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tv   Bloomberg Daybreak Australia  Bloomberg  May 28, 2019 6:00pm-7:00pm EDT

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"daybreak:come to australia." i am paul allen. sophie: and we are counting down to the open. ♪ paul: here are the top stories we are covering in the next hour. u.s. stocks tumble to the lowest since march over deepening fears of protracted trade wars with china. , a signal ofore looming recession.
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rainfall affecting wheat. anchor: and we have breaking news out of the u.s. we are hearing from the treasury department, releasing their semi annual report. they have reframed from naming china a currency manipulator, something they have not done since 1994, and they have expanded the list of u.s. trade partners under review to 21. when it comes to the watch list of these fx reports, it is italy, ireland, malaysia, and vietnam now on the monitoring list. also, the u.s. says the nine countries require close attention on currencies. they are also saying there are no major trading partners that are a currency manipulator, and what is interesting right now is that the u.s. has lowered two thresholds for the manipulators. they have three criteria based
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on the 2016 trade facilitates facilitationade and enforcement act, and they have lowered the thresholds for two of them, including that the current account surplus has to exceed 2% of gdp instead of 3% of gdp as in the past, but once again, the u.s. treasury again refraining from naming china a currency manipulator, something it has not done since 1994, and even if it was designated a currency manipulator, it would not really mean it would lead to penalties, so what is interesting again is that last week, the trump administration had said it was planning to penalize countries that undervalue their currencies, and now on the watchlist are italy, ireland, singapore, malaysia, and vietnam. right, let's get a quick check of the market close here in the u.s. it was another down day for the u.s. stock market. we saw the s&p 500 fall 8/10 of 1% after coming back from that holiday weekend. of course, we do have concerns over trade weighing on the
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markets. now, the s&p 500 headed towards the 2800 level. seeing utilities leading the declines, not surprising then that we saw treasuries rally, accelerating, and part of that yield curve falling deeper into inversion, so let's see how things are shaping up for the asian markets at the moment. sophie? sophie: we will be gauging reaction to the u.s. treasury update on the currency minute pollution watchlist, seeing reaction with china not named to that list. take a look at asian futures, very much in the red after what we saw on wall street, opening lower by one third of 1%, and a downgrade of apple with a ripple effect through the supply chain today, with an anticipated slowing demand in china, and speculation over alibaba, with tech listings, and over in sydney, we are watching miners as china proposes coal price cuts, plus a bond rally likely
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,o continue into the session with the boj quote at later today, paul. paul: all right, thanks very much, sophie. as we just reported, the u.s. treasury department has held back from naming china as a currency manipulator. there was the twice he report on the foreign exchange, and greg has finished going through the report. read, what are the key takeaways? that is right. china was not named a currency manipulator in its latest semiannual report. the treasury was unable to do so because china did not meet certain criteria. in fact, the treasury department said there was none manipulative the currency according to the criteria they follow. however, one interesting thing out of this is the treasury department lowered to their threshold for criteria to be on a currency watchlist, which
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actually widened the net of countries that would now be under the monetary list. as we heard earlier, countries such as singapore, malaysia, vietnam, italy added to that list of countries that are being monitored, along with some long-standing countries, such as china. now, the treasury department took pains to say they would continue their monitoring of china, and they take that issue very seriously, so china is still being watched by the treasury department but not being named a manipulator at this point. -- anchor: this seems like we are now talking about the 2015 trade facilitation act, but what happens to the switch, and basing these decisions on the old 1988 omnibus act. could we see china in some way or form being actually labeled a currency manipulator if the trade tensions continue between the two countries? treasury has. indicated they continue to watch
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china very closely and that they are concerned about china particularly -- potentially manipulating the currency. as of right now, it is not meeting the threshold for being named a currency minute later, but we know the trump administration takes this threat very seriously. one thing that was very interesting coming on the heels of last week's commerce action, where they said they would now place tariffs or countervailing penalties on countries that subsidize their currencies or weaken their currencies, so the administration is looking for ways to police the currency manipulation, even if it will not necessarily be three treasury. a key focus of president trump, who, as you remember, during his campaign said he would name china a currency manipulator, and the treasury has yet again declined to do so. paul: yes, he said he was going to do that on day one, gray, but anyway, greg sullivan, thanks so much for using that.
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let's go to first word news with jessica summers p jessica: -- with jessica summers. jessica? jessica: a hacking, and the national said they operated appropriate the in obtaining information, a drama overshadowing the well-being budget of new zealand do. it focuses on metrics beyond just economic growth. merkelchancellor angela 's succession plan has fallen apart. bloomberg was told that she has decided her heir apparent may not be up to the top job. the woman known as akk has seen her up you leary slide since taking over as the christian union leader. has seen her popularity slide since taking over as the leader. and politicians around the world have threatened representatives of facebook, google, and twitter with stricter laws on privacy,
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fake news, and hate speech in a wide-ranging meeting in ontario with countries including canada, u.k., mexico, and singapore all participating. much of the conversation centered on the fact that the facebook ceo, mark zuckerberg, did not show up as requested to answer questions himself. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than one or 20 countries. i am jessica summers. 100 20ore than countries. i am jessica summers. paul: up next, look ahead. on "daybreak: australia," we have an exclusive interview with a chief executive. this is bloomberg. ♪
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paul: we are counting down to the sydney open, futures currently quite a bit weaker here in australia, this after we saw some selloff in u.s. stocks, the dow and the it stay down a little overnight tenths of 1%, but here in sydney, we count down the open in just under two hours per yet i am paul allen in sydney. shery: and i am shery on. you are watching "bloomberg daybreak: australia." the yield on the treasury notes hit their lowest in 19 months, and the key part of the yield curve fell deeper into the inversion zone. kathleen hays is here. we are seeing the 10-year yields continuing to fall, but the three-year is kind of where it was. are there concerns with the ongoing trade war right now? kathleen: the escalating trade war, so many concerns about the
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global economy, u.s., china, japan, korea, europe. they are all there. then we had the yui -- the eu elections. over,pulists did not take but there was also the budget, and nigel for our -- nigel farang. what this shows you is the blue line is the 10 year note that , the lowest26% since 2017. the yellow line is the shorts on the treasury 10-year note. now, usually shorts diminish, because it is such a strong buying market, but the last couple of months, they have diverged. now, people are starting to short the 10-year again, maybe they are thinking it is overdone, but that remains to be seen.
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meanwhile, the bond market is seeing at least an 82% chance the fed will cut rates this year, only seven months away. it gets closer and closer, and shery was justas alluding to, it has inverted. it has not inverted a lot, but still, eight basis points. it has been flat for a while. it inverted again. why do we look at this chart, because red bars are recession. if it stays there for a while, it has been a very reliable indicator that recession is coming next. now, one more thing i want to point out, economic data. we have got the fears of a global economy slow down, maybe even a global recession if the trade war gets really bad, but in some ways, the signals are positive, u.s. consumer confidence hitting a six-month high, and, in fact, the eu has a sentiment index that was positive for the first time in nearly a year. you have got a data-dependent
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fed that is sitting tight and watching and waiting, and their forecast is for more growth and more inflation this year, but the fed is watching the trade war, watching these tariffs, waiting to see their impact, but a lot of this is playing out in the bond market for now, paul. paul: ok, kathleen hays, thanks for joining us, and with us now for more is our global markets chief strategist, victoria. thanks for joining us. i want to return to one of those charts that kathleen was showing us, shorts on the 10 year treasury continuing to build. as the old saying goes, the bond market is smarter than the equity market, so what is it telling us right now? as the shorts, continue to build, that would not be surprising, coming back to these low levels that we are at. when you look at some of the technicals, it seems that we should be hitting one at the bottom at those levels and
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returning to higher rates at this point in time, but there is so much uncertainty in the market right now, not just for ,hina but also for brexit questions about opec, iran, slowing growth, a lot at this point in time, but it seems that the bond market might see a change coming in the future. paul: when you look around at all of these global risk factors though, how many of them -- transitory? you can imagine some of them being cleared up with a tweet by president trump or something from the fed, and then it is all risk on? those two items in themselves have changed the markets over the last months. it only takes a tweet or one word from the fed, and we see the market changing gears. when you look at transitory, obviously the u.s.-china trade deal has been the catalyst for this move down in treasury yields. people are concerned we are not
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going to get the deal be anticipated. a lot of people thought the g20 meeting at the end of june was really going to be the signing party for the u.s. and china, but it does not appear that is going to be the case, and both sides seem to be digging their heels in a little bit, so right now, i think that is the reason we are seeing yields go down at the pace we have. shery: and we are seeing the treasury department refraining from naming china as a currency manipulator but at the same time lowering the threshold for be able to name a currency manipulator. given the criteria and the escalation in this, could be a matter of time before the treasury finds a way to name china a currency manipulator, and would that make sense? victoria: well, that has been something we have been hearing since the election in 2016. that is obviously something that the current administration spoke about a lot and something they wanted to do. to this point, that has not been the case. i am not sure we can say they
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are in manipulator when you look at the moves they are making currently. it does not really fall into those brackets. it does not mean it will not in the future, especially if they are luring the criteria for that, but we will keep an eye on that and see what -- especially if they are lowering the criteria for that, but we will keep an eye on that and see what happens. shery: take a look at this chart, the s&p 500, the etf. not only withstand the pressure but managing to rise to new highs last week. seeing more momentum in the sectors, given what is happening out there? victoria: you know, it is funny. the vix did make a move higher today, but the volatility, you are right, is not tremendous, even with the larger swings we are seeing in the bond market and what we have seen in the equity market the last couple of weeks. what we are talking about to our investors, because we have a longer term outlook, we are
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shifting more towards value stocks. some names we have purchased recently include mcdonald's and estee lauder. we also added charles schwab recently in the financial sector, so we are looking at some names that perhaps have a little more value than growth tilt. growth has taken a bit of a hit lately, but with that volatility staying low, i think those are good plays. paul: victoria, i just want to talk about one other stock, and i am wondering why you are keen on this. is au have a sense there new "grand theft auto" in this? is, thereit actually is another one that is due to come out, just based on the releases they have done in the past. we did not have any exposure to that gaming industry. i am not an expert at gaming, that is for sure. that is something my children keep me up to date on, but when we looked at this sector, we wanted to have some exposure there with take two interactive,
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and it seemed encouraging, and when you look at the moves that the stock has made with the volatility we saw in the last couple of weeks, it looked like a good opportunity to move into names. paul: i just want to get a feel if there are any sectors you are steering clear of right now. victoria: you know, we are really looking more individual securities, not so much at sectors in general. we feel like in all of the sectors, you can usually find a name that, perhaps, when the market has come down that it is an opportunity to go into. there are no sectors we are avoiding completely, but we are running names through our multifactor model, seeing where there are some opportunities, and the names we spoke about a moment ago, those are ones we are putting money in. shery: it seems the numbers are better than expected. is this enough to keep the round going? victoria: i think it is, just for now. if you look at the earnings expectations we saw at the end of last year, we really thought there is going to be an earnings
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recession. that is what the market was anticipating in the first quarter. that did not happen. we had better than expected, perhaps because the bar was lowered so much, so that has been pushed out a little into the second quarter, perhaps the third quarter. the question will be if we get that rebound in the second half of this year that many people are anticipating. there is really kind of a j curve anticipation for earnings at the end of this year, and we are going to be watching to see if these uncertainties are removed from the market. perhaps that comes to fruition. if not, we may be in for a hard road for the rest of the year. shery: victoria fernandez, thank you. victoria: my pleasure. we havend on bloomberg, an exclusive interview from a venue, and we will talk to some from morgan stanley, also a representative, director carl ikenberry. do not miss those interviews
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next. this is bloomberg. ♪
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♪ bloombergs is " technology global link." i am pollyanna in sydney alongside shery ahn. let's take a look at the global tech stocks. -- i am paul allen in sydney. emily: a proposal set for a shareholder vote at the facebook annual meeting. like to eliminate special class of shares and give early investors 10 times the vote of ordinary shareholders, but mike zuckerberg -- mark zuckerberg controls shares. and considering an entire investment in georgia if a law restricting abortion takes show,, where its films and like "stranger things."
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the new law is set to be enacted in 2020, and if it acted, several filmmakers say they refused to work in georgia if it passes. these remarks are significant, given that other companies have remained silent. and apple has unveiled its first ipod touch in four years, costing $199, and it will support new services including apple arcade for games. the ipod was an instant hit when it came out in 2001, but in recent years, it has been overshadowed by the iphone. these are the global tech stories we are watching. shery? shery: emily, thank you, so the question is, why is apple breathing new life into the ipod? let's bring in mark gurman, joining us now from los angeles. mark, why after four years is apple announcing an ipod update? big: next week, there is a worldwide developers conference, where they will announce a nut -- a bunch of new software.
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in order to run the software, you need new processors in some cases, and like you said, this was not updated in four years, and that means it is running on a much older processor, so now they are adding a processor from just a few years later, so the 2016 processor, which is basically going to expand the lifespan of this device another few years and make it compatible with all of the latest, new features. barca, iw, obviously, am sure part of the strategy is sure obviously, mark, i am part of the strategy is to drive new businesses. touchi would say the ipod business is maybe the smallest seller or one of the smallest devices that you could find easily on the website. i think most people at this point are springing for ipads, would you can get for about $50 more on amazon than this new $200 ipod touch, also the iphone, but this price point actually makes a key for a really interesting demographic.
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that is kids, kids under i would say 13, 14 years old who do not have a cell phone yet but want a device to play games on, so in many respects, this is like the new game boy or the new nintendo or the sony, not new in the sense that it is just happening. this has been going on for years, but it is important now that apple has a gaming service to keep pushing this, adding a better graphics engine and better features and new software to make it compatible with the newest games that kids are going to want to download. apple could bek, caught in the crossfire of the u.s.-china trade war, and i know you do not believe that china would completely ban the iphone, that apple profits could fall 26% if that does come in fact, happen, but how could apple actually get hurt from the ongoing tensions? mark: yes, you're absolutely right. i do not believe it at all. apple is a u.s. company and so
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key to the united states in many respects, but it is also very key for china, right? they have between 2 million people and 3 million people who are making a living off of apple just with the supply chain, including the retail employees and other apple corporate employees in china in addition to that, so china outright banning apple would not only hurt apple, one quarter or more of its business going away, but it would also hurt the chinese economy, so i think that would be a lose-lose for everyone. how could they be hit? they could be hit with tariffs in both directions, so apple makes some components in the u.s., experts into china, plug them in in the final assembly of the iphone, then it ships them out of china as part of the build up iphone, so it could be hit by tears coming back into china and also when leaving china. -- it by tariffs coming back into china and also when leaving china. francisco, thank you. that is bloomberg technology global link. do not miss "bloomberg
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at 5:00 p.m. in new york. coming up next, "bloomberg: australia," and flooding in the u.s.. we will dig into the details next. this is bloomberg. ♪ .
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>> it's 8:30 a.m. on a cool sydney.here in the markets open 90 minutes away. allen in sydney. >> i'm coming frou new york where it's 6:30 p.m. you're watching "daybreak australia." >> jess? >> thanks. the editor of china's global says beijing is seriously considering estricting rare earth exports to the u.s. a tabloid says. the financial times says china's national development
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reform commission also hinted at a ban on the in high-tech applications. rose.n bonds exchange of letters -- he'll devote all his energy changing what he calls and obsolete rules. immigrant league party scored a dicesive win in the e.u. elections. son-in-lawrump's and senior adviser jared kushner is in the middle up support for his as yet unveiled israeli-palestinian peace
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plan. kushner will visit morocco, jordan and israel this week. the u.s. plans tole are out of commission portion the plan next month at a conference in bahrain. the palestinians have plan y rejected the and are urging arab nations the conference. has ckenzie bezos romised to give away at least half of her fortune. she's one of 19 new signatories to the giving start by bill and melinda gates and warren buffet. more than 200 people have donate more than 50% of their wealth to philanthropy or charitable causes. global news 24 hours a day n air and at tictoc on twitter powered by more than and journalists analysts in more than 27 countries. we're still waiting for open in asian markets after three sessions of gains.
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for what to watch, here's sophia. >> when trading kicks off, nomura very much in view broker was hit regulators. trying to turn the company around from its first loss decade. the executives will also be taking pay cuts including chairman and president in response to inspections. also, malaysia's khazanah and denko may on news it's to buy. e're watch woodside and other energy players as they see investment risks, going head without having pre-sold all their production and coles also in iew after the stock was upgraded by credit suisse.
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in favor over woolworth's. london climb above the average for the price target. shares surge. heads up, mirvac has been suspended in sydney. reporting that the company is planning a $750 million aussie dollar be restructured as an institutional placement. much.anks very let's get a little more on what we should be watching under way ints asia. adam, as we've been talking sliding, nd yields a further aversion of the key curve. is this a trend or has all priced in s been and out? >> essentially, paul, there is nothing stopping this bond rally. focus over he the last 24 hours has been the u.s. with the treasuries closed ating been the start but this is clearly a global phenomenon. it's showing you that the reach for yield is reaching levels we've not seen in a long time.
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a look at this chart. this is the value of egative debt in the world that's now to 10.7 trillion so getting back toward those that we had a few years ago. yeah, as you said, reaching ew levels in certain parts of the curve, the three-month 10-year again very large a amount. also, new levels in places like australia, where the yield is getting down to 1.5 and may today below that level which is very important because that's where the rba cash ate is and shows you just how worried people are on a global basis, this continued to safety shows no signs of easing any time soon. bump de got a good overnight. are we seeing these supply concerns really coming to a now? >> you know, supply concerns very much a global story. it's not just what's of ening on the plains
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the middle east tension. the discount for u.s. oil is tarting to rise and begs the question as to whether that kind of gives the exports,o drive up even further, as prices get a little bit lower there. of course, on the demand of the equation, you still have got the overall global a slowing economy and crude below kind of, you know, $60, around $59 on wti, and the view, with a slowing global continued anxiety around the way that you dowill play out, have that demand side really we can on things as well. at the finely poised moment. >> thank you. bloomberg's global market and don't forget adam's charts. you can find them at gtv go bloomberg the corn futures hit a three-year high as
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unrelenting rain continues u.s. midwest and great plains. asia agriculture reporter joins us. how bad is this weather situation going to get for how isnot to mention the trade tensions playing market? >> well, just on the weather, the short answer is t's going to get a lot worse. and that's essentially because the forecast for one is going to stay. the forecast is for more rain to keep coming, and why hat's important is because this is the crucial time of year when corn and soy are u.s. planted in the and every delay in that means the yield from the corn, or the soy hat's grown is going to be less so that will mean a lower crop, and that's what's pressuring prices. ust to give you some numbers, after the market, the usda updated on the plantings, and, at this time of year, normally, 90% of he corn crop has been
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planted, but the rain over the past couple of weeks 50 of it hasly been planted, and in soy, only 29% has been planted normally 74% has been planted. now, soy, of course, has got going on else with the china trade tensions although soy cargos still going to china from the u.s. >> andrew, we could probably use a little bit of that here. it's very, very dry in at the moment. >> it's hugely important here as well but exactly for the other reasons. unfortunately for the southeast of australia, there is essentially no rain coming to the crop districts and this xt week is the crucial time for planting here. this is when the winter wheat crop goes in and if look at australian wheat futures, they are surging. they have risen for 10 the ght days which is longest run ever since that contract came into existence or four years ago,
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because of wet weather in the u.s., and here it dry.g >> thank you for that story on soft commodities. let's get to other news in here of the cash rate in australia. j.p. moving now forecasting the reserve bank of cash lia will cut the rate to just half of a mid-2020.y there will be four rate cuts, j.p. morgan forecasting in the next 12 months. follows up with some had. calls that we've very accurate when it comes to predicting rate cuts. he's calling three rate cuts one of our guests yesterday signaling that perhaps the reserve bank of ustralia are considering a q-e, but just to recap that, j.p. morgan seeing the cash australia at half a percent by the middle of next year. considering t, a $20 billion listening, mojokong regaining its as a hub for global ipos. we'll take a closer look up
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next. this is bloomberg. ext. this is bloomberg.
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>> coming to you from new york. >> i'm paul allen in sydney.
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ou're watching "daybreak australia." its kong may regain global ipo hub with a potential homecoming. a s been a little over year since they changed more to attract companies. an we expect more firms to follow sumplts according to morgan stanley, it could be catalyst to keep it going. hat was evident in 2018 when hong kong saw $15 billion in new economy fundraising due in part to market reforms introduced last year but as we well know, enthusiasm for ipos f those red-hot have fizzled out including
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hall me which has lost 40% since its debut and it's among the chinese names that make up half of the 10 worst ipos in the world over the past 12 months but there may when m for a revival investors are grant access shells. by the stock connect since depositoryhinese receipts have been derailed. it could pave the way for secondary listings here in the city, in which the global exchange is trying to make it easier to do. so, trying to launch this that nghai, how might benefit hong kong? >> paul, the nasdaq style targeted at ly smaller home groaning ompanies plus it was made easier for tech companies to go public but it's proving more difficult with the of candidates going through a rigorous
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ofcess, and the majority applicants are seeking to raise less than one billion un plus the launch of the board is unknown with regulators aiming for the first half of the year but rade interruptions may be adding to the uncertainty when it comes to that timeline although the picture may become clearer the first three applications are heard at the june 5 review. hong kong ly the exchange reform could prove nticing, especially with other revisions like corporate voting rights, or a ipo ping process, potential lind consideration and that speaks to the pressure of to stay competitor as fascial hub while balancing the interest of shareholders. be r this morning i'll discussing all of this and more with charles lee in an at the hong t 8:30 a.m., e at china time. > planning to brief its japanese partners today on its plans to merge with fiat
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hrysler making the world's third largest automaker and that's without nissan participating. our chief correspondent angle has more. >> absolutely. for sure, dache and this will be very interesting. closed doors, of course. his alliance partners nissan and, okay, corporationotor later today on the rationale this planned merger with fiat chrysler, and gm.ging hyundai and just being behind volkswagen and toyota. -- you know, monkey in the wrench, if you will, for him, because he's been rebuffing repeatedly merger
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carlos , first by goan and continually by merge as well to with renault so this is another challenge for him john 're hearing that will brief on the rationale for the cost savings and the ize and scope and scale that the merger would create. keep in mind, nissan is not being invited to participate this new entity at this time, but i'm sure he's here to kind of, you know, coax im into believing that it will be a good idea down the road to join. mentioned a lot of challenges there for nissan company. what are the options? >> you know, again, like i rebuffing been the merger, because one of the main complaints that he nissan owns 15% of renault but with no voting rights, whereas of nissan s 43% with voting rights, and the
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bugaboo in all of that to is the french government also owns 15%, right, of renault, but it rights.le voting so under this new structure that we're hearing about, a 7.5% ould gain stake in the new entity with and with seat voting rights in that 7.5% stake. to hat enough, though, compel him to say, this works for us? it dilute their voice? and that would be the big failure for nissan, because is, fiat, ening chrysler and renault, much er, would have more sales and profit than nissan by itself. in fact, you could lose influence within the larger grouping. if you think a franco japanese merger has been until you , wait see a franco japanese american italian grouping. we lete, just before you go we're getting the
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headlines. he's speaking to reporters saying there may be opportunities from the fiat deal, that he wants to learn more about fiat pact from renault. so he's not completely dismissing i. could w saying there be opportunities there, steve. >> well, again, he's head right is there because he's got some oceans but he's got a headache here as well, you know, he can't -- nissan cannot block merger. you either kind of go with the status quo and become a part of a really convoluted structure with with renaultty and fiat chrysler, and then there is still the alliance renault and mitsubishi and nissan, or do you go it alone? great option, though, as well, because of the disruption that's and the huge r and d costs in the auto rise to the
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challenge. 'll give him credit, he's survived a lot of troubles over the last six months, but now it's another for him. engel, thank you for your perspective. interviews on our interactive tv function, tv go. any an also dive into of the securities, bloomberg function that is we talk about plus become part of the conversation by sending instant messages during our shows. this is for bloomberg only.ribers check it out at tv go. this is bloomberg. at tv go. this is bloomberg. sydney.aul allen in
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"daybreak watching australia." based think tank says china is closing in on
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american dominance of the part acific region in due to the trump administration's policies. this is one of the findings its 2019 asia power index, ranking 25 countries economic from resources and military apability to diplomatic networks. for more we're joined from behind e by the man the index. back. to have you how much of the u.s. underachieving in this ranking is due to the trade tensions? >> a considerable amount. i think what we need -- what really makes clear is that we're entering nto a new and quite turbulent peer of power relations in asia. e're moving from an open and concentric order that's been held since the fall of the cold war moving more in of competition and zero sum politics largest he two players, which is china and the united states.
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i has three big consequences. first, i don't think the u.s. will be able to halt the narrowing power differential between itself and china. to the contrary, trump's trade war is actually this leveling effect. second, globalization will still i am involve the nited states and china but perhaps not the two together, and that minutes a variance dous dominated by spears of flick economic influence. terms of in managing the u.s. and china, managing the predominance of in the region, and sharpening ambitions of china. a look at the 019 asia power index, not surprisingly, it's u.s. and china the top two. india, have japan, russia, and south korea. in this list we don't necessarily see north korea it was really interesting to get from your
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report that north korea is one of those countries that the highest overall gains in power in 2019. happened? i think north korea has had a very good year and played a weak hand well. starting from a very low base, ranked 21st in terms of its ssessment clout, largely as a result of being an isolated state, north korea has jumped five just in that measure alone. it's actually now become the most power country in asia. that might seem surprising but we have to keep in mind laos still has a larger north korea and in a sense, it's completely debilitated in other ways. kim jung-un has done very well is to blur the theatrics of power with the the two are and feeding into each other. the fact that he's gone from solated dictator to international statesman, walking on the red carpets
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singapore, and seen as an equal to donald trump has really elevated also partly and normalized north korea's diplomatic relations. wants aboveg-un all is not de clushgization or relaxation on the international sanctions so at the moment gotten that but there is a relaxation of those trade sagses and korea's e north future prospects are looking a bit brighter. o kim jung-un has played a very weak hand very well. played that 's weak hand well but was he gifted a few trump cards by president trump because the a longstanding policy of just not meeting with north korean leaders, the u.s. give away a major bargaining chip of influence there? look, there is no question that that was a unorthodox concession towards the
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leader of north korea. hand, to give donald trump the benefit of he doubt, they were stuck in a rut. there is not much you can do. it's a nuclear power now and i don't think that's going back but the llusion that somehow it's denuclearization is actually not substantiated in facts. alone last 12 months north korea has produced produce terials to 12 nuclear weapons. it's also jumped one place in our assessment of its capabilities, now the sixth most powerful force in asia. largest e third standing army behind china and india. is, north korea has made zero concessions on its power but it's its relationships in the region. you could argue that that's the best that you could that's the best way you can manage a very dangerous situation. be seen.s to >> just looking at this list here at the moment, very
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she big with improvement for malaysia and vietnam. line the rationale those two countries climbing? malaysia is really come return of the 93-year-old leader who has around.things amongia is not longer the top economies. matters, done very ffectively is to renegotiate these big flagship belt and road initiatives, with beijing, without -- his focus has been on resilience and and improving the argaining power of small southeast asian countries. >> thanks for that. very interesting read.
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straight ahead on bloomberg, e'll have exclusive access to the morgan stanley china summit in beijing. we'll talk to some big guests. to some big guests.
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paul: good morning. i am paul allen in sydney. we are an hour away from the australian market open. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this wednesday, asian stocks look set to follow wall street lower. a protracted u.s.-china trade war. a risk-off rally in 10-year treasuries sees the yield curve fall deeper into

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