♪ >> uncertainty in italy. the euro slides and polls suggest the prime minister has lost his referendum on reform. -- newattentions tensions on taiwan. >> the president elect is warning corporate america, move your production overseas and that will be a big mistake. sony'spokemon on as

quietly profitable game is leaving its rival in the dust. >> this is daybreak asia. i am betty liu. it is just after 6:00 p.m. on sunday. >> it has just gone 7:00 a.m. on -- in hong kong. what a way to start the week. we have the results of the italian referendum on the constitutional reform coming in a blow too have nationalism and populism in austria. shery: if you have been looking at 2016, it has been a similar theme throughout starting with brexit and then donald trump and his election. the people are speaking. anti-euroration, folks who are heading to the polls and having their say. the outlook is clear in italy and no surprise results in austria.

euro losing ground in reaction against the dollar. the exit polls from italy's referendum starting to trickle in an showing the no vote is ahead. let us look at the markets in play. new zealand is the major market to start trading the week. unchanged at the moment. a little bit of pressure, the kiwi dollar is down 0.6%. week ofa capped a losses. unchanged at the moment. investors must be cautious as we have so much to look forward to this week. the aussie dollar losing ground at 0.5%. counting down to the open in japan and south korea. we are seeing the nikkei futures are losing ground by 0.7%. the japanese yen is strengthening, 0.3%. we are seeing a bit of weakness

in the dollar with mixed u.s. jobs report coming in on friday. let us look at what we can look forward to in the region. but baddie, as we have been talking about, a big day in europe. betty: the euro as you mentioned is sliding with the exit poll suggesting the italian prime minister is heading for defeat. early projections put the no vote at about 58%. to bring in our bureau chief. is it all but certain that the no vote will reign? >> it looks like a no. these are not exit polls. they are actual projections from real votes. it is a high turnouand it looks like he has lost his that. >> what does that mean for the prime minister? thing -- he ist

going to speak and the next few minutes. we assume he is likely to resign. tomorrow will be a big deal. he will see the president. the president will have to decide what he will do next. he will have to find a way to form the government. renzi is still the head of his party so he still has a big role to play but there is a lot of chaos still in italy. and the impact on markets. >> there must be a timeline. a busy day tomorrow. what should we expect in italy in the weeks ahead? that willst thing happen is that it will take a few days -- renzi will see the president and we expect him to resign. the president will have to speak to all of the parties to see what kind of government can be formed. and then looking forward still, we will have to see if it is early elections for italy which is a likely scenario. that means more instability and

uncertainty which is bad for markets and italian banks. not ideal for the country. ideal for the rest of europe as well. thank you so much for joining us. we are seeing some strong currency fluctuations on the back of the italian referendum. joining us on this set is su keenan. >> you will see this continue to play out as more information comes out of italy. a no vote in italy playing hard against the euro. we have seen it weakening against the dollar. in asia trading, that is low volume. as the other continents come online, that could pick up. exit polls showing the italian prime minister clearly losing a constitutional referendum that could end his career. it will put the countries alterable banking system at

risk. seemsly votes no, it it -- and it seems like we will get confirmation on that vote, the dollar will be in greater demand and italian bonds will face pressure as u.s. treasuries and german bunds gain favor. it also puts the eurozone towards a new crisis. scenario, italy will hold a vote to leave the euro. >> a lot ahead as well in terms of economic numbers. jobs report on friday. donald trump is tweeting out some more messages for u.s. corporations. be afraid, be very afraid is the message if you are thinking about outsourcing it will cost you. just when you thought that donald trump had his twitter account taken away, he sent out a series of twee morning -- giving a warning

warning. one tweet said -- any business that leaves the u.s. for another country, fires its employees, build a new factory and then thinks it will sell its product back into the u.s. without consequence is thinking wrong. and typical donald trump style. straight talk. grand sweeps. he says countries will regret it. he has had a couple of postelection victories. -- a couple ofed companies have -- ford has announced plans to scrap a move out of the country. donald trump plans a 35% tax. the companies to be forewarned and that it will pay tuesday. -- pay to stay. >> the reports are getting a

greater scrutiny. less than two weeks to the next fed meeting. it looks like according to u.s.mists, the robust service industry will be confirmed in the latest report. retailers and builders growing at a stronger pace. solid sales are bolstering this. we will also get the latest on the trade deficit. investors waiting on this data will find the trade gap widening due in part to a lot of imports. >> thank you so much. let us get the first word news. backed leftisty will be the next president of austria. in a run of right-wing anti-immigration victory around the world. he took 50% of the vote. elections can be won on a pro-european platform. acrimonious year

of campaigning that polarized austria. environmental protesters have won a landmark victory. engineers saysof there is much work to be done and alternative routes must be explored. the pipeline was to have crossed land sacred to native americans and has prompted a standoff with soldiers and protesters at the standing rock. president obama has blocked the on --f extra on -- extra aixtron.. the treasury department says the president upheld the recommendation that the $750 million sale should not be allowed. kongtock deal between hong

and chin shin finally begins operating on monday giving foreign investors direct access to more than 800 stocks while opening 100 smaller hong kong equities to mainland traders. it is all of china's -- global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. >> the unprecedented phone conversation between donald trump and the president of new life onow shown the island's diplomatic isolation and triggering criticism from beijing. our beijing correspondent is here. it is not clear if this is a shift by the president-elect or just may be a mistake here in accepting this phone call from the taiwanese president. tom: that is right. what seems to be from the

taiwanese side is a bet -- getting increased recognition from the president-elect is worth the risk of riling china. this phone call happened friday between the taiwanese president and donald trump. it lasted no more than 10 minutes that it was the closest that a taiwanese president has come to a fictional -- two official u.s. recognition since 1979. it has over the weekend shifted attention to taiwan and its diplomatic isolation. taiwan of course sees china as an authoritarian neighbor and an aggressive and belligerent one that threatens it every time it tries to solidify or takes any steps towards solidifying its tobacco independence. itsa sees taiwan as part of territory and has said that it could resort to force to take it. the consequences of this are

still being seen but it has been seen as a foreign-policy win for now for the taiwanese president polls facing falling numbers. her ratings fell last month to 26%. she is struggling domestically with a sluggish economy. the economy is expected to grow less than 2% next year. side, weld trump's heard from the vice president elect saying that there will be no change to the chinese policy for now. >> this definitely raises a threat of retribution from china. what has the reaction been so far. ? tom: so far, we have heard from china's foreign minister who has said and described this as a little trick played by taiwan. keeping the focus on taiwan. and seemingly not wanting to as the late tensions with the u.s. over this at this stage.

we have also heard from the famouslyia here, a nationalistic newspaper here saying that taiwan would face consequences if there were any moves to shift the status quo. we have rdc measures put in --ce by china since taiwan since the taiwanese president was elected. she is a member of the pro-independence party. china does have other tools and leverage to inflict economic pain on taiwan. and it could continue to pull back the number of tourists and it could also start doing flights into the taiwan strait and it could try to pull away the last 22 nations that recognize taiwan diplomatically. does not seem that donald trump is sensitive right on on the relation -- ruining relations with china.

tweeted outago, q another series of tweets against china. did china ask us if it was ok to devalue weight our currency? or to build a massive military complex in the middle of the south china sea? i do not think so. more harsh words here to write of the relationship. it is very interesting. and policymakers that we haven't begin to since donald trump's of election have pointed to the uncertainty around the election and what it means. there had been hoped that he would be pragmatic and he would take the businessman's approach to china and he would not put into place the 45% terrace -- that heatf -- tariffs talked about. some people say it is no big deal that he took a call from a

democratically elected president. interesting times, certainly. >> tom, thank you so much. tom mackenzie in beijing. standby for higher interest rates. into theing to dig latest outlook for 2017 a little bit later. up next, more on the italian referendum and what it means for the eurozone's future. this is bloomberg. ♪

betty: this is daybreak asia. i am betty liu in new york. shery: and i am shery ahn in hong kong. india's group has secured final government approval for a controversial coal mine.

the 16 billion-dollar project faced opposition from environmentalists who say it will further damage the reef. the chairman is expected to meet the prime minister on monday to discuss funding for a 32 kilometer rail link. hsbc will step up hiring in china next week despite the slowing economy. it increased the number of retail inks in the delta area by 57% and the pace of hiring may in theate as it expands manufacturing hubs. it launches a credit card business in china on monday having one bank regulatory approval to issue cards itself. isry: indian prime minister cracking down on black money and it has sparked an investigation into two declarations totaling more than $31 billion. a family of four told the government that it had evaded a would make them

wealthier than india's richest man. betty: renzi looks to lose the constitutional referendum that he has staked his job on. italians are joining the global backlash against establishment politics. andrew, great to have you with us. what do you think exactly is going to happen? it looks all but certain that outcome in is the this referendum. what do you think will happen to the prime minister and to the interim government? .ndrew: good morning excellent to see that the italians have not forgotten mussolini and hitler's and have really gone through to make sure there are not massive changes to the constitution that concentrates too much executive power in the executive branch. the next step is we will hear renzi's speech soon and he has

mistakenly staked his political future on the referendum rather than making it about the constitutional reform. he has made it about his popularity and he got a backlash from a middle-class that has been disappointed by the political elite. he will pay the price. i think it is a resignation. the forming of a new government under the president. and eventually, we will hear who comes out next. betty: is this really a referendum on the constitution or is this a referendum on the euro? andrew: i am not sure it goes as deep as the euro. we would like to make it the that. i think it is really a criticism -- betty: why not though? the opposition has said all along that if they have the power, they would cast a vote or they would put in the process of determining whether italy should stay in the euro.

andrew: that makes great press for the opposition that ultimately if they come into power, they will have to face up to an electorate that once to stay in the euro and the eurozone. across the board in europe, surveys have shown that the european electorate wants to stay in the european union. they just want a change in government. i agree with the take that this is anti-establishment and is a protest vote against the incumbent but not necessarily a move out of the euro. atty: taking a live look renzi speaking to the public. at his room residence. as exit polls show he is about to lose. and my question is given what is happening in italy, what happened in the u.k., what is happening in the u.s., is this a losing game for globalization? andrew: i think the world is exhaling and globalization will suffer.

if you are middle class and you worried about your family and jobs, globalization takes a backseat. takesalism and democracy precedence and globalization gets pushed aside. this is about people who are concerned about their livelihood. vote, leading up to the italy's market showed little signs of panic. and now that it is a fact, will we see a major selloff? andrew: i think the euro will weaken, but no selloff. european economy is stagnating except for germany. there will be a little bit of selloff but not necessarily a call for the end of the european union. markets will be relatively orderly going into the end of this and we will wait and see what happens with the italian banks. that is the real story for the stock market. anna: --

shery: banks in italy are fragile. stand now that this defeat -- this noble has happened? banks: this is about balance sheets globally, not just in europe. i think what we are starting to is we are starting to move towards resolution of the crisis. banks are already moving that way. this is probably the third or fourth bank restructuring in our generation a loan. in the u.s., europe, and other parts of the world including sweden. towardsll be a movement good banks versus bad banks. that is what we will see on the market side. betty: thank you so much for joining us, andrew.

we leave you with live pictures of renzi giving us a speech at his room residence after -- at his rome residence after exit polls show his defeat regarding the constitutional referendum. more on that coming up. this is bloomberg. ♪

renzi prime minister speaking right now and conceding defeat in the italian referendum. i want to read you some lines coming from his speech. he says i have lost. we have failed in convincing citizens. a defeat is win and my responsibility. i did all i thought was possible. i want to know that the markets are reacting. the euro is down 1.5%, most against the dollar since march 2015. andrew, we wanted to keep you

back on this as we are seeing this market reaction. do you expect this to be an ugly reaction in the markets as this starts to sink in? probably we will have a knee-jerk reaction against the euro. hartley because of politics and the referendum and concern over the dissolution of the european union. i think that is a little bit too overreactive. we will start to see some stability. the real weakness of the euro will come from the differential in growth between the european union and the united states. the dollar is picking up strength. the yen is also picking up. this is more about a big short position against the euro needs to play out and work its way through. the euro will continue to weaken against the dollar but in a more orderly fashion. betty: thank you so much again, andrew. officially, the prime minister

says he will offer his resignation to the president. he will see him tomorrow and will then offer his resignation. we will keep our eyes on all the we will keep our eyes on all the developments we will keep our eyes on all the developments i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a networ comcast business. built for security. built for business. hey, drop a beat.flix? ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪

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a.m. on monday here in hong kong. a gorgeous day to start the week 30 minutes away from asia's first major market open. betty: 6:30 p.m. here in new york on sunday evening. it looks like a beautiful and clear evening sky. on markets closed mixed friday. two signals coming out from that friday jobs report although it is still a pretty robust jobs number. shery: i am shery ahn in hong kong. let us get the bloomberg news. haslinda: the italian prime

minister renzi says he will offer his resignation tomorrow after losing his referendum on constitutional reform. the euro fell to its lowest since march 2015 as he conceded defeat saying the people have spoken. the anti-establishment five star party leader is seen as the big winner. his party is never and that with renzi's democrat in the prime minister says he will now offer his resignation. he is expected to meet the president later on monday. south korea's three opposition parties have filed a motion to impeach the president rejecting her offer to resign for allowing a friend undo influence. parliament will vote this week on the issue which has the backing of all 100 71 opposition lawmakers and independence. they will need support from dissenters. to achieve the 200 votes required to pass the impeachment bill.

the sale of ac milan to chinese investors may be held up. we are told that sign a europe investment asked to delay the deal until next year as it awaits the go-ahead from aging. the payment of a nonrefundable deposit is said to have been discussed to facilitate the delay. the company did have funding in place when it agreed to the deal. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i am has haslinda amin. this is bloomberg. look at how the asian markets are doing early this monday as we had so many headlines out of europe including the italian prime minister runs a -- renzi conceding defeat. currencies are in focus as investors follow developments in italy. david: a lot of movement in the currency market. there is a move out of european concert -- currency.

out of high-yield as well into safe havens like the yen and the dollar and gold to a lesser extent. euro-dollar, 105, 32. a drop since the brexit vote. back to march 2015. we are watching the key crosses. looking at the pound. we are also seeing some weakness coming through there. euro-pound. when you look at the current level right now of this cross, let us go back 12 months. for the first time, we are looking at possibly if the downward momentum continues, it is looking to hit a 200 moving average for the first time since december 2015. this time last year. 83.33. the 200 moving average.

81.21. roughly at that level. as i mentioned, moneys moving back into the japanese currency. euro yen. interesting to see if we chart this out. caught in between certain key levels. 119.43. have a look at where we are on the japanese currency. one day move. here ons the euro level dollar-yen. , nikkeiull up futures futures? about an hour and a half ago, i now weking at gains but have developments in italy and more certainty that mr. renzi will be offering his resignation

to the president tomorrow and we are getting declines at 0.6%. roughly, we could be looking at declines at the open in tokyo at 0.7% or 0.8% at the open. inupdate of the markets asia. afx, 1% down. -- asx 200, down 1%. everything is risk averse at the moment. betty: a lot of nervousness in the market in the equities and currencies and the euro. the spotlight is firmly on europe, just four days before the ecb holds its final meeting of the year. kathleen is here. the outcome of the referendum is critical for italy but what about for the global markets? >> more and more, there is a? mark there is a question over the european union.

i want to jump into the bloomberg to look at a chart. suggesting just how much traders were bracing for this. how much of the liquidity is drying up. you can see what happens around brexit and this vote. this puts the market are ready on edge. this willknow how play out according to bloomberg intelligence. carl weinberger points out that all of the issues about banks may be getting bailouts. if they do, that goes against the ecb rules. it raises a lot of questions. bloomberg news is arguing that the european elections in italy, moreustria are putting onus on the european central bank to provide stimulus and some stability while europe goes through this. policymakersre the thinking about? >> you have one more thing to

figure out. i love this headline. mario draghi is ready for one as they go to the stimulus finale. people are talking about the ecb extending qe which currently and in march. possibly another six months. 89% in our latest survey show the ecb tapering by the third quarter of 2017. this is our december survey. the orange number and the blue is the previous survey. the biggest bar is the orange bar. people have changed their view because growth is picking up and inflation. is employment is at a seven-year low. on thursday, the ecb will issue its updated economic forecast. this will support or refute the

views of investors in the market. betty: the italian referendum is now out of the way that what else is big on the european macro front? we have the payroll report on friday. quickly that you net newbar is showing jobs in line with forecast. unemployment was the shocking headline -- down to 4.6%, a nine year low. wages pulled back a bit. we will be listening to three fed speakers on monday. we have the president of the new york fed and we have the president of the chicago fed and the st. louis fed. and government -- governor kuroda talking in tokyo. india. reserve bank of

a lot going on around the world. we will be watching for the fallout of the italian referendum vote. fory: thank you so much joining us. our central bank watchers. in this group are looking like this. this infrastructure company confirmed it has received an unsolicited dollar bid from hong kong's infrastructure pipeline assets. paul allen is here. hong kong billionaire is making another multimillion dollar play here for aussie assets. what are the details? this bid is 5.4 billion u.s. dollars. three dollars per share. a healthy premium. week's close afford duet. close for they have multi-net gas.

they own two thirds of victoria's united electricity distributor. and the pipeline which is a guest pipeline in western australia. a fairly diverse set of assets. this is some ways off from being a done deal. --t has confirmed the deal has confirmed the offer. it would also have to get shareholder and regulatory approval. what happens next is the board will offer this up. -- paul, his last effort to grab a slice of the utilities in australia did not go so well. paul: it was a bit of a misfire. when the ausgrid was put up for sale. two offers were knocked back by the government.

citing security concerns. there is no chinese government involvement on that one and the prime minister caught a bit of -- caught a copp bit of criticism for knocking back that deal. -- theionalist won nationalist party did quite well. thank you so much. on duet. higher rates and currency volatility. donald trump. what are the biggest threats for the asia-pacific. that is next. this is bloomberg. ♪

betty: this is daybreak asia. i am betty liu in new york. in hong am shery ahn

kong. more on the top story. the italian prime minister says he will quit after losing his referendum on constitutional reform. the euro fell to its lowest since march 2015 as it renzi conceded defeat saying the people had spoken. andrew davis is a former bloomberg rome bureau chief. we know that renzi will be resigning. didirst said that and then not comment again with interviews with the press. what will come next? andrew: he will have to present his resignation formally to the president who will then have to make a decision on what is next. it does not mean that we will have early elections. we will probably not. probably a new government. a comeback.make he is still head of the party. likely he will lead it into the next election.

it would give him a lot of legitimacy if he one thing. the last three times prime minister's have not in elected. i would not count out renzi. betty: there is more to come. that uncertainty will breed volatility in the market. what does this mean for the italian on to market and the banks? hit the nail on the head with the banks. there is a lot of concern about the banks. the italian banks are saddled with bad loans. strugglingaschi is on the brink. if investors lose confidence in italy and monte dei paschi struggles. i think we will see some real turmoil there. i don't think it is any surprise. italy's economy has been tremendously week and they have had a slow recovery from the post financial crisis. their growth is anemic. they have had a huge debt level

second only to japan. people are aware of it. people are aware they have a huge debt level. betty: what about the other thing to watch which is, is this an opportunity or opening for an exit out of the euro? thatw: frankly, i think narrative has been overblown in this case. a populist party, anti-euro that is gaining ground and they lead the no vote. but does populist party backing the status quo, backing a bloated parliament that cannot get anything done which is what renzi was trying to address. you basically have this populist party backing the status quo where renzi who is a political outsider is backing change and

shaking things up. i think that narrative has been overblown. this could help the five star party if it is seen as having led this effort to defeat renzi. renzi made the mistake of personalizing this and making it about him. he opened himself up to a lot of protest votes by doing that. betty: including rallies across italy. fine that heis made the mistake saying that if i lose, i will resign. i think that came back to hurt him. shery: thank you so much for joining us. andrew davis. we are talking about the aftermath of the italian referendum with the euro plunging. currency volatility. and this may be one of the key, top credit risks facing asia next year according to a nor -- according to a new report.

let us look more at the credit rating. from chan joins us now melbourne. we have seen the results of the referendum and what this is doing to currency markets. how much is all of this happening in the political space exacerbating the risks for asia next year? >> you hit the nail on the head. any political risk is affecting the market. electioneen post u.s. that there has been a stronger u.s. dollar, a selloff of emerging-market currencies. anything between 2% and 10% in asia. now, we are seeing it in euro. hasncrease in uncertainty that effect on investment. investors become cautious. a flow into gdp growth.

we are watching to see what the impact will be on asia with the currency movements in recent weeks. shery: headline growth rates have not moved much in asia. where is the region headed in terms of growth and how will debt problems play into this? expectt, in asia, we do a flat growth going into 2017. it is a mix of different countries. china continues to slow down which does affect importing industries. but we expect japan to pick up from 0.7% this year to 1% next year based on momentum. -- around 8%. ok with a bit of a caveat because -- becausetization

of the demonetization. growth is flat but it is a mix. betty: we are talking about china's debt problems being compounded by the fact that president-elect donald trump during his campaign has pledged a trade war with china. it could exacerbate the problems there. what does that mean for china and for the other countries in asia that depend on china for sending their manufacturing and services there? take a look at the bloomberg. trade flows with china -- so many asian countries depending on trade with china. affect -- how will that complicate asia's credit quality concerns? scenario -- the

donald trump administration imposes tariffs up to 45% on china's imports into the u.s. and that will have a -- that will have an effect on other countries. countries including malaysia, indonesia, and parts of singapore and hong kong and even australia. definitely, if that comes up, that will slow down export growth in gdp growth. of course, the devil is in the details of when this is going to be imposed. but any increase in trade restrictions will be negative. betty: what you mean by the recent global selloff of bonds -- that they have not been fully transmitted to local credit spreads. what could that mean? when we tendally, to look at credit spreads, we the markets including

the u.s. and the u.s. dollar. what we have seen in terms of spreads going up, we have seen upcross-border bonds going 25-40 basis points. the impact has been much more muted. because of two things. the banks are still the largest provider of capital to borrowers. and second, there is a home buyers in terms of local investors investing in names that they know. debt fully seen transmitted into local markets cap. betty: hang on one second. we are getting some headlines out of new zealand. the prime minister saying he will be standing down as prime minister. the national party can win the

2017 election. he says it is a good time to go. new zealand's prime minister key saying he will stand down but believes the national party can win the 2017 election. pretty apropos, talking about political uncertainty and the risk to the world economy. it seems every day we are seeing some more turmoil in different countries. we will have to leave it there. thank you for joining us. talking about the global risks. much more ahead. president obama blocks a chinese acquisition. we will assess the impact of his decision. this is bloomberg. ♪

betty: president obama has blocked the sale of german

semiconductor equipment supplier aixtron to a chinese me. we have more on this. this is all to do with national security. suggestiony, this comes from what is known as a committee on foreign investment in the u.s. was established in 1975 and it has a mandate that authorizes it to look into potential transactions when a foreign buyer goes into the u.s. looking for an acquisition here especially if there is an impact on national security. aixtron is a german-based company. how does that impact the u.s.? the company has a u.s. unit in california with 100 employees and it makes semiconductors, specialized semiconductors using a special kind of technology. they go into things like solar cells and leds and of importance here is lasers as well as

satellite communications and radar. it is saying in its statement that the national risk imposed by the transaction relates to the military applications. going with that recommendation has a quote saying there is credible evidence that leads me to this may take actions that could threaten the national security of the u.s. he is going to prohibit that purchase. betty: thank you so much. to go over some of these headlines coming out from the new zealand prime minister. thing he willey stand down as prime minister and he will offer his resignation to the president saying he is not a career politician and he could not have served out his full term. the key we right now is falling is following right

now on the back of these headlines. he does believe the national party will win the 2017 election. we will keep our eye on what is going on in new zealand and a lot more ahea

♪ >> renzi to resign, the euro flies, he says his government ends now. , trump is auncing diplomatic trick. >> the president elect has a ning for america, moving abroad would be a mistake. >> concerns about national

security. >> this is the second hour of "daybreak asia". it is just past 8:00 a.m. in hong kong. >> i am betty liu. a lot of news breaking over the last hour. we heard officially from the prime minister of italy that he will be offering his resignation , the same in new zealand as well, saying he will be offering his resignation to the president , so too parallel motions here, equal volatility in the markets on both sides. in new governments coming in italy and new zealand, investors digesting all this on top of news from the political space. we have a lot of data, including china pmi services data, inventories, inflation, japanese consumer confidence.

investors have a lot to digest today. the markets that are open are in the negative. let's get a check with the david. it is 8:00 a.m. on monday, and i am already exhausted. let's have a look. it is risk off. we've been talking about italy. s&p futures down .4%. keep in mind that things look worse earlier on, so things have come off lows, but still a lot of money coming out of high-yield back into safe havens point 35%.ries, two gold getting a decent bed, .3%. have a look at the open across the japan and south korea. .5% underwater. at one point, australia was down 1%. is the news there

announcement out of new zealand, the prime minister stepping down. a caucus will be voting on a new leader december 12. we will be fleshing got out in a moment, but reaction in the markets, down .3% lower. have a look at the bond markets. 10 year treasuries, let's measure that move down, there we go, three basis points. get started this monday, jgb's down everr so slightly, so risk-averse this monday for all of his reasons. is declining, down to levels not seen in 18 months. >> right. it takes us back to march 2015. almost all the low

between 105. look 105.74.hings just to show you on my chart when the announcement came in for mr. renzi that he was conceding defeat. it was roughly at this level here. 105.67 is your current level here. have a look at the kiwi dollar, below $.71.p, with the longer-term chart, you can barely see that. you so much. the tie-in prime minister matteo quit afterg he will losing his referendum on constitutional reform. as we mentioned dropping to its lowest level since march 2015 as renzi conceded defeat, saying the people had spoken and he has lost.

what is the situation now? yes, he has conceded defeat, a crushing defeat. there was a chance he could lose, but no one thought he would lose by this much. this means he is leaving. this means a lot of uncertainty for italy in the days and months to come. >> what happens next year? at this point, he will go to the president. it is in the president's hands. he will have to decide who will form a government next. there are some names bouncing thend, maybe perhaps finance minister or the speaker of the house, then likely the president will say that government has goals it needs to accomplish. one of those might be the electoral law, and possible

early elections, but hard to say right now. >> what does this mean for italy? this was a high risk european political event. >> exactly. you are talking about the euro just now. some analysts told us it was already priced in, but from what happened, apparently it was not priced in. the referendum created increased uncertainty, and this is another unpleasant surprise for investors because people don't know what will happen next, and you have elections coming up over europe, france, the netherlands, germany, and possibly a referendum in fanned, so this creates proms for italy and for europe. so much.you we will discuss the follow-up inm the referendum result just a few minutes, but for now,

let's get to first word news. backeda: a green party left this will be the next president of austria, ending a run of right-wing anti-immigrant victories around the world. almost 52% ofk the vote and later said elections could be won on a pro-european platform. it defies media projections of a tight race and ends acrimony. more political headlines, the new zealand prime minister says he will step down after eight years and office. he says it is time for someone else to lead the national party. expects the party to win and form the next government. has blocked aa sale to a chinese company, the

first time and a quarter century that the white house has rejected a buyer at risk to national security. the treasury department said the president of held the that it should not go through. with a bank inck china. shanghai authorities have warned the young and elderly to stay indoors. reading of air quality was a fraction under 200, 8 times the internationally agreed danger level. asjing's air is rated unhealthy today, but not quite as bad to shanghai. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. trump has taken on china via social media, hitting back at criticism of his decision to take a phone call from the president of taiwan.

tom mackenzie is here. what has the president-elect been tweeting now? tom: some recent tweets from donald trump, couple of them focused on china, and he asked rhetorically did china ask if it ,as ok to devalue the yuan impose taxes on u.s. imports to china, and build up what he called a massive military complex in the south china sea. apparently stunned by criticism domestically and in china about that unprecedented call that he took from taiwan's president on friday. that was a call of course that the president of taiwan hoped and that would put a spotlight on taiwan's diplomatic isolation , though acknowledging intentionally the risks of backlash from china. tie one sees china as a belligerent and authoritarian neighbor that is intent on

crushing any steps it takes toward solidifying its the fact oh independence. china sees taiwan as an integral part of its territory, at a time when it is seen as going public policy success with this now. low in one president is polls, coming in at 26% last month, and the economy is sluggish, expected to grow at less than 2% next year, but this call that broke with the diplomatic convention potentially risks further pushed back from china in the weeks and months ahead. >> what reaction have we seen so far from china? we heard from china's foreign minister, who described this as a trick played by taiwan, trying to keep the focus on taiwan rather than escalating tensions with the u.s.

we heard from the state media, one newspaper saying taiwan would pay the price if it did soy with the status quote, some strong words from the global times, a nationalistic newspaper, so no big surprise there. china does have leverage it can use against taiwan. there were a number of agreements signed, economic agreements, china could target those. seen tourism numbers fall off since the election. she heads up a pro-independence party. china has stopped communication between the island and beijing on her election, and also reduced the number of tourists. it could continue to do that, and it could send military aircraft into taiwan strait and put pressure on some 22 remaining countries that see taiwan diplomatically, for example panama.

>> thank you so much. the ever growing complicated relationship between the u.s. d china. still ahead, after months of anticipation, the hong kong, shenzhen link will get underway. we will be live at the hong kong stock exchange later in the program. >> our next guest sees chinese and russian assets safe. we will talk investment strategy. this is bloomberg. ♪

♪ this is "daybreak asia". >> a quick check of the latest business flash headlines. has securedp approval for a coal line. the $16 billion project faces opposition from environmentalists. is expected to meet

the prime minister on monday to discuss funding for a 32 columbia rail link. hiring instep up china despite the slowing economy and increase retail bank staff. the pace of hiring may accelerate as it expands into manufacturing hubs. hsbc launches a credit card business in china on monday, having one regulatory o approva. narendra modi's crackdown has sparked an investigation into two declarations totaling more than $31 billion. a family of four told the government it had even eight attacks on $29 billion of income, a fortune which would india'sm welfare than richest man.

another revealed $2 billion of the legal income. both decorations were rejected. our top story, italian prime minister matteo renzi has lost his referendum on constitutional reform and says he will resign, meaning more uncertainty in italy and the eurozone. let's discuss that with the head of global asset allocation at societe generale. >> it is great to see you. a lot of news today from the political space. we have a lot coming out of europe, also a new zealand prime minister resigning. how does all of this factor into your market strategy giving what we are seeing the euro do since this defeat for renzi? in thet of all, it is currency markets that when you make a link between global politics in one country in the markets, so you have

uncertainty. right, does this affect at all the feds outlook? you give the fed three rate of 2017, thehe end giving the mixed picture we got from the jobs report on friday, would you be reassessing this? underline you have to the forces, the strength of the u.s. economy surprising on the upside and which should force the fed to act. the dollar is one of the most expensive currencies in the world already. it would mean the competitiveness of the u.s. economy would be ructurally damaged, and that is a dent in growth expectations. the job for the federal reserve

is not an easy one. you have to bring opposite forces. if they raise too much, that hurts the u.s. dollar. now that the no-vote has happened in italy, do you see meeting to extend its qe program if there as a crisis in the banking sector in italy? >> first of all, i don't believe it will lead to a major crisis in italy. what you have is the prime minister, who was forced, he did not want to do it, but from the regulations in law, he has been forced into that. towas a good one on change adapt and reinforce the constitution, but in the end, the referendum was in favor or against the prime minister, and there are so many people who did

not respond, 60% against the referendum itself or the changes. in the end, the major question we are facing in italy, the most important one, is are we going to have early elections for the parliament or not? as you may know, the parliamentary elections are ineduled by may 2018, and italy, they know they have to change the electoral rules, so the big question in the days to come is are we going to have an anticipated general elections or not? our view is that there will not be. you will have an interim government after renzi resigns. expect a major crisis, the euro is going down today. would be the safest

places to put your money then? >> i think at the moment the situation is more global. -- what we are having for the g 10 currency is a major switch out of monetary andcy into fiscal infrastructure investment. and asset allocation into equity markets, driven by growth expectations, so we advise to go into equities, especially u.s. equities. >> what about japan though? >> the benefit is the mix.ordinariy policy you have a referendum in september, and another by

january 2017. the bank of japan can add to the uying program, and that will send the yen down. we are expecting 120 against the u.s. dollar. we know the equity markets move up when the yen is going down, on top of the boost to gdp growth. marketsthe japan equity . we advise to hedge the yen. >> thank you so much for joining us. much more ahead, a hong kong billionaire making a bid for an austrian group. details on that coming up next. this is bloomberg. ♪

.> this is "daybreak asia"

i am shery ahn. >> i am betty liu. up 15%in duet group after the austrian infrastructure company confirmed an unsolicited dollar bid from hong kong for its pipeline assets. allen,et more from paul li ka-shing making a multibillion dollar play for assets down under. what are the details? 5.4 billion dollars is the bid, 7.3 billion australian, three dollars per share, a 20 8% premium on last week's close. owns a bunch of assets, gas just riveter's in victoria, i share of electricity

distributors there as well, and the major gas pipeline in western australia, but this did has a number of hurdles to clear. bid is incomplete, in decorative, unsolicited, and nonbinding. the board will weigh this up and decide whether to allow them to hold due diligence, but even then, there will still be hurdles, the foreign investment board of review, the regulator and australia, and the shareholders as well. they would all have to sign off on this bid for it to proceed. >> this comes on the back of li ka-shing's last attempt to grab a slice of utilities that did not go as planned. inl: that was did did back august -- bid back in august. both bids were knocked back by in one case for

national security concerns. a lack of clarity because that was a private company. bit of politics around that one. it comes after elections when national parties did quite well, so not surprising. this time, could be better look -- look for li ka-shing. >> thank you so much. months of anticipation, the stalker link between hong kong and shenzhen began operating on monday, giving foreign investors access to more than 800 stocks in china's southern financial of, while opening 100 smaller equities to mainland traders. it is part of china's efforts to internationalize its currency and get shares into the msci global indices. >> environmental protesters have

won the victory. the army corps of engineers says there is much work to be done, and alternative routes must be explored. pipeline was to cross land sacred to native americans and prompted a standoff between protesters and soldiers at standing rock. up next, donald trump takes on beijing about its currency in the south -- and the south china sea. we will have the latest reaction. >> and reactions online to italy's referendum as the euro continues it slide. here is paul krugman from the new york times. more details to calm. -- more details to come. this is bloomberg. ♪ ways wins.

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>> it is a: 30 a.m. in singapore. >> looking a little bit ominous in the skyline. i am betty liu. you are watching "daybreak asia." the top stories this hour. saystalian prime minister he will resign after losing his referendum on constitutional reform. the euro fell to its lowest since march. people are saying they have spoken. the no vote at about 60% support

with half the ballots counted. the leader is seen as the big winner. donald trump has used twitter to renew criticism of china after backlash of a phone call with taiwan's president. the president-elect tweeted that beijing did not ask the u.s. for permission to devalue its currency nor to build up its military presence in the south china sea. trump floated decades of diplomatic protocol by speaking directly with the prime minister. south korean parties have filed a motion to impeach the offerent, rejecting her -- they have the backing of all 171 opposition lawmakers and independents. they will need support from the tosus for the new party achieve the 200 votes required to pass the impeachment bill. the chinese have offered plans to put chairs at nine dollars

for the ipo. the group has agreed to be cornerstone investors. aims tor of the app offer 575 million shares, potential raising 710 million dollars. global news, 24 hours a d powered by more than 2600 journalists and analysts and more than 120 countries. >> asian stocks are under pressure as investors are flooded with headlines from the political space this morning. here is david ingles. >> they are shaping down. things are sort of stabilizing at the moment. euro, we fell as much as 1.2% against the dollar. almost breaking below 105.

have a look at the dollar-yen. the yen is now weaker against the u.s. dollar. one thing that i want to watch is, when you look at the euro-pound. when you look at the 12 month chart here, you look at the 200 day moving average which is roughly at about 81.21. the last time it was trading ago, that was 12 months before we came to the new year. that is coming to watch. at how we are doing across the bond market. these yields are coming down. when you look at the u.s. 10 year, we are done for the second straight day. australia is down eight basis points below 2.8%. equity markets are doing this.

volumes are picking up. in about an hour's time we will be watching in other news the shenzhen hong kong stock takes off but it is not exactly the best time to get underway. as i mentioned, things have stabilized somewhat over the last 15 minutes. not quite sure when europe opens up and when italian banks are trading on monday. in europe i will close my eyes because that will not be in favor. betty: thank you, david. president obama has blocked the sale of german semiconductor equipment supplier to a chinese company. centers on a risk to u.s. national security? >> definitely. this recommendation comes from a committee on foreign investment in the u.s., known as cfius.

it has a mandate to look at foreign buyers who come to the u.s. looking for deals but if there is a national security concern, cfius will raise a red flag. a lot of people might not know what axtron is. it is actually german-based. so what does it have to do with the u.s.? it has a unit in california and employs about 100 people. it makes semiconductors there. cells,o into leds, solar and laser and satellite medications as well as radar. that is a huge red flag for .fius they say the red flag on this transaction is relating to the military application of the knowledge of axtron. with. they cfius recommendation, president obama has taken that cue and issued his own

declaration saying there is credible evidence that leads me to believe that grand chip investments through exercising the control of the u.s. business might comparetron the security of the united states. the end result is, the proposed sale of aixtron is hereby prevented. betty: it will also have an impact in asia. explain that to us? this is a great function here called supply chain. splc here. this is for the company aixtron. for the middle we have been, german-based and on the right-hand side, those are the customers. is northrupstomer grommond. they make fighter jets as well as radio jammers.

general electric, dow chemical and merk are also part of that list. a lot on the table in terms of the knock on effects. shery. >> thank you so much. the spotlight is firmly on europe just days before the ecb holds its final meeting of the year. bank watchers joining us here. italy has rejected the chance to shake up its politics and the prime minister is quitting. tell us why this matters for the global market. >> we havseen all kinds of instances when something happening and one part of the world can reverberate to the global market. david was showing the moves in the euro. we are seeing the yen strengthened against the dollar. we already know that this is something that traders and investors around the world are watching very closely. let's see what they were facing ahead of the home. v 45.is #bp

right in the middle of this you see, the late june brexit vote. more liquidity can cause more work it moves. called winer writing -- carl weiner running ahead of the election result saying a no vote could make people wonder about eurosceptics gaining more power but some big capital is very theirant to the ecb and qb calculations have already started to leave italy. so this is a big question over how this will be viewed by the ecb. and that decision coming up on this thursday. what are they waiting this week as they get -- what are they weighing this week as they gear up? >> if you are in europe or italy there is a question mark over

the history of the euro and the euro currency. this is a time when the ecb can stay on the path it has been on, which is providing stimulus through quantitative easing, and bond buying purchases. this is what they were expected to do anyway at a meeting on thursday. people are talking about them extending the program for six more months beyond march. a bloomberg survey shows that 89% see some kind of tweaking, and something will come out. because growth and inflation are doing better. this is an interesting result from that same survey. in the december survey, people linelooking for the blue that says ecb started tapering at the end of the fourth quarter and now they are moving it to the end of the third quarter. we have unemployment down to a seven-year low so this is one thing hastening that expectation. betty: what else is on the

global macro front? >> we have three figures tomorrow. one of them is the president of the federal reserve bank, bill dudley. it will be interesting if they say some thing about the italian vote. this will not slow the fed yet. they are focused on the economy. last monthent report is strong enough to support that. at the bank of japan, governor kuroda will be speaking in tokyo. will he be talking about the yen? it is going against the grain. they want a weaker yen to help the economy. and we have to reserve bank in india meeting to cut the economic rate. the reserve bank of australia is in a tight space. maybe they would cut the rate but it might hurt their credit rating. you can find that story on your bloomberg. betty: kathleen hays with a look ahead at the week. looking at the week in markets we have a fresh round and economic numbers and is

continuing headlines related to the presidential trend here. awe were talking about with tom earlier, donald trump was at it again on twitter. >> sending a shot across the about -- across the bow to u.s. companies. workersthink of taking offshore they will be hit with a tax. coming across in a series of tweets, just when you think his account was taken away. let's look at what he says in one of the posts on twitter. any is this that leaves the u.s. for another country, fires its employees, builds in a factory in that other country, and things that it will sell its products back in the u.s. without consequence or retribution is wrong. he is telling companies to be forewarned, he is going to put together some kind of tax that will make them feel sorry like expensive made an '

mistake." earlier, ford scrapped its plans to take the plant offshore and last week trump directly intervened in a plan by carrier to take a plant out of the country. he is drumming up some success. mr. criticism? -- is there criticism? let's go back to the bloomberg #btv. there is a huge hole and manufacturing jobs which is what trump is trying to fill but on capitol hill some are skeptical saying, if you tax the companies you will raise the price of products and it could hurt the price of -- it could hurt families. this has yet to play out. betty: let's talk about eco-data this week. what are we expecting? >> we have a lot of reports hitting the tape. most of them forecast -- let's look at what is expected. economists that bloomberg are

saying we will likely get u.s.ts showing a robust service industry, particularly retailers and builders likely to grow at a stronger state. economists predicted -- projected solid sales. and we will be getting a report on the trade deficit. this gap likely widened in october due to a pickup in imports which is seen as widening as the u.s. markets prepare to open monday. the economic reports are taking on greater importance because we are in coudown mode. >> su keenan in new york. coming up on daybreak asia, the shenzhen singin -- stock affect finally arrives in the next hour. we will see how it affects the markets.

shery: this is "daybreak asia." betty: i am betty liu here in

new york. a quick check at the business flash headlines. sources say this investment firm is a front runner to buy pioneer global asset management. aey are said to be closed deal for pioneer valued at $3.5 billion. about $240rsees billion and it would be one of the biggest acquisitions and propel it into the top rank of money and injures $1.4 trillion in assets. betty: one of -- shery: one of scandinavia's biggest asset managers is adjusting its portfolio to reflect a lack of confidence in the euro but growing faith in the u.s.. they plan to adjust its investments so that it is no longer on the way to the u.s.. that reallocation primarily affects fixed income and real assets and equities to a lesser degree. >> disney's "moona" led the box

office again. the animated tale generated just over $20 million in its second week, beating estimates by $7 million. theaters and fans await the new "star wars" picture on december 16. universal's over film was the only new release to break into the top 10. after months of anticipation, the exchange link between hong kong and the shenzhen is set to open. let's go to stephen engle who is at the hong kong stock exchange. after months and months, the day has finally arrived. >> that's right. we are sardine and into the press area with a gong behind us that will be struck at 9:30 launching the much anticipated hong kong-shenzhen stock

connect. we will have the heads of both stock exchanges as well as the hong kong chief executive. he is expected to speak at about 9:20 this morning. giveis going to institutional investors access to the booming side of the chinese economy. 40% of the stocks rested in shenzhen are related to the consumer sector which the chinese government would like to promote as they diversify their economy. shanghai is dominated by the banks. wethe renminbi has weakened, have seen for an interest in the shanghai connect which was launched in 2014, start to wane. we are looking at the shenzhen having a conduit for institutional investors a better representation of the chinese economy, that has really

bifurcated right now. mainland investors will get better access to hong kong shares. we are awaiting for the dignitaries to speak and the gong will be struck. >> then it will begin. stephen engle at the hong kong stock exchange. what does it mean for china's inclusion into the msci indexes? let's bring in our next guest, nicole yehn. there is a lot of excitement at the exchange, for this link. could it be that there is so much excitement but it will and up being actually disappointing for investors as some are saying? i don't think it is right to success bye it, the the initial day or days trade volume.

as the most seen important market opening event for the last 13 years since the 2003.g of the two fee in this is of strategic significance to the liberalization of the chinese market. the stock connect was open to the shanghai link to years ago and we complete the process with the opening of the shenzhen. beyond that, as you reported earlier, the shenzhen market is very much full of new economy sector stocks, allowing investors to access the new economy, or what we call the future of china. in that sense, the shenzhen-hong kong connect their significant importance for the whole china market. shery: your point -- betty: your point is taken. from your point of view, what would spell success for you? what are you hoping for in the first few days?

what would spell success? >> the most important thing is that it be smooth sailing and people can access the market. that there is no technical hitch. the third is a smooth transition of a lot of interest from shanghai to shenzhen. we are seeing domestic investors investing into hong kong. with the technical glitches being away and as investors, getting more familiar with shenzhen stocks i'm sure that the fund flow going forward will continue. fee, youu mentioned q have been nicknamed the queen of it. how much progress has china made with the start of shenzhen connect and the already existing shanghai connect? >> the progress of the shenzhen

connect is to allow investors to go into the martic knology side and the more economic areas of the market. that is where the shenzhen is different from shanghai. few limitations existing for example, repatriation on the type of holdings they could have. are has been a huge flow southbound because of the depreciation of the renminbi. which sectors will gain the biggest boost? >> i would believe that the themes will be the discounts. the aha discount.

it will still be very attractive. i would also think that some devalued stocks will be interesting for domestic investors to diversify. that is why we have been very keen to start our own -- our onshore business, just in time for the shenzhen connect. we expect quite a bit of southbound flow in addition to the northbound flow into china. betty: good luck on that new project. en.ole yu why older people are spending more in japan, and have it is affecting the economy. this is bloomberg. ♪

betty: this is "daybreak: asia." i am betty liu in new york. shery: i am shery ahn in hong kong. senior citizens are spending as younger consumers are holding back on pursestrings. i went to bring the north asian economy editor henry honig. what does this tell us about japan and its spending patterns? >> this is a great story for in termsapan's seniors of the lifestyle they are enjoying after retirement. this is a bad sign for japan's economy.

working age people should be driving consumption and spending more. in japan it is not so much that seniors are spending a lot it is that their numbers are growing. meanwhile, working age people are spending less and saving more for retirement, ironically they are quite concerned about having enough money to survive on retirement. people who have already retired are generally with more assets and stronger pensions. is there an upside? >> sure. the elderly in japan are spending quite a bit more on certain things and that is certainly helping support the economy.

they're are looking to stay healthy and have fun and in addition to health care they are spending quite a bit more on travel and leisure activities, gulf, gym memberships, dinners with friends and at home they are buying things like massage chairs and bigger tvs. thank you, henry. it is interesting to see the choices between generations. plenty more to come. bloomberg's markets asia is up next, shery. shery: we're counting down to the open of shanghai and hong kong. ♪

♪ 9:00 a.m. in singapore, midday in sydney, 8:00 p.m. in new york city. i am rishaad salamat. haidi: i am haidi lun. this is "bloomberg markets: asia." ♪ rishaad: renzi to resign, the euro sliding to 20 month lows as the italian prime minister loses his referendum. years john key says eight is enough, he