But the e. U. May challenges deal with china. Up ad Morgan Stanley wraps big earnings week for u. S. Banks , with a beat. We are live from the Morgan Stanley global Alpha Investment conference in hong kong. Us trillion markets just open for trade. Sophie. Sophie asx us trillion marketst open for 600 the top smock the top stock market so far this year. Broadly speaking, asian futures are pointing higher and regional stocks are headed to a seventh weekly gain. We will see if the u. S. Tech rally feeds into asia, given bullish guidance. We did have alphabet joining the 1 trillion market cap club. Fed expected to stand pat on rates. Looking ahead to the chinese gdp report, futures in singapore closing higher after a three day drop was posted and the offshore yuan is headed for an eighth weekly rise. Thea top forecaster says yuan will in the year is one of asias worstperforming currencies. Shery lets go to first word news with jessica summers. Jessica the Senate Begins the formal impeachment, swearingen officers for President Trumps trial set to begin tuesday. Democrats will try to force a vote on calling witnesses, White Houseking chief of staff mick mulvaney, former National Security advisor john bolton and other officials. They are also seeking documents the white house has withheld. Digital banks may find it hard down under, even though digital traders have been rocked by scandals. Five new online banks were licensed by the regulator last year, and more are expected in 2020. But according to the latest survey from Consulting Firm rfi, seven out of eight australians have no interest in trying a digital alternative. The eruption of a volcano in the philippines appears to be weakening, but officials warn there is still a chance for a massive explosion. Up,ke in a crater has dried a sign of continuing activity. And earthquakes continue. Access to nearby towns has been blocked and more than 120,000 people are seeking safety in emergency shelters. s internal investigation into the carlos ghosn affair says many other people were involved in financial impropriety alongside the former chairman. Stockrt sent to the Tokyo Exchange says those people worked in japan and overseas. Unidentified Senior Executives have been punished. The carlos ghosn drama has upended nissan and strained its reliance with renault. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. It will be a busy week ahead for central bank watchers, three rate decisions in asia and ecb do with their monetary decision. We will be watching a bank of korea decision in the coming hours, and later in today and later on today we have key china gdp readings for the Fourth Quarter and monthly activity data. Lets bring in our guest for his views. Analyst atane is an moodys in singapore. If we get another positive reading out of singapore later today, it is going to paint a consistent picture of the slow and steady recovery in this part of the world . Ve it does look like iced like a slow and steady economic recovery in this part of the world. You see it particularly in export numbers coming out of most of the asiapacific region, where exports may be down over the year, by much, much smaller numbers than they were even six months ago. Instead of down in the mid teens on a yeartoyear basis, exports , a down by, 5 yeartoyear big improvement. Recent data from korea shows exports to china were positive in december. So things are looking better. Domestically there is hope we would be easing trade tensions, improvement on sentiment that the worst may be over for that economy, as would be the case as you can imagine. Tensions,is that something the f korea will be weighing today, will they stand pat to see how this transmission of public sentiment carries through . Steve yeah, i think they will. The consumer side of the korean economy looks good, retail sales are looking better, the cpi turned positive after being negative for six month or so, Consumer Sentiment surveys are looking better as well. So the domestic side of the economy looks improved. The export sector looks like it is improving. It looks like stability, at least, on the tech side of exports out of korea as well. That all looks pretty good. I think the big question is how much the central bank may be weighing an uptick in the unemployment rate. The and rate has gone up from three point 2 to 3. 8 . Those numbers tend to be volatile, so they may look at that little ad be more reliant on monthly nubbers coming out in terms of Consumer Sentiment and trade. Anyy if you speak to korean person, especially the young population in south korea, they wouldnt agree with the macro numbers, especially those that say the employment rate is now at the highest ever in 2019, 60. 9 last year or so. How big an issue is it that the south korean economy seems to be growing with more parttime jobs instead of fulltime regular jobs making up the composition of these labor gains . An importants structural issue in the korean economy, the fact that parttime jobs are a big part of any employment gains means wages are perhaps not rising quite as quickly and benefits might not be as good as they would be if people were seeing greater opportunities and working fulltime. 2020, ifchange in indeed the economy accelerates and things look better this year. But that is one of the weaknesses in the labor market, and a structural problem that has to be addressed. Shery we have the bank of japan decision also coming up. What was interesting this week surgingg machine orders 18 on the month. We were expecting some reconstruction efforts to filter through the numbers, given the typhoons, but what is all this about, and where is the japanese economy headed . Steve yeah, those are remarkable numbers. And that was a surprise for everyone. You have to attribute a lot of that to simply the rebuilding from the typhoon. It has created a lot of demand. Heart ofso goes to the the fiscal stimulus that will be the 120 this year, billion dollar stimulus that has been passed for 2020. A lot of that would go for typhoon recovery work. So a big part of it, but i think we may get a sense of the japanese economy also looking a little bit better, as the trade picture at least stabilizes, and demand for durable goods improves across the region. Cochrane, thank you for your insights, moodys chief analyst. Lets head to hong kong, stock markets on the move. Sophie kamaruddin has a look at the movers. Sophie lets look at rio tinto, gaining ground in sydney after production updates forecasting a rebound and iron ore shipments this year after a 3 drop in 2019 due to the effects of fires and operational issues. The benchmark has fallen about 25 from a july high. Lets check new farm, under pressure, in sydney sliding as much as 15 after updated guidance saying sales growth to gnus and south america, although markets have been impacted by strong competition and in asia, sales and earnings are expected to a lawyer to be lower due to difficult climactic conditions. Haidi some of the movers and watchers today. Still ahead, an exclusive 101 exclusive oneonone, and why Asset Management is the next horizon in china. Shery and another exclusive, eu trade commissioner phil hogan joins us after three days of talks in washington. This is bloomberg. This is daybreak asia. Im haiti stroudwatts in sydney. Shery im shery ahn in new york. The European Unions trade chief is in washington. Ours cross to d. C. And Bloomberg Markets anchor vonnie quinn is there with a special guest. With them here newlymeant trade commissioner for the European Union, phil hogan. After several days of meetings with representatives of the administration and what has been described as a low point for euu. S. Relations, what goodwill did you feel was in washington, d. C. . Is this the beginning of something that might be positive . Phil the objectives of the visit is to reset the relationship and try to understand each other in relation to a number of trade irritants, and find Common Ground with the u. S. On many issues per we started on a positive note tuesday, where the u. S. , European Union and japan lined up for a statement to say we wish to have an issue around industrial subsidies and forced Technology Transfer dealt with on the basis of a level Playing Field for the Global Economy and all the players in the future, and the wto process, reforming the wto. A bilateralhad meeting today with u. S. Trade representative robert lighthizer. Did you receive assurances that there would not be tariffs on the eu . Phil now, and we didnt expect any assurances from ambassador lighthizer, whom i respect very much. He has a very big trade region in terms of the statement with the European Union and japan, the big deal between the u. S. And china yesterday and of course the passing of the usmca today in the senate. So it is a very big week for him. We will continue in touch because we expect to be in davos next week to continue our discussions. 25 25 e threat of tariffs on eu autos has been out there for a while. Did you get any sense that that is still a live threat . Where did it come up . Too it didnt come up often in terms of questions i was asked by the administration. In visitscome up much i made to business organizations, but that doesnt mean it wont come up in the future. But we have difficulties at the moment in relation to tariffs arising from airbus and boeing, and of course discussions around the digital tax agenda, very important from the United States point of view, and we are trying to work out solutions. Vonnie the Washington Post had a story that in the days before iran abouted deviating from the jcpoa, that the Trump Administration said you need to do this or we will slap a 25 tariff. Did that happen . Phil i dont think it happened. That wasnt raised with me during the course of any meetings i had with the administration. Vonnie how concerned are you . Because as you say, the president has two what would be considered winds on trade in the last week alone. Perhaps theyd ministration has more leverage now, phase one is done in the usmca locked in. Phil we respect the fact there has been Good Movement on trade in relation to the u. S. And their many partners around the world in recent days, and of course we want to now build on some aspects of the deal the u. S. Has done with china, see if we can move in a common area and a lane of cooperation to deal with the issues that we share in relation to unfair trading practices, and hopefully we can identify Common Ground in relation to a number of these issues, and that we can build our own relationship arising from the july agenda agreed between president junger and President Trump on conformity assessment, regulatory cooperation, standards and so forth. Vonnie you said there are Common Elements on phase one, what are the Common Elements . And are there elements that , as an you as someone who ries, opposent managed trade . Phil it is a complex deal. But at the end of the day we see a good chapter on intellectual property. For the first time, there is movement on the chinese side to accommodate the u. S. Requests for dealing with secrets and intellectual theft intellectual theft in terms of the intellectualproperty area. This is an example where we can build a positive agenda, and get to the level langfield we all want in terms of trade. Vonnie you also spoke with the treasury secretary and commerce secretary among others. How do you rate the chances of and 2. 4 billion of french goods being tariffed . In dailyare communication to move this process toward a compromise. I wont prejudge the outcome ahead of the discussions. Next week is a very important week to see if we can reach a positive outcome on this. You mentioned boeing airbus, is there any indication from the american side that there might be a proactive taking off of tariffs so that you wont have to do a titfortat action . Made proposals from the eu side to have a pozo to have a proposal in relation to airbus and boeing, and these proposals were not acceptable to the u. S. But we will keep trying and there is some small level of engagement to reach an outcome, but it is going to take a number of months. The u. S. Would like to see the full picture in relation to boeing before they come to any conclusions about what outcomes we need to negotiate. For wt and longer time reform as well. What are you thinking . Share the views expressed by ambassador lighthizer regarding the need to engage Better Together about wto reform, including the appellate body. I made that clear with him today. That is a step forward. Hopefully we can build on that. Vonnie i would like to ask about u. K. Eu relations. There is a suggestion about orest johnson and brinkmanship. About Boris Johnson and brinkmanship. And what that will mean for trade negotiation . Borisi havent accused johnson of brinkmanship. He has certainly put another timeline into thousand 20 to conclude issues about the relationship, and it is a tight timeline, he has to make a decision about it by july 4. There is very little he can achieve in a few months, so it makes the possibility of a comprehensive deal that was agreed to in the document bygely difficult to achieve the end of the year. But we will do our best. Need toyou will prioritize, in that case. Is there agreement across the eu and what should be prioritized . It seems there might be confusion whether security will be more important than the economy or vice versa . Phil security is very important end of the relationship between the eu and u. K. In relation to security will continue to be very important. We share common defense issues. But equally we see a very united European Union in terms of discussions approved by the end of february. Agreement, will it be for all parliaments to agree to our one body . Phil that depends on what we see in the final agreement. It depends as much on what is in the negotiations ended also depends on what we can agree on in the u. S. On with the u. K. In a short span of time. Talking tonk you for us, the first visit to washington, d. C. For the new commissioner of trade for the European Union. Haidi vonnie quinn, thank you, with the eu commissioner. We have major guests coming up on bloomberg tv. Next week will be live at the World Economic forum and davo send will speak to a whole host of guests, including the heads of state of norway, greece, the another lens and jordan. Coming up next, a political win for President Trump as his impeachment trial moves ahead in the senate. Have the usmca being approved on the same day as well. We are back ndc next. This is bloomberg. Senate has approved President Trumps new north American Free trade agreement, political win on the same day senators are sworn in as jurors in his impeachment trial. Lets get the latest from washington with our congressional editor. Todayell us what happened and what is to come with the impeachment trial, and the significant impact, given we know acquittal is in the cards . Joe the trial gets underway tuesday in washington. Today there were procedural and ceremonial aspects, the chief justice sworn in, and subsequently swearing and all the senators who sit essentially as judge and jury in the impeachment trial. There will be a number of things going on Going Forward, a lot of them taking place behind closed doors, the most significant of which is to decide whether to call witnesses. Getcrats are pushing to Administration Officials to testify and to introduce other evidence. Mitch mcconnell, senate gop leader, and the white house have been trying to make this a very quick process taking maybe just a couple of weeks for presentation of arguments by both house prosecutors and trumps defense. It will depend on several key republican senators as to whether this trial will get extended. Collins of, susan maine, came out just a little while ago and said she was likely to vote to call witnesses. So there is the prospect of that Going Forward. Just hours before the impeachment trial officially kicked off, there was good news on the trade front. The usmca finally passed. Ae right, and it passed by wide, bipartisan margin, 8910 in the senate. This is a major victory for the president. He made this one of his top right alreadys, a Campaign Promise that he would revise nafta, and he did get it done after some wrangling with nancy pelosi and the Democratic House over provisions, so this will give him something to tout. Not a huge economic impact, but a bigger political impact. , our congresscyzk editor joining us from d. C. Business flash headlines, Cathay Pacific warns more struggles will continue this year. The airline was hit by protests in hong kong. Cathay and its affiliates saw traffic plunge and east of the plunge and each of the last two months. It is warnings firsthalf profits will be significantly lower. This Companies Making itself more attractive to bidders, rolling out more comfortable seats and rounded place. Air india has moved its smaller 787 dreamliner to its washington service. Shery boeing suffers another blow with a lower a Loyal Customer and china turning to rival airbus. China airlines has only flown boeing planes since the 1980s when it launched, but is now leasing 10 a3 21customer and cho rival airbus. Jets. The carrier is majorityowned by China Southern and is planning for deliveries in the second half of next year through 2023. Coming up, highlights from our exclusive interview with the ceoy on ceo alion discussing Asset Management and china. Plus, we had to hong kong and hear from th management. Plenty more to come. 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. Shery you are watching daybreak asia. Ins go to Sophie Kamaruddin hong kong. Sophie the nikkei could end the week top and 24000 and chip stocks help provide that lose after snp earnings beat stronger capex with chip equipment makers come a part of the catalyst that drove u. S. Tech stocks higher. In that rally, alphabet joining the 1 trillion club. On the events this morning, adding 1 after the bump overnight. Lets check in on the sydni market, aussie shares on fresh eyes again while bonds slip ahead of the chinese gdp report. The austral you dollar is finally under pressure, trading off a 10 day high as the dollar strengthened on strong u. S. Retail sales, and the aussie has yet to make a weekly gain this year, especially against the kiwi dollar. Haidi china is due to report on gdp growth for the Fourth Quarter and the full year as well as a monthly report on december later today, this after china and the u. S. Clinched the faceone trade deal. We have corporate reaction. Lets bring in tom mackenzie. He is he spoke with the allianz ceo. Tom we spoke to oliver baete in an exclusive interview, the ceo of allianz, and the also have the finance arm that includes pimco Asset Management. In terms of his reaction to the trade deal, relatively optimistic but wants to go through the details and look at the implications. The reason he was in shanghai is the same day the trade deal was signed is that he is officially opening the first foreignowned Insurance Holding company. Toianz thinks it allows them take parting opportunities on everything from property to Casualty Insurance on Life Insurance and Asset Management. He things that is crucial. But to get that and take part in those opportunities, they need more licenses. And that is part of that faceone deal, pressure on china to speed up licensing in the financial industry. So the implications are significant for him and his team. Take a listen to what he had to say about the trade deal and the opportunities in Mainland China. Olvier the good news is that we finally have some agreements between the government, after a long time of insecurity. So it is a good step in the right direction. Tom given the nature of the trade deal between the u. S. And china, is there a risk that u. S. That European Companies may face bias as china focuses on licenses for u. S. Counterparts over and above europeans . Is that a risk . Oliver i dont see that. China, and i wish the u. S. Was the same, has really committed to multilateralism. Most things the Chinese Government do, they say it isnt part of the wto rules, it applies to everybody. So my assumption is that whatever they do, they do it in a multilateral way. So i am optimistic. In the second reason i am optimistic is that china has a strong relationship to my home company to my home country, to germany. And they are working very hard to make sure that very strong relationship becomes even stronger. Mentioned that you are now the first Foreign Insurance Companies to have a fullyowned Holding Company in china. What opportunities does that open for you . Where are Revenue Streams coming from in the Chinese Market . Allows use first one synergies between various businesses. In the past we had to keep them separate. So there are significant cost savings attached to having a unified approach to the marketplace. It allows us, secondly, to expand into other businesses we were not able to get into, particularly insurance Asset Management. Remember allianz is also one of the largest Asset Managers in the world, not just an insurance company. We see the investment side is the next horizon, maybe more important than insurance, because china, as it grows, will have to come to terms with how it does invest in brought invest abroad. In it needs support balancing risk and return as they put their money to work outside china. Will you take advantage of the Asset Management prospect you outlined . How much are you investing in that part of the business . Adding we are significantly. We also come up by the way, need additional licenses, going back to the point earlier. So the holding licenses the ticket, but we need some licenses, for example, to operate beyond what we have today. We need an insurance Asset Management specific license. We are in the process, and once we have those i can specifically answer when and how and how many people. We will probably have steam in terms of investing and building the presence. Tom you have taken a 4 stake in tie, one of the biggest Insurance Companies in china. How do you plan to leverage that stake . . Liver oliver we are still waiting for approval, so once we have that approval i can tell you more, but other than that it is a strategic investment. That is as much as i can say. Tom given that caveat, once you get that approval would you plan to potentially raise that state . Oliver i cant tell you at this point. Sorry. I am being very careful here. Ceo,that was the Allianz Oliver baete talking about opportunities in the Chinese Market when it comes to Asset Management. They are going to be competing with blackrock and vanguard, and part of the challenge will be building out the presence, and they will have competition from domestic players as well and need to get those licenses in place the company has a lot of cash on the balance sheet, and we did talk about dealmaking. Made two deals last year and the u. K. And one in brazil with a 4 stake. And also the 4 stake in china as well, so we discussed whether they will pull the trigger on , and they said valuations are looking quite steep and they will be more conservative but certainly they have the cash pile to make more acquisitions this year. And this is an environment where Interest Rates remain very low. That is a Pressure Point for this company. He says that will be the new normal. So organic growth will grow the business and they will focus on building things out in china. Shery tom mackenzie, thanks. The Morgan Stanley annual global Investment Conference has kicked off in hong kong. Bringsvate event together Top Fund Managers and investors to discuss strategy for the year ahead. Lets go to hong kong and our chief north asia correspondent Stephen Engle. Steve . Sephen morgan state Morgan Stanley holding its conference as the stock goes up more than it has in seven years. It is jubilant on wall street similarly jubilant here in asia. Lets get to the host of this conference, the asia pacific head of wealth management. Thanks for having us again. Last year we talked similarly au were trying to attract more konghy families, and hong and singapore. How do you see the mood changing this year . We have had a year of turbulence here in hong kong and the trade dispute between china and the United States that has reached a phaseone resolution. How do you explain the jubilance here . Thank you, steve. Wealth creation is second to the economy in this part of the world, notwithstanding socioeconomic and political events in this part of the world. And the second tier cities in china and other parts of asia continue very, very strongly. For us, our continued expansion and growth will be a matter for. S to accelerate steve what is going to be the mood today clients and nts, and theie door with confidence that the trade deal was signed . Most of ourt year clients focused more on the favored class of assets in particular, and some alternative assets, and much of the time they spent a lot of assets on Wealth Planning and restructuring of assets. Focus will think the as auity, for example, better focus for them. Steve the elephant in the room is the trouble we have seen in hong kong. How will that impact clients and where they want to shift assets . Vincent our focus is on our High Network Customers and Asset Managers. For them, it is global, maybe their home is here, or maybe offshore india or taiwan, for example, so the impact on us is very limited. It is inconvenient for a lot of our clients when it comes to travel, and there are cost concerns among our clients, about our offices in singapore and hong kong deal with all our clients on a global basis. Steve we have heard a lot of stories about cloud about capital flight from hong kong, and i am sure they are coming to you and saying, what are contingency plans . Last year, you wanted more relationship managers there and build up the client base with richard chinese families that are still tied to the mainland. Has that last year, you wanted dynamic changed because of hong kong . Vincent not really. The expansion of our Singapore Office as the second top of our business continues very strongly at think the restructuring in hong kong the past few months has caused discussion about how fast people should do that. We continue at our own pace. The domestic situation had client asking had client asking questions. Networkthe ultra high clients have plenty of choices. We need to hire a lot more people. Four hour segment, ultrahigh network is really about quality over quantity, so my aspirational target for 2020 would translate into 50 or 60 customer service, risk and product specialists. A big number for us. Steve how is that divided between hong kong and singapore . Vincent a big advantage for us is that we look at both as one. Steve how do you see the pipeline for Wealth Creation in asia . A lot of ipos come attack in particular, in hong kong and the United States. How do you see that feeding into your business as wealth is created for 2020 . Vincent i look at the source of Wealth Creation. One is geography. One is sector. You mentioned the sector come attack is extremely strong, health care is strong, domestic consumption will remain strong. And i see opportunities in western china, where there is a lot of government investment, a lot of focus and a lot of Wealth Creation where clients need a lot of help in terms of structuring their wealth. That is where we are spending a lot of time. Steve you are in a highly competitive business with other companies on wall street looking for talent as well. Is morgan considering purchasing this year . Vincent Morgan Stanley has been saying they want to focus on the wealth business in this part of the world. Itn it comes to acquisition, is a matter of opportunities arising. A lot of firms are looking at the same thing. Steve you are not against in organic growth . Vincent we will look at all the opportunities that we can to expand our business. Choui, thanks for joining us. From hereve much more at the ritz carlton in hong kong. We will have lots more from Morgan Stanleys Investment Conference just ahead. Just ahead, the alphabet investment ceo joins us in the next hour, and we will speak with the Value Partners chair. Shery bloomberg will be live at the World Economic forum next weekend we will be joined by big guests, including the citigroup ceo, the bank of america ceo and the Morgan Stanley ceo, and the Goldman Sachs ceo david solomon. Lets get to first word headlines with jessica summers. Jessica thanks. An independent panel in washington says the White House Budget Office broke federal law when it withheld more than 200 million in security aid to ukraine. The Government Accountability office says execution of the law does not allow the president to impose his own priorities over those approved by congress. Insurance losses from push fires in australia may be in the billions of dollars. That is according to blumberg intelligent. Reached 920e losses claims million u. S. This week, rising one third in the space of just four days. Forwhile, plans call donation of a days worth of trading to the fires. And the a russian of the taal volcano in the philippines does appear to be weakening, but officials still warn there is a chance of a mess abruption. There is a sign of continuing activity and earthquakes continue to rattle the area. Access to nearby towns has been blocked. More than 120,000 people are seeking safety in emergency shelters. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im jessica summers. This is bloomberg. Next, we hearup focusedas first female fund with arbitrage opportunity. This is bloomberg. Delighted line idi you are watching daybreak asia on bloomberg. Asias first femalefocused Investment Capital fund. Economy is considered a Growth Engine for markets including china and india. Managing partner virginia discusses why women are huge opportunity in the markets. This venture believes in investing in the she economy. Single femalehe consumer or generation w is the single biggest arbitrage opportunity of our generation. The reason is, people think the cosmetics or milk bottles, but women are multiple markets. They consume for themselves and their households and they control approximately 80 of global Discretionary Spending. That market is worth almost 20 trillion globally, bigger than the economies of india and china combined. At yet people see gender as limitation and not an opportunity, and i wanted to change that. There are studies that show women raise less Venture Capital but generate larger returns. What you mean by that . Shows woment data control 80 of global Discretionary Spending but are allocated less than 3 of global capital. And with a seamless play out in recent times, Women Consumers feel massively underserved, and you can see that in terms of the new wave of products and platforms emerging. Think we are 20 years into the new millennium and what we see is women coming to the forefront of business, society, and politics. And that is shaping consumption and society at large. Isthe she economy describe not just milk products and makeups. What are the products were you see the greatest financial return potential . The material i have identifies things including food, and food is for everyone. The first adopters and Healthy Foods that are vertical, and there is a global trend toward that. Financial services is another huge thing. Right now we are seeing the largest handover of wealth from one generation to another, to millennials and also to women, and a lot of women managing the family wealth, they are saying traditional Wealth Managers who have been male, so these are two we recently had cost plus become a unicorn, and that appeals to the majority female consumer. Aren your portfolio, what you most excited about in terms of an opportunity to become a massmarket play . Virginia in china we have invested in Mental Health, Artificial Intelligence and technology. Using voice biomarkers to detect Mental Health. The majority of the Mental Health market is in stress, anxiety, depression, whether that is young adults, children, people in stressful jobs. But when we looked at the application of this technology, we noticed some of the greatest applications would be in safety, and thisre, education, is again a femaledominated marketplace. You travel around the world to look at earlystage investments in particular. Where does china stand in terms of developing these kinds of consumer products, particularly for women . Great gamehina was a changer in terms of my mindset. I happened to witness china at a time when the Big Technology boom with social media and social networks was taking off in a big way. What i have also seen in the last few years is new innovative platforms and technology coming out of china, like tictoc. Some examples in the chinese 90 et is the red platform, under 30 and majority women, and it is a forum where you can post and share with friends reviews on beauty products. That is one of the big trends we are seeing with the she economy, new forms of retail and new forms of consumption, so content type and driven commerce and not just some he going to a normal website and clicking on things. So that is an example of how we see china leading mobile technology with this model. You started lean in china and 2013 and that has grown to 100,000 members in china. What are some challenges your members face and how has that changed . Virginia the data is really interesting. When we started lean in china, one reason was that we realized women lacked confidence, social networks, and they lacked role models. A lot ofrs later, these issues have been addressed. And what we see now in terms of data that we publish is that women are talking about what selfactualization means. When we ask, what does this mean to you, they talk about realizing their own goals, their definition of success, and that is not just marriage, work, or family, but actually having more goals, to achieve their and homeownership is one, looking for new forms of consumption and new experiences as another. Virgina tan speaking to selina wang. More on trends in hong kong with Michael Chang in the next hour of daybreak asia. This is bloomberg. You are watching daybreak asia, futures higher on the nikkei 225 and the yen at an eight month low. We are watching chiprelated stocks across the region after some surpassed forecasts ahead of the 5g rollout expected to demand growth. Ng at firstan holdi policy rate of 2020, split on rate cuts. We have Market Sentiment over rates the next 12 month, tempered by signs of an economy questions about what the governor has to say with stress risk, accounting and demographics. About onet is out in hour. In the next hour of daybreak asia. Ceo speaks to us from the global Alpha Investment conference in hong kong. Markets opening in seoul and tokyo will be next. Shery and more big guests coming up next week at the world davos,c forum in including numerous ceos. Plenty more to come. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Haidi a very good morning. Shery good evening. I am shery ahn. Sophie i am Sophie Kamaruddin in hong kong. Welcome to daybreak asia. Haidi our top stories this friday, new highs on wall street look set to propel asia forward. They are looking set to equal sresident trump weigh diverging trade headlines. Shery we will assess the outlook for retailers in hong kong as months of social unrest scare tourists away and trigger store closures across the city. Japan and south korea coming online. Lets get straight to the market action. Sophie stocks are opening higher. The nikkei 225 began is at a fresh eight month low. Jgb traders will be waiting on a 20 year sale. Lets check in on south korea. The kospi gaining ground by. 6 percent, switching out to check in on how the mood is in south korea this morning and the korean won is trading firm this morning, up. 1 against the greenback. We are seeing the aussie share market staying about 7000 points with iron ore minors among the leaders. Fortescue climbing to a july 2008 high while rio tinto is climbing as much as 2. 1 on the back of this. We have seen a recovery this year. Aussie dollar is off a 10 day high. Lets switch this out to check in on commodities. Gold holding the overnight drop we saw for bullion. Crude adding. 2 but oil is set for a second weekly drop given the pressure we see from rising u. S. Stockpiles and we are seeing treasury futures slip early in the Asian Session after the u. S. Announced plans to issue 20 year bonds this year. We are seeing a pickup in 30 year yields by three basis points and the offshore yuan is Holding Steady on the firmer footing below 688 ahead of the gdp report. Shery thank you. Data points to a betterthanexpected outlook. We will see how the economy is performing at the end of the Fourth Quarter. Lets look forward to the release with an economist. Great to have you with us. We have seen broadly positive numbers recently out of china. This gtv chart on the bloomberg showing the economic surprise index, surprising on the upside. 7 ons surging more than year. Will we see this optimism being replicated in numbers out today . Yes. Growth is chinas gdp likely to have gone up in q4 from 6 in q3. Robust production resulting in an annual growth for 2019. There are expansionary activities towards the end of the year. Raising demand on policy stimulus but sentiment is earlier Chinese New Year this time. We think the continued support of policies and some tailwinds could lead to further stabilization of chinas growth in the first half of this year. Of thisow much stabilization in the chinese economy is happening because of some tariff relief that was seen last year, especially with the delay of those december tariffs not to mention the reduction of some levels as well, and how much is it just how much have policymakers done in terms of more easing and liquidity injections in the market . Deal think the phase one could bring for most of the year, which is positive for chinas economic growth. The phase one deal could reduce the tariffs threat on chinas 2020 by zero point 3 and the remaining tariffs could possibly have growth by more than 2 although we do believe that the negotiations might have more issues. On the policy side, we think that the fiscal policy will turn witho be more expansionary the physical stimulus shift to more spending this year. The Monetary Policy easing cycles will continue to support the expansionary fiscal policy, and we think we will be lucky to have two more reserve ratio cuts of 50 basis points in q2 and q3 this year or equivalent liquidity injection to maintain a downward liquidity in the market. In the meantime, to lower the financing costs of the real economy, we expect to see a total in the first half of this year to help to further facilitate lowering of the loan prime rates. I want to throw up this chart to get your gauge on what we are expecting for these monthly activity numbers. Industrial output really fell in the Third Quarter of last year foreseeing a little bit of a rebound about whether you look at retail sales, fixed asset industrial output, we are all looking at multiyear lows. Where do you expect the recovery to be and does that consumer story continue to be sustained in 2020 . We think the infrastructure investment, it is likely to pick up. Policy support. In the manufacturing inventory is likely to bottom out given the recovery of the industrial inventory cycle, better car sales performance, and this. Side, wetail sales think that consumption will to have a stabilization of chinas economy given the relatively healthy labor market so far in china. On the other site, we think that appears to beit mitigated by the decision to give local government more flexibility in regulating their local housing market, so overall, we think the supportive measures as well as the cyclical tailwinds, could help to support our consensus for 2020 of 6. 1 . The day, doesof the signing of the u. S. China trade deal show optimism towards the phase three deal and a moderating effect on the economy . Does that move the needle at all for pboc policy . Deal think the phase one could mean that this year, we will have less trouble with issues and the receding global headwinds for the chinese economy, which is good. The optimism is likely to continue to underpin the performance of renminbi in the first half of this year, but after the initial optimism, which coincides with stabilizing growth in china in the first half of this year, we think we are likely to see structure in the economy and the currencies are likely to give gains likely towards the yearend. Much for joining us. A preview of those numbers. We will have more analysis on chinas economy at on. We are joined by the chief china economist and bank of America Securities chief Greater China economist who will be with us. Take a look at the gdp as well as the monthly activity numbers today. Take a look at the markets. We are joined by mark cranfield. A bit of data daily from china. Markets are kind of brushing off any kind of event risk from that at the moment. Mark theres optimism as a previous guest was saying. People are expecting generally slightly better numbers to come out of china and now that we have got this truce on trade with the United States. As for today, we have not been getting much volatility in the gdp data so we are not expecting that to have a major impact. Where we do expect to see some movement is Industrial Production and retail sales. Those are numbers that are more likely to have an impact on chinese equities. Certainly, people would like to see the Industrial Production numbers back above the 6 threshold. That would be a clear indicator that things are improving at it would certainly help to improve the mood in chinese stocks which have seen seems to go sideways. Eemed to go sideways. It would be good for the mood in china stocks peered on the downside, if the number came out in the low 5 range, that could really be having an impact on the market. People are already bracing for that. We do expect some movement, especially in relation to Industrial Production and retail sales, how they come in, to set the market up for how we go into the weekend. Haidi in the u. S. , we saw alphabet joining them in the trillion dollar value club. The dominance of tech and internet stocks seems to continue. What is the message here . Mark he is telling us a few things. January, people are optimistic on the United States. The economy is growing well. Major tech stocks are playing a huge part in that. Amazon is not far behind. They could become a 1 trillion company in the near future as well. Nextso tells you that the earnings season for these companies is very important because so much of that money is going into them based on their outlook for where they see the tech sector going in the year ahead, how many sales they are going to do, and the growth of technology in the United States and around the world. It really puts a big bonus on the next reporting numbers and their outlook. If investors are disappointed. There could be quite a big correction in tech stocks. If everyone is satisfied, it will keep the mood going. It tells you a lot of passive funds are building up. Just the Big Companies now make up Something Like 15 of the s p 500 index, which is a very big waiting when so much of it is an etf related fund and similar passive investing. You dont need too much bad news to bring that down pretty fast so we are in a situation where for the time being the momentum is very good, the news is heading in one direction, but as soon as we get something which is slightly disappointing, there is room for some of these stocks to tumble pretty hard and that could bring down the rest of the market with it. Mark cranfield, thank you so much. You can follow more on this story and all the days trading on the bloomberg at mliv. Lets get to the first word news with jessica summers. Jessica. Jessica thanks. This phase i trade deal between the u. S. And china may face a legal challenge. The European Union says the accord could violate wto rules and is being closely scrutinized in brussels. The e. U. Wants to know if chinas pledge to raise purchases is compatible with wto regulations. The comment signaled the deal could have implications for the rest of the world. President trump plans to nominate judy shelton and Christopher Waller to join the board. The two economists have widely different backgrounds but their policy comments suggest they would be inclined to support the president s call for easier Monetary Policy. Shelton publicly said the fed should reduce rates and waller has been consistent in his calls for a more dovish approach. Eruption of the volcano in the philippines seems to be weakening. There is still the chance of a massive explosion. Continue to rattle the surrounding area. Access to nearby towns has been blocked with more than 120,000 seeking safety in emergency shelters. Nissans internal investigation into the carlos ghosn affair says many other people were also involved in financial impropriety alongside the former chairman. A report sent to the tokyo stock Exchange Says those people worked growth in japan and overseas. Three unidentified Senior Executives have already been punished. The carlos ghosn drama has upended nissan and put strain on its alliance with rhino. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Hour, we willhis assess the outlook for retailers in hong kong and canada with the pwc asiapacific Michael Chang. Shery we will be returning to the Investment Conference. Stephen engle standing by with our next guest. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Lets head back to the off Investment Conference in hong kong where Stephen Engle is standing by with his next guest. Steve. Stephen lets get to our next guest and kind of get a pulse check on Risk Appetite in the asiapacific as we enter 2020 but also around the world. Thank you so much. She is the investments and ceo. Wall street obviously had a very good reporting season as Morgan Stanley came out with big gains. Do you think that given the centralbank environment right now on hold, and with the trade war, at least phase one come out of the way, done, is it more riskon right now . I think it is more riskon as long as Central Banks keep these conducive environments and the reason is because if you think about it, Morgan Stanley is generating a return on equitys close to 14 with twice the equity it used to have, so back in the old days, this would have been a 25 return on equities. What it means is same level for stability with a much safer institution and more stable earnings power, so our conviction is we think markets are the 20. We think financial earnings are underpriced. In the states, in particular, we can see the numbers, and this will happen. Stephen we will talk about europe in a minute. Do you think this rally in the United States, which is already getting long in the cheese, this cycle has more legs . Davide financials will outperform. Technology earnings, in our view, are overvalued in terms of multiples, because basically, the s p was a multiple expansion. Earnings did not move. Financials are the only one actually with earnings. The multiple has been on track. Real cash earnings where the lower multiple rather than the opposite. We will see in a performance of financials. A panel you are on talking about Central Banks and in the note, i believe you said N Central Bank governors to superheroes. What will be those powers . The fed telegraphed they are on hold and the rest of this year. Ecb, negative rates. Japan at negative rates. What tools do they have . Davide the experiment of negative Interest Rates i think inl end up being phased out this decade and the reason is because the negative effect of negative rates in our view are basically neutralized in the positive sector and the shortterm, meaning with negative rates, the fact that you are imposing a wealth tax on any savings, the implication is Financial Assets because they need deals p or the longerterm implication is that no one invests. Oncomingpoorer on and basis. What are the Biggest Challenges in facing Christine Lagarde as you are invested in europe . Ecbde mario draghi and the saved europe because they were the only institution that actually acted. Other people were talking. The ecb acted. I think they have to do more simply because politicians were behind the curve. Today, new commission. Green nodeal. Brexit is happening. You have seen it yesterday. Merkel basically, headlines regarding brexit. Europe cannot any longer postpone decisions. Trump has made decisions on their behalf. Has madek. Decisions. We will see fiscal expansion in europe probably around sustainability, green new deal, and i think the ecb will try to move to zero rate within the possible future. Stephen what is your advice . You talked about yield starvation in the credit market. Davide if you look at the credit market, the liquid market, its about 90 trillion, which is equal to global gdp and equal to Global Equity market cap, so basically, its a simple number. 90 trillion. The economy, fixed income, look equity. In the fixed income space, if you look at less than 40 trillion, less than 1 , and if you want to look at any yields around 4 to 5 , we actually like a lot of financial credit, so additional tier one, preferred, trust preferred, so basically, it is the credit space that is above the equity of the safest financial institution. It is the area where Central Banks have not been manipulating the actual price. Stephen you have less exposure in asia as you do in europe. 13 billion globally under management. Whats japans dilemma right now . They have been in negative rates. Haruhiko kuroda cannot seem to get any momentum towards the inflation target. What would be your advice . Davide theres more value in the equity market than there is in the credit market. In a credit market, simply because of zero yields, basically, there is no upside. Any yield in japan gets tucked away. Even financials, there is value and the reason is because the dividend yield of equities is actually much higher than the bond yield. You see what is happening in japan. After 10 years of zero rates and negative rates, what are they doing now . Fiscal expansion again. 120 billion. We are talking about a huge number for the underlying gdp. Davide monetary stimulus stephen monetary stingless does not work. So fiscal. Stimulus does not work, so fiscal. It is a president ial Election Year in the u. S. Davide it can only be more volatile because volatility has been suppressed. In 2020, centralbank action will start tapping back. Stephen davide serra, thank you so much for joining us. We will be back on morning here from the Morgan Stanley game conference in hong kong. Back to you. Haidi thank you so much for that conversation. We will have plenty more coming up including china economist and bloomberg will be at the World Economic forum in davos. We will be joined by some big guests including the heads of the new york stock exchange, the nasdaq, and the hong kong exchange. This is bloomberg. Ange. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Alphabet has hit a milestone, rallying to an evaluation of over a trillion dollars for the first time. Tech and internet stocks drove wall street higher. Digit market cap. The other two u. S. Companies are apple and microsoft while the global list is topped by saudi aramco. Amazon flirting with a trillion dollar valuation last year. Surgedgap shery gap in late trade. The plan has been announced under previous ceo with the aim of making mold may be a Standalone Company since his fast growth is not being reflected. Old navys performance has deteriorated in recent quarters and he was removed as ceo last year. Thei jetblue is leading pack in the u. S. Erasing its fees for checked baggage, adding another five dollars to the cost of the first and second bag, setting in a benchmark for other u. S. Carriers to follow. It will cost 35 for the first backchecked, 45 for the second, putting a third piece of luggage in the hold remains 150. Travel light. Chinas former vice commerce minister tells us he is confident beijing can deliver on its phase one trade pledges. We have that exclusive conversation coming up next. 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. Shery we have breaking news crossing the bloomberg. Data on singapore. Not all domestic exports month on month for the month of december, coming in at 1. 1 , following a contraction of 1. 5 in december. And a prior number of 5. 8 . Also, nonoil domestic exports year on year, that number also beats 2. 4 and clearly much better than that contraction of one person in the month of december. This is the first positive number we have had for this reading for singapore exports in 10 months. It is continuing to paint this picture of a gradual but supportive regional recovery. We have had positive numbers out of korea, taiwan, china. More out of china today. Electronics exports year on year, that number was a contraction of 21. 3 . Worsening that contraction in december. Electronics as well as pharmaceuticals for singapore remains very volatile. There is the chart. Asia exports showing early signs of recovery. That number for singapore swinging back into growth for the first time in 10 months, really building up this broader regional picture of a slow but steady recovery after we have had similar signs of green shoots out of korea come out of taiwan, and of course leading into chinese gdp as well as the domestic activity indicators for Mainland China today as well. Lets take a look at the market reaction. Sophie. Sophie singapores data, another sign that we are seeing Global Growth stabilizing. That could fuel demand for assets like the seeing dollar, which is gaining ground, up trading against the greenback this morning. The korean economy showing signs of a turnaround so ahead of the bok, expected to have rates. The korean won gaining ground while the kospi is higher by being led higher by chipmakers after a strong Earnings Report and the further capex from the chipmaker and we are seeing chip equipment makers rally in tokyo, helping the nikkei 225 chop 24,000 points once again while the yen is trading at a low. In sydney, we are seeing banks miners lead gains for the asx 200, clocking fresh eyes once again. Rio tinto jumping after its forecast. It recovery and iron ore shipments in 2020. We are seeing some pressure come through for aussie bonds ahead of chinas gdp report. The 30 year yield is rising three basis points early in the Asian Session after the u. S. Announced it plans to issue twentyyear notes in 2020. Heads up. Jgb traders will be watching for a 20 year sale. We have 10 year jgbs looking to cap the week in positive territory for a second consecutive week. Share. Shery lets turn to jessica summers. Jessica thanks. The senate has begun the formal process of impeachment, swearingen officers for President Trumps trial, which is set to begin on tuesday. The democrats will try to force a vote on calling witnesses, including forcing bolton, andy, john two other white house officials that are seeking documents the white house has withheld. An independent panel in washington says the White House Budget Office broke federal law when it withheld more than 200 million in security aid to ukraine. The Government Accountability office says execution of the law does not let the president substitute his own priorities for those approved by congress. It is essential to the impeachment case against President Trump. General banks may find it hard down under even though australias traditional lenders have been rocked by scandals involving everything from mortgages to investment advice. Five new online banks were licensed by the regulator last year with more expected in 2020, but according to that latest survey from Consulting Firm rfi, seven out of eight australians have no interest in even trying a digital alternative. And a new survey from julius baer says hong kong is the most expensive city in the world based on luxury goods and services. The bank reviewed housing and handbags to whiskey and personal trainers. It puts hong kong on top. New york came in fourth. While rio finished down in 16th place, it topped many of the reports individual categories thanks to its high local taxes. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am jessica summers. This is bloomberg. Deal the phase one trade is a ramp of broader disputes between the u. S. And china. There are doubts that these two sides will be able to make much progress to future negotiations and how enforcement will play out. Selina wang is with us. The deal has been signed. What are the primary risks for progress now . It has been seen as a trade ceasefire that leaves trade tensions unresolved and there is a common view in beijing in washington that china is not going and washington that china is not going to change its model just to appease the United States. That is even in the face of maximum pressure. There are sanctions on some of its Superstar Companies like huawei. I spoke about some of these trade risks with the minister. I asked him about how feasible it is for china to make 200 billion dollars of purchases of u. S. Goods and services in the next two years as outlined in this phase one trade negotiation to double itsds amount of agricultural purchases compared to before the trades were started. We hope we can accomplish that goal even if china is under a lot of pressure. I am confident for that. If the u. S. Officials decide china is not holding up its promises, the Trump Administration could slap more tariffs on china. What do you make of these Enforcement Mechanisms . The enforcement mechanism is for both sides. It would not only supervise the Chinese Government if they are implementing the deal, it would allow china to supervise the u. S. Government and doing the same. The Chinese Government always honors its commitment. Thate you concerned tariffs could escalate again and the Trump Administration could go back to maximum pressure . Like everyone else, i am concerned, as both china and the u. S. Failed to reach an agreement in the previous talks thanks to President Trump. We hope we can carry out this deal. We would like to look to phase two. The Administration Says tariffs will remain until a phase ii agreement is reached. When do you think that phase two agreement could be reached . We have not only stopped at a more tariffs, both sides have lowered tariffs in phase one. I think there will be more improvements in phase two. We will make efforts to remove all added tariffs. As you heard from the vice commerce minister, a former vice commerce minister of china, he is cautiously optimistic that they can make progress on the phase two agreement but he does recognize the risk remains and it could further weaken an already fragile chinese economy. Selina wang, thank you so much. Our china correspondent joining us from beijing. A second person has died in Central China after being infected with a new virus that has caused dozens of causes of pneumonia and emerged in japan and thailand this week. Our Senior Health care editor, jason gale, has been tracking this. What do we know about the two people who died . Inwe know that they were their 60s and that they had received very aggressive medical treatment by doctors but succumbed to their infections. In the case of the first one, the man had multiple serious medical conditions before he was infected. Theres not a lot of information. He was 69 years old and he might have had tuberculosis. What do we know about how this virus is working, how it is spreading, how it behaves . We dont know very much about this novel virus. It has been implicated from a market, selling seafood and other animal products. Many of the cases have worked there or visited there, but then we have had some cases like the one in bangkok on monday and then yesterday, a case reported in japan, where the people infected had not visited the market and may have picked it up in other places or potentially from people who are already sick with the virus. Been the Health Advisory so far in these different cities, both in china we have seen cases in japan and thailand as well. The u. S. Government, for example, is warning its citizens to avoid going to markets where the virus might linger in Central China. The World Health Organization has reiterated it does not recommend any travel restrictions. At the moment, we know many airports around asia have implemented fever screening and that has been successful as we saw in the case of the traveler earlier in the week. We continue to monitor that story as it develops. Jason serra, senior gail, Senior Editor in hong kong. Next on daybreak asia. This is bloomberg. Haidi shery this is daybreak asia. I am shery ahn in new york. Haidi our Consumer Market will have a tough year with retail to 54dropped by 2. 5 billion dollars. Joining us now is the pwc asiapacific Mainland China and hong kong Consumer Markets leader, michael. Let me set up with this chart with paints a pretty wellworn feature we have seen and to the retail sales, Consumer Sentiment , tourism arrival story in hong kong since those protests began. We have seen sharp contractions. Topline, we have seen the changing retail sales value year on year. At the bottom is monthly visitor arrivals from Mainland China so with the political situation still deeply entrenched, a lot of mainland visitors are avoiding hong kong because it is obviously a very divided kind of atmosphere for them at the moment. Do you see any prospects of a positive change . As you mentioned quite rightly, this was one of the worst cases we have seen in hong kong for ages. The second half of 2019, we have the worst retail sales value for the last 20 years. The 2009orse than financial crisis. We are definitely having all kind of issues affecting the Hong Kong Retail sales. Obviously Going Forward, if you the four months of jobs over 20 decrease on a monthtomonth basis. For december, i think it would be a slight recovery, especially after the election in november. We saw hong kong has a little bit of a recovery in terms of unrest,nterest, so so fully that will continue with. He chinau. S. Dispute going to a better negotiation the first phase of the negotiation on wednesday. The outlook should be a little bit better. Going forward, i see the first half of 2020 to be a little bit worse than last year in particular. Last year had a very good first half 2019 so overall, i think we aboutee 2. 5 decline to 420 billion to do stuff or hong kong. Haidi the hortense will continue. How do retailers react . They will be closing a fifth of their Stores Across hong kong. We are likely to see more store closures and rental agreements not being renewed. If you look at the Hong Kong Retail, again, its a very special case that we had such a small city with such a small volume of population. Our retail sales are actually quite predominant. Most of theat retail, how they operate their businesses, they have to rely specifically on the physical sales. That means stores are being operated at a high cost, the high rental cost. To 2017for the 2015 that a bit of setback, the rental has gone by little bit. 2018, we had recoveries, so the cost is going back up. I think you see a little bit more of the socalled change from the from the high rental ct shop and then try to move on to a little bit of the lower cost than middle range area, but i still see this as not a really bad strategy for most of the retailers because they see the need to embrace a little bit more. To attract customers, not just on a physical basis, but also on the online basis. Shery we have seen retail sales in china as well really take a hit with the slowdown in the chinese economy. This gtv chart of the bloomberg showing how retail sales are at a multiyear low and we are expecting the monthly activity numbers to come later today. Despite the slowdown, what was really interesting is that Online Retail remains resilient. You definitely point out the right scenario. The online sales for 2019 had 15 growth on a year on year basis compared to only about the overall sales in china. It is can see, online, still very much the pillar for the consumers to try to reach the retailers. And this is what they normally day by day basis including luxury and consumer goods. Obviously, we will see continuous decline in retail sales for china because of the last two years. In particular, if you look at 2019, we already had two years of a little bit of gradual setback or slow down. I think that really comes from the chinau. S. Trade dispute. Hopefully, the design of the first phase of the negotiation, we will see a gradual recovery, so our production for china in retail sales will be about growth in 2020. What is your expectation about the strength of the one Going Forward and how it will affect chinese purchasing power . With the chinese going out to do more with it, shopping, with the strength of the renminbi, it will be possible for most countries to enjoy the sales from the chinese tourists. Issue forways a big the chinese coming over. Hong kong dollar impacting the u. S. Dollar. We saw the strength of it in the last two years but we have a little bit of weakening of the u. S. Dollar in the last few months. I think the outlook is going to be a little bit weaker. The renminbi is going to at least be stabilized at this level, even more stronger. With the chinau. S. Trade, it continues to be in a small stage. I see it continue to be short and then obviously, it will do good for Hong Kong Retail sales as well. Shery thank you so much for your thoughts today. Consumer markets leader. We will have more analysis on chinas economy later with barclays asiapacific chief china economist and bank of americas security chief Greater China economist, helen chow. This is bloomberg. Shery breaking news out of south korea. The bank of korea leaving its key Interest Rates unchanged at 1. 2 5 . This is not surprising. Economists had inspected the bok to leave rates unchanged. There are Financial Risks that the central bank has to consider not to mention that we have seen some signs of recovery in the south korean economy. The export numbers for the first 10 days of this month rising more than 5 after 13 months of contraction when it comes to those exports. We have seen expansionary fiscal policy supporting the south korean economy as well. The bok leaving its key Interest Rate unchanged at 1. 25 . The 20 one economists surveyed by bloomberg have forecast no change. This is not quite a surprise. Lets discuss this latest development with our Global Economics and policy editor, Kathleen Hays, who is watching this for us. As we mentioned, not quite a surprise given where the south korean economy is right now. Kathleen lets start with how the bank of korea got here because yes, holding the key rates steady at 1. 25 percent, as everyone in the world expected, what we are going to wait for his the press conference from the governor to give us some sense of what are you seeing now, sir . Lets jump into the bloomberg terminal now that shows you where we are and how the bank of korea got here. You can see two rate cuts last year down to 1. 25 . This is where they are Holding Steady. This is the interesting part. How you saw inflation fall to 0. 4 . N september, it got back it is up to 0. 7 percent. It is still a long way from this green to percent target. Now, if we look at some of the things share he just mentioned, why governor lee and his colleagues have probably decided to stay here, you have trade tensions easing, property prices rising. They dont like the household price spiraling out of control. Chip cycle looks like it may be turning. In addition to that, we have got spending fiscal coming, record household debt, which korea has had forever and ever and ever. Theirember, they cut inflation forecast down to 1. 0 from 1. 3 . You have a bank of korea looking out the possibility that it does not get anywhere at 2 target so they may be on hold for a long time. Governor lee says to give a little more they will not even think about using this year unless they see a big disappointment in gdp growth or if the fed starts easing again and that does not look too likely right now either. With other Central Banks, they are looking at these dwindling policy tools they can use and thinking, now, we need to see more being done from the fiscal side, right . Kathleen they have promised to there will be more fiscal spending. That is another reason why the bank of korea can sit back. 2. 3 fromd it to 2. 0 . And see,y not wait unless economy suddenly flows, but why would the economy slow . Like it cycle looks bottomed and the trade war, exports yearoveryear have been down 12 months or 13 months in a row. At least there is a glimmer of hope that that is going to stabilize. Who knows if it turns around. Its another reason why policymakers are prudently not being inpatient and just wait to see what happens. Shery Kathleen Hays breaking down the bok rate decision. Lets get a preview of what to watch and markets later this morning. Sophie. Sophie you are watching shares in taipei. Watching Cathay Pacific. We can secondhalf earnings. The carrier reported a drop in passenger traffic. Also keeping an eye on Chinese Consumer discretionary stock on watch after they spoke in the sector. Flipping the board and keeping an eye on Chinese Pharmaceuticals as local drugmakers and multinationals bid competitively to win nationwide contracts for 33 drugs and the price ceiling under the new system presents a drop of as much as 95 below current prices in china as authorities have health care costs. Haidi. Haidi Sophie Kamaruddin. Lets look bloombergtv which will be in the World Economic forum in davos, where we will be speaking to a whole host of guests including the pie ministers of norway and greece, the netherlands, and jordan. Shery we have plenty of big guests coming up. Ceo and cfo at the World Economic forum next week. Haidi lots of content to come. That is it for daybreak asia. Our markets coverage continues as we look ahead to the open of trading in hong kong, shanghai, and shenzhen. 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. 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To hang seng index is equal his longest weekly streak in 13 years. Yvonne singapore maintains asias improving import drive. Its first positive numbers and 10 months. Tom the next hour will bring more economic data. We are counting down to the latest edb retai