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tv   Bloomberg Daybreak Asia  Bloomberg  March 18, 2019 7:00pm-9:00pm EDT

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paul: good morning. i am paul allen in sydney. shery: i am shery ahn. i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: all caps or this tuesday, theresa may gets -- our top stories this tuesday, theresa may and brexit. opec plus agrees to stick with curbs.
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pressure at the bank of japan. sources close to the board say some members think 2% inflation is years away. shery: let's get you started with a quick check. gained a quarter percent despite the fact that boeing was hit by more news around the 737 max 8. we saw the s&p 500 gaining ground for a second consecutive session. energy stopped getting ground as wti pushed towards the four-month highs. we did see pressure on communications and military sectors. the nasdaq gained. the s&p futures really not doing much, but of course, investors have a lot on their minds right now. tons of central bank decisions coming up this week, including the fed, the doe, and -- boe, and south asian banks. sophie: it could be a tepid session in asia.
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added $2 trillion market cap this year's through for -- this year through friday. a mixed start. shares extending the gains we saw on monday. the aussie dollar is trading near a two-week high ahead of rba meeting minutes. commodity prices from oil to iron ore have boosted the aussie dollar. we are seeing the gains and wellington. the kiwi dollar is holding a two-they advance. wo-day advance. that may be feeding into sentiment when it comes to the nzd. paul: here is jessica summers. utrecht sayice in it is not clear why a gunman killed three people. a turkish 37-year-old man has
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been arrested and is said to a criminaly had record. the attack came three days after 50 people were killed. new zealand lawmakers were working on gun laws. france is strengthening security legislation. it will potentially ban protest like then areas champs-elysees. the latest violence was linked to the so-called yellow vests movement. they stepped up the use of video footage to identify perpetrators. as the approval process for the 737 max 8 came under investigation. its role in setting its own planesas been rush -- has been questioned. it was triggered by information obtained following the lion air
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disaster in october. the seattle times says much of the safety assessment was delegated to boeing itself. pursuit of japan's long of 2% inflation has left some policymakers thinking that level will remain out of reach for at least three years. sources inside the banks say pessimism is growing as governor kuroda and his team prepare for next month's quarterly outlook. the report will provide the boj's first estimates for inflation and economic growth in the fiscal year beginning 2021. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: thank you. reports from london say that the e.u. willy -- delay brexit.
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our global economics and policy editor, kathleen hays, has been looking at what this means with brexit just around the corner. kathleen, let's start with prime minister may's brexit bill being rejected. what does the e.u. report suggests? kathleen: that they are concerned about an overly long extension. a life raft for theresa may and this deal. instead, the man you see on your screen right now, the speaker of the house of commons, certainly torpedoed the plan by invoking a rule that the same bill cannot be repeatedly put to a vote. he says in order for her deal toh the e.u. on brexit to go a third vote, it would have to be significantly changed, fundamentally different. here is what he said today. >> what the government cannot
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legitimately do is to resubmit to the house the same or substantially the same proposition as that of last week, which was rejected by 149 votes. kathleen: this suggests of course that something new would have to be agreed with the e.u., right? and this guardian piece is they are going to agree to a new delayed brexit theyat the summit, and plan to keep it on offer until shortly before midnight on march 29. that is the brexit deadline. officials are changing the date to july 1. it might convince them that the deal has changed enough to vote on it. it is getting complicated.
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this is not exciting. it is more of an exciting brexit day than i anticipated. chancellor of the exchequer the sunday news show that they saw support from the eurosceptics building. they would vote for me's bill -- may's bill. balls just got the brexit rolling pretty rapidly. paul: i guess the next move for theresa may is heading back to brussels, cap in hand. she will be asking for that extension. it looks like the e.u. is going to agree. isn't this kicking the can down the road? be soen: it must difficult for theresa may, members of parliament, and for the people of e.u., for the businesses. so much uncertainty. it is starting to hurt the economy. we had thought e.u. leaders would be reluctant to offer a new deal.
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they don't have to change the deal itself. the new agreement on the irish backstop, the jean-claude they agreed on sunday, monday last week, could still stay in place and move forward. the danger of reopening the deal, which they may have to do, they may have to have a year-long extension in 2020. the e.u. might demand some new concessions from the u.k. is boiling. it will be interesting to see if the e.u. officials make this announcement public, how the u.k. response, and ultimately, i guess that is enough for a vote read we shall be. paul: global economics and policy editor, kathleen hays. i guess that is enough for a vote. we shall see. economicsal and policy editor, kathleen
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hays. they will stick to the plan until june. let's is into highly doubtful lead. -- khalid al-falih. >> there is still significant inventory glut in the market about what we consider to be normal, and that we need to draw this down in the next two months before considering easing the production cuts that we have undertaken so that that objective would not be served in a meeting in april. paul: joining us now is bloomberg america's energy -- carlos. rallying, butil how long is it going to last? is there a showdown in june? carlos: for the short-term, they sent a strong message. keen on making
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this deal work. they have shown they are. and they are cutting more production than they needed to cut to make sure this deal works and the message was let's make sure it works until june. there is ase live-action happen between now and june, and there are things that we have to observe until june. most importantly, the stockpiles in the u.s. are still quite high , and americans tend to start driving more in a brawl now that the weather gets better, so the driving season is going to help bring down those stockpiles, and that is the kind of thing that saudis are observing. shery: what are analysts saying about the price outlook for oil? are we going to see the same setup as the boom and bust cycle of 2018? carlos: maybe. but you have to see that one theg is u.s. oil, and
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stockpiles for that kind of oil are pretty high. when you look at brent, the market is pretty type. when you look at the futures curve for brent, it shows that it is in -- which means that there is high demand for delivering now. buyers are trying to get as much oil as they can, but it is a tight market. the market for heavy crude is very tight. it has never been this tight in recent memory, so if the stockpiles in the u.s. go down, then you have these three types of crude. u.s. crude, the global benchmark brent, heavy crude, all these types of crude. you know, coming to a tight market. it may be that they will be able to say, look, we have done our job. now, we will progressively phaseout the cuts. that might not be so dramatic. you know -- traumatic.
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you know, if the market is really tight for oil at the middle of the driving season in the u.s. shery: carlos, thank you so much for that. bloomberg america's energy editor. still ahead, we will discuss president trump's trade strategy with nelson coming in later -- cunningham, later this hour. paul: ed campbell will tell us whether he is still bullish on risky assets. this is bloomberg. ♪ omberg. ♪
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paul: this is "daybreak asia."
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i am paul allen in sydney. shery: i'm shery ahn in new york. the s&p 500 climbed to a five-month high. of significant is expected from central-bank meetings, geopolitical developments, and economic it up. joining us now is ed. great to have you with us. last the selloff we saw year, how much have equity valuations improved? down tohave gotten pretty close to recession levels. i mean, you know, down to about 12.8 on the msci all caps in world index. we rebounded pretty significantly. it feels like the markets want to push forward to new highs, especially in terms of the u.s. equity markets, but at a 14.5 multiple on the msci world, that
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is slightly above average. in an environment where interest rates are low, inflation is low, the central banks have pitted towards a dovish stance, i think towards a pivoted dovish stance, i think that is pretty advantage. we maynger-term view, need to consolidate or correct a little bit here shorter-term, but between now and year end, we continue to move higher. shery: stocks are not the only thing that has rebounded recently. we have seen financial conditions loosening up quite a bit. the chart on the bloomberg financial conditions rallying, not to mention the average for the eurozone and e.m. asia gaining ground. when will this become part of the debate again? we are comfortable now and central banks will try to hike again. have a we still round-trip in financial conditions. they tightened their a dramatically in the fourth
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quarter, and now, they have loosened up. the big fear in the fourth quarter was that we were headed and a global earnings global economic recession. in financial conditions will help because that will feed back onto the real economy, so i think in order for equity markets to continue to drive forward from here, we need to see some signs that earnings growth and global growth data is actually bottoming. but in terms of the fed hike in, that is not something i see in the near term. you know, certainly, if financial conditions heat up and things start to get bubbly, that could be a scenario, but i do not see that in the near term. you seem to be constructing a fairly positive argument for a risk on strategy at the moment. where are you seeing the best opportunities? edward: we still like u.s. stocks. one thing that has changed is we
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have gotten much more bullish on emerging markets, so we were underweight emerging markets for year inthe year last 2018. we shifted to a positive stance more recently. i think the fed pivot, the fed going from foe last year to friend this year is a big factor that is supportive of emerging markets. china stimulus continues and if we see signs that that is bearing fruit, that will be positive for emerging markets across the board. growth forecasts are stabilizing in emerging markets and we see attractive i with the forward ratio at 12.8. we know that when valuations and emerging markets are between multiples of 12 and 14, that with equityncide appreciation rates of about 15% over the next 12 months. paul: there are still some risks out there. the trade were between the u.s.
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and china not settled yet. maybe another one brewing in europe. on the subject of europe, brexit continues to keep serving up surprises. so where do you see the key risks right now? edward: i think you have given a good summary of what the key risks are, and that is the main reason why although we are overweight risky assets across the board, we do have reasonably measured overweight because of some of the risks you mentioned including the u.s.-china trade deal. there is a lot of optimism that we are moving toward a deal. record certainly fall apart. exit. it looks like we are moving towards what is likely to be a brexit delay, but certainly, we cannot rule out a hard brexit, so that is something that is still on the table. we could be wrong about the globe economy, and it may fail .o find a bottom
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an alternative scenario would be the global economy goes into a recession. we are late cycle. we see that much more as a risks and audio than anything we see likely. -- risk scenario than anything we see likely. shery: we see treasury yields falling as the s&p 500 rallies. what is going on here? is there too much money in the markets? edward: it is the lack of inflation pressure, so we have seen treasury yields come down. i don't think they can come down much further because the 10 year treasury yield is at 2.6 and the fed funds rate is at 15. if treasury yields went down much further from here, that would be a bearish signal for know, what isu explained in the equity rally is investors simply priced in too high a probability of global economic and earnings recession we are seeing a
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lessening of those risks and easing recession fears. the central bank is doing a more and we hadt valuation support. equity valuations have gotten to really attractive levels upon which we saw the balance. shery: we will have to leave it there, but thanks for joining us this morning on "daybreak asia." that is ed campbell. you can get a roundup of the stories that you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪
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latestuick check of the business flash headlines. apple has launched a new mid-level ipad with a larger screen and introduced the first mini update. they have a 10.5 inch screen and brings back a model that was phased out. apple offered the ipad pro. continues with the 7.9 inch screen. they have a package designed to challenge netflix. shery: abu dhabi's development company is revising plans to distance itself from the simmering 1mdb scandal in malaysia. the singapore unit wasn't shut down for failing to flag more than $1 billion in suspicious deposits linked to the fund. they held unsuccessful buyout talks last year. boeing shares fell again today. a ninth decline in 11 sessions.
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investigators dig deeper into the twin crashes of 737 max 8 jets. there was already a probe into the certification of the jet the for the latest accident. ramy inocencio joins us for more. ramy: the most important thing about this is the operative word is before the crash, before the ethiopian air jet crash. it turns out the department of transportation had started investigation on its own because of what happened from the indonesian lion air jet crash. they decided to launch this in conjunction with the justice department. not just one, but two departments in the united states , according to a person familiar with the situation. this all stems from an allegation that has been broiling over the past several years and reported earlier by the seattle times in washington state, saying that the faa delegated to much oversight to boeing itself.
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basically, the faa let bowing to the town people, to give the thumbs up on safety for the mac's family aircraft. family aircraft. a portion of the flight control software suspected in the 737 crashes was was -- certified by boeing employees. this is raising eyebrows across the airline industry. jim hall, the ntsb chairman in the 1990's to the early 2000, said that it raises for him the question of whether the agency, is faa, it is properly -- properly funded, whether there is an of people, and enough independent oversight. the faa came out with its own statement pushing back against this, saying that aircraft certification processes have consistently produced safe
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aircraft designs and the 737 max 8 education program followed the faa's standard certification process, but again, this is not something new. it might have been something we but it has been going on for the past several years. saying faa times whistleblowers have been doing this for the past several years. mnuchin,ed richard retaliation. we see all of this now coming out. one interesting note. the wall street journal is pointing out the grand jury and d.c., has subpoenaed at least one person involved in the development process. all of this falling into place now. the probe we are talking about tarted a long time ago. shery: thank you so much for the latest on boeing. the stock continues to fall today. ninth out of 11 sessions. lyft is looking to pick up the largest ipo in the u.s. so far this year. that would follow snap's ipo.
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all the details, next. this is bloomberg. ♪ ♪
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jessica: this is "daybreak asia ." i am jessica summers with the first would headlines. reports from london say the e.u. will formally agreed to delay brexit. the guardian newspaper says the offer will be good until shortly before midnight on the 29th. theresa may's home brexit strategy has been blown off course as the speaker of the house's comments refuses to allow her to bring the twice defeated departure deal for a new vote. >> should not be regarded as my last word on the subject. [laughter] >> it is simply meant to indicate the test which the government must meet. -- must meet in order for me to meaning fullhird
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vote can legitimately be held in this parliamentary session. jessica: le 79 people have been found -- at least 79 people have been found dead as rescue inorts continue indonesia. almost 5000 people have been displaced, with hundreds of houses severely damaged. pentagon has compiled a 20 page list of military construction projects that could cut the fund president trump's border wall. democrats -- the president is willing to cut necessary defensive spending and make the u.s. less secure simply to realize his wall. know which ones can go, they are more likely to vote to override the president's veto. warner bros. ceo is leaving amid
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allegations he had a sexual relationship with an actress he helped promote. the hollywood reporter said he had an affair with kirk. his departure is yet more upheaval for a business acquired by at&t last year. the media unit announced his departure puts the studio at risk. global news, 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. much, jessica.ry let's check in on australian markets. yet it over to sophie kamaruddin. -- get it over to sophie kamaruddin. sophie: gains being led by materials and utilities. the aussie dollar hovering around -- the currency is facing headwinds with the rba anticipated to come under more pressure to support the economy. that backdrop is pushing bond yields closer to the policy
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rates. aggregate open interest for three-year bond futures have surged to a record high. let's look at the board to check in on stock movers. this company -- hope undernew pressure, sliding nearly 5% after its result. the income rose 4% and it boosted its interim dividend payout. australia with a rise. feel margins softened due to the rebound in prices and rising competition. check inthe board to on westpac, we have the stock adding to monday's events. westpac says the changes are up and300 million australian
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they are expected to be etf positive in 2020. it did maintain its prior forecast for fiscal 2019. business as usual. this after posting a 76% drop in first-half profit on the impairment from its decision to halt the rollout of its australian mobile network. we have ppg saying they expect a .ecision so much.ank you let's turn to japan because the boj's long pursuit of 2% inflation has left policymakers thinking that level will remain out of reach for at least three years. sources inside the bank say pessimism is growing as governor kuroda and his team prepare for next month's quarterly outlook. editor ing in our tokyo. this is just the latest slim sin that the inflation debate is heating up again. >> this is likely to add further
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fuel to that debate. as you mentioned, this will mean that three years from now, 2% inflation will be out of reach. the boj has been at this for six years. and the debate in japan is definitely heating up. last week, we heard finance minister taro aso on two separate occasions say it would not be the end of the world if we did not reach 2%, and that -- one of those times was actually on the day of the boj decision. he walked right out of a cabinet meeting and said that to reporters. speaking out on this issue, so it is definitely becoming a hot debate here. course, the of boj's quarterly report is up
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next month. is this debate going to change anything there? that based on our reporting, the quarterly report, while the number that they put out on inflation is likely to be , they will2% probably be some finesse and going on. it will probably be north of some giving the boj opportunity to basically maintain the narrative that momentum is still in tact even if it is three years out. give them some rhetorical defense, perhaps saying by the 22021, we might yet -- 2021, we might be at 2% inflation. to bedefinitely not going a positive given the debate is going on. paul: all right.
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thank you very much. week for lyft, the number two ridehailing company behind uber. we are learning the terms that it will sell to investors. $62 to $68 per share. news -- reporter joins us. big numbers. what is the bottom line pitch to investors? >> in some ways, a very typical tech company pitch. they are pitching the next revelation, that they are the vanguard of it. transportation is a service. they are highlighting the metrics that favor them. the profit they get from each upe is going up and let -- a bit and i are going to
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downplay some other things, such as the company's revenue. lost $911 million last year. money. a lot of they want to convince investors that the growth in the industry will help them overcome that. from awe also heard this board member. take a listen first. this is a kind of totally new service which is going to services.ge we are talking about converting car ownership to mobility as a service. this is big. and often just one company can do it. and just one company can do
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it. >> competition will begin for everybody, including helping the company's be sharper in the services they provide. the big advantage is partly that because uber is so much more dominant on a global scale, lyft would essentially be a footnote if uber had gone first. this way, lyft is testing the waters to see what investors are interested in and to what degree . i would even suspect that from uber's standpoint, there is a bit of an advantage for lyft going first in the sense that because it is first to market, it is a new type of industry, are semi-comparable ipo's out there. there is nothing quite like a thisailing company on scale that has gone public before, so uber will have the advantages of watching how
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shares, andice lyft they will be able to build on that and avoid any mistakes as well. broadly, what is it mean for the ipo market this year? >> it is a big boost. ft's ipo isipo -- ly going to top the 22 ipo's this year that have come before it, raising $1.6 billion in total. really be the first big attention-getting ipo for the year, and it is set to be followed by of course uber, but also by other companies like slack and post makes that are -- stmates that are lining up behind it. there is an italian company that is not to be ignored either. fors looking ahead on plans
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a $3.1 billion ipo in italy. that will be a big boost. shery: what else is going to affect the deals market this year? one of the most important cautions you might take is back in december, bloomberg and a a lot of other news organizations, were going to say 2019 is a blockbuster. shutdown.ame the there is a little bit of uncertainty in the political and economic realm. there always is. there are specific issues now. and i think a lot of it will also depend on how these initial ipo's go. itsyft gets a good pop on first day, if investors are picking it up before the listing in the ipo it self, that will generate a lot of momentum as well, and it could sort of
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signal how the market will go for the rest of the year perhaps. shery: michael, thank you so much for that. coming up next, a work in progress. u.s. officials say china has provided some attractive concessions, but more time is needed to seal a trade deal. we will have more analysis on the trade wars, next. this is bloomberg. ♪
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shery: this is "daybreak asia." i am shery him in new york. paul: -- shery ahn in new york. paul: i am paul allen in sydney. president xi and president trump's trade agreement may not be finalized until june. mr. cunningham, thanks for joining us today. i guess you could take it in a
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couple of ways. it is either encouraging or it is not. how would you take it? well, donald trump has given himself a very difficult task with this trade negotiation. d.c.based in washington, i see that side of it every day. i just came from five days in china, talking to business people on how they see these trade negotiations, and i see the following dynamic. trump has two important constituencies he has to satisfy at home. those is his conservative base and the other is the american business community. he promised the american business community he is going to get fundamental reforms that help keeppromote and the chinese from getting american technology and from ip theft and cyber espionage and the like. very important goal for american business. he promised his base he will stand up to china after years of china bashing.
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can he come home with an agreement that satisfies both of those? he failed in north korea. he walked out rather than make a bad deal. and we saw with the border wall controversy around christmas, he wanted to declare victory, and his right wing would not let him. meanwhile, president xi has his own dynamic. he not only has to keep his slowing economy growing and accelerate that growth, but he has also got to take care of the huawei issue, which hangs heavily over these negotiations. june might even be too soon. you mentioned north korea. wet was interesting because did not see him walking away from the deal if he did not feel he was getting what he wants. what kind of impact will that have on market? nelson: you can imagine it would be -- it could have
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extraordinary impact on the markets. although we have seen so much unpredictable behavior from this president, and then two days later, we are onto a different topic. off theions that were table are back on the table. my guess is that market take all ofthis with a certain brand salt and will beep appeared to watch the actions that follow and not just the rhetoric. shery: we heard from ambassador lighthizer as keeping tariffs as an enforcement tool, keeping them on the table to get some compliance from china. this is what the secretary had to tell me about tariffs as a tool earlier today. take a listen. andne tool for enforcement hopefully the chinese will understand that. matter -- it is complying with the law. if you comply with your agreement, you don't have anything to worry about. if you don't, there are consequences. previous have seen
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administrations trying to deal with china. really, it was a compliance issue that was always the problem. will tariffs be necessary here as a deterrent so china will enforce theply and changes put forward in this deal ? nelson: donald trump has called himself tariffs man, proudly. he likes tariffs. he likes creating uncertainty in relationships. he likes piling up chips on his side of the table that he can use in negotiations. hefound in tariffs, which has now applied all around the world on steel and autos, steel and aluminum, he has threatened to apply them on autos, and he has applied them against china on intellectual property issues. he loves these tears because it -- tariffs because it is entirely within his discretion in the short run and it
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forces the other side to come to the table. he will not want to get rid of tariffs as a threat to hold over the chinese because that is the way he can get them back to the table quickly if he feels things have not gone well. here is a problem for the business community. they need certainty. thathem to have tariffs get imposed come on get taken off, get threatened, get added, get increased, it makes it incredibly difficult for them to plan and to do their business properly. transpacific trade takes months from the time of manufacture, crossing the ocean, before it arrives on u.s. shores. if business does not have certainty, it is going to hamper the relationship and squeeze the trade relationship between the u.s. simply by having the threat of tariffs hanging out there. shery: in the meantime, we are seeing president xi jinping travel to europe this week, really touring italy, monaco, and france, trying to foster
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better relations with the european union. are we seeing a fundamental shift in the geopolitical dynamics as we see the u.s. using more with -- fusing more with key allies? seen,: we certainly have given the trump administration's difficult trade practices, and it's questioning of fundamental alliances that the united states has relied on for decades, we have seen our trading partners and allies look to do deals with each other. tpp in this part of the world. classic example. we stepped out of tpp, so the rest of the countries formed tpp 11 and are moving forward with that trade agreement. we have seen mexico reach out to europe. we have seen the europeans reach out to asia and other parts of the world, japan. they are all trying to find
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trade arrangements that are more secure and more predictable than the newly unpredictable trading relationship with the united states. it is not good for america's position in the world. it is not good for the efficient supply chains and efficient movements of people and goods that business relies on for success, and it is not good for the countries's, because when you are trading with someone, you have to keep on a friendly keel, or you want to. it is good for the relationship. if you are not trading with those people, with the other side, it is very easy to have misunderstandings and for tensions to increase and go through the roof. that is bad. shery: thank you so much for ,oining us, nelson cunningham co-founder. if you missed part of that interview, tv function tv on the bloomberg. you should check it out. you can watch past interviews. thecan also dive into
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securities and functions that we always talk about. if you have any questions for our guests, left side of your screen at the bottom, you can ask the guest a question. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
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shery: china's top talk streaming service is aiming to launch a new app to compete with tencent. detailsdeep flails -- his plans in an exclusive interview with bloomberg. us, our main focus is entertainment. we don't care about short videos focusing on news or information. we care about entertainment-related content. of course, the short video market is a crowded one, so we need to find areas where the synergies with our existing
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offerings are stronger. we have already explored possible short video services and believe we may see a spike in traffic this year and next year. >> are we going to see a standalone product for short videos? >> we have made some attempts and had some standalone video ads, but we have not seen one generate huge traffic, so we don't need more trials and to get more users. >> how long do you think that will take? >> before the end of 2020, that we will get an app with more than 10 million daily active users. >> we expecting peak growth for revenue or acceleration in the future? >> the online video market will see a slowdown compared with the past decade. if you look at the protocols, advertising provides only limited growth because it has taken a with a market share. we are past that peak now. as part of the business will slowdown.
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membership subscription please only started exploding in 2015. we are not near that peak yet. think last year, because of taxes and caps on pricing, we were able to control our costs. one thing that helped was acquisition costs. we are seeing calls coming down to a more reasonable level. >> how does that translate into your cost control over the long-term? costs haveeeing that been falling since the second half of last year until now. that rings true for content acquisition, after salary, and general costs. this drop is only short-term. long-term, the costs will still go up, but it will be because we are producing content of greater quality. >> you have 86 million paying subscribers.
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a lot are discounted subscribers. they got promotion to subscribe to your platform. on average, how much does a user actually pay for your platform? is that oursion monthly average revenue per user is more than 14 you on -- 14 yuan. paul: that was the ceo speaking exclusively to bloomberg. let's review the market open in japan and south korea. here is sophie kamaruddin. are lookinghers mixed at the start of cash trade. yen trading in a tight trade ahead of the fed decision. in seoul, we are watching samsung on a note from kb securities, expecting both companies to post record high earnings from tv sales and heine and-- escott heineken -- this company. i want to highlight a stock rewriting. downgraded.on being
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this coming as japan's machinery orders continue to fall in january. add to the grim picture on manufacturing sentiment. that is a snapshot of japan and south korea. this is bloomberg. ♪ you.
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>> welcome to daybreak asia. ♪ paul: our top stories, brexit drama turns another page saying eu will delay the divorce as teresa's may vote -- theresa may's vote to find a third deal. and strains are increasing among
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top producers. shery: growing anger at a sex .nd corruption scandal sweeping the markets are getting underway in japan and south korea. shares comenese under pressure at the start of trade. they lost to tenths of 1%. trading, kicking off a two-day policy. i want to highlight a lagarde, tokyo electron following -- following with other makers. they were downgraded to underperform. ofs comes on the back japan's machinery orders continuing to fall. we are seeing some positivity in korea. kospi adding to tenths of 1%. we -- 2/10 of 1%.
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aussie shares are fluctuating this morning, up to tenths of 1%. -- 2/10 of 1%. we are seeing more evidence pointing to rba looking to support the economy. the kiwi dollar is under pressure this morning. confidence slid to a six year low. paul: let's get the first word news with jessica. from londonorts says the eu will formally agreed to delay brexit. they meet in brussels later this week. untilfer will be good
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shortly before midnight on the 29th. the speaker of the house of allow theresas to may to bring the deal back for a new vote. >> it should not be regarded as my last word on the subject. it is simply meant to indicate the test which the government tot meet in order for me rule as a third meaningful vote can legitimately be held in this parliament free session. the dutch cityn say it is unclear why a gunman opened fire on a train, killing three people. a man has been arrested. he already had a criminal record. the attack came three days after 50 people were killed when i'm gunman opened fire in christchurch, new zealand.
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new zealand lawmakers are working on new gun laws. france is strengthening security legislation as they potentially banned protest rallies in high profile areas. the government decided to act aftershocks were burned and looted on the avenue in the latest violence linked to the yellow vests. they have stepped up the use of video footage to identify perpetrators. and the boj long pursuant of 2% inflation has policymakers thinking the level will remain out of reach for at least three years. sources say pessimism is growing as the governor prepares for next month's outlook. aprilscal year begins 2021. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
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paul: oil is trading close after opec and partners committed to production curves until june. stephen is tracking this. tell us about what the market is watching. reporter: everyone has their eyes on opec and russia. they are the big players in the market. ontosay they will now hold cuts they promised in december until the end of june. they recognize the market is not balanced and because they are holding onto production cuts they promised last year, the expectedd more up than and they are taking it favorably. it is a bullish signal and keeping prices holding at the highest for 2019 so far. pivotal will the june
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meeting be, given that we are already seeing cracks appear in the saudi russia alliance? midhey put off a meeting in april. russians and opec were going to meet to decide if they should continue production cuts from june. they put off the meeting because they said they will not know the shape of the market until june. , a week beforeng the production cuts will expire, it is an emergency move because the market will not know whether or not the production cuts will continue or not just a few days before they expire. that puts a lot of pressure on the meeting, whether or not :00 and -- whether or not opec and russia will come to terms. they had joined together to bring clarity to the market and take production value out of the market now that they have put off the april meeting, perhaps
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there are some cracks in the relationship. you have seen the messaging from saudi minister and russia is a little different. saudi is strong on continuing production cuts until the market is balanced. the russian ministers have been saying they are not sure and it might not require further cuts. we will be watching the meeting in june. paul: we talked a lot about saudi and russia. how about american supply and demand? how does that play into it? is theican supply biggest wildcard. one tweet from trump consent the market crashing depending on what he says. and people will be watching if the u.s. will continue to give waivers to countries that are importing oil from iran. these waivers allow for the import of oil passed.
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they gained the waivers last may. a bearish sentiment in the market. opec, russia, everyone will be watching with the trump administration does they are and in venezuela and what shale producers will do. they are producing at the highest levels of her and it is adding inventory to the u.s. -- highest levels ever and is adding inventory to the u.s., making the u.s. a wildcard in the moment. shery: stephen, thank you. markets stocks in currencies have rebounded as the dollar weakened and china pledged to maintain stimulus. is saying there is more room for more growth. john woods, great talking with
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you. stocks have been on fire. today we saw brazil topping the 100,000 level for the first time ever, closing at a record high. what is fueling the rally? is this about central banks? the centralpivot by banks globally have been supported and encouraged risk-taking but i suspect liquidity seeking growth and earnings and less than satisfied than the levels in developing markets is encouraging the rotation. i think the china story is underpinning a more positive outlook and if we can close the deal on this set of negotiations with the u.s. and china i think it would set the groundwork for further gains to come. the bloomberg shows how the csi 300 has pulled ahead of global stocks so far this year
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including the s&p 500. how much room is therefore further upside is potentially the optimism over trade talks has been piped in? is that talksess will result in freezing of tariffs but you have probably heard some suggestions that the tariffs could be reduced or canceled. that would be new news and more positive upside for equities. to your point, emerging markets cannot rally in this way in terms of expanding multiples without earnings catching up. -- there must be at some point a level where they reach fair value and anything else is in a recent story. we focus in hong kong on the asian market in china and i -- a
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share market in china. paul: you seem optimistic on trade but we were discussing with our last gas some of the risks around the discussion between the u.s. and china. trump has one eye on the electorate in the u.s. has some freezing power when it comes to walking away from deals if he does not think it will play well with his base. you think that optimism over the trade war could be misplaced? >> i like the way that he walked away from the discussions with north korea. i think he sent a reasonable signal that there would not be a deal at any cost. i think both china and the united states need a successful deal for their own constituencies and to that
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extent i believe there is a reasonable amount of self interest in assuring something is past. -- passed. our own view is that china is not able or willing to go head-to-head with the u.s. at this juncture on the trade side, given the fragile nature of the chinese economy. so i think they will be more concessionsrovide and a positive outcome from a u.s. perspective. we are following the rumors and news and it is our contention that there will be a positive outcome to these talks. paul: in terms of the china market, what is your theory? are you seeing attractive sectors? what valuations are good? >> there is a lot of momentum in
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tech although the top profit on having read of 35% or so year to date, we are directing clients into the broad financial sector now and including insurance banks and real estate opportunities because that is where i think valuations are extremely compelling and there is an opportunity for upside. more broadly, i would like to see the china economy stabilizing and we would like to see for example some of the credit momentum metrics accelerate and indicating more underlying growth is gaining traction in a meaningful way. but we suspect that is a story for the next couple of months. in the meantime, markets are pricing in that expectation. ofry: the story the rest chinese policymakers really want to see happen. a shares of prefer
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our stock in hong kong? a share very much and at the moment. story at the moment. markets are at five times greater than they were this time last year. it is driving momentum. bitee retail bid sites to -- starts to bite, markets have further to run. but we have been long into this rally since the early part of this year. well.s have done i am tilting toward seeking to take profit at a certain point paul:ck in these games
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still ahead, we will be talking about one of the biggest funds in asia. shery: and up next, the race for 5g. forward.i is pushing this is bloomberg. ♪
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shery: this is daybreak asia. huawei has shrugged off criminal charges and posted a 36% rise in revenue for the first two months of the year. our next guest says the 5g race may show what we have reached peak china. this is the managing partner of future map and he is in the city today to talk about his latest book, the future is asian. how do you square that? >> asia is a lot more than
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china. china is the largest economy in the region but it is 1.5 billion people out of the four point 5 billion people of asia. so 3 billion people in asia are not chinese. fastest-growing market. in india, they are growing significantly faster than china. if you take the markets of south asia and southeast asia, a younger population. 2.5 billion people. whole is collectively rising immensely and i want people to remember the cooling of china does not mean a cooling of the collective asian story. a 6% growth rate is not sustainable. >> exactly. and they are adding a hundreds of ball -- they are adding hundreds of billions of dollars a year to the economy. they have been globalizing rapidly. --le way market share
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huawei's market share. that will continue because despite pressure from the u.s., the pushback in certain countries where the u.s. has sway, most countries are saying if we do not see the evidence and the quality is good, we will go with quality. countriesns out some like germany and the u.k. say they will still work with huawei. the cte -- ztead saw that. what lesson did the chinese take away from this? >> great question. i think the move gave the u.s. administration too much confidence because they picked the right target in the sense of a company that was vulnerable to american high-tech, dependent on
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american high-tech components, chips from qualcomm and so forth. so that obviously left them exposed. but the key lesson is that china will pursue permanent substitution. identify the exact category of goods for which one depends on the u.s. and substitute them through alternate suppliers. when it comes to semi conductors, there are plenty from taiwan, south korea, japan. in those will be the beneficiaries of china's reaction to what happened with zte in the trade war. shery: we continue to see the trade negotiations and it seems the hardest part art tech and structural issues. is chinanging fruit promising to buy more u.s. goods. >> we could easily see if we are
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able to come to a trade resolution, doubling or tripling that number over two to five years. shery: how positive is this concession from china on china trade talks? u.s. orappeasing the could it eventually lead to more difficult issues and all of the ip theft issues and technology transfer getting salt? -- getting solved? iplet's separate trade from because it is difficult to make these prudent -- make these projections so far out. it is just about face-saving and finding a compromise short-term to appease trump and they know the way to his heart, to say let's get more soybeans across energyan and restore
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exports to the level they were at and that will not really solve the underlying structural issues around ip. but i want to give some credit of thetough posture trump and europeans who have been equal amount it at stake when it comes to the issues of ip. so you might see an opening where it will be more of these ip cords and allow more foreign courts and allow more foreign ownership. china is pushing their china account liberalization i want to have a credible financial system and regulatory environment trusted by the global community. that is trillions of dollars at stake.
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they have to demonstrate a degree of openness and ip protection is one way to do it. i am cautiously optimistic they will make good on some of the provinces. paul: and you have seen an acceleration china has made. >> it goes back to the permanent substitution. it is not just signed conductors. a host of areas are pushing for self-sufficiency. 70% ofsed to import components for electronic exports, which are two thirds of the total market of electronic commitment -- equipment. now they only import 20%. they have been substituting for decades. they are almost self-sufficient in many areas. so now when it comes to the areas identified in made in china 2025, semi conductors, 3d
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printing, they are going to put their foot on the accelerator. this is part of the permanent substitution. thingsute the u.s. for that are technologically sophisticated and vulnerable to u.s. administration export insteadand get them from proximate trading partners like japan or europeans or make them yourself. that will lead to one of the biggest issues in global economics, decoupling. an asiane be decoupling that will accelerate as a result of the trade war? it is the last thing the trump administration wants. paul: thank you for joining us. to come.re stay with us on daybreak asia.
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this is bloomberg. ♪
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the: a quick check at latest headlines. apple has launched a new ipad with a larger screen. a 10.5 inch has screen and brings back a model that was almost fades out -- phased out. the apple many has a 7.9 inch screen. mini has a 7.9-- inch screen. shery: sources say deutsche bank and a successful merger could create europe's fourth largest bank. the german government says they will accept job losses.
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with a, we are joined ceo live from a conference in kuala lumpur. this is bloomberg. ♪
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paul: breaking news on the bloomberg. the reserve bank of australia releasing minutes of their march meeting. board agreed the labor market developments are in -- important. awaiting information to resolve current tensions in the domestic. no strong case for near-term adjustments and policies. the rba shifting to more than future files -- buyers. the aussie dollar is unchanged. house prices are out. nothing to cause you to spill your coffee.
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a contraction of 2.4% in the fourth quarter. let's get the first word headlines with jessica. the u.s. agriculture secretary says that china could triple purchases of american farm goods as part of a trade deal between the countries. he told us the latest trade talks are dynamic but there are concerns over how to make commitments enforceable. he said all agreements must be fixed and any tariffs will be binding. one tool for enforcement and hopefully the chinese will understand. it is complying with the law. to comply with your agreement, you have nothing to worry about. if you don't, there are consequences. several people have been found dead and others are missing as rescue efforts continue in the flood from indonesia. it was triggered by 70 hours of
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credential rain on saturday. -- torrential rain on saturday. warner bros. ceo is leaving amid allegations he had a sexual relationship with an actress he helped promote. the hollywood reporter said he had an affair with charlotte kirk and helped her win movie roles. companies unit announced his departure, saying he put the studio at risk. boeing has written to airlines to confirm it is working on a software upgrade for the 737 max 8 saying it will be released soon. they also add that new pilot training should address safety issues. we have been told the transportation department inquiry into boeing began before last week's fatal airlines crash.
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global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: time to see how the asian markets are shaping up. asian stocks are sliding after a two days rise while the yen is advancing. week.s a make or break up half of 1% is and japan display is an outlier in tokyo, rising 7.3%. the kospi has joined the regional downturn after opening higher. chipmakers are the biggest drugs along with tm motor.
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1%.asx 200 is up 1/10 of the kiwi dollar is slipping this morning as consumer confidence to go ahead in the first quarter 's leading a six-year low. the malaysia stock market has left the regional rally. sophie: it is barely in the black for the year. it has been a rough ride for stocks which have fallen in tandem with earnings. week results are not helping. telecom is expected to sell more assets. the market is waiting for clearer signals on budget deficit and to tackle corruption.
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uncertainty has set the outlook for malaysia with economists predicting 4.5% growth for this year. observers do not see an improving picture any time for the economy or earnings. some expect malaysia will deliver a rate cut after adopting a cautious tone this month. malaysia 20nvest conference is kicking off in kuala lumpur. a reporter is there at the conference. reporter is at the conference. reporter: malaysia is trying to revive investments in the company and government is trying to boost returns.
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this has done really well. until has granted the pace of 10% every year for the last 10 years. us. to have you with overseas.vested given the uncertainties we are seeing, is it impacting your strategy? you for uso remind whenever there is uncertainty, we are also presented with a lot of opportunity. -- us it is looking
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bloomberg.com [indiscernible] are you looking to buy more when you look at real estate prices in the u.k. have been following? >> absolutely. reporter: what is your assessment of the risks given brexit? we have investments in the u.k. at this point of time. for us it is the long-term outlook. brexit is a great opportunity for us to look at long-term.
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reporter: what kind of returns? >> we are looking at the gdp value could grow 45 times. the u.k. market, we were one of the first looking at the .roperty it gave us good returns. with brexit, a lot of uncertainty for the short-term investors but for people like us, it is a great opportunity. reporter: how about other overseas markets? us.atin america is new for
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notre a pension fund and too ambitious, more conservative. we are not able to look at latin america in totality. reporter: brazil? columbia? >> for us we want to look at the strongest economy. brazil would be one of the top. they are exposed to commodities. us, opportunity. reporter: what is the biggest risk in investment overseas right now? 40% of the income comes from overseas. >> it depends on if we can liquidate it. we need to ensure the typos [indiscernible]
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reporter: when you look at the domestic market it is the only one in asia that is [indiscernible] from thethe euphoria election has dissipated. >> we have to remember this is the first time they have been in power. upwill take time to come with different policy direction and the way forward. , for a lotspective of foreigners especially, they want to see what is happening with the country.
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once we have something more solid. reporter: would you be a net buyer or seller? >> it depends on the circumstances. fundamentals. we are interested in the banking sector in malaysia and looking at opportunities in the .elephone sector there are a lot of opportunities. reporter: and the bond markets? >> we are looking in terms of yields are starting
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to come down. so we are looking again. reporter: there you have it, epf, the biggest investment fund in the country, looking to see a boost of those returns. thank you. next, some of korea's biggest stars embroiled in a scandal. we are looking at the growing anger. this is bloomberg. ♪
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shery: this is daybreak asia. reports from london say the eu will formally agree to delay brexit. the guardian newspaper says the vote will be shortly before midnight on the 29th and that theresa may will ask for one year. kathleen hays has been looking at what this means for brexit around the corner. what does it mean? eu hasn: it suggests the some interest, may some stake in helping theresa may get this deal to the third vote, because guardian reporting they will offer to extend the brexit departure date. this?ey suddenly doing because changing the brexit deadline could change the mind
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of house of commons speaker john nota who says the deal has changed enough for a vote, essentially torpedoing theresa may's plan again. she was hoping she could get it up for a vote this week after they are were signs -- there were signs that some tories were willing to back the deal. the same role cannot be repeatedly put two of vote unless it significantly changed. so her bill must be fundamentally different than the one that has been presented to the house of commons twice if she is going to get a third vote. here is what she said. >> what the government cannot legitimately do is resubmit to the house the same proposition or substantially the same
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proposition as of last week, which was rejected by 149 votes. also said he was not trying to say this is the last word, this is just meant to indicate to the government that it must pass in order to get the third vote. this clearly has some fire under the eu. be that the eu is trying to give theresa may's deal at a chance to pass, given the curveball? kathleen: throwing in a lifeline. that is what it looks like. that theyan reported have offered to move the brexit deadline to july 1 from march 29 and issue a summit communique with legal force enough, and that would help get the argument that there is enough there for a
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third vote to be held. ready to offer up to a nine-month extension if the deal passes. if theresa may comes to the eu and wants bigger changes to the deal, they would need a longer delay. this is what the probe brexit areers -- probe brexiteers saying. arehro-- pro brexiteers saying. if mae asks for big changes, the eu could come back with changes -- if theresa may asks for big changes, the eu could come back with big changes of their own. is a very dynamic situation. the eu summit is a chance for
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her to talk face-to-face. i would not be surprised if something big comes out of it. so much is in play. the south korean president is calling for an investigation into the sex and corruption scandal that has engulfed k pop stars. has the reason we care, k pop has become a big part of the economy. what are the allegations against these k pop stars? reporter: the allegations are complicated. is member of big bang currently facing allegations of facilitating prostitution on the premises of a club and being part of a group chat of sharing videos of women being filmed
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without consent. but there were more complications. deeply connected with a police official that may or may not have been involved in the investigation having to do with this. k pop and all of these stars are linked to big entertainment agencies that trade on the south korean exchange. not to mention there are so many products south korea sells that carry their name. so what has the reaction been in the south korean stock market? a $5 billionis industry, which has a huge overseasmestically and for yg entertainment. shares dropped as much as 14% and brought jay y p entertainment with it. you can see the market reacting
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to the tarnished image of what k pop stars are known for. shery: will we see changes in the power structure surrounding these agencies? these allegations and investigations are a revelation of the power structure surrounding the entertainment industry and the close ties with the government, public officials, and corporate structure that allow the abuse of power to constantly take place, and for people with power to hide behind it and hide behind the names of entertainment industries to constantly get away with it. so with the president having called for an investigation, this could lead to a deeper dive into the crack down corruption in south korea. shery: another wave after the #metoo movement.
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thank you. still more ahead on daybreak asia. this is bloomberg. ♪
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--ry: and in dn bankruptcy in dn bankruptcy report has -- in dn -- indian bankruptcy report.
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thendian tycoon owes to local unit of erickson. repeated failures to pay landed andin trouble in february he had one month notice to comply or go to jail. lyft aims to raise $2 million and would value the company at almost $20 million. it comes after the company reported a lost almost $1 billion last year. shares are set to price march 28
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and start trading on the nasdaq the following day. >> totally new services which will replace huge services. we are talking about converting car ownership. this is big. i do not think even just one company can do it. sophie: in hong kong we have plenty of earnings of interest on tuesday. me.k is down 30% and shall we saw optical on the earnings line. if china telecom due to report today. investor expectations have been cooling.
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csa china telecom will follow china unicom. after aeeping an eye liquor maker soared to at all price hi. high. chineseeeping an eye on equity stocks and sotheby's prices -- soybean prices. could triple its purchases of american farm goods. we will see what happens when it comes to chinese equity stocks. shery: let's get a check on the market. here's how we are trading at the moment. pressure for the nikkei down
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3/10 of 1%. strengthen the japanese yen weighing on the stocks. the kospi is unchanged. the korean yuan holding steady. the sfx 200 up to tenths of 1%. -- 2/10 of 1%. u.s. futures are unchanged after the s&p 500 touched a five month high. we have more optimism extending in the markets in the u.s. and not a lot of movement for taiwan futures and the offshore yuan holding at 671. china open is next. this is bloomberg. ♪
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>> it is 9:00 a.m. in beijing. welcome toll "china open." we are counting down the opening of trade. here are the top stories. rallies in asia amid the reports that theresa may will ask for a year. slumped es dramatically. >> the 737 fix is coming soon as planes remain groupeded. shares sell begin in new york.

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