♪ >> trading places, we are coming down to the latest exports data from china, with strong numbers expected. ask the u.s. deficit reaching a five-year high in january. trump prepares its case against beijing. wikileaks says the cia could hack into smart devices. thousands of documents show agents can monitor our messages. on international women's day, the governor of tokyo says she wants more female politicians in power. this is the second hour of

daybreak asia coming -- asia. >> it is after 7:00 here in new york. we are fresh off of those revised gdp numbers coming out of japan. as sometellar economists would have expected. up 0.3% quarter over quarter. hading what economists expected, 1.5% for the fourth quarter. >> it was amiss for that. the biggest driver they were talking about was capital spending. that was just 3.5 percent. it swung into positive territory. we can see a little less optimism here. that gdp deflator, three straight quarters in negative territory. we continue to see the negative territory. looks a little murky for japan. let's go to the market.

a final reading, big changes were not expected. when it comes to the growth outlook we see the yen strengthening. those gdp numbers came in below estimate. the surplus narrowed to the smallest in 2.5 years, a slight concern for trade. take a look at the reaction in tokyo. let's look at what is going on with the nikkei 225. japanese stocks dropping 1/10 of 1%, a drop for a fourth today. japanese stocks making their way to play the reflation story. i want to focus on what is going on with toshiba, climbing to over 3%. aporting they have set deadline for shipping this month. more than 10 major companies having expressed interest. potential contenders include foxconn and others.

and on the toshiba front, black rock, the third biggest oil company, has lent out more of its shares and made a surge in short interest. ,ake a look at korean stocks dropping 1/10 of 1%. minister is finance saying the company is trying to minimize losses from issues with china. we will take a look later it consumer stocks. says -- despite the issues we see with china. we have thoseat japan gdp numbers out of the way, we will look to trade data coming from china. the strong rebound for exports in january. >> that is outlook that has been given by the survey from bloomberg. we look at 35 institutions.

in forecast is for exports dollar terms to increase 14%, year-over-year. imports of 20%, year-over-year. we have to look at data from january and february. when you look at those, and accounts for the fact that there was a holiday. last february we saw a drop in shipments. we will focus on the base effect. in a report on the weekend they did say china trade continues to pick up. and bloomberg intelligence saying 2017 is positive for exports, given the weakening yuan. and donald trump policies will be a huge factor in what happens, going forward. notable has made a shift in language regarding the chinese currency. how will that affect trade ties? in the report they said the exchange rate would be further

liberalized. and the stability will be maintained. they had a report from the shanghai securities saying the deputy governor has said china will steadily promote international valuation. advocating this for many years. however, liberalization at this point could mean a weaker yen. -- the u.s. has already been complaining about the trade deficit with china. >> we also had data showing in january the u.s. racked up the biggest trade deficit since march 2012. that having to do with this widening gap with china. >> exactly. $31.3 billion. and the commerce secretary the china as past,

a major nation. a chorus of former officials expecting their concerns about a possible trade war with the the, saying they will help nation. there was a huge volume of trade between the two countries. we have the chinese finance minister saying china does not seek a big trade surplus. they are looking to resolve problems using negotiations. the former commerce minister saying both are weakened and wounded by trade war. saying china is not afraid of a trade war that is not looking for one, either, and does not want to start one. all these concerns being voiced as we see what will come out from the trump administration. >> indeed, we are all waiting for what policies will come out of the trump administration. let's get to the first word news. >> china's foreign currency reserves have unexpectedly held

to a seven-month losing streak in february. stockpile increase by almost $7 billion to climb back above $3 trillion due to tighter controls on capital outflows and the rally. analysts say they remain under pressure because beijing will want its control in the medium-term as it hurts economic growth. wikileaks has published thousands of documents that suggest the cia has the ability to break into ios and android mobile devices to monitor messages, as well as smart televisions. the material includes malware viruses, and several hundred million lines of code. the cia says it does not comment on the authenticity of reported intelligence documents. the world's biggest copper pushcer says it could prices higher. nearly 3.5loss of

thousand times production a day. the production between the company and the unions have stalled. but the government has no plans to intervene. china's number two telecoms maker is being fined for violating u.s. restrictions on the scale of american technology to iran. $892 million and potentially another $300 million if they break the terms of the deal. it is the justice department largest criminal find in export control and sanctions case. attorney general jeff sessions say zte lied to investigators and their own lawyers. global news 24 hours a day from 26 hundred journalists and analysts in more than 120 countries. this is bloomberg. >> north korea expected to be at the top of the agenda when china's minister speaks at the national people's congress. he will bring his annual briefing with tensions on the rise.

tom mackenzie is outside the north korean embassy. what can we expect to hear? >> we are hoping to hear more from the foreign minister about their start on the latest missile tests. from now up until this point we have heard more from china about their opposition to south korea to applying this missile defense than we have about the missile tests. hopefully, more detail on that when he starts to speak in a couple hours time. clearly, china has a lot of leverage over north korea. they account for the vast majority of trade, about 70%, with its major -- neighbor. they also provide food aid to the country. they have banned imports to north korean coal in february. they were linked to the apparent assassination of kim jong-nam. there are steps that they can

take, they are under pressure from washington from president trump to take a proper line on north korea. but they will also be angry because the raising of political tensions in the region is starting to overshadow their national people's congress taking place here in beijing. right, you now have, saying after this call, these ballistic missiles, they are 100% behind each other on this front. chinaou have travel curbs is a plummeting on south korea. how has this shaken up china's relations with the region? >> a really valid point. i think it casts doubts on this proposed that- china can pull its regional neighbors closer into its orbit of influence as the u.s. steps back to read it seems apparent that with north korea acting as

many would see a, increasingly belligerently, countries in the region are starting to go back to the u.s.. they need the u.s. military support on this. you have seen that from japan and south korea. meanwhile, tensions are exacerbated. relations are at a low. then you put malaysia, that china would have hoped to have stronger relations with, they have broken off diplomatic ties with north korea. there is still a standoff between malaysia and north korea. where does beijing stand on that? who will they backup and support? it is a conundrum. analysts say that communist party is divided on how to treat north korea. the old guard remembers china and north korea being close. and the reformers want beijing to take a tougher line on north korea. we may start to see how china is approaching this. but it will be a surprise if they go off their normal line on this.

we will see rex tillerson, secretary of state, visiting south korea and japan next week. on his visit as this geopolitical issue continues to roll on an royal the region. the region. just got breaking. a statement on the un security council. they were meeting here on this very issue. they have now released a statement saying they are condemning north korea's missile launch. and they are now calling on on ons to enforce sanctions the dprk. to bring younue more. once again, condemning north korea's missile launch. >> sticking with the forecast for the s&p 500 to reach 2500. schoolteacher, now a regional president of a global

tech company. joins us next. ♪

facts this is daybreak asia, i am betty liu in new york. kong.miami von in hong the latest headlines. more potential troubles for toshiba. blackrock is one of its biggest shareholders. filing to the finance ministry they indicated a huge rise in the amount of stocks it has loaned out. blackrock is currently lending 46 million shares, up from 1.4 million in january. borrowed shares are mostly used in shortselling. they are betting the stocks will fall. toshiba rising this morning. chinese solar panel maker is looking for a new debt strategy after missing payments on $280 million. the committee of independent directors will evaluate and

develop strategic financing plans after accepting this weeks payment. borrowed heavily to expand its factories just as the market was flooded with cheap solar products. founder called on china to impose harsher penalties for fake goods. he is trying to rid the site of counterfeit products. they want to come down as hard on figures as on drunk drivers. there has been criticism on alibaba for not deterring copycats. the company has been labeled a notorious market by u.s. trade officials. >> from a schoolteacher to the regional president of a global tech bunny. our next guest, president of one of the biggest companies in asia. what a transition. >> a successful transition as

asia-pac has registered 13 consecutive quarters of revenue growth. it has been a successful transition. good to have you with us. >> thank you so much. >> it is mainly about cloud. asia is driving this tremendous growth, especially in india. tell us about the potential. >> first of all, thank you for the comments on the transition. we have seen a 43% year on year growth last year. margin company -- countries like india are big part of that growth story. part of the reason, the cloud is a consumption model for software provides a level playing field to companies to get on board with software that helps them run businesses the way sap can help them run businesses. >> i want to show a chart. it doesn't show that it is

pretty flat in japan. elsewhere in asia there is rising revenue for the company. is that sustainable going forward, or are you able to exceed the growth you are seeing now? feel very confident about the opportunity i think asia represents. that is because there is a about -- around a digital core, providing businesses real-time environments. and linking that digital core two other cloud elements. it provides the opportunity for businesses to address what is today's imperative. i am very bullish about the opportunity that exists for a company like sap here in asia pacific japan. >> what will that translate to in terms of revenue? can the revenue for cloud outpace? >> we are lucky at the moment that we have a two-car stream.

we have a revenue stream in our traditional business, predicated by an in memory digital core. it as you have pointed out have a rapid progression toward the cloud. asia are at different levels of maturity in terms of the capacity and capability of business and the infrastructure in that market to take on board cloud and deliver business outcomes in a. for example, in asia, australia is ahead in terms of maturity and uptake of cloud. currently we are at a model for traditional business. youhen you talk about cloud have to talk about ip. that is a huge concern. what measures are taken by you in your implementation partners to make sure that is protected? >> a.p. is the core of what we are doing, part of our dna for 43 years. we offer our solutions in the cloud, we allow consumers to

have business models. the complexities are hidden below that level. >> i want to talk briefly about the women in your company. they make up 44% of your workers. and 25% of the leadership. today, it is international women's day. how have you achieved that? can we expect more women to take up leadership positions there? not a big fan of quotas, per se. what is important is what you do behind them in order to support the outcome. because if you measure something, then you manage it. perspective, our approach to women is a very multifaceted one. it starts at hiring and goes all the way through to the policies. at hiring, training, programs, and the policies that we deploy in order to support female talent. >> do you expect more women to

be holding leadership positions? and how have you personally broken the glass ceiling? fortunate, given opportunities throughout my career. i had opportunities to take on board very strong mentorships and capitalize on some of those programs in the company. of i now have the honor running sap. for women opportunity to progress in the company. particularly when i look at asia. asia is rising. in order for us to sustain the growth you spoke about, we need to really pull from talent pools that are broad talent pools and include what i consider to be an untapped pool in asia. which is, the pool of talented women that exist in this region. >> one final question, what you see at the biggest risk for your business? think we have great

strategy, great products. it comes down to execution in the field and ensuring that we are able to clearly articulate the value that we deliver to our customers. >> all right, there you have it. happy international women's day to you. >> same to you. thank you. speaking with the president of asia pacific japan at sap. much more ahead on daybreak asia. wikileaks says the cia can hack into devices, including iphones and smart tvs. ♪ ask this is "daybreak: asia," i

am yvonne in hong kong. >> i am betty liu in hong kong. the cia has the ability to hack into your smart phones and smart

televisions to monitor your conversations and messages, according to wikileaks in an online disclosure today. a big data dump. ramy inocencio look set these troubling details. >> a massive detailed -- data dump that has ramifications for everyone that has a smart phone, which is anyone watching bloomberg or anyone in any developed country. cia has not only one tool, but a hacking arsenal at its disposal. even more troubling, the cia has lost those tools and its people out there have potentially stolen that -- these and have them at their disposal. potentially a group has the ability of the cia, to hack other organizations. let's go through the devices that have been targeted and could be targeted. apple phones, iphones, 50% of the market share, according to ibc. more so, 85%s even of the market share. also can be in a

fake off mode. that means they can still hear and record your conversations and send that on the hackers out there. also are beingws hacked or could be hacked. 400 million instances of microsoft windows 10, for example, to give you the scope. signal andhat telegram. vault seven in this data dump. more than 8500 pages floating around. wikileaks saying it is their largest ever publication of confidential documents of the cia ever. malware, and vulnerabilities. the cia has gone on record saying, it does not comment on the authenticity of this. as you would expect, they will

not talk about this or deny it. but is the information true? it turns out, according to the analysis coming out, university of california berkeley and an intelligence source of the washington journal, they say yes, most if not all of this is true. interestingly, politicians are calling for a probe. if this arsenal is in the hands of other organizations or people, we need to know. and we need to know how to protect ourselves. are huge,implications obviously. we are learning about the techniques according to wikileaks. have we learned about actual attacks were these tools world used -- were used? >> the short answer is no. we are looking at a list wikipedia has sent out. orse are executables, proof details of actual attacks. it does not mean they were not done. but it means that something

could still be out there. documents are still being analyzed. -- sayss says bci tools ci tools could be used.

>> a beautiful son out there. a: 30 in singapore. we are half an hour away from trading. gorgeous in the lion city. i am betty liu here in new york. let's get the latest. >> thank you. sources say china has taken action. during last week's people's conference in beijing. regulators have ordered large mutual funds to end net selling. chinese stocks have fallen to the lowest since the 1990's. investors are prepared to buy shares if necessary.

with are pictures aired kim jong-un overseas during missile launches. s werehaad missile launched over the seas. three of them landed in japanese waters. the north says that there is a rehearsal for invasion. many republicans and conservatives have a task to replace the affordable care act. rand paul called it obamacare lite. a group of gop leaders said it would create public welfare entitlement. some called it a warmed over substitute for government health care. >> obamacare is collapsing. obamacare is not staying. woulddid nothing, the law collapse and leave everybody

without affordable health care. , byre doing an act of mercy repealing this law and replacing it with patient-centered reforms that we conservatives have been arguing for four years. female governor says that more must be done to promote the role of women in japan. she wants women to take the majority of seats in the july election. she is the first female defense leader and the verse two content against shinzo abe's party. >> there is a little improvement since the news of policy towards women have been taken. unfortunately, i should say that the speed is not fast yet. two steps advancing and one step going behind.

>> global news 24 hours a day with over 600 journalists in -- and analysts. >> time to see how the asian markets are shaping up this morning. time to take a look at the mixed picture right now. korea is the only green on the board. china could stir things up later this morning. >> i will keep an eye on chinese exports in particular. we have the cost be swinging into the green. it is set for a third day of gains. the finance minister saying that the country is trying to minimize losses from issues with china. take a look at the stocks that by thisn affected economic retaliation. is looking atite losses today, that now swinging into the green. chinese authorities have suspended lotte mart stores.

makes less than 5% of its sales from china. is still favoring the space. fidelity are taking a long few valuation because cosmetics are so popular on the mainland. popular on the mainland. that is a 5-10 year story. a price target- increase that implies a 20% upside. this was ahead of the annual meeting on much 24th. >> the final gdp reading was coming in less than a forecast. another provision that we mentioned, nonetheless. shows that japan's

economy extended for a fourth straight quarter. ae nikkei 225 sliding by third of a percent. we are seeing industrials helping along with the big decliners. sophie, thank you so much. we will get more on those gdp figures. shery ahn has more. we expect the gdp numbers to be the real driver here, but it still came up short. a corporate investment was stronger than expected. yes, it was a revision upward, but not by enough. it missed estimates of how much we were expecting it to be revised upwards. only .3% on the quarter. public investment lagged behind. that was because of some construction delays.

that tends to happen when you are out of skilled labor, which is the case in japan over the last few years. it is worth noting that they did beat estimates. that is a positive out of the gdp numbers. when it comes to investment in the long-term, it is still not enough. look at this former boj member and professor told me earlier today. pastat continues over the three years. if you look at the level of investment, it is not very high. and also compares to the cash flow. e growth is not very high. this suggests that they are very cautious in terms of increasing production capacity. shery: when it comes to the corporate spending part of

things, the professor tells me that will happen in the next quarter. the trade surplus also missed estimates. is that a concern for policymakers? trade surplus coming in at less than half of what we 65.5ted for january at billion yen. the trade numbers for january are always skewed because of the lunar new year across asia. that took a big toll in these trade figures. in the bigger context of these things, we are seeing a cheaper overueling japan's exports the last six months or so. the professor points out that they should not be too much of a concern. up.re seeing exports pick

the broader economy seems to be picking up. in the latest gdp numbers, we are not seeing a revision downwards. what could be a problem for japan going forward and what has been a problem for japan in the last few years of economics, profits have soared and the wage growth has not picked up. we do have the wage labor negotiations coming up. that is a bigger problem for japan right now. the numbers that came out today, not too bad. being cautiously optimistic when analysts and economists take a look at those. ry, thank you so much. back here in the u.s., the u.s. trade deficit nearing a five-year high. their caseres against china. it is going to throw more fuel on this whole idea that they

need to get tough on china. >> yes indeed. this latest trade deficit fueled by imports here. the issue is that donald trump, in his own way, when he talks about unfair trade deals hurting american workers, if your trade deficit gets bigger, your gdp gets smaller. jump in with me. a 65-45 trade gap. it is now at its widest since 2012, importing lotsen of stuff. consumer demand is picking up this this demand. that is making that wider. imports are up 2.3%. that is the most since 2015. we are seeing consumer goods, capital equipment, and cars, demand was strong for.

maybe this is a sign of global economies hitting a little bit stronger. buying more u.s. goods. chris from msg in new york points out that with a higher trade deficit it will be tougher to hit his first quarter target. chris is very enthusiastic for donald trump turning the world on his head -- on its head, talking about bilateral trade deals. he thinks that ultimately, this is filling out a new wave of trade deficit for the u.s. >> the big thing is the trade deficit with china. waving a cave in front of the anti-china trade bulls. >> we will see. billionaire wilbur ross was confirmed as u.s. commerce secretary. he spoke about preparing plans to deal with global trading with

everyone including china. the interesting issue on this front has to deal with the fact that the chinese trade deficit has grown so much. you will see that the u.s.-china trade deficit grew just over 10 years to $3 billion. it has a growth of 1000%. the key question of wilbur ross, he is talking about u.s.-china trade flashpoints. the steel industry in china dominating the world. many other countries in the world have accused china of dumping steel. >> that industry is hit hard by imports in china. wilbur ross, the head of the donald trump trade team, will he take that cudgel up? kathleen hays, thank you.

we are looking at the business of banking in asia. this is bloomberg.

"daybreak asia." >> abn amro is one of the oldest banks in asia during it sold its regional business. a change in asian strategy for abn? haslinda: a tweak in the strategy. it is pretty strategic. i spoke to marine. it is good to have you with us. abn decided to get rid of its management business. what is the focus of the bank in asia? >> the focus is the bank. we have several businesses.

it is very industry focused. we have commodity and we have a clearing business. that business has been steadily growing in the past few years. haslinda: industry growth, where is it and where will it the? >> the asian numbers are included in the global growth numbers. since we started from a smaller base, we have been expanding geographically. last year, we opened a branch in shanghai. we have a long history in asia. shanghai was very strategic for us to help our clients, especially with natural resources. it made sense to have an offshore in china and on the ground as well. in tokyo, in australia. in australia, a clearing bank getwe are also looking to

our franchise license again. metals for commodities. quite focused on spending. haslinda: the bank has been going through a lot of reconstruction. they said it is getting rid get our franchise license again. it -- rid of 60 management positions. what indications are there? talks i do not think it applies to asia. we are in growth mode. these are some general management layers that are being cut to be in line with the strategy of the bank. it is appropriate for where the bank is going. haslinda: so the bank remains committed to asia? we look at the business. deutsche is getting out of commodities. give us a clear indication of where the bank is focusing on? >> we are quite countercyclical.

as banks are retrenching. food and beverage is one that was recently added. we are going to service the financial institutions again based in asia. we will be making some key hires shortly. things,ee a lot of especially for european banks. yes, we are dedicated to asia. we are investing. we are creating bigger teams of clients. haslinda: i want to pull up a chart to show the outflows in china. we have been going over this for a month now. there is a lot speculation that perhaps it could the stabilizing. >> china is trying to stem the flow. it is the first time we have seen research increase slightly again.

however, the inquisitive nature of the chinese companies will be resilient. there are limitations in being inquisitive. m&aan expect a lot of activities. you see western companies declaring to sell off assets. energyt not be the big companies. there is a lot of independence now. they will also continue to expand and look for assets. haslinda: you talked about some indications that it would fall $2.8 trillion by year-end. what is the sense? >> i think china is managing it quite well. reserves are substantial that they can afford for it to drop a bit. it depends on the sectors.

what is the dollar going to do? it is hard to predict. i leave that to the economists to be more precise about it. i see china getting better at grasping how to deal with her monetary policies. it is a big economy to run. sometimes, we are very harsh and critical about it. i think they do a decent job. haslinda: everybody is speculating as to when the fed will move. march, may, beyond. >> they will move. there are a lot of concerns that it could happen in march. it could be soon though. haslinda: before we let you go, one more question. we were talking about the sale of your wealth management business. is there a sense of how many of your managers will be retained? >> i think that is essential to

lgt. it is not my bank. i cannot. haslinda: we thank you so much today. there you have it. >> great interview. thank you so much for bringing us that interview. we are going to take a look at what is happening on "daybreak asia." blackstone is worried about angela merkel. we will tell you why.

>> this is "bloomberg daybreak asia." i am betty liu in new york. yvonne: and i am yvonne man in hong kong. you are watching china trade closely. >> looking at these trade numbers coming out of china at the moment. looking at seeing how this bears out at the moment. also looking at how this goes in the u.s. we do have the new president donald trump. we are joined by someone from barclays. course, also in china we have the international people's congress -- national people's congress taking place here in we are going to be talking about stock strategy when it comes to china. that is coming up in about 15 minutes. she is from atlantis investment

management. joining us there. least, itertainly not is international women's day. in some ways, the lives of women have gotten that are in some sense. in other ways, it has gone backwards. a gender gap does exist. 62 million girls are not in school globally at the moment. we will look at the world bank. that is on the way as well. work to be done at closing that gender gap. the trump presidency. >> my feeling is that the 2500 estimate was based on trump getting his progrowth agenda implemented.

the problem is, he is spending so much time on first he had to replace the national security advisor. now he has the sessions recusal. now he has to deal with this accusation. he should really be working on legislation. >> bottom line is? >> bottom line is that i am getting a little nervous about 2500, but i am not backing away from it. the 2500 sticks. the 4%, i am thinking we do not get there. there is too much liquidity sloshing around the world. interest rates are higher in europe and japan. betty: what was the 4% based on? >> 4% was based on the economic growth going to 3%. the economy being stronger, creating more inflation.

inflation is a result of wages and house prices. i thought, wages are already creeping up. house prices i thought would go up a little. i thought there would be enough inflation and enough demand for capital that rates would go up to 4%. i think they will continue to rise and get above 3%, but not get to 4%. betty: it is not just about the snp or treasuries. in your surprises of 2017. you seemed, at least, pretty bullish. >> absolutely. i did not vote for trump. i did not support him. i thought his progrowth agenda would be good for the economy and for the markets. betty: you also mentioned that over in europe, one of the surprises was that there could

be active discussion about ending the european union. >> right. more discussion than there is now. i do not think it will happen. i am worried about both the french and german elections. betty: do you think we will see a frexit? >> i do not think we will. wins, that would create more danger. she may win the first round. i do not think she will win in the second. i am more worried about angela merkel. i hope that she wins he cut she is the leader of europe. betty: you see a real chance that she could lose her reelection? >> i do. populism put donald trump into office. populism is sweeping europe as well. betty: the vice president of multi-asset management at blackstone.

he puts these surprises out every year. last year, he was wrong on most of those including missing the entire rally we saw in stocks. on the flipside, he has turned very bullish this year. yvonne: one from deutsche bank has a 2600 forecast for the s&p. we just spoke to somebody from irl investments. for avestments are ripe correction. we are meeting the expectations and it is only march 8. betty: we are indeed. we will see if all of this pans out.

♪ rishaad: 9:00 a.m. in hong kong, 8:00 in the evening on tuesday new york city. on rishaad salamat. sydney. am haidi lun in this is bloomberg markets: asia. ♪ rishaad: japan's economy expanding more than the end of last year, but the growth rate remains modest at best. haidi: we are counting down to the data out of china, strong data expected. rishaad: