, but we have no interest. We cant trust the u. S. , we dont trust donald trump. President trump came back and said the time is not right for talks with iran. There is a lot of mistrust on both sides. , after the u. S. Pulled out of the nuclear deal, there very top level at the top level, there is not much interest in both sides in going to formal talks. Are there talks going behindthescenes . Probably, but that is different than the top line lets make a deal kind of talks. Both sides say they flat out have no interest. Paul bloombergs Senior Editor, Derek Wallbank. Thanks for joining us. Lets check how this is playing out in the markets with mark cudmore in singapore. What are you seeing on markets as a response to this event . The really large reaction, oil markets did come true yesterday. About 4. 5 inked less than two hours in the middle of the asia date yesterday. That saw a little bit of a haven bed. It did not last long. Equities in the u. S. Traded of k overnight. We are seeing the haven in treasuries. That is causing yields to come down. There is not too much of a panic elsewhere. We did see oil prices come down highs. Eir not only after the first spike at about 4. 5 , but also later on towards the session. There is a general belief in oil markets that they need extra risk premium priced into oil prices, they have that now, but there is no reason it will lead to sustained down flow. That has been the perspective in Commodity Markets at the moment. It looks like as long as we dont get a follow, we can probably move on. We need to incorporate slightly Higher Oil Prices into the models. That means slightly higher inflation figures. Probably lifting sentiment, also the fact that investors seem focused on when the next rate cuts will come from the fed. We have the meeting next week. What happens if we dont get that . I think that is a very big driver at the moment. The last few weeks, the support equities have been from the rate market. We removed the mexico tariff threat, but that was not there a few weeks ago. I think it has been the raise support for equities markets. There is no guarantee that the fed will be acting next week, but i think it will be disappointing if the fed does not make it clear they intend to cut rates very soon. As soon as july. I think ultimately, we will get to a situation where the economy is clearly slowing down sufficiently. The market will force the fed to act in july. We want to see the fed is aware of that by next week. Shery we are going to get more chinese eco data out of this morning. Seen different numbers out of china recently. What will it take to spur more speculation that there can be more policy support coming . Angle abouta good is bad news good news. We get a massive disappointment, does that mean more stimulus for equities . The first thing we need to take into account is what kind of data that will surprise the market . The whisper number is it will disappoint, because recent data has disappointed. Many economists are being slightly optimistic with their forecast. Its hard to tell with the chinese numbers. If they come in line, the market will be happy on initial reaction. If they disappoint, we may see an immediate selloff. Investors will focus again on what, the reaction from china will be from the pboc, and if we can expect further stimulus. Thats a general dynamic at the moment. We see a slowdown in the economy on both sides of the pacific. China is being much more reactive, much more supportive of its assets. Its more likely the sustained pain will be in american equities, rather than chinese equities. Some here, given they have repriced. Shery always great having you, mark cudmore in singapore. Still ahead, hong kong braces for more protests over the weekend. We speak to the citys former chief secretary, who says Police Treatment of the protesters has hurt hong kongs international image. Paul first, we are about to find out how chinas economy is holding up in the face of the trade were. We get a preview of the next data dump. This is bloomberg. Shery this is daybreak asia. Im shery ahn in new york. Paul im paul allen in sydney. Investors will have another check on the chinese economy later on it when beijing releases data on industrial output, retail sales, and investment. Selina wang joins us now. What can we expect from these numbers . this is really a way for investors to get a window into how the chinese economy is holding up amid the trade war and other Economic Issues around the world. Saw all three metrics of industrial output, retail sales, and investment miss economist estimates. That was a sign chinas economy was on shaky footing ahead of the latest trade escalation. We are expecting the retail Sales Numbers that this will be stronger than previous multiyear lows. It will be a sign to see how the Chinese Consumer is holding up amid some of these dampening trade tensions. Assets, the expectation is 6. 1 growth, compared to the numbers we saw in 2018, when the Chinese Government was trying to stimulate through Infrastructure Spending. Industrial production is likely to be in line with the previous month. This will probably be the most telling metric on how the tariffs are impacting some of the companies and how they are being pressured by weak demand at home and abroad. If you take a look at this chart terminal, you will see the trend of these three metrics over the past several years has been on steady decline. We are expecting this downward trend to continue, except for the retail sales metric, which had multiyear lows in april. Shery we have seen pretty targeted stimulus measures coming from the government. What can we expect now . Earlier this year, we saw the government roll out a pretty hefty tax cut. The Chinese Government has tried to stimulate the economy through domestic consumption, rather than through these massive Infrastructure Spending projects. They are trying to buffer the economy without letting it spiral into some of the debt risks we have seen over the past several years. After the april weak data, the expectation from every economist bloomberg has spoken to is more stimulus measures will be needed. Last week im a we saw the Chinese Government roll out a stimulus effort to boost like areas electronics. Later today will be a sign to see how the previous stimulus measures have been absorbed by the country so far. So much,ank you bloombergs china correspondent in beijing. Our next guest says the outlook for china has darkened. Lets bring in. Great to have you with us. Selina was telling us what we should expect out of the numbers. Retail sales growth is expected to rebound after a slowing to the most since october of 1999. My first question would be how healthy is the Chinese Consumer right now . If you look at chinese economic numbers, we have seen volatility. We had a reasonable start for it year, and went down in april. These economic numbers for supplies to the downside. Retail sales were the biggest downside. Nbs offered a nation last month. It was actually driven by fewer holidays in april. This year compared to 2018. For todays data, it will be a verification whether the official explanation was correct or not. In maye of this rebound will tell us how healthy the Consumer Sector really is. If you look at the labor market situation, it remains relatively steady. The Housing Market seems to be doing well. I think it remains a healthy for the chinese economy. Shery the economic recovery has not been supported by government measures, even when it comes to Infrastructure Spending. How much can we expect in terms of private Sector Investment . Somethingt is clearly beijing wants to stimulate. Know private sector is more profitable, more productive, and efficient in utilizing resources. We have seen measures from both the fiscal and monetary side deliberately trying to boost the private Sector Investment and spending. Old tax reductions, we have seen some signs of steadying in the private Sector Investment. If you look at the fai breakdown between the official and the private sector. , it hasr the latest pmi had about 50. To get to some part of that private sector is doing well. Concerned all be about the trade tensions, which imports art the i lot harder compared to the more domestic oriented ones. It is a very likely and much needed. Paul we have seen recently chinese small caps entering a bad market. Are you concerned about credit risks in some of the smaller and mediumsized banks . The bank is something that has shaken the market and credit risk. That is by talking to our colleagues onshore. The liquidity has tightened significantly. Particularly for the institutions and the smaller commercial banks. The pboc, the overall liquidity in the Financial System is still very abundant. We are seeing a number of days of liquidity injection. Liquidity iss the not going to the Smaller Banks and financial institutions. Its a structural problem as opposed to an aggregate problem. Paul speaking of the pboc, we had the governor saying he has tremendous room to adjust monetary policy. He is not concerned about the yuan anymore. He says there is no red line with iran as it approaches seven. What sort of policies do you expect from the central bank . Our view had to change recently. Previously, we thought defending the seven levels is very key. We had recently changed our minds. The reason the pboc wants to defend the seven in the past was beijing still thinks a deal with the u. S. Is imminent, on the table. If you have a deal, you can argue the fair value is below seven. Therefore, it makes sense not it go over before coming back down once a deal has been struck. Excess, you cause volatility. Developmentsent with the escalation of trade tensions and the technology conflicts, beijing no longer believes we can strike a comprehensive deal in the very near term. They are hunkering down for a more protective fight. I think defending 7 makes less sense right now. Yai axa investemt managers senior emerging asia economist. Thanks for joining us today. You can tune in for our special conversation. Watch the interview with the pboc governor at 9 00 a. M. Hong kong time. If in new york, that will be friday at 9 00 p. M. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Alibaba is moving closer to what could be hong kongs biggest share sale since 2010. Bloomberg learned chinas Largest Corporation filed confidentially for a listing in the city. Alibaba has not finalized its but it couldarget, raise as much as 20 billion. It raised money 5 billion in its new york ipo, which was the Worlds Largest ever Public Offering. Paul qualcomm slumped after cutting its Sales Forecast and saying the trade war will wipe out the orders they have in the second half. Pointill give of about 22 5 billion for the 2019 fiscal year, down 2 billion from projections. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Paul this ed this is daybreak asia. Im ed ludlow with the first word headlines. The u. S. Is blaming iran for 2 oil tanker attacks near the gulf of oman. It is not clear if the explosives were actually from the Islamic Republic. Iran rejected any role in the attack. U. S. Central command has a better group in the region, but says conflict with iran is not in americas strategic interests. The u. S. Government that the Islamic Republic of iran is red sox will for these attacks in the gulf of oman this the attacks in the gulf of oman. Fact that no proxy Group Operating in the area has the resources and proficiency to act with such a high degree of sophistication. Ed the eu is warning the next u. K. Prime minister that relations could be threatened if the government withhold almost 50 billion of brexit payment. Brussels says the money forms the basis of future cross channel ties, although the deal has not been approved by the house of commons. Boris johnson says he will refuse to pay up unless the eu agrees better terms for the split. 2 mass accused of shootings in christchurch in march as entered a plea of not guilty. 51 charges of murder, 40 of attempted murder, and one charge of terrorism. Here. Court. Ppeared in high he did not speak as his lawyer entered the plea. The trial is expected to start next month. Hsbc says the pay gap between its male and female employees in the u. K. Is improving, but there is still a difference of about 55 . 61 one year ago. The disparity in bonus pay has shrunk from 85 last year to average of around 70 . Companies with more than 250 u. K. Employees are required to report gender pay gap figures based on differences in average hourly wages. News, 24 hours a day, on air and at tictoc on toward her, powered by more than 2700 journalists and analysts in more than 120 countries. Im ed ludlow, this is bloomberg. Paul just to get you some reaction from one of the stories we are following at the moment. The apparent attacks on 2 in the gulf of oman strata hormuz straight of hormuz. They are taking a more cautious line on the u. S. , which has been blaming iran. He says he still doesnt know who or what was fired at the tanker. And prime attack minister shinzo abes visit are unrelated. Are notby abe bearing any fruit at the moment. Just some update from japans transport minister. Lets get a market share with Sophie Kamaruddin. Sophie asian stocks are trading mixed. The recent benchmark could be set for the first rise in three sessions. Oil is looking steady after jumping overnight. Wti trading below the 52 handle. Bonds are higher, pushing u. S. Twoyear yields to december 2017 lows. The yen is steady. Is an outlier, falling to an eight month low. The response of stocks on the highlight emp, falling in sydney. The most since february 14. There are additional conditions for the Wealth Managers pensions business. Empan stanley downgraded amid the structural shift in the tension market, which places more than 90 of their wealth earnings at risk. These are other stock movers. Ntg sliding after delayed earnings by one month as it widens the scope of an accounting probe. , s casey is headed for a sixday gain after deals from kicking off for 1. 2 trillion one. Netmarble jumping as much as 7. 4 earlier. Thats the biggest boost on the kospi. Their game released last week. It is expected to drive their growth. Shery a bailout for a troubled apple supplier is in jeopardy. Investors are unlikely to meet a friday deadline to come up with a rescue package. Elstrom joins us now from tokyo. What will happen when the day is done and no bailout plan is submitted . Japan display is a deeply troubled company. They have been losing money for five years in a row. They supply apple and others that make the glass screens that go on your phone. The trouble we have been having is the smart phone market has been stagnating and sliding. Secondly, they make older technology, not the new Oled Technology Many Companies are moving through. They have been struggling making investments. The R D Investments have not been as big as others. For two years, they have been trying to find money someplace. In april, they announced this deal where they would get about 1 billion from foreign companies, including a couple in taiwan, china, and Innovation Network corp. Of demand japan. That was supposed to be finished today. Byis not going to happen that time. They are still negotiating terms. They are concerned about japan displays financial state. Get ited more time to done. That puts more pressure on the japan display. They will layoff about a quarter of their workforce. Everybody will take pay cuts, the ceo will step down. There are troubles. Shedding,cuts, job what does it mean for the company in the mediumterm . What is the plan Going Forward . Peter it gets more difficult for japan display to get to the cutting edge of screen they need toat develop. There is very fierce competition. Samsung is top of the list. There are many others investing billions of dollars to be able to develop new screens that are brighter, less power consuming, and they are struggling to get back into that place. Without this money, it will be more difficult for them to save the business and get back into a position where they can be one of the leading suppliers for apple and the other smartphone companiesd other more broadly in the technology arena. Shery what role will the government play . Peter it is interesting. Incj has been helping several companies, including japan displayed. They have been trying to broker some sort of deal. Historically, japan has been reluctant to let these Cutting Edge Technology companies be acquired by foreign companies. You will recall with toshiba, they were auctioning off their chips business and did not want it to go to chinese buyers. They engineered a buyout between american buyers and local buyers. Japan display has thrown up their hands. They need someone to come in and rescue the company. Role and lety a chinese and Taiwanese Companies come in and help this company. It is deeply troubled. They need money quickly. The consortium that is now negotiating still wants to come in and take control of the company, but need more time. They want until the end of the year. Japan display is concerned because they do not have that amount of time. They need cash before that as everyone is taking pay cuts and laying off workers. They need money sooner rather than later. Paul Peter Elstrom joining us from tokyo. Theext, we are joined by former chief secretary of hong kong to get her thoughts on the protests against the new extradition bill. This is bloomberg. Paul this is daybreak asia. Im paul allen in sydney. Shery im shery ahn in new york. Weekassive protests this over the controversial extradition bill in hong kong have sparked business concerns. Property developers were among the First Financial casualties of the unrest. Esr has reportedly pulled its planned 1. 2s billion i feel, the which would have been the biggest in hong kong this year. Another at the airport has been postponed. Thesays it may hit important luxury goods sector through temporary store closures tourism. Sales of hong kongs highend malls or hit by the protests. Joining us is senior retail analyst Catherine Lim. Tourism. What are we seeing so far . Catherine . so far, the protest has been contained. Much of at seen so direct impact, with the exception of store closures at malls such as pacific place. Operated out operating hours shortened for jewelry stores. The Current Situation as it stands right now. Paul things are really quiet at the moment. What would the concern be if the protests and numbers ramped up again and this spread some more . Atherine if the unrest protests persists, this will take a toll on tourism in the city, particularly with regards to chinese to risen, which had sloped in the month of april after very strong numbers in the first two months of 2019. If this continues, i wouldnt be surprised if we see the tourism numbers slowing down, or possibly turning flat or negative. Shery how will this impact the earnings outlook for luxury retailers this year . Instance, they are reliant on the Chinese Tourists for more than half of their sales in hong kong. Efer theirrists d visits over the next couple of months, which are critical tourism,r the chinese storel likely see thin sales. Stores in hong kong will take a further dip. In the latest results, the company also shared that because of a higher base they saw last year, sales are at about 5 . 8 s drops to the low below a present, it will probably take a toll on their earnings. Paul Bloomberg Intelligence senior retail analyst Catherine Lim in singapore. With us now is one of the most prominent figures condemning the use of force by police against the protesters, former hong kong , was secretary anson chan the secondhighest official 1999. She said this has damaged hong kongs international reputation. She joins us from our hong kong studios. We have seen that there is a the introduction of this controversial extradition bill. The government said it is not urgent. Do you see this as an Encouraging Development . Anson im not quite sure what they mean by not urgent. Hasalize the precedent decided for the time being that it is time to hold off the second reading because of possible unrest around the chamber. Therefore, he cannot guarantee the safety of members going into the chamber. What the bulk of the population here wants is for the government to withdraw these controversial proposals to allow time for proper consultation, then possibly formulating proposals more excepting to the community as a whole. Paul in the past couple of days, we have had the chief executive join us now, they support this law. They say if somebody commits a serious crime in china, why should they be allowed to take refuge in hong kong . Other countries have extradition laws. What is the concern here . Anson other countries have extradition laws with china, and the agreement is between 2 sovereign parties. Here, were talking about a more less formal agreement between the chief executive of an china,trative region of and an area of beijing. We see the total lack of trust in the legal and criminal system in the mainland. If this law is passed, no one in hong kong will feel safe. Our personal safety and freedom are supposed to begin indeed by the joint declaration and the basic law. Fact thattout the hong kong is a very safe place, a safe haven for doing business. As the International Community and the local Business Community have made clear, there are serious concerns over the extradition proposals, which they believed would considerably undermine Business Confidence and effect the reputation of hong kong as the premier financial and services center. The chief executive has heard from all sectors of the community, local and overseas, that they do not wish to see the bill passed in its current form. Shery if you see the protests continue indefinitely, would you say that will affect the Business Sentiment anyway . Anson undoubtedly. Thats why we are very surprised the chief executive and his top advisers, whether it is his policy secretaries, members of his cabinet, are not advising him to listen to the voices of the one Million People who took to the streets last sunday in heat. Ring what does it take for the government to reconsider its position . What is the urgency . There is no urgency. Hong kong people cannot see the benefits it brings hong kong to push through and to bulldoze these proposals through a very compliant Legislative Council where the probeijing party has majority. You are shery you are the chief executive in hong kong before the handoff in 1997. ,ow has the legislative process jurisdiction wide in hong kong, the legal system, a little gold, our peoples rights and freedoms evolved since that time . The Legislative Council is now dominated by the party. Jing they changed standing orders, they bypassed due process. Occasion, you are talking about a very controversial bill. They have not even put it for scrutiny to the normal Bills Committee. The government decided to bypass the Bills Committee to take it to the full council, and then to tell the full Legislative Council it has to be passed before the summer break of the chamber in mid july. Such an occasion, to completely throw the rules out of the book is not exceptional acceptable. Paul the Legislative Council, there are votes to get this bill passed. Anson there are the votes, but will they be cast with a clear conscience . Are the probeijing members going to do what they are told . Paul what can opponents of this bill do to prevent it . Anson hong kong people have demonstrated their resolve. Sunday, you saw the indomitable hong kong spirit at work. You had over one Million People, one in seven hong kong people took to the streets, many of whom who had never participated in march in their entire life. They have to ask themselves, given this intensity of feeling and passion, is the government prepared to pause, stop, and listen . Interesting you find there is a bipartisan effort in the u. S. Getting behind protesters to oppose this extradition bill . How significant is that . Can a change the picture . Anson it is significant. I have always said america is our largest trading partner, it has a special relationship with hong kong by virtue of the Hong Kong Policy act, on the basis of which, because we have 2 systems that are entirely different from that pertaining in the mainland. The u. S. Gives special treatment to hong kong. They have already pointed out their concern over the extradition proposals. They have said that if this is passed into law, they have to look again at the entire basis for the special treatment according to hong kong. The u. S. Has a very legitimate interest in hong kong. It is a stakeholder, like many other countries, canada, australia, members of the european union, they have all expressed concerns. Anry right now, we see environment where the china u. S. Trade tensions are deepening. Would it be beneficial or hurtful for hong kong if the hong kong issue and the extradition bill become a hot spot between these 2 giants . Anson we dont want to be caught in the middle of this trade dispute between our country and the u. S. As i pointed out, if the u. S. Feels, quite rightly, that may have an interest in seeing the faithful implementation of one country, 2 systems, that they are concerned that the extradition proposals that will considerably undermine confidence in hong kong, it is entirely their right to speak up. Whether in the context of the upcoming meeting between President Trump and president xi, or on any other occasion. Shery realistically speaking, president xi jinping pays a little price for ignoring the demonstrations back in 20 14,000 of hong kong people. Do you expect this extradition bill to be shoved and for beijing to back down . Anson it appears the extradition proposals are the initiative of the chief executive. The chief executive is accountable to the people of hong kong while also being accountable to beijing. That as our chief executive, she would listen to the concerns expressed by her people and she would act accordingly. Thature if she feels pushing this through at the moment will not be acceptable to the bulk of the community here, im sure she will give appropriate advice to beijing if they insist she goes ahead. Beijing wants stability in hong kong every bit as much as we all want, because without stability, it will affect hong kongs longterm prosperity. Shery thank you so much for your perspective, the former chief secretary of hong kong, anson chan. We are reaching out to stakeholders on all sides of the extradition bill. Later today, we are joined by ron are coolly and jimmy lai, and Hong Kong Executive Council not official member ronnie tom. This is bloomberg. Lets check in on what to watch in the markets later on this morning and get over to Sophie Kamaruddin in hong kong. Sophie we will be watching reaction to all, as it goes on a base for chipmakers for secondhalf recovery when it comes to demand of semiconductor stocks. The number among its key has aers and customers conservative cents with a broad race point anticipated as customers reduce inventory levels. Open, i factor is concern about potential lower orders from huawei. On the ipo front, alibaba has confidentially past earnings. Pharma is expected for its debut today. Esr cayman has defied the outlook, finding unfavorable conditions. It would have been the biggest in the city so far this year, until alibaba. Shery thats it from daybreak asia. Continuess coverage as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. Stand by for Bloomberg Markets the china open. Potentiale to watch protests in hong kong over a controversial extradition bill. Hang seng futures down. 02 . This is bloomberg. An is welcome to Bloomberg Markets china open. Im tom mackenzie. Yvonne im yvonne man. David im david ingles. Oil up after tigers came under apparent attack. The u. S. Points to figure at iran, but says war is not in americas strategic interest. Yvonne the impending offer could raise as much as 20 billion. Tom and the growing anger in hong kong is starting to have an impact on business. Well assess the outlook with more protests planned