Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240714

Ban on huawei. Grounding may have serious implications for boeings future credit worthiness. Shery lets get you started with a quick check on how markets closed in the monday session in the u. S. 3 , as we rallied had tech shares leading the gains. The Philadelphia Semiconductor index up 2 . We had some positive trade news on the u. S. China front, not to mention a time of earnings and analyst calls. Apple being the biggest win on the nasdaq, up. 7 , with Morgan Stanley boosting its price target for the stock. We had Energy Shares gaining ground with crude jumping the most in more than a week. Tensionsanu. S. Ongoing in the middle east. Lets see how things are shaping up for the asian market. Pointing tores are modest gains in toto, sydney, and seoul. Tech firms very much interview with optimistic call travel and macron plus micron plus. On the koreajapan parade fund, governmentont, a official from south korea reportedly said the country is preparing a plan for a Semiconductor Test to boost domestic suppliers of chip parts and materials. Earnings on cap. Is up next. A bright spot amid the anticipated outlook for korea. We will get resolved from lg display which is to invest 3 trillion won. Bloomberg intelligence expects lg displays operating loss they were in light of the global decline of prices. Paul. In on thes check first word news with ritika gupta. Ritika President Trump says congress has reached a deal on spending the debt limit and raising Government Spending for two years. The agreement would offset the 75 billion of higher expenditure that would give the administration and the republicans about half the savings they are seeking. The new spending and limited savings will let you push the budget deficit over 1 trillion next year. A new report from london says stumbling moves towards brexit may have triggered a technical recession. The National Institute says even the u. K. Is a smooth economy will grow by 1 this year and next. The think tank said there is about a one in four chance that the economy is already in reverse. The governor of the bank of japan says he and his team are keeping a close eye on the threat to Global Growth. The bank will maintain its policy of easing. Inoda told the imf washington that the bank is monitoring global risks to assess the effects of any new policy moves. Globalrtainties in the economy have been heightened and some nervousness has been seen in Global Financial markets. The bank needs to pay close to these developments on japans Economic Activity and prices. Ritika British Airways is ining a third pilot strike four decades after industrial action was backed by a 93 majority. The union says they have no date for a walk out and that negotiations are on hold will the airline seeks an injunction to halt any strike. The demands relate to pay and Profit Sharing and, after cockpit crew took salary cuts in the financial crisis to help bolster finances. 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 lytic a group that. I i am rich the group to am ritika gupta. This is bloomberg. Shery tech was a big theme during the regular session as well as after hours. Su keenan joins us with the latest. Chipmakers were the big winners. In the arm from the upgrade and recommendation from goldman. We are seeing a lot of the big earnings and that will give us a ism idea of how this impacting these companies and gives direction to the markets. Lets take a look at the snapshot. You will see the stocks index up almost 2 , an indication of core strength in the market. Lets go into the bloomberg. This gtv chart, where you can find our library of charts, says chips are fairly valued. Evaluation is nearing a fiveyear high. Goldman believes the inventory levels, improvements in those, have come much more quickly than expected. Lets go to some of the big movers. It upgraded a number of companies on early signs of stabilization. Research pacing the gains we saw in those companies that got an upgrade from goldman. Upgrade. Ple getting an from Morgan Stanley, the second target increase in one week. That is a bit positive for that company. Notice halliburton coming off strong earnings. They announced they will cut about 8 of their american jobs. It is part of a new strategy playbook they are using to adjust with the change in customer trends. Shery we also had some big movers after hours. What are we seeing . And chip stocks back in the news. Apple and intel apparently in late page talks about apple buying intels chip modem business. We heard sophie mentioned earlier that part of the big do we have a chart if possible of some of the after our movers . Movers . Hour they are buying intel smartphone modems chip business and it is a big part of the story. There is a loser as well as a winner. Perhaps intel, apparently, according to people close to the matter, a deal that could be worth 1 billion of a portfolio of both pageants and staff could be reached within the week unless the deal falls apart, and not a largeion is deal given the size of apple and some of the other acquisitions. Certainly strategically, it is very significant to the smartphone business. Paul caps on about oil. Wti futures rising the most in a week after the seizure of the british tanker and iran. What is the latest . Su conflict good for bulls. Oil was down in a big way last week and it has come off of that with an increase. We are at the highest level in a week in terms of gains. It was just over 1 . Look at the big picture chart. You have tensions in the middle east rising. A lot of the Hedge Fund Investors who we reported two weeks ago are at their lowest level of disinterest and have now got them back in the game, so we are seeing positions at the highest level since june. And what you typically see with these kind of tensions where neither side appears to be very interested in aggression, i am talking about that situation. Oil traders say what you have is oil rising to meet the news of the event and then pulling back. Many believe that these tensions will continue to find support to oil price in this current range. Su keenan, thanks very much for that type of the markets. Still to come, the governor of the bank of japan says there is nervousness in the air in markets. We will assess his causes for concern. Shery rob mumford, Portfolio Manager of emerging markets, gives his top investing tips. This is bloomberg. Paul the rba assistant governor speaking right now here in the sydney euro of bloomberg. He had bureau of bloomberg. He says they are a far way away from conventional policy. Policy unconventional tools are some way off. The aussie dollar might be higher now if it was not for those two rba cuts we have seen. Pretty resilient. It has barely moved during the remarks from the assistant governor. You can watch that online go if you are a bloomberg subscriber. Why not watch us instead . We had apple rally after Morgan Stanley boosted its price target while micron was lifted to buy from neutral at goldman. Sophie kamaruddin is here with a little more. Expected forame asian tech stocks since tuesday, yes . Tohie quite a few catalysts track the gains on wall street and we have had a few relating to our notes for Morgan Stanley. Chip testing Device Company and Tokyo Electron getting an upgrade. They may come under pressure. The company may see firstquarter operating profit fall into falling to less than terminal to the focus on wally on the back of President Trumps meeting with seven tech ceos huawei on the back of President Trumps meeting with seven texas euros. The Company Reportedly planning to ship seven tech ceos. We learned that you have deferred its decision the u. K. Has deferred its decision. Shery chinese investors mark. He debut of star board the 25 stocks on the star board 148 percent at the close. Lets discuss the index with rob mumford, emerging markets Portfolio Manager. Great to have you with us. What is the risk of this enthusiasm over this new exchange draining funds from other exchanges across china . We are already seeing volumes shrinking. Rob it is a fairly small market, fairly restricted to can actually participate in this. I do not think it will be a drain in liquidity. These are very early stage companies. It is difficult to know exactly what the fair value should be, but it is a Good Opportunity to raise capital. The trust markets, the shortterm instruments that a lot of these Young Companies have used has caused a lot of trouble in the thinking market, so this is part of a Bigger Picture of sustainable sources of capital and sourcing that from equities. We know about the very high levels of debt in china generally. Shery when it comes to the Bigger Picture, we have seen beijing announcing over the weekend new measures to further open out the Financial Market to overseas investors. How positive is this development for market level . Rob it is positive. It is part of a Bigger Picture for discussions with the u. S. I dont think there is any coincidence that we are talking about opening up this industry at a time when we hope talks will resume soon and some form of agreement will come through. Broader or longerterm positive. The markets are looking much more closely at these various Central Bank Meetings this week. The direction of earnings, and ultimately, what the resolution of those trade talks are. How much of your optimism also circulates around the likelihood of more stimulus in china . Rob i think we are in a similar phase that we saw in january where you saw some easing toward the in the rest your, but it was tempered slightly by the fact that the fed was slightly on a hawkish stance. This round of easing that we will see not just from the said this week actually will trigger another wave of controlled easing in china. They emphasized over and over they do not want to floodgate your edition. We expect a move in u. S. Rates and could see slightly more affirmative action on the Interest Rate front in china. Not necessarily, but just benchmarks and movements in the sort of interbank market and other tools related to that. Yes, i think we will see another phase of significant monetary adjustment and china, and i coordinatedbeing with additional fiscal stimulus, which we have seen all year. Paul there are some risks that all along with that, and i am thinking particularly in terms of the property market. If is that something that you are conscious of . Rob these changes are going to be measured. We are already seeing talks down the offshore debt for the property market. That is one area that is sustaining the growth of the economy, but they do not want to see it overheating. Areadjustments they make quite nuanced. We expect some adjustments certainly in the interbanks. We expect adjustments using new tools rather than benchmark tools. The prime rate and lowering that and focused on corporate mending and not comforted lending. They need to sustain that to sustain the current growth rates but they do not want to see it overheating. Otherwise, they will have to do more deleveraging, which we saw last year and the negative implications for the market. Shery given the slowing Global Growth environment, we are hearing this call from Goldman Sachs saying that it is too late to go naked long emerging markets. Instead, you should bet on shortterm carry trade and assets in countries that can afford fiscal stimulus. Given what goldman is saying, are there any economies that you make sense . I see what youre saying. The sovereign bond market, they have done quite well. Laggarde been a huge even yeartodate. Another year of laggard. We think emergingmarket equities are a great place to be. You have premium growth, improving quality of growth, and attractive valuations. You saw that significant dividend yields. As you saw an hour december and january, when you see the asian or emerging market dividend above the u. S. Treasury yield, you see a lot of support for the market. Some protection from the downside. Paul and to some extent, you you did invest heavily in em securities. Are you satisfied with what you have seen so far and how much more upside do you think that is . For we are pushing hard people to invest on any of the pullbacks, particularly in december and january. We saw the china stimulus coming through. The valuations were attractive. In em, we went mutual. Particularly in china. India performed slightly better. When you think about the longerterm picture for em, percentage of the population, equityage of gdp, the markets are small. On a longterm basis, emergingmarket equities should be a key part of your portfolio. Shery we continue to see huawei and other semiconductors in the crossfire of growing trade tensions around the world. The potentialeigh impact from these trade tensions . Rob it does appear as though you are going to see an allowance for the u. S. To sell to the nonstrategic with threatening areas of business, most specifically handsets. Tech generally, 5g is a very exciting opportunity. 5gannot say how many times was mentioned. This is not just them suggesting that 5g is going to be this is client saying we have orders for 5g. They raised cap x. For nexte a story year. This year is a transition phase. In general, with huawei still in the handset business, and with some form of resolution trade talks, there is we are favorable towards technology in asia and em. , thanks veryford much for joining us. 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. Shery this is daybreak asia. I am shery ahn in new york. Paul i am paul allen in sydney. Lets get a quick check now of the latest business flash headlines. Apple is in talks to buy a modem business. The deal would cover a portfolio of patents and staff valued at 1 billion and could be reached in the next week. The move would jumpstart apples push to take more control in developing the critical components. Jigging is re production among the u. S. China trade war. It will spread the manufacturing of key products across the world rather than focusing everything in one market. S says it is bracing for more than 20 million of costs when the next batch of expected tariffs come into force. These trade wars which are avisive in the world, and as strong believer in what globalization has brought to the world, i hope that we can see people coming closer to each other, and that will be good for the worlds economy. There is a new monster tie up in the video Gaming Sector with tencent teaming up with pokemon to developing titles. The group will take the lead in developing the games. Analysts say the Partnership May chinastendo to crack mobile vending arena which is the Worlds Largest and tends to favor locally produced titles. Seeing more fallout from the 737 max 8 rounding. This time, it is lowering its Credit Outlook to negative, citing regulatory uncertainty around the returned to service and the growing logistical challenge of getting the jet back into the air. Our guest joins us from dallas. Have serious is this problem getting for boeing . It shows perceptions of financial risk at boeing are worsening at some influential observers. It does not necessarily mean that boeing will be downgraded or that its borrowing costs will increase. The reaction was muted and boeings bonds have held their own throughout this whole situation, but the company said last week that it would take about a 5 billion charge related to the max, and what this shows today is just the way that the companies finances are being dented by this. Shery when was the last time the Companies Credit rating was cut . Rob it has not cut its rating since 2011. For standard poors, it goes back a decade since the last cut. Moodys has a shorter history. They also adopted a negative outlook today. But basically, what we are talking about is a big, study Credit Rating for a Corporate Giant that has become quite a wall street darling in recent years by generating so much cash, and clearly, that is being reporting Company Earnings on wednesday. What should investors be watching the . Watching for . ,ob boeing said last week that assuming it is a best estimate, that early in the Fourth Quarter is a likely timeline, but analysts will want to know a lot more about why the Company Thinks that. They will also be listening for on possible clues or hints how this situation is affecting at the company, such as the certification process of a new triple seven jetliner and the decision to potentially build an allnew airplane for middle distance routes. Case, thank you for joining us from dallas with the latest on the boeing story. Lets get a quick check of asian markets now. Pretty quiet. New zealand losing a bit of ground in the early going. Off. 1 . Futures elsewhere pointing modestly higher. Volumes have been quite low recently. Futures are ticking up following gains we saw. Shery coming up next, big tex visits the white house big tech visits the white house. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Ritika this is daybreak asia. I am ritika gupta with the first line headlines. Facetoface talks may begin in the coming days after goodwill gestures by china. He says Mainland Companies have contacted u. S. Exporters. They have applied for exemptions from chinas retaliatory tariffs. The South China Morning Post says is u. S. Trade team will fly to china next week. A new report from london says the u. K. s stumbling move towards brexit may have triggered a technical recession. The National Institute of economic and social Research Says that even if there is the u. K. Will only grow by 1 this year and next. The think tank says there is about a one in four chance that the economy is already in reverse. Man who led the International Atomic Energy Agency for 10 years and was key to the Iran Nuclear Deal has died unexpectedly. He was a veteran of disarmament and nonproliferation diplomacy ea sinceled the ia 2009. Monthsth comes just after President Trumps unilaterally abandoned the accord. Indias Space Program is back on track with the successful launch of an unmanned rocket heading for the dark side of the moon. It blasted off one week after the initial launch was halted at almost the last minute. The mission is aiming to land a rover at the Lunar South Pole to see water deposits. India plans Unmanned Mission by 2020. 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 ritika gupta. This is bloomberg. Thank you. Lets get a check of the markets. Sophie is in hong kong. Sophie focusing in on the aussie bond space, we do have that resuming resuming gains debt debt resuming gains. Australia is a long way away from unconventional policy and lower neutral rates. That is a global trend. The aussie dollar might be higher if not for rba rate cuts. It is not able to break out of its extended downtrend for a fourth time since december, stalling after being pushed higher by some bright spots. Traders pulling back on that for aggressive fed easing. There is speculation about whether the rba will see a rate cut for a third time this year. Odds are for a 70 chance in november as well as december. Lowe might discuss challenges if the cash rate were to be cut to the lower bound. Paul. Paul sophie, thanks very much for that. Oil rose the most in more than a week as tensions remain high in the gulf. Iran is ramping up its defiance of the u. S. , saying it will execute a group of alleged ciatrained spies. It says it will not release of british tanker a must and iranian tanker is freed in gibraltar. Lets see what all of this iranian unless an tender is freed in gibraltar. Lets see what all this implies. It is escalating tensions in the strait of hormuz. Latest is on, the friday. Irans revolutionary guards seized the british oil tanker. It is impounded like you said. They asked that the u. K. Release and iranian vessel that the u. K. Has impounded as they said it would deliver oil to syria. Generally, we are seeing escalating tensions between iran and the u. K. And the u. S. , and the sort of titfortat. In may and june, there were six tankers that were attacked. Iran denied responsibility for that. Thatshot down a u. S. Drone it said entered iranian airspace, so we are seeing rising tensions in this really crucial chokepoint for oil exports globally. Prune shery cleanup moment down, but initially, originally, the move was higher, of course. Rob yesterday yesterday, we saw brent rise the most in a week. It close at around 63 a barrel. Around 56 a barrel. We are beginning to see a little bit more geopolitical risk priced into oil. We have seen a rise a little bit the last couple days. Overall, i think there is much more concerned with overshadowing the geopolitical risk. Of economicerns weakness. Wti fell about 7. 6 last week, the biggest weekly decline since may, and a lot of that was because u. S. Gasoline and diesel inventories shot at much higher than analysts expected, up much higher than analysts expected. There might be weakness in north america. That is continuing to overshadow this so we are seeing prices rise a little bit more as the geopolitical tension gets priced in. Shery aaron clark, thank you so much, joining us from tokyo with the latest on oil. Lower rateswards continues. Who will be the next central bank to move . Here with as is preview of the big three. The fed, the bank of japan, and the ecb. Lets start with kuroda speaking at the imf in washington. What did he say . Kathleen he clearly is concerned, like so many central bankers around the world, not so much about the domestic economy, but what is happening with the trade wars and the china slowdown. He did repeat and said so many times in the past meant the boj is going to maintain its powerful monetary easing. He said they are watching very closely all the global uncertainties, and that, in fact, again, having to do with trade, having to do with all the things those are causing around the world. Also, mr. Kuroda saying the Energy Easing will be needed to keep inflation moving toward its 2 target. This raises a very important question. If the fed is getting ready to cut its key rate at least once, that will not help the inflation struggle because it may hurt exporters. It makes their goods more expensive overseas. It may drop import prices. Bottom line, when they meet on july 30 and july 30 first, they are going to be debating the kind of question that youre going to hear mr. Kuroda talk about right now. We will carefully examine various risk factors in addition to developments in Economic Activity and prices as well as financial conditions. The benefitseigh and costs of the policy effect. Kathleen no rate move is expected. I will be in touch of the cover that. We will be hoping that begin a Monetary Policy report and mr. Kuroda press conference afterwardss, we will get some signal to where they are positioned and whether they will give us Forward Guidance that suggests they are ready to move at the next meeting in october. Paul the boj, like the rest of the world, is expecting the fed to cut their key rates. Is it going to be 25 or 50 basis points . Kathleen 25 basis points is the bet, because jay powell, the fed chair, seems to be leaning in that direction. 25 basis points. The move to lower rates. Jim bullard, when i spoke to him at an event on friday, he was with a bunch of reporters. We asked him 25 basis points, 50, what do you make of this . When we look at the bloomberg terminal, i will show you, i think, what jim is depicting. There was a big spike again towards the odds of a 50 basis points. You have to be aggressive. He seems to be saying something about the present. Looking for a 25 basis point cut. Who trade in eurodollar futures because of speculators positioning us in the way they think the fed is going to be doing the aggressive 50 basis point cut. , he is noted voter favor of any rate cut at all. You can understand why investors are so uncertain. It is a big deal for other Central Banks, not just what the fed does next week, but how much more they do afterwards. Decides thisb week. Many would think the ecb has reason to cut right now. Will they take the plunge . Kathleen on the manufacturing side, their inflation index has moved further away from the just ther 2 target, and so, question for mario draghi and his colleagues, do we go ahead and move now . Is it not urgent or can we wait longer to see how the coming data turnout . Cut rates now, restart bond buying, or wait until september. That is how people are looking at it. Not only is the economy slowing, but there are three big potential shocks ecb may affected by. Forced johnson taking over as prime minister. U. S. Tariffs on europe. Do those come through . That would be another shock on an economy that is not doing so well on the exports side. The chinas slowdown, this is a big market for european goods. If china continues to slow, this will be another thing weighing on the economy. Mario draghi is going to say insurance cut, do it now or wait and see how things go . It is a big debate for a lot of Central Banks now. Paul Global Economics and policy editor kathleen hays, thank you. Ceos of seven Major Tech Companies paid a visit to the white house on monday to discuss economy and the status of the u. S. Ban on huawei equipment sales. Bloomberg Technology Executive editor tom giles joins us now from san francisco. Tom, what was the outcome of that meeting . House said there was a constructive meeting between the ceos and the Trump Administration. According to the white house, the ceos of the companies expressed support for National Security restrictions on business with huawei. They also asked for timely decisions on when they would be exceptions to that band. To recap, the u. S. Impose really strict restrictions on what u. S. Companies can and cannot do business with, with huawei. Later, the Trump Administration came out and said we will make ,xceptions in certain instances but not when there is a National Security implications. Todays meeting was aimed at flushing that out, seeing what that looks like. Do not know how the companies and the Trump Administration are making distinctions tween what is a National Security risk versus what is not. Is it based on whether or not it is a consumer gadget . Is it based on whether it is part of 5g equipment . That remains to be seen. What we do know is that the chip add ministry the chip industry has been very vocal in telling the Trump Administration that it should not impose restrictions. They are really concerned about retaining leadership in this this critical equipment that is used globally, including 5g equipment made by huawei. They said we dont want to be seen as an unreliable partner. We do not want to lose leadership or revenue. China is a critical market. And if you stand if you impede us from doing business with huawei, that really puts us at risk in this big, global market. Shery given the questions hanging on the line here, it is no surprise that congress has really not been too happy with the president s trophy is to provide some relief for huawei. They will all be not happy at all that you have this media huawei actually helps north korea build their 3g network now. Aaron right. That does raise questions about whether and to what extent embargoes,violated the strict embargo that the u. S. Has imposed on north korea. That is certainly in the minds of lawmakers, who had implored the Trump Administration, do not cut a lastminute deal. Do not cut an 11th hour deal with huawei the way you have in the past with other chinese on other chinese equipment makers. Not do the same thing with huawei. What about your claims. Huawei represents a National Security threat, these claims that the Trump Administration has been making time and time again about huaweis ability or potential to create that stores for the Chinese Government . What about these allegations of ip theft . All of these things that the Trump Administration has been saying about huawei. If you cut a deal, if you suddenly lit these restrictions, what does it say about these claims that you have been making about huawei being a National Security threat . That is what u. S. Lawmakers are concerned about. Shery tom giles, thank you so much, bloomberg Technology Executive editor joining us from san francisco. Coming up next, Earnings Growth is being driven by its popular new suv. We will see if other korean automakers can keep up. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery im shery ahn in new york. The earnings the season is taking up his in asia. Lets bring back something hong kong. What is the lay of the land . Sophie we are 6 of the way in for the msci aipac index. 60 names reporting. 19 more companies on the benchmark are due to announce results including kia motors. The korean carmaker expected to post an increase in net income for the june quarter. As you can see on the em function on the terminal. Plus, we are coming off of a low base. In sales atakness home as well as in china, that may see profit fall short of the consensus estimate. Domestic shipments fell 11 as it has lost market share to hear and they to hyundai. A 30 rise in secondquarter operating profits, the biggest increase for the carmaker in seven years. Concerns over a labor union potentially striking at hyundai over wages is weighing on shares. Hoping toead, hyundai improve profitability by adding new models. His luggage korean economy is weighing on appetite for cars even with the government extending a tax cut for purchases. Paul. Paul thanks very much for that, sophie. Joining us now from seoul, kj whang. We heard sophie talking about some of the results and expectations for korean carmakers. Just wanted to get your reaction to hyundai. Biggest profit increase in seven years. That must be quite pleasing. Sure. I think in terms of the operating profit gain yesterday, yearoveryear, was very impressive. In thes movement domestic and export side. We did see a very significant high singledigit improvement. Risingly, the suv portion of the sales have been proven, however, my view is that after the results announcement in the market hours, the share prices to client. The netthe bottom line, profit, has missed consensus by 13 , and that mostly attributes to the weak equity income, which i attribute to the weak china sales. The company has not really revealed the rational yet. They wont report today so they will report today so we might see the breakdown sometime today or afterwards. I am continuously seeing the week demand in the pressure weak demand in the pressure along with these subdued pressure they can impose on the parts makers at this time, all coming back as a backlash in terms of the china business. In the longer term, if this persists, there will be more anysure to warrant prices other markets, which i believe could eventually turn out as a. Egative market pressure i think that was the initial take regarding the numbers. Paul we do of course have kia out later today. As you mentioned. But sophie was saying it looks might have eaten into some of its market share. What are your expectations . U. S. , theys of the have been catching up very fast with the new segment. Incremental volume gain has been there. I think the managements target was about 5 by sometime next year, so that is quite material and visible. The thing is that the market side in terms of the total growth, in the u. S. Suv market, has already peaked as of last year, four q. Right now, i am serving that the dream cars, including the easy market, ev market, has risen. The market share for the Hyundai Brand has fallen to 3 . In terms of the ketchup story of the delayed out rush into the suv side, i think this could potentially dematerialized. Dematerialize. We are seeing the yenu. S. Dollar to couple with share prices after the announcement of the batter reaches the battery jv. I expect share prices to fall more in tandem with the ev. You mentioned earlier hyundais weakening presence in china. Is that a Company Specific story or is it more of a reflection of the slowing auto market in china . Kj sure. Even the luxury brand bmw cut guidance last friday, so i personally perceive it as a market issue. Degree of market share loss has been deeper for thekorean brands than japanese brand yeartodate, i think it is tied korea spread. We have been cutting the capacity in china since earlier this year, so that pretty much reveals the story. Other than that, the actual have lineup, including to cope with the requirement. I think it is a combination of both. It seems to be more korean specific risks that is prevailing at this point. , thank you sog much for joining us today. A securities director with the latest on the korean auto market. Plenty more ahead on daybreak asia. This is bloomberg. Daybreak asia. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Microsoft is investing 1 billion in a partnership with Research Group open ai. The nonprofit was cofounded by elon musk, peter thiel, and other Silicon Valley entrepreneurs, and will now use servicess azure cloud to run its ai software. They will jointly develop supercomputing technology and Work Together to commercialize open ais creation. Paul British Airways is facing a first pilot strike in four decades after industrial action was brought by a 93 majority. Says there is no date for a walk out and that negotiations are on hold while the airlines think seeks the hih court injunction. It comes after cockpit crew took salary cuts in the financial crisis to help bolster finances. Fell after output missed analyst estimates by more than 10 million metric tons. The miss asked to supply concerns. Iron ore prices were sent to the highest in more than five years. Aey have to grapple with quarter of target output this year following a deadly dam collapse in january. Kick off at the top of the hour. Lets preview the market open. Sophie. Sophie teachers are hinting at modest gains across the board with earnings in focus along with trade. Ers in watching min sydney, but the company is betting big on medical. The kiwi dollar is falling by as much as. 2 on the rbnzs comments on policy. The central bank taking another look at the strategy for unconventional Monetary Policy. Measure under consideration. Watch, korean budget carriers are in review. We are watching nintendo as pokemon is to team up with tencent to create games in a move that may help it cracked the chinese mobile game market. Softbank is an focus on speculation that the tmobilesprint deal may be renegotiated with an announcement to be made midweek. Japanese steel stocks also on the radar as the industry cautions against chinas decision to let the antidumping duties on some steel imports from japan. They say the move is inappropriate and regrettable. That snapshot of the start of cash trade in tokyo, sydney, and seoul. We have earnings a much in focus. Earnings very much in focus. 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. Paul i am paul allen in sydney. Asias major markets are about to open for trade. Selfie welcome to daybreak ai asia. Paul our top stories this tuesday. Tension rises in the gulf. Sending forces to protect shipping as arguments rage about the u. K. And iranian tankers. Xi actedt trump says responsibly. Frenzied debut for chinas new tech board creates three billionaires in one day. It the Market Action with sophie in hong kong. All. E tech stocks in in tokyo stocks fluctuate at the start of cash trade. Little changed for the topix. Traders priced in 25 basis point points. Were checking in on the mood in south korea. He korean won Holding Steady we are keeping an eye on chip stocks and an upper third of 1 with emphasis on the chip space as the south korean government will be considering a testbed to boost domestic suppliers when it comes to parts for the industry in south korea. Were planning desk counting down to the wto wto meeting. 24the waiting for the decision on the white list whether south korea will be taken off that list from japan. Moves in sydney we have aussie stocks opening little changed, miners and focus as well as always output missed estimates when it came to iron ore. The aussie dollar under pressure remaining by a 200 day moving average. Bonds are gaining ground along with kiwi notes. Commentary from the rba regarding Monetary Policy. The kiwi dollar lower off. 2 of 1 on the week of that fight. A 1 fall. Lets check in on the first word news. President trump says congress has reached a deal in suspending the debt limit on raising Government Spending. We are told the agreement would offset 75 billion dollars of higher expenditure that would give the administration and the republicans about half the savings they are seeking. The news will likely push the budget deficit over 1 trillion next year. Supports from beijing suggest facetoface trade talks may resume in the coming days after what state media describes as goodwill gestures from china. Shan juan says mainland u. S. Nies have contacted exports about cultural products and have applied for exemptions from chinas retaliatory tariffs. The South China Morning Post says the u. S. Trade team will fly to china next week. The man who led the International Atomic Energy Agency for 10 years was key to the Iran Nuclear Deal has died unexpectedly. A veteran of diplomacy and had let the iaea since 2009. He was heavily involved in the its that saw a red halted nuclear ambitions. His death comes after President Trump unilaterally abandoned the accord. The u. K. s stumbling move toward brexit may have triggered a technical recession. The National Institution of national and social research said if they split in october the u. K. Economy will only grow by 1 next year. The think tank says there is one in four chance the economy is already in reverse. Indias Space Program is back on track with a successful launch of an unmanned rocket. Heading for the dark side of the moon. The they blessed off a week after the initial launch was halted. The mission is aiming to land rover at the south pole to indication explore indications of water deposits that were spotted. India plans a manned mission by 2022. 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. This is bloomberg. Paul thank you. Oil has stabilized after climbing over rising tensions in the gulf. Our Energy Reporter james ford hill joins us with the latest developments. The u. K. Trying to calm the amateur but europe is planning to send forces and protect shipping. That typically does not and well. How is all this being digested by the markets . It has been a quiet start quite a strong gain in new york they will send some forces to secure safe passage in the gulf. As you mentioned more military hardware and the strait of hormuz is going to add to nervousness which is already strong. All parties do not want this to worryte but you have to there could be some sort of inadvertent incident that could cause a flare up. This continues there will be uncertainty. I could see is scenario whereby are trying to secure the safe passage. It ends of helping to defuse tension. Hopefully we can see some cooling of tensions over the next couple of days. How well the tensions we against rotter oil demand concerns . Demandave seen the concerns take a backseat in recent days. Oil was a pullback in prices recently. We had speculation last week that the fed might go for more aggressive rate cut after some commentary from senior fed officials. That seems to have come down the market. Equities have performed better and we have not heard as much chatter about weak demand in the oil market and with those mideast tensions taking precedent. There are reports that some senior u. S. Officials will be going to beijing next week for further trade talks. It has been quite on the trade front. That could be another focal point. We will see of tensions are moving to a deal which would be positive for the oil market. It is not the main factor for the market right now. Wery what will we see as continue to watch the price of oil and we do not have any more clarity on geopolitics or demand. Of flux overate the iran situation. To thea resolution british tanker being held in the port trade we might more clarity on where we are going with attention with iran. Going down there is little chance of oil pulling back too far. The outlook looks bullish in the shortterm. Onl still to come, stocks chinas new check board, triple gains on day one. We will ask one of the countrys biggest dealmakers what to expect on the road. Shery if investors flee to havens in terms of risk, what happens when the havens become the risk . The answer coming up. This is bloomberg. All we are moving in to the thick of earnings season in the region. 130 companies on the asiapacific will release results led by japan and korea. Joining us is stephen glass, Portfolio Manager. Trade weighing pretty heavily on the picture. Of expectations in korea just as us case study of. Not great things. Is this a bad time to be exposed auto oring in the Semiconductor Space . There is no doubt that cyclicals have been the week spot and markets have become highly concentrated around safe havens in growth names. Trade has been a problem with cyclicals and it is a bad time in the shortterm. Long term look at the and these stocks are looking to. If you are concerned about the shortterm it is best to stay away. Paul things look kind of expensive but that is mainly due to tepid earning estimates as well, isnt it . Yes. We have seen some examples of improved governance. Thattions do not let attractive. They can be. One company we have invested in that we think looks interesting is called the amazon of japan. They will be established in the fourth mobile network. We think there are opportunities. It does look cheap on the surface. There are some great opportunities. When it comes to the valuations of the japanese stock market take a look at this g tv chart on the bloomberg. You can see that japanese stocks not expensive. You can see that it looks expensive given earnings estimates have been falling. When you look at japanese stocks, what worries you for the stock market there as we continue to see slowing Economic Growth around the world are you trades trade tensions are rising. The things we worry about is more technical issues and that is the buying of japanese stocks or etfs. A lot of these have been lot for nonfundamental reasons. It speaks to a broader which is Monetary Policy around the world [inaudible] and driven by the markets. So yes, we do think there are some issues and japan primarily because of the [indiscernible] we think that is part of a stock marketshere are supported and when that stops it will be a day of reckoning. Get it is a good time to into some volatility interests. That is something we have done and it is a great time to buy. Stocks have benefited from volatility. Have owned some Market Makers like for to financial and we think gold makes a lot of sense of the moment. Volatility has been suppressed for a while. This is at 14 and when these things change they change very rapidly. We think it makes sense to invest in the stocks that benefit from an increase in volatility specifically if they paid dividends. For to financial on a 4 dividend dividend yield at the moment seems like a smart place to put your money if you think volatility will increase one day which it almost and they will. Lets talk about Monetary Policy in china. They are being reluctant to carry out big measures for easing. We have sent we have seen triple archives. What happens when the fed starts cutting, will that force the pbocs hand . It will absolutely force their hand. Most people think the fed will cut by 75 basis points, that is what the market is pricing in. There are four weeks to go. It could be they cut by 25 basis points and 1 over the year. That will weaken the u. S. Dollar to the pbocsl hands in our opinion and they will have to implement more substantial Monetary Policy. We think that is to come later in we think it is likely to force the ecbs hand. They meet earlier this month before the fed and they might not cut because they might want to see what the fed is going to do. If the fed cuts we think that the ecb will cut as well. Broadly speaking the fed determines what is happening around the world and the fed cuts will result and other Central Banks cutting Interest Rates. How economically justified will the cuts be . We think it is to appease trump in the markets. When you look at the mandate which is to, focuses on unemployment and inflation, you would think there is a case not to cut Interest Rates and a case to increase it which was six months ago. Close to thege december swan. It is close to what is running the fed and we dont think there is economic justification and it will it not help the economy, all it does is help the stock markets. Paul i want to get back to that point you made on gold. And analyst wrote about how much he likes gold on a 6000 word linkedin essay. Are you looking at gold or etfs are minors, what do you prefer . Investors e invested in miners. The and ofe is at value. , we are printing cheap money and there are a lot of risks. The could be a war. We have to look at what is happening with iran. The could be in inflation scare. Demand point labor will a higher wage and that will flow through to inflation. We think it makes a lot of sense specifically of Interest Rates are low. If you want a riskfree asset people look at gold relative to u. S. Treasuries and if we are pushing down the Interest Rates to levels that is not justified, all of a sudden, the opportunity cost of putting money in u. S. Treasuries is not as great as it was. We think gold makes a lot of sense at the moment. Paul in terms of safe haven one isne of the curious negative yielding debt. We have one that illustrates this 13 trillion of it right now. There a trend you expect to see continue . This is extraordinary. We joke in the office that someone will pay you to take mortgage. Creatingthat this is real asset bubbles around the world and it will come home to roost. This is one of the rings that people are talking about in emergingmarket asia. Emerging market asia, people are worried that if the fed lowers Interest Rates a lot of emergingmarket asia will take a lot of debt. They will be an increase which will be hard to unwind one day when they need and we could have a repeat of the asian crisis. We think that is not likely to happen because the emergingmarket asia is being conservative with their debt and we have not seen a growth in debt to gdp. We think the debt is covered by the fx reserves and the debt is domestic rather than u. S. Dollar denominated. We dont think that risk is justified. We do think there are bubbles out there being driven by the low Interest Rate environment. Stephen glass, thank you for joining us. Thecan get around upon stories you need to know to get your day going in todays edition. Bloomberg subscribers can go to your terminals. You can customize your settings so you only get the news on the industries and the assets that you care about. This is bloomberg. Steven this is daybreak asia. Shery lets get to sophie for a stock a check of stocks are moving. 18. 5 jumping as much as this morning headed for the best four days on record as they consider options to revamp its operations. 3800 jobs may be cut as part of this turnaround. The company is asking banks were supported living waiving ¥56 billion in debt and creditors on september 18. Pound the british weakened further. Lets get over to David Finnerty in singapore. How are traders positioning ahead of this . David if you look at the start of the year when markets were not sure and they were fluctuating, by the last few weeks they decided to go shirt short sterling. Asset managers are short 65,000 contracts according to the latest data. Adopted that will go down in the near term. Shery we had a forecast saying that the u. K. Have entered a technical recession because of brexit. The former governor mervyn king was saying that brexit is not the only cause for the slowdown. Take a listen. In terms of a macroeconomic response if there were a weakening of the economy and i think it is important to make clear that what is happening to the economy is not entirely driven by brexit. One of the great mistakes of the past three years amongst many commentators is to assume that isrything that is happening a result of brexit. It is not. We are part of the bigger World Economy which is slowing. World is the whole slowing down does this leave the u. S. Dollar as the only game in town despite the fact the fed is cutting rates . It benefits the u. S. Dollar. I would say it is the only game in town. There is an escalation in the u. S. China trade war. May god of slow down sideways or slightly higher. It is not the only game in town, the japanese yen being the obvious one. We have seen the kiwi dollar slipping. Theyre looking to refresh their unconventional policy strategy is rates drop. We heard from the rba governor saying there is still some time off on the rate that is even lower. You would not have to think that unconventional policy is somewhere some way away. They have room to cut in the markets. Markets are pricing in a rate cut. Theyre looking at unconventional policy. Result resort to qe or Interest Rates. The markets are interpreting as dovish. Were seeing the kiwi move lower. Your time. K you for david vanity joining us from singapore. Lets get a quick check of the latest is this flash headlines. The new boss of banks of danske bank says he wants anyone with a good idea on how to run the company to drop you met email. Danish regulator curt criticize the bank. He would like to hear directly from employees and investors. The ceo says he handed out his Contact Details to staff and others across scandinavia. Paul apple is in advanced talks. The deal with would cover patents valued at 1 billion in could be reached the next week. It could jumpstart the push to take control after developing the critical components of power to divisors. Isry microsoft [indiscernible] they were cofunded by elon musk and peter thiel and other people in Silicon Valley. Developwill jointly supercomputing technology and Work Together to commercialize open ai creations. Paul valet shares fell after output missed estimates. Mess added to supply concerns. Secondquarter production fell to 64 million tons down 12 from the previous time. They had to scrap a target output following a deadly collapse in january. Shery the new china tech for scott off to a stellar start. Working with many of the companys top startups. Will hear from the chairman and ceo. This is bloomberg. This is daybreak asia. The governor of the bank of japan says he and his team are keeping a close eye on the threat to Global Growth and the bank will maintain its policy of powerful easing to miss inflation to their 2 target. Saying that the bank is monitoring global risks to assess any new policy moves. Economyding the global has been heightened and some nervousness has been seen in Global Financial markets. The bank needs to pay close attention to the [indiscernible] andapans Economic Activity prices. Facing a third pilot strike in four decades prompting industrial action backed by a 93 majority. The union said there is no danger of a walkout and negotiations on hold while the airline seeks a High Court Injunction to help in a strike. The pilots demands lead to Profit Sharing and come after they took salary cuts in the financial crisis to help finances. The man who led the International Atomic Energy Agency for 10 years was key to the Iran Nuclear Deal has died unexpectedly. He was a veteran of disarmament and nonproliferation diplomacy iaealed the aie i since 2009. He was involved in a deal that saw iran halt its nuclear ambitions. Trump after president unilaterally abandoned the accord. The u. S. Space program is back on track with a successful launch of an unmanned rocket heading to the dark side of the moon. They blasted off a week after the old initial launch was halted. They are aiming to land a robot at the letter self Lunar South Pole. They plan a manned mission by 2022. 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. This is bloomberg. Lets check in on the markets with sophie kamaruddin. Sophie we are seeing regional tech shares tracking the gains we saw helping push the regional benchmark higher led by japan appointment of 1 on the nikkei 225 and regional bonds climbing. We are the kiwi dollar under pressure. Help taking the heat out of the kiwi. This morning we are seeing the , thee dollar move too much currency may have been higher if not for rate cuts. The korean won is on the front foot this morning with the kospi. The index being higher by tech samsung and sk hynix among the biggest which boosts for the benchmark. They are looking cheaper so that might help a more courageous investor look through the profit outfit the outlook. To wane. Ings expected speaking of earnings in seoul, checking in on monday, the stock extending mondays losses and concerns over a potential Labor Union Strike offset the rise in secondquarter profit. Also under pressure ahead of its results that are due today. And the thing ground as the the ceo stepping down. Also reaffirmed earnings guidance. Shery i trading frenzy gripped the opening of shanghais new nasdaq. Theere at the exchange for open. It was quite a day especially given there were no price limits to trading. There was a lot of excitement and optimism at the exchange yesterday. We saw massive gains, the first 25 companies rose on average to 140 . That was no surprise given the limited supply and the fact there was endorsement from the top levels of the Chinese Government for this exchange. The star market is chinas attempt to incubate and fund its homegrown Tech Innovations and avoid losing them to exchanges on new york and hong kong. It is a testing ground for regulators. The type of companies that can list including allowing companies to list with unequal voting rights. I asked about the longterm trajectory of the tech board. It is a boutique investment form firm he founded including some of the companies that listed yesterday. Take a listen. Roaring start it is. It is expected given the limited supply. Excited that is the beauty of the new market. It will take some time to settle down. I definitely see more supply. Has somearket enthusiasm that is not bad. Longerterm the investor will become more [indiscernible] this is not the first time china has tried to create an alternative venue. What is different this time . What is different is the well defined timetable. [indiscernible] certain requirements. Us tos the process for represent a lot of chinese companies. Is an interesting change. There has been concerned about the quality of names that are listed. For the country that has the most unicorns after the u. S. , what is your view on that . I think in terms of companies a lot of them are there not because they are the best companies in china but oftentimes because they are the ones that are ready for an ipo. We have gone through a lot of companies. Think [inaudible] see thisch do you shifting the balance of listing from new york and hong kong to Mainland China . The u. S. Is still an attractive place given the opportunity to raise u. S. Dollars. These are different markets. The u. S. , hong kong, and china will have a different focus. Company,e a large cap [inaudible] hong kong obviously has liquidity to the china market. Unique is this model hong kong is probably your top pick. It will become a hard tech company. Powerconductor companies, companies, china is the best choice. From our perspective, it is always good to have more options. Eventually the chinese Tech Companies also will find that they are grouped toward different specialties. There are some investors that are taking more pessimistic views about whether or not the quality of these companies can live up to their valuations. Many investors are choosing to sit it out over concerns that these valuations are going to dive down quickly after the initial excitement. Other analysts have expressed comfortability about volatility as investors try to figure out what the fair valuation is. There are concerns that this sustained time of ultrahigh demand is draining market liquidity. A lot of concerns but hope as well. Definitely entertaining to watch at the very least. Tensionscome, trade dominate the Economic Calendar in asia. We will tell you what to expect with key data from singapore to month and south korea. This is bloomberg. Paul this is daybreak asia. Trade tensions are said to dominate the Economic Calendar in asia. And thursday a firm from south korea will report the First Reading of gdp. It is inflation in singapore and malaysia and focus. Always great to have you with us. Lets talk about this Inflation Numbers coming up and the inflation trend in the water economy. The key question in this race toward lower rates by Central Banks is whether inflation will be good enough for Central Banks to keep cutting rates as the fed moves to cut. What are you saying . If inflation is a hurdle for Central Banks in Southeast Asia, asia in general to cut then it is not going to be one. We have malaysian inflation coming up and there will be a significant to cap. Most of it is a statistical reason because of the base. The growth in malaysia is weaker and even if it were to pick up from nonexistent Inflationary Pressure it will rise roughly two hello 2 . Angapore will tell you similar story and across asia even in the philippines and indonesia where inflation is higher among because of import demand pressure, it will remain benign. That is why we are seeing cuts across asia, the malaysian pickup of inflation will not hold bank the central bank from cutting by another 25 basis points. Singapore has a growth problem. If you look at the massive contraction of nonoil domestic exports and also the gdp reports which shows a lack of growth, that is because singapore is a huge trader and exposure to trade means that it is exposed to weakening Global Demand and at the center of that is the deceleration of china growth. About trade talk tensions and deceleration. When we talk about Southeast Asia and trade tensions we talk about vietnam being a potential beneficiary of all this. Are we overlooking some other markets like thailand or indonesia that could also benefit . The data shows that vietnam and thailand are key beneficiaries. Foreignract disparate direct investors will diversify. The supply chain is not the area. That said, if you look at the export data, it is the only country in asia that reports evenhigh Single Digits and since 2014 you see a huge and going back to the late early to thousands, if the vietnam outperforming the rest of the this. Because of thailand has something different. Thailand has more advantages in the medium tech and that is why it is a tracking a lot of fdi. That does not mean that thailand does not have issues with the weakening global trade. We saw that the trade fever that came out shows continued contraction and what is worrying is that furthered by imports that foreshadows the thailand economy is seeing weakness from external demand and also based a strong thai baht. Ongoingcause of the trend regionally. We have an aging china and an aging korea and an aging japan and increasingly, an aging thailand and an aging singapore. All of these regional aging stories shows that if you are labor intensive any want to have cheap input costs, vietnam is the place to go and not just because they have cheap labor, growthrs a have policies through trade liberalization such as the eu and other than singapore, vietnam is the only country that has it and that is key because the opening up of access to people they are also using as an entry point to ferry large markets in themselves. I want to get back to the point you were making about china growth. That is casting a long shadow over everything. Longer term as chair china ages, growth trade of 6 is not sustainable. Just before gfci growth rate of 10 was not sustainable. That is not the rate mature economies grow at. Doesnt the world have to get used to China Growing at a smaller rate . Absolutely. Were looking at two factors, cyclical and structural. One of the things that people overlook when they look at this smooth the slowdown, is an unevenness of growth. Moreover, how it sustains stabilization of the yuan and usingmestic economy, and the current account as a first line of defense, what does that mean, policy that you have seen andar in terms of reduction support from manufacturing all tariffsthe raising of of the eu and japan. Isshows that china protesting more of its Domestic Industries and we know that from the year to date contraction is 4 . Exports are not growing at 0 on a dollar year basis. What is the key is that china through its stimulus and fiscal and Monetary Policy is no longer as helpful as it has been in the past after the gypsy which pulled the world out of a crisis and it is tired. This tiredness of china has pulled thousands of applications for traders such as south korea and singapore. Has profound indications for companies that try to rolled through trade moving forward because of the, you look at korea, it is suffering very 20sively three the latest day exports show that korean contractions going deeper and a lot of this contraction is driven by the 19 year on year contraction of chinese imports occurring and it is not just korea, it is singapore, it is across the board and because the stimulus is targeted in infrastructure only the ones in the sector such as australia are benefiting. The manufacturers of Southeast Asia and east asia are suffering from weak euro demand, weaker japanese demand, week chinese demand and because chinese is using china is using the current accounts as its first line of defense and that is the key point moving forward that chinese growth is not going to be as helpful create even though we expect more stimulus moving forward, to stabilize growth within china, we do not expect a vshaped recovery out of the region. You are expecting more stimulus out of china but you are also concerned about another poverty bubble inflating, right . I think the metrics in which we look at chinese property and western countries are different. One of the key reasons is that the government controls the land supply and it uses that as a key usage to boost what is needed. You can control the pricing but they also try to boost investment in the sectors. The used infrastructure as well. The bubble with china, if you were to look at it from that point of view, you have to worry about the sustainability of how china will deliver it moving forward. The leverage ratio is massive, it is massive in certain sectors, not all sectors from the corporate level is quite high and at the government level and thel Level Household level is low compared to the Global Economy. It is rising at a rapid rate. Tochina moves forward in how [inaudible] this massive level of debt, this is willing to be delivered. Growth concerns taking over the derisking concerns. And managing that is a very dance for china. That is key in that it is using many levers to contain and it is in everyones interest that china does not have a massive landing. It has economic consequence for the region. Even if the Global Economy is not as financially integrated into the chinese economy saying with the u. S. , for example. The consequence of a massive slowdown in china is profound for the world because we dont have an alternative source of growth. Even if the u. S. Is growing decently. Shery thank you for joining us. Plenty more to come. This is bloomberg. Shery i am shery ahn in new york. Paul i am paul allen in sydney. President trump says his chinese counterpart has acted responsibly. It is a very important situation and you can say what you said but you can also say that he has allowed that to go on for long time and it has been relatively nonviolent. Kong. Lets cross to hong , why did of protests we see clashes over the weekend . This movement is sustaining momentum well into the summary and what you are seeing his frustration with the fact that carrie lam has not exceeded to protesters demands, still drawing hundreds of thousands onto the street. You saw she said the extradition law that fueled these protests was dead but refuse to formally withdraw. Which was the protesters main demand. They would continue to protest and that is what you are seeing over the weekend. We saw a new element which was we do not know who they were. Near the chinese border in that fueled concerns that this could spiral into a more sinister type of clash. The hong konger General Chamber of commerce wanted a formal withdrawal of the extradition bill. What is the impact on business . They say they represent one third of the businesses and they are calling for the withdrawal say that there is a possibility that all of this unrest will risk the rule of law and the in the city. We are seeing some hit on retail and luxury which are important industries. Tourists and shoppers fuel a lot of the industry. If the unrest continues this might not become the haven for business that it has been for so long. Shery thank you for that. Lets get a preview of what to watch in markets later this morning. Newie lots of focus on the start board in shanghai which saw the 25 debbie rally in that frenzy creating three new billionaires in the process. One firm jumped as much as 500 and 1 . 140 8 withs at 7. 1 billion in shares traded. A far cry of what we see on the mainboard where firstday gains are capped at 44 . Myle the stoxx did rally chinese brokerages listed in hong kong and the mainland tumbled as earnings to the tech toward are seen to be priced in. Morgan stanley not recommending exposure to the market by these brokers. Tanning your attention to casinos, operators in macau are expected to show higher quarterly profit when they begin reporting results thanks to traction in the mass market segment. While revenues have declined, some players are returning. Mgm china expected to post the strongest Earnings Growth rate helped by the new resort. That is expected to fall due to low [indiscernible] market coverage continues as we look ahead to the start of trade in hong kong, and shanghai. Paul stand by for bloomberg markets, the china open. That is coming up next. 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. 9 00 a. M. Beijing, shanghai, and apart and singapore. Lets get your top stories this morning. In the u. S. And china, trade talks may be getting back on track. With goodwill measures to smooth the way. Inmissing more money shanghai. A frenzy days for the nasdaq style tech board crates billionaires in one day. And the house when spared macau casinos expected to be resilient in the face of the trade war and deepening slowdown