And betty, on the road. Betty indeed, on the road. Exciting, it is. You have a big lineup of guests, we are looking forward to in the next couple hours. I am betty liu here in new york, where it is just about 7 00 p. M. Vixtility is back, the surging the most since brexit. The dow set to extend it to asia. Carney has a warning on warming. He says investors are ignoring the potential costs of climate change. Tell us about some of the guests we have . Of course, this is a huge anniversary, 20 years and a lot of questions i know you will be posing to guess over the next several days, where is hong kong . Role in the kongs next 20 years . Will it be a Financial Hub . Fair, via the other fastgrowing chinese cities . Yvonne as we continue to see a tighter grip from china here in the city, we certainly got a warmer response and tone and tenor coming from the president on his first day on thursday. He did say, hong kong has always been in my heart. He wanted to talk about the benefit beneficial ties between hong kong and china. He wanted to talk about not challenging beijings authority, as well. It was a softer touch, but some thorns as well. His meeting with the chief executive, he praised him for cracking down on that small but vocal Independence Movement earlier this year that became a very Political Force during his term. We talk through this, the future what is in store in hong kong the next 20 years. In 10 minutes time, we will hear from the former Financial Services secretary, fred ma. And, the former chairman of hong kongs exchanges. He will be joining us in the next hour, as well. On Bloomberg Markets, i will speak to the chairman of a holdings company. A major player in hong kongs entertainment and restaurant scene. Betty mr. Hong kong, we will be talking to a lot of folks who have various opinions on where hong kong is headed. In the meantime, lets take a look at how the markets finished u. S. Trade. You can see a big tumble here on the back of those tech shares. A look at the nasdaq, down to the sevenweek low, down 2. 1 . Falling 167 points. In asia, lets take a look at how the new zealand markets are opening up. Down about half a percent. The kiwi trading flat. We are counting down to the open in south korea. Mr. Moon is meeting with President Trump as we speak. Equity futures in australia showing a gain of 1 . However, both kiwi and aussie dollar are unchanged. 1. 16 . Futures, down checking japanese futures, how they traded in chicago. Nikkei futures following the lead of wall street, down 0. 1 . The dollar slightly lower against the yen, off 0. 2 , trading at 112 even. Trumpst up, president s and clinton are to meet for the first time at the g 20 next week in hamburg. After bilateral relations are at the lowest in decades. This includes the war in syria, russias intervention in ukraine, american sanctions in moscow, and the kremlins a legend meddling in last years election. Those subjects will be raised. U. K. Prime minister theresa may has cleared her first parliamentary hurdle. Lawmakers expecting the queens speech. Northern ireland Democratic Union is the government. The bill only passed after ministers rushed at an announcement, funding for women in Northern Ireland to have abortions in england, to head off a tory revolt. The bank of england governor says he is concerned investors are not doing enough to assess the threats Global Warming will have on their assets. Mark carney has won the backing of many ceos for raising reporting standards related to the environment. He says it will help investors realize how rising temperatures can affect company performance. The risk is that people are not talking about this sufficiently. There is a bigger adjustment that comes. Toughernt much technological displacement. North korea has publicly vowed to kill the former south korean leader. Through statee television, saying she would face summary execution, should u. S. And south Korean Forces attempt any execution on kim jongun. They are planning to they added the plan was scrapped thre television, saying she would face summary execution, when they were impeached last year. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Betty renewed selling an attack sender sector, sending u. S. Equities tumbling. With more onenan the tech selloff, yet again. Banke saw rotation in stocks, they were flying, tech was dying. Was at its worst, lowest since brexit. Take a look at the way we closed. For itshe nasdaq headed worst days since tuesday. It is an improvement from a drop in the selloff. Big, standout stocks, they are all tax bones. Especiallya big hit, as it loses to nvidia. T, the maker of a robotic vacuum cleaner taking a big hit as a short seller announcing they see the stock going down much lower from here. Volatility hard to get rid of. The hottest risks on trade, the stocks. Tocks fang lets look at the bloomberg. At the top come on the white line is a huge take off in fang stocks. It shows tech stocks are worse for wear. It is a dramatic separation in terms of the directions the two industries are going in. Yvonne lets talk about the banks, the rally kicked off yesterday after the fed a stress test. It gathered momentum today. Su a huge buyback, bigger than expected. 33 banks passed with flying colors and one eat to buy eked by. Lets go into the numbers. Stocks were up 2 to 4 across the board. We have one more bloomberg to show you. A lot of bank stocks are mirroring what we talked about central bankers been union bringing in the rate hike, once again. Lets take a look at one particular bank stock they really took off. That was a regions. It was up 11 times the normal volume at the height of trading. Look at that big hike. You can see how the stock has really jumped. It is just an example of how these particular stocks, where investors wanted to be for now. Su, thank you, joining us live from new york. We will talk about the south korean president , moon jaein, having dinner with President Trump right now at the white house in d. C. North korea may be the main topic of discussion after the Treasury Department announced increased sanctions. Lets bring in ramie inocencio more of the highlights from that dinner. Ramy as they are having that dinner, the more substantive part of their meeting will be happening tomorrow and friday. You outlined the yourself. The defense situation between north korea, what is happening in north asia, and the deficit over the past five years, it drivers of two main discussion between the two leaders. Things,t aspects of going to the bloomberg terminal. There is a great maps function. Is maps 5. This is where potential Nuclear Ballistic sites are. I want to point out the proximity of pyongyang. This is only 200 kilometers long. If anything should happen, it could be mutually assured distraction on both sides of this border. To the west, china has been trying to be pulled in your by the United States. Ever since february, china has stopped importing north korean coal. But there is more that can be done. With u. S. Pressure rising on china, that happening today with Steve Mnuchin saying there will be penalties with institutions, as well as people, affiliated with china, as a pertains to north korea. In a cityse is a bank on the border between china and north korea. This is been serving as a conduit for the north korean access to u. S. Financial systems , as well as international systems. Is unityspect shipping, with dolly and dalian. Two chinese citizens have allegedly been helping them avoid sanctions. That thereoint out are things here with chinese exports as they pertain to north korea. They also could be used as leverage. At last year, steel exports to north korea, soybeans, fuel, oil, gas, they can be levers that could be pulled, in terms of trying to make something happen with the pyongyang regime. Hopping back into my bloomberg, there is what is happening in korean trade. On the face of that, all of this is rising. And it does not look like it will be stopping the trade deficit. Ramy, thank you so much. Still ahead, how was hong kong placed for its future place in the world . We look athanges, sustainability and livability. Economics are doing well. Our next guest gave the now chinese president a unique view of hong kong back in 2004. We asked frederick ma heavy seas the relationship with china. This is bloomberg. Lawhe preamble to the basic , or major fundamental, is that hong kong is in inalienable part of the peoples republic of china. Autonomy under the basic law. Over the years, we have been operating, in my view, very successfully under one country, to reserving are serving preserving hong kongs position. Important point about the people in hong kong is that an understanding of the relationship between pluralism, rule of law, prosperity, free markets, free politics, is part of their dna. It is amazing, and good for morale, that it is not just older people that feel that. It is younger people, the generation that feel passionately about freedom. They should be represented in the government of hong kong. They usually win a majority in elections. Elections are the pretty limited in what they can achieve. Could hong kong be marginalized in the future . That was not a concern at the time. But now people see china has and it isntrol impossible to have a financial senator when you still have control. But the chinese economy is still growing and Financial Services are still badly needed. It is in a unique come good position to do that. Those are some of the big names of speaking on bloomberg as we mark the 20th anniversary of hong kongs in china. Kongs handover in china. We have a fred ma in the city. Thank you for joining us. A landmark day for hong kong. Rise ofable to see the the city is not just a civil servant, but a business leader. Have you reflect upon the past 20 years and how to the plane to hong kongs future . Fred hong kong, during the last 20 years have has grown to become an International Financial center. 20 years ago, our Financial Market was not as good as today. Capitale are the raising center for not just but in the world. Our fundraising diversity is one of the top three in the world. Alongside with new york and london. We definitely have done well, in terms of Economic Growth, during the last 20 years. Our growth rate is roughly around 3. 4 during the last 20 years. Compared to china, you would probably say that is low. But compared to most of the economy around 2 , we have done quite well. Yvonne what you see as the biggest challenge . Put we probably have to more resources on i. T. Shenzhen is the Silicon Valley of china. Yvonne singapore, catching up . Fred one big challenge is to remain our status retain our status as a big financial center. We have a lot of competitors. Singapore is a competitor. Shanghai is a competitor. Even shanghai is trying to catch up. We have a lot of edges. We have our judicial system, the rule of law, the human capital. Because the competitions are so strong, we cannot be complacent. Yvonne do you think this is an opportunity for beijing to win hong kong people over, to address these issues . Do you see that kind of will coming from president xi . You know him quite well. He was here in 2004 and you met him. Do you think he has an understanding of hong kong, 20 years later . Fred absolutely. Yvonne how so . Fred his father had a long relationship with dandong, and he was a relatively free solicitor to hong kong. In 2004, i was a secretary for Financial Services and the treasury. I had the honor of working with him. We took into the Hong Kong Monetary authorities and talked about the Economic Growth of hong kong. Even during that visit, i could tell he loves hong kong. He really cares about hong kong. And he does know quite a bit about hong kong. Yvonne i want to talk about mtr, infrastructure a big part of hong kongs integration into china. There is talk of a Highspeed Railway which has faced delays. Chinasprime example of tightening grip in the city. What you think of critics who say, we do not want chinese officials having immigration control in the city . Without location location, it will not be as effective as it should be. With it, it is a more effective railway. Fact, it is in europe, london. Staffn check in with your , and the French Border at the same time. Then you arrive in paris. Yvonne but people say it is different when it is in two sovereign states, that it could put one country at risk. Fred we need more particulars to make that kind of argument, because we are one country. This colocation arrangement is happening many years in the shenzhenhong kong border. We have to balance a lot of things. To make it effective as an economic tool. That withoutink it is another, train, just faster. From hong kong to shenzhen it only takes 40 minutes. It does not make sense. It will be completed by the Third Quarter of next year. I cann, with colocation, see hong kong will be connected to not just Mainland China, but the rest of the world. Yvonne one road, encompasses that as well . How does hong kong fit into the picture . Fred one belt, one road, challenges for hong kong. We are talking about lots of business opportunities. We cannot sit here and wait for opportunity to come to us. We have to go out and the more aggressive. Look for opportunity. We have to capitalize on this very important nationalist strategy. Yvonne fred, great to have you with us. Thank you for joining us so early in the morning. Mtr chairman. Do not miss the former chairman of the hong kong exchange, he will join us. This is bloomberg. Betty heres a quick check of the latest business flash headlines. Sold assets and introduced a new ceo. We are told he wants to give brian time to improve the companys performance. He took over last month and says he may reduce share buybacks and pursue acquisitions. That raises questions whether icahn will support him. Bhp opening of credit for its iron or joint venture in brazil. There will be access to more million. 150 in november 2015 killed 19 people and polluted waterways in two states. The reopening process has been delayed by the mayor. Murdoch will have to keep waiting. She told parliament she wants further scrutiny of 21st century s operator. He also controls the times and newspapers in the u. K. Buyers headed back to the market with what may be a hefty bargaining chip. Tokyo and osaka gas want to resell gas. They have more supplies and they need. Something their contracts denied. Japans Free Trade Commission tokyo gas says it will now seek more flexible contract terms. Will japan inch closer to whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if there was a single site where you could find the right hotel for you at the best price . There is. Because tripadvisor now compares prices from over 200 booking sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Hotne 7 30 a. M. Friday in hong kong. We are 30 minutes away from asias first major market open. We mark the eve of the 20th anniversary of hong kong handover to china. Betty a historic moment for hong kong. It is 7 30 p. M. Thursday evening in new york. Markets closing considerably down. That tech rally just disappearing today. The s p 1 lower. I am betty liu, here in new york. Yvonne i am yvonne man in hong kong. Youre watching daybreak asia. Betty breaking news out of japan. A lot of economic numbers we are waiting for. Pricesp is cpi, consumer yet again missing economist guesses. This is year on year, economists estimated a rise of 0. 5 . When you look at core cpi, excluding food and energy prices, not much better. Also missing estimates, no gains at all. Where is the inflation for the bank of japan . That is for the month of may. If you look at the jobless rate, up 3. 1 , that is exceeding what economists estimate of its 2. 8 jobs rate. The jobs to applicant ratio at 1. 49. It shows pretty much no move on inflation. That continued frustration for japanese officials and for the bank of japan which says, where is that inflation that allows the boj to start stepping back on that stimulus . Inflationtheir target, still. Lets get more from adam haigh. Pylon that the retail Sales Numbers we got yesterday, the stimulus is still not working there in japan. Adam absolutely. It is hurdle after hurdle, isnt it, the bank of japan keeps jumping over. We have Immediate Reaction to these numbers. It puts the context of a difficult situation with the economy showing declines here or there. Certainly going to be pretty hard for the bank of japan in the discussions going into next month and over the next few weeks. This is in the context of a of a risk off day. These numbers out of japan, head of the big deflator number we will get in the u. S. Later. It is one of the key measures for the Federal Reserve and Bond Investors who have been very worried about inflation in the u. S. Volatility is suddenly spiking, we see dollar under pressure. Is that likely going to last, or is there a sense this will pass . It is coming quick. We saw a big spike in volatility this week from Central Banks, europe and the u. K. , in particular. I will bring in the us terminal chart on the bloomberg, you can see across bonds and stocks, a huge impetus in volatility. The big question now, whether this has sustainability to it. The initial indications are, that it does not. In may just be a lot of the u. S. Is in rotation from one sector to another. People setting down some of their equities to buy into financials, got the clearance from the Federal Reserve stress tests this week. We hand back more money to shareholders, with buybacks and dividends. But you have to pay with that pay for that with something. That is why we have seen money out of tech and into financials. Were looking at gauges on the nikkei and hang seng that will probably be jumping when those markets get going, shortly over here. Context to remember the of it being a very good quarter. We had a record high on june 19 and that isstocks, continuing to push on. There are still reasons to be optimistic on global equities. Betty thank you so much. We will be back with him for more market reaction. I want to quickly mention one area where it looks like the markets did beat market spending down 0. 1 . A fall of 0. 1 . That is a mine with the recovery we have seen in Household Spending in japan. A bright spot, not yet. But the momentum is there. Up, resident xi jinping offered a soft touch in hong kong with a carefully managed public event. He said the Chinese Government will always support its development. He emphasized closer ties but is unlikely to meet any of his critics facetoface. Prodemocracy protesters kept well away behind the leased lines. Police lines. President trump tweets ,riticizing an american tv host criticism, including from republican lawmakers. They say he will not sit back and be attacked by liberal media and hollywood elites. He called Mika Brzezinski crazy and said she had been bleeding badly from a facelift when he refused to see her in december. I do not see that as an appropriate comments. We want to improve the tone and disability of the debate. That does not help do it. The chinese Property Developer on trial in new york. Prosecutors say he funneled hundreds of thousands of dollars to former General Assembly president john nash and others. Ash died last year when his lawyer was negotiating a plea bargain. A bid to unite 1. 2 billion people in 29 states into a common market. There are fears of chaos as businesses used moved to a tax system that requires 37 annual filings. A Software System has been declared ready to handle 3 billion invoices a month. Slightly lower growth and inflation with a rate cut at the end of the quarter. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney collins. This is bloomberg. Hawkingentral banks are quite a Monetary Policy stance. Not the boj, but the bank of england. Mark carney saying it was not yet time for hiking rates. Matt boesler joins us now with more. Get to the bottom of what you think carney was trying to say to the market. Mark carney is taking advantage of what a lot of other global Central Banks we have heard are turning toward tightening and taking advantage of this global upswing we are seeing in britain as well as many other places. We are seeing a strengthening and the data, giving optionality. His colleagues at the bank of england are talking about potentially tightening. It is interesting to hear them say that some removal of monetary stimulus is likely to be necessary if the data continues to improve. He did not give us strong as indication as he did in previous summers, like the summer of 2014. He said we may need to tie consumer sooner than the markets expect. Strong anas indication. But still, taking part in this over the past few weeks. Betty we heard from jim bullard at the st. Louis fed, look, we might see the Balance Sheet reduction happening sometime in the fall, september. What is the latest on this . Interesting, it seems like the fed is looking at this Balance Sheet decision and not going to it is be that much of a tightening because we have been talking about it all year and nothing has happened in the market. Given the inflation data has been more disappointing, maybe we delay another rate increase for a while, do the balance see how that goes, and a few more months of inflation data, maybe there will be actual rate hike rate tightening in december. Thank you so much. Lets talk about china. Manufacturing sector expected to more evidence of a slow down and overall growth into the second half. Lets get the latest from our china correspondent, Tom Mackenzie from beijing. What are the forecast . The survey is for 51 for the month of june for manufacturing pmi, down slightly from the 51. 2 we saw in may. We have a mixed early indications leading up to this number. We have had the satellite surveys for june that contracted, came in below 50, lowest level since august of 2016. We have the trade partner pmi, looking at the eurozone, japan, and the u. S. That also came in lower. On the flip side, you have seen Sales Managers, their optimism , their most optimistic since may of 2015. A positive for chinas Manufacturing Sector. We are getting the nonmanufacturing pmi number. The may number came up above 54. 5, verys, comfortably in expansionary territory. It is driven by the construction component. Betty how does this play into chinas broader economic story . If the numbers came out as the survey expects, it feeds into this idea that we are moving into Slower Growth in the second half with china. You remember we had that surprise gdp number, 6. 9 . The consensus is it will slow, but few economists think it the 2017 gdp number will miss the governments target of the 6. 5 . There has been a differential between the private surveys when it comes to manufacturing and the official survey. We have a chart that illustrates this. Surveys the private looking at smaller businesses, diverging from the official survey that looks at larger companies. In may, moving into contractionary phase. Smaller businesses have less access to credit. That may be part of this reason. In terms of what else we are seeing in the economy, exports and imports, demand domestically and externally. Overhose question marks u. S. Tariffs for steel. Rrr not expected to move, either. We will break these numbers down for you at 9 00, hong kong time. Betty thank you so much. Decades after that hong kong handover, we ask how to tackle pollution, quality of life, to support Economic Development in the next 20 years. This is bloomberg. Yvonne this is daybreak asia, i am yvonne man in hong kong. Betty i am betty liu, hearing new york. Kongselebrating hong 20th anniversary and over celebration. For a sustainable hong kong. The chairman of the city exchange. Good to see you. First, give us the numbers. Doing better off now, than it was 20 years ago . From an economic perspective, you look a gdp per capita growth, it is not doing that. The per capita gdp has increased by 60 since 1997, an average of about 2. 5 per year. Two is after going through financial crises. Not too bad. Why doest to that, but it seem like on the ground i was just there in hong kong last week, why does it feel like people are so unsettled . Evan the numbers are ok. In terms of competitiveness, the Heritage Foundation has ranked hong kong number one since 1997, 20 years. But people feel that in general, it is maybe more polarized and getting more unfair. There is a bigger divide, that is one. The city seems to be more and more expensive to live in, which is what government is looking into. What the Business Community is looking at, there is a general sense that perhaps the economy is not as competitive as it was before. An unsettling aspect of hong kong right now. Betty i am glad you mentioned economic uncertainty. We have a chart for everything. I want to pull up a bloomberg chart here. This, evan,can see i am not sure in the studio. It shows the Hong Kong Economic insecurity index. 1970 d have thought you would of thought 1997 would be uncertain. But it was extremely high. It is very, very high. What would you attribute the uncertainty to the most . Chinat property prices, what do you think it is . Evan it is an interesting chart. At the end of the day, right now hong kong is the smaller partner of china in terms of overall gdp per capita. And, overall contribution to the economy, growing industries, it is on the fringe. It is more in the center since 1997. If we look at the financial center, is ranked number four in the world. In terms of creation of industries, like syntax, it has not anticipated it. Given the relative underdevelopment of Financial Markets in china, one would think hong kong would make a big contribution from that respect. It is a bit of uncertainty about hong kongs role, going into the future. That might be what that charter showing. Betty we asked quite a few leaders over the course of last week, what is hong kongs role in the next 20 years. We got a lot of different responses. Some even said, there is no role unless you talk about china. The story is about china. How would you answer that question . Kongs role in china . Betty in the next 20 years . You have Economic Development is not necessarily bad for me gdp perspective, but you have industries that are key. We talk about the four pillars, they are the same pillars right now. Are we going to have to develop new ones . For example, the entire tech boom in southern china. The government has announced there will be an innovation and technology talking to the border. That is a start. Where we are, if we focus on where the talks are, we are not thinking about how you develop these industries. You might still be at a stage where you have to facilitate more of a circle for these industries to develop. A livable city, these elements going to development of key industries. Betty making hong kong a place to attract more talent. Evan auyang, the chair of the civic exchange. Breaking news another set of numbers on japan. Industrial numbers. Another set of numbers are disappointing, down 3. 3 on industrial output, they had estimated a decline of 3 . These are preliminary numbers. 6. 8 , that also missing what economists had estimated and is a decline from the prior month. Checking how the japanese yen is reacting to this, you are seeing a slight softening of the japanese currency, trading against the dollar at 1. 1201. You saw a little bit of an increase after those cpi numbers economistssappointed estimates. , hong kong a roundup handover, these stories to get your day going in todays edition of daybreak asia. Subscribers go to dayb. Also available on mobile. You can customize your settings so you only get the news on industries and assets you care about. This is bloomberg. Is daybreak asia, i am yvonne man in hong kong. Here in am betty lou, new york. A quick look at business flash headlines. Bhp chairman says the timing of the foray into u. S. Shale in 2011 was a misstep. If he could turn back time, it would not have gone ahead. These echo the comments of the ceo who said the deal was poorly timed. Bhp has been criticized by activist investor elliott. Plan to sell a stake in its air carrier they declined to comment. The government wanted to buy air india. Saw its worst intraday fall in more than a month. Local media said another was interested. Shares of fell before rebounding. Tim cooks takehome pay was rather more than the reported 8. 75 million, that puts them in the bottom third of ceos in the s p. 145 millionally dollars, putting him far ahead of the field. Most came from awards granted in 2011. Netflix topped 100 million last year. News for three hong kong tycoon two made their fortunes by taking their companies public. They shed more than 90 of their value in a for small cap size. Compensations. Ng we have a lot more ahead. I think it is interesting, this 20 Year Anniversary is absolutely a milestone. Remember, we have this 50 Year Agreement from 1997. There is some sense things will stay the same in hong kong. It is really the next 20 years and what happens after the 40 year mark, when people will urgently question what exactly is going to happen to hong kong. Right now it is kind of status quo. Yvonne especially with carrie lam. She was a deputy are things going to be the same, will she bring anything different to the table . A lot to look ahead to. Can hong kong remain in that status of International Finance hub in the next 20 years . We will ask that question to our next line of guests. Ronald arculli will join us in the next few minutes. Also, a former chairman of the hong kong jockey club. I want to speak about joshua wong. He is a leader of the occupied protests of a few years ago. He was detained 32 hours on wednesday after staging a protest at the civic square. We will ask him what is next for him. Has he pushed it too far, what are his plans, as president xi continues his trip to hong kong . This is bloomberg. Sony is back. The surge and brexit. Japans search for success goes on as it takes up trashing that we are still a long way from the target industrial production. On warming, investors ignoring the potential cost of climate change. This is the second hour of daybreak asia. I am betty lou. 8 00 year in new york. Yvonne and im yvonne man in hong kong. We are live at the hong kong maritime museum. The 20th anniversary of its independence. We just saw a helicopter carrying the chinese flag. Jinping president xi say that china will respect hong kongs autonomy, trying to give some reassuring words to those who are in hong kong worrying about beijings interference. I am curious. Are you seeing any protesters gathering . Any signs of disturbance . No, but you can see the heavy Police Presence. I was talking to a taxi driver and he said every corner uturn, there is Police Presence in the business district. Stayingt xi jinping is in hong kong. He is going to meet with some business leaders. Tomorrow is going to be the big day with the flag ceremony. That is going to be the focus here. A lot to talk about in the next hour. Joshua wong, the student protest leader was just released out of jail this morning. He will be joining us. Lets get the market open with david. Run thiswent for a morning. I passed several checkpoints. Of course, they didnt stop me. Lets have a look at markets right now. Japan. 1 in new zealand has already been up and running. Australian futures are adjusting. Upside when you look at the futures. The dollar the story is dollar. Up foreally backing yields basically spiking up. 2. 26 . We are continuing to follow this, of course. Given the hawkishness from Central Banks, do we go back to normal . Uh, alright, uh, david. Any cool stats that you can tell us . David absolutely. Have a look at your bloomberg function. This tracks the monthly return. You can tweak this. Just to give you a sense of how unusual 2017 has been. For the first time on record we havent seen a monthly decline in stocks. You take this all the way back. It is going to take some time. Here we go. Toord goes all the way back 1988. The closest would be 1994. Here is 2017 for us. Now, lets push this ahead quickly. In asia, upside momentum. This is your price, right . Heree hitting highs depending on which day you look at. That may just try and get that up. What you want to watch though closely is a fate does did. And if this trend you get lower and lower highs here. Some people say the upside momentum is weakening. Guys. Lets get to the first world news. Japans core Consumer Prices creeping higher for the fifth month but the rise means inflation far from target. Prices excluding fresh fruit rose. The jobless rate joes rose unexpectedly. Industrial out it fell. That is worse than expected. President trump and Vladimir Putin will meet next weekend in hamburg as bilateral relations are at their frosty asked. Disputes include syria, american sanctions on moscow and the alleged meddling in the election. The white house declined to say if those subjects will be raised. Theresa may has cleared her first parliamentary hurdle. 323309. Voted afterll only pass ministers rushed an announcement for women in Northern Ireland to have abortions in england. Sentiment has fallen to its lowest level since brexit. The inconclusive election have deterred spending. Indexnsumer confidence dropped. The survey was carried out before and after the election. Peoples attitude toward the economy has gotten worse. Hasbank of england governor said that investors are not doing enough to assess the threat of global warning Global Warming. That will help investors understand how rising temperatures can affect companies. Is that people are not thinking about this sufficiently and that there is a bigger adjustment that comes. There is much tougher regimes put in place. Day inal news 24 hours a more than 120 countries. This is bloomberg, betty. Betty Singapore Says it is not time to ease property curbs to cool the market down. Despite price decline investors are still necessary. Our International Correspondent is joining us with more. Maintain these property restrictions . Reporter [indiscernible] it looks like were having some problems. We have much more ahead on daybreak. Are President Trumps policies helping to boost markets . Next, the imminent bond connect. We alive with the former chairman of hong kong exchanges. Having a financial rule of law center is advantageous to china as a country. Navigationect through smaller political problems. The way hong kong is positioned today works in the global economy. All of the global cities, there is a decoupling of affordability. People from a lot of places will invest in hong kong. Measuring the property price, income of average person in hong kong is no longer that relevant. We need to make sure that people can afford housing. That is an issue that the government needs to address. China is a window to international markets. Given the wellestablished companies. Timeframe, you can raise some serious questions about the future of hong kong given the growth of Financial Markets. Some big names speaking on bloomberg as we mark the 20th anniversary of hong kongs handover to china. A beautiful backdrop this morning. Isning us to talk about that the former chairman of the hong kong stock exchange. He joins me. It is a beautiful backdrop. 20 years. I cannot believe it has gone by so quickly. What do you make of it . I think we are in a very good position. Systems has two worked out pretty good. Majority of people in hong kong vote local. People have nothing but confidence. We maintain that status as a Financial Hub. Clipre playing a sound that said 20 years from now, it is murky. Intertwinede is with Mainland China as opposed to 30 years ago. Think i have no reason to be anything but optimistic particularly in the heart of asia. We are covering 4. 5 billion people. Concern on how they can keep that reputation as a safe place to do business. There are concerns about how far china can go. We saw a glimpse of that two years ago with the bookseller incident. What impact does that have on business . People look at it incident by. Ncident if you look at it at a global context, what country is troublefree . There isnt one. Between thevide i amd haves not hopeful that the new administration coming in rift thatill heal the we have experienced. What does that tell us about control . We have seen a pickup in the last couple years. I think the opportunities are there. It is up to our Business People who are adventurous risktakers. It, thingside of occasionally do go wrong. Think it is our democratic development. The opening up of mainland markets. If you look at the financial connection, there is a trend. Shanghai started business in 1992. Is china continues to integrate, we have seen some cracks in hong kong already. Aboutstocks are concerns murky governance or whatnot. Of regulatorysue framework and the people and forcing the rules and regulations and also a question education and [laughter] you think there needs to be more reform . We need to be very careful about incidents developing like this. Active media. That helps. Do you think the hong kong dollar needs to retire . Not yet. Once the chinese yuan becomes the international currency, that is the time to look at it. Where do you see that . Canith progress in china predict. Of the chief executive elect. What she could bring to the administration. What could she bring . Is a much more open style. During the campaign, we saw her doing that. Priorities. Licy these are the immediate things. Of course, aging is an issue. She has quite a full plate. Said xi jinping is familiar with hong kong. Thinks that he knows what china is. What does he not know . Not enough about the people. That is partly our fault. Understand the Bigger Picture for the country and also, on the international role. How we can play a always great to have you. Coming up next, china says cybersecurity needs better protection against hackers but Foreign Companies are worried. The latest cyber attack is shining light on a new cyber law. Concernedmpanies are that the law could be used against them. To be stable, you need servers. You cannot put all of your servers in one city or country. How do you do that . It is a highlevel law. They need to be explanations on that. That goes back to the ambiguity and a lot of questions. A lot of Foreign Companies are scratching their heads. It is a very highlevel law. Nothing can be [indiscernible] is 100 perfect for everybody. Do you think there are elements to the law aimed at protecting companies . The policy for Chinese Government is equal to everybody. [indiscernible] difference is to know what very much compared to local companies. They think it could be used against them. Is that the right interpretation . There is a lot of arguments for Foreign Companies. Regulations, new rules. To average country need follow their local rules to increase security. They run the risk of having a repeat of what happened to to follow their localyahoo when tr personal information. One of the hallmarks of the law is the protection of personal information. Protect chinese information . I do not think that china did good in this area. Also needs to do that. I increase my caused. In longterm, i increase my benefit. Former cn iche ceo. Sorin after delivery a nike sooaring. The plan is to let social media users to purchase shoes directly. Slowdownast follows a in the north american market. Carl icahn said to be easing off on aig after they sold assets. He is one of the biggest holders of their stock but we are told he wants to give the new ceo time to improve performance. He took over last month. The questions about whether carl icahn would support him. Rupert murdoch has pursued control of the sky and has now learned he will have to keep waiting. Parliament wants further scrutiny of 20th century foxs offer for sky. Controls the times and the sun newspapers. Japan buyers are heading back to the market with what may be a bargaining chip. Tokyo was the freedom to resell gas when they have more supply they needed. MayFree Trade Commission violate antitrust law. Oh. Up next we are looking head to chinas manufacturing area Economic Growth may have already peaked. 8 30 in the city of hong kong. We prepare the 20th anniversary of the handover to china area in new york, you are watching daybreak asia. Lets get to the first world news. President xi jinping is offering a soft touch on his first day in hong kong during carefully managed events. He says that the city is in his heart and the government will support the development. Ties and hed closer is unlikely to meet any critics facetoface. Protesters are cap behind police lines. While the white house has defended the tweet criticizing a Television Host and made widespread criticism including from lawmakers. A spokeswoman says trump is not going to be attacked by a liberal media and hollywood elite. Crazy anded a hosted said she had been bleeding badly from a facelift. Has an not see that it appropriate comment. We are china to improve the civility of the debate. Deutsche bank has stepped up its fight with democrats saying he will easily comply with their request for information on those provided to President Trump. The information can at the given to individual members of congress that could be turned over in response to a formal request. Coming in a bid to unite 1. 2 billion people into a common market. There are fears of chaos. A Software System has been declared ready to handle 3 billion invoices a month. Lower growth and inflation with a rate cut by the end of a Third Quarter. This is bloomberg. Time to see how the asian markets are shaping up. Look at the bleed across markets right now equity markets. Similar losses, we are looking at in australia, of course. Willl break down the i break down the losses of basically, like futures, basically flat. We are obviously getting heels on the way up, in fact. Highest level here so far roughly this year. But, all intensive purposes all intents and purposes aussie dollars. Have a look again at how things break down across sector groups in the asiapacific. In fact, i think we can look at some of the movers here for these guys, just quickly. Have a look at the drop today. We saw, well, only three are on their way up. Have a look at a spike in volatility. This is in green. This is your read over in japan. Volatility, 15. 4. That takes you all the way back. Just very quickly, just let me and on a bright note, if you will. Of 2017, i guess, has been one of the best halves. Ell,h korea tops oh w top of the heap. Just a note, here, in hong kong of course, xi jinping is in town. So, lets see how this all plays out. Well, that chinese currency had a roller coaster ride in june with the bears on the prowl. Robin got more on this. Why are analysts so bearish right now . This is a really interesting point. We have had several fireworks in this month, or so. Why are Analysts Bearish . They are expecting the economy to suffer a bit. We have some people expecting stabilization. They are expecting a slight rebound in the dollar. That thisteresting is month so far until monday, we had the chinese yuan down. 1. 5 . Fshore, down words,ek, tuesday, on the currency is up. Signal probably a clear that when there are increasing pressures. When the market pushes the currency down, they will set some sort of stability. The way they have done it is pretty surprising. It is that the strongest level since november. What is the Central Bank Action . Will the pboc go into the market . I think they will. There he stayed of policy is to maintain currency, Monetary Policy, etc. They will step into the market if things do not go as they plan. Index, thisat the month through monday, he was down 0. 2 . That is a bit strange. Thought was of the slightly unfair depreciation pressures. We heard from the former state official saying that so far supply has failed to meet demand. Is that likely to continue . So, the interesting thing. Strengthens then people take advantage of that to purchase dollars. That puts increasing pressure on the onshore yuan. Pointg ahead, that is about the pboc will step in. That is you know the case for that is made slightly stronger. Risen in four of the last five months. The bond connect. We talked about that coming online imminently. China has been opening im not quite sure that there will be a huge rush to purchase onshore debt because if you remember all the indication that we had so far is that the money will flow towards shanghai. China tries to relax capital controls, it allows people to take money out as they put it in. I am not sure it is going to have a huge effect on the currency. You. Ank chinas Manufacturing Sector is expected to have softened in june providing more evidence of a slowdown going into the second half. Lets get the latest from our china correspondent in beijing. Were still talking about chinas Manufacturing Sector. It is still in the expansionary stage. 51 is the estimate for the month of june. We have had some early indications that he would be mixed. The satellite manufacturing index. A takes a snapshot of some of the factories. That came in at its weakest level. Moving into contraction, in fact. The components that are weighted toward chinese manufacturing that came lower in june. We heard from the Sales Manager index. That strengthened, in fact. The Metals Prices are relatively stable and that is seen as another positive. Were also going to get nonmanufacturing pmi data. Last month, it picked up very elderly. A lot of that growth coming from the construction component of that index. He will be interesting to compare through that data. Given the additional curbs that have thats right. We are going to get those numbers, as you mentioned. Tell us how all of this plays into the broader story . There is now this consensus among economists that we are going to see a slowdown in china and a weakening pmi number. It is worth pointing out we have gone this divergence now. One survey looks at smaller businesses and the official pmi ber look set big soa hes soes. A will be interesting to see how that number of plays out. We have also got the inflation story. It is starting to slow now, these factory gate prices. That feeds into this question. Economists expect prices in china will average 5. 1 by the end of the year. Exports, imports remain relatively strong. There is a few question marks over trade tensions. That andtching for whether or not that adds any risks. We are at this tightening phase, of course. Policymakers continue with their tightening. The numbers are going to be breaking at around 9 00. Next, emerging markets doing better than elsewhere. We are going to talk to Anthony Craig about the best opportunities. We are seeing equity markets. They are extending those downbeat tones. Amidhitting wall street the surge in volatility. Central banks are turning more hawkish. I want to bring in anthony greg. Less a about a little little less than 15 minutes we are going to be getting the chinese pmi numbers. You are kind of surprised how well china has held up despite some of the negative news we have heard, right . Their ratings downgrade on china. I wouldnt say we are surprised. Was thelast year aberration when russia and brazil were the bestperforming markets. Leadership has returned to china and india and asia. I will be able to tell you what the pmi number is in 15 minutes. I would guess it is going to be slightly lower. It is still healthy and it is important to tighten liquidity enough to squeeze that out of the system. We have had recent strength. Remember at the beginning of this year, not only are most commentators negative, but they were also some commentators were very negative on the yuan and thought we were going to have a currency collapse. Expectations were negative. I want to talk about the large and larger emerging market. I want to pull up this chart and it kind of shows you a bit more in these indexes. Of it is really sort converging now with how much tech is weighted. You have now they Chinese Tech Companies making up more and more of the emergingmarket indexes leading some people to say, look. He have got to start now looking at technology. I think that is a very good point. Old thinkers that you look at commodities. Increasingly, that is not the case. More of our markets are importers. More importantly, the markets we uplike have steadily moved the technological food chain so we really try to focus where we can on new technology sectors. Market about in terms of regions or countries . Chinas strength has not surprised us. We thought it would be included and we see that is very important to move. Mexico surprised a lot of people. Mexico was seen as most vulnerable. It is up 22 . It is doing much better than brazil. Oftenn europe also is kind of overlooked. We have seen strength in poland and romania. Asian strength is not really a surprise. There are many reasons why asia many reasons why we prefer asia on the whole. Is a big part of the emerging markets story. They are implementing Prime Minister modis overhaul of the tax system. Gdp chart shows you indias and where it has been trending. Nationsaid that this one to twois going to add up Percentage Points of growth. Behis view, it will phenomenal for the economy. Do you agree yeah co how important is this reform going to be . We do agree. On thevery positive reforms that Prime Minister modi has implemented. He has strengthened his credentials. This trend of demonetization, identification cards, tax reform. It includes more and more indians, more and more of the population in the financial system. Reducing the black economy. This is very positive going forward. It is a market that we like very much. Maybe perhaps this is surprising. The fact that lots of things have happened in washington, right . Outything from trump coming to this crisis that we are facing in north korea. That it been surprised has not affected sentiment in asia . Yeare last quarter of last , it was effective because people were frightened by things , the u. S. Rade war threatening the one china policy, the wall with mexico, all of the stuff. Most of that has not materialized. We have been pleasantly surprised by the degree to which the United States has not adopted joe akoni affecting the emerging markets. The performance has reasserted itself. Thank you so much. One feature on bloomberg with an eye to bring to your attention is our interactive tv function. He will not only be able to watch us live but you will also see previous interviews. Dive into any functions that we talk about and you can become part of the conversation by sending us instant messages during our shows, for bloomberg subscribers only. Check it out. This is daybreak asia. A quick check of the business headlines. Dhp chairman says the timing of the raid into shale was a misstep and that if he could turn back time, they wouldnt have gone ahead. His comments at go those of mackenzie, who says that the deal was poorly timed. Forhas been criticized destroying assets. Indias stake to sell a stake in his carrier. Indigo declined to comment the eased byt said it was air india. Was also says interested which ministers denied. Take him pay last year was more than the reported a . 75 million. That put him in the bottom third of ceos but the real figure is higher. His pay was actually 145 million putting him farther ahead of the field. Hastings,ce, reed topping 100 million. [speaking simultaneously] we will continue to focus on hong kongs anniversary of the handover to china. I am looking forward to the conversation with joshua wong, one of the leaders of the 2014 occupy protests, one of the people detained after wednesday after draping this banner. The statue was a gift from china to commemorate the handover. We are going to be the first to get some insight on that after being released. The 20th anniversary there, just going to be, of course looking at all of that. We will be discussing the future of hong kong. We will look at the issues facing the territory. Att but not least, looking something beyond that and we are looking at indias gst comes to affect overnight. Betty . It is 9 00 a. M. In hong kong. I am haidi lun. Rishaad i am Rishaad Salamat coming to you from bloombergs asia headquarters in hong kong. This is Bloomberg Markets asia. Haidi asiapacific markets pair monthly gains. Central banks adopt a hawkish tone. Foraad the search
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