♪ >> trade tops the agenda as finance ministers meat. et. u.s. look ahead to talks amid rising tensions over protectionism and korea. >> deutsche bank plans to raise $8 billion to boost growth. >> a rare reunion for the korean lotte family. >> this is "daybreak asia"

coming to live from bloomberg's asian headquarters. it is just after 7:00 a.m. and hong kong. i am if on man. -- yvonne man. event risks out of the way with central-bank meetings, but can markets continue in the sweet spot? ramy: based in the u.s. on friday, they weren't in the sweet spot. .1%, but some geopolitics to unpack today with rex tillerson in china. through thatll dig with our guests, but not a lot of risk appetite. with howk it off things are looking in new zealand. quite a bit of pressure, down confidencemer

numbers in the first quarter edging lower, so pressure there. the key we hanging onto its 11 month low at $.70. in sydney, slow going on the asx 200. the dollar on a downward trend on the back of that dovish fed meeting, $.77 for the aussie right now. japan is closed today for the spring equinox. wellen is still trading, below the 113 handle this morning. certainly a lot went on over the weekend with rex tillerson strip in asia, as well as an interesting communicate out of g-20. ramy: the trump administration mark on the g 20 finance ministers meeting in germany despite critics and saying they came in ill-prepared. kathleen hays is right here with more on this. first to the g-20, to what

extent is this communiqué water down and is it a win? win foru think it is a the g-20 to remove anti-protectionism statements from its communiqué, then it is a win for the trump administration. bloomberg reported that this was in the works. what they would be pushing for it the g-20 summit here it if you want details on what that means, then you are in the wrong g-20 meeting, because that is not what you got from steve mnuchin and his team. said.s what they many people said this was water down and the result of back-and-forth. >> we are working to strengthen the contribution of trade to our economies. >> i guess that didn't and know i anybody, so i guess that's why

it work. here is what steve mnuchin said. we believe in free trade. we are one of the largest markets in the world. we are one of the largest trading partners in the world. trade has been good for us and good for other people. having said that, we want to re-examine certain agreements. from thes a good chart bloomberg to help you understand what steve mnuchin and donald trump are looking at when they say we need to re-examine trade and make it better for everyone, particularly the u.s.. the first upper half of the turquoise bar is services, a surplus, but goods. the goods deficit is large and has not improved much. chart ism part of the why the u.s. trade deficit is still so wide it $42.5 billion. it is aanother reason

new position, but it is the position that has not been spelled out in policy. it was interesting. a lot of the finance ministers were thinking they could move steven mnuchin closer to the center, but he did not move. how did other officials react to that? all realize that steven mnuchin and has not been in office long, and the whole team at treasury is not in place yet. minister of germany said we know he did not have a mandate yet to engage in detailed negotiations like in the past with more seasoned officials from the u.s. scott morrison said he ran around and talk to people. i think he performed pretty well, so that was a plus. economicsister for and finance seemed understanding, but in the end, he wants to make it clear that

protectionism is not the way the g-20 is going to go. >> we all share the view that trade, fair trade, has to be that trade is good for our economy and protectionism cannot be the solution. for china, the chinese leadership has been pounding the ,rum globally for free trade anti-protectionism. a news agency reporting the chinese finance minister and stephen mnuchin agreed to better future economic cooperation. i guess that means trade. there is another summit in july, so the g-20 can get into these issues then, but as far as the world is concerned, this america first campaign on trade is opening the way to trade detente between the eu and china. the finance minister of germany

urges china to move forward, while still nervous about the niceies, so they can talk about it now, but as people question the multilateral agreements donald trump and his team have, moving to bilateral agreements, even if it is a big block like the eu and china, there are questions that will be raised. yvonne: really pushing that trade issue to the july sentiment when president trump -- let's get to first word news with paul allen from sydney. paul: the latest opinion poll in france puts the independent candidate emmanuel macron in first place. the survey gives him 26% support, the same as marine le pen. the conservative francois fillon has 17% backing, with left-wingers on 12%.

emmanuel macron is seen beating the arena pen in the second round. japan and russia have agreed to begin direct flights between disputed islands to allow former japanese residents the chance to visit. kyoto news says the two sides have discussed proposals for the joint development of four islands. the proposals are said to include health care, fishing, and tourism. has made a claims it revolutionary breakthrough in space technology with the ground test of a new type of rocket engine. unate tv shows kim jong-i watching the test and saying it was a great event of historic significance. north korea was banned by the united nations from conducting long-range missile test, but claims the program is for peaceful uses. home prices rose despite increased restrictions on property transactions.

in 56 out of 70 cities tracked by the government, compared to 45 in january. beijing raise the down payment requirements for second homes by 10% to 60% to 80%. environmental lists have spent years fighting the rise of the suv, but it is all but over and the suv has one. sales of high sided sports utility vehicles and australia took over passion or cars falling a similar picture in the u.s.. suv's there outsold cars and vans. in china come suv sales surged 45% last year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: the founder of south lotte to face a string

of criminal charges. we are looking into conglomerates under the spotlight, but this case is separate from what we have been covering with president parks impeachment scandal. rosalind: that's right. the four biggest figure of the dot plot, the shin family. those investigations and indictment started before all these issues with the south korean president and the related conglomerate investigation started, so this is a separate trial. they have been accused, these four from the shin family of crimes in the hundreds of millions of dollars. we have the patriarch, the founder of the lotte group, 94 years old. the elder son, the current lotte chairman, and their sister. group empire spans

japan and south korea and includes hotels, theme parks, duty free, chemicals, and generated revenue of $81 billion. the charges span tax evasion, embezzlement, fiduciary duty. themselves have denied wrongdoing. overaughter is in jail separate issues and charges and could not be reached for comment. ramy: the outcome of this tribe could tip the balance of the family fight for control of lotte. what are the details here? rosalind: it has been a rough couple of years for lotte and stems to 2015. out hislly, shin pushed father and his brother.

he has the support of lotte holdings based in tokyo, largely controlling many of the other units in the lotte group. his sister has been jailed as well. the corruption investigations have taken their toll on lotte group. they have had to stall or cancel a number of plans they had, for example the ipo for hotel lotte. they had to withdraw plans to list its malaysian petrochemicals business, so all this has taken a toll and the units have suffered since these investigations have been going on. could open anit opportunity for his brother to come back in to take control, but all rests on what the court decides. the lotte group are saying the when thens happened

father was in control of the company, and not to do with the current chairman. on top of that, there are separate investigations regarding relationships possibly with the ousted president park, so a lot going on for lotte group. ramy: so much going on. keeping a straight, thank you very much. still ahead, tillerson on tour. we look at how successful his debut in china was. yvonne: china's home prices on the rise yet again. is it a bubble to be burst? we will ask that of our next guest. this is bloomberg. ♪

toy: we are counting down asia's first major market open this morning. trading in sydney underway. futures down by nearly .4%. you are watching "daybreak asia"

. i am ramy inocencio in new york. cathay pacific has been fined 51 million dollars by the european union for antitrust violations. the carrier said the fines relate to cargo surcharge levels that the eu says breached competition laws. week, cathay pacific announced its first annual loss in eight years and will cut senior and middle management levels by 13% and is reviewing the eu ruling. dalian wanda group partnering with ibm, allowing chinese businesses to have access to its cloud infrastructure and language services that allows customers and consumers to talk to apps. yvonne: transactions in

southeast asia expected to improve. share sales and offerings are ,ikely to come from industries however geopolitical issues in europe, the u.s., and volatile commodity prices could affect the positive outlook for the year. china's home prices rose in more cities last month despite tight curves on transactions. the outlook for property in china, we have the chief economist at anz. home prices now regaining speed after four months of declines. let's throw out the chart and show the trend between the first to come a second, and third tier cities. in terms of the first tier cities, off the highs, but we are seeing more momentum once again. how effective are these property curbs?

is there a real trend right now? observedwhat we have is that some first-tier and second-tier cities have a slow down in the price in the first quarter, but public investment in the first two months was very strong at 8.9% year on year. they are still confident in the prospect of the chinese property prices. that as aly describe cooling measure that can slow down the pace of an increase in prices, resulting in a contraction or downturn of property markets in china. see cities like beijing react with stricter measures, raising down payment requirements. other cities as well. to divertgh really demand from larger cities to

tier three and tear for cities? how is it actually playing out? >> that is why the government needs to introduce cooling measures in order to tame the price, because demand is strong. in first-tier and second-tier cities, the data shows a slight theine in some cities, but price is stable, even after 2-3 months of cooling measures. extent, if this continues, the government will continue to keep the current thed to tame growth, but policy is a balance between growth versus the social demand for housing. housing is for living, not for speculating. this will probably set the tone

for the rest of the year. yvonne: that was the quote from president xi jinping as well at the npc. what you make of the comments we got out of the npc? there seems to be a relaxed attitude when it comes to these controls. the premier said it is important to clear the inventory. the pboc saying mortgage our ring benefited the industry as well, so how serious is china when it comes to deterring speculators in the market? when we look at the contribution of the public market to growth, it is about 1% cames gdp growth, from property, so the government will try to slow down the pace, but not kill the market. what they are trying to do is ensure that it won't result in

overheating and some of the cities. what we have seen in the past 1-2 months and during the weekend, the cooling measures released by the government trying to curb the buying of second homes, the down payment requirement will go up to curb financial risks to the banking sector as well. iny: would you forecast terms of china property contributed to gdp? this year, 2017, despite the cooling measures, properties and real estate as a whole and including transactions will continue to play an important role in growth. our estimate is 1% came from the property sector, including

construction and real estate services. this year -- #6904. want to show you we've been talking about manufacturing and nonmanufacturing pmi, the white and blue line respectively. you are forecasting upside risks of growth here. what is making you bullish on china and the biggest weight? seene first two months has a surprisingly strong a .9% in public investment, compared with 6.9% in december last year, so to me that was already an upside surprise. this year the first quarter, the chinese gdp will see an upside risk.

the pmi will continue to stay at a high level above 50, and the new orders continue to be strong, february figures 53, one of the highest. a bullishain this is indicators to the growth prospect at least in the first quarter. ramy: we will have to leave it there. chief china economist at anz. all right, deutsche bank a, 8.6 pain dollar plan to cruise growth coming up. this is bloomberg. ♪

ramy: welcome back. as we kickoff the trading week on wall street, deutsche bank will be one stock in the billiont, raising $8.6 starting this week. tos as the lender seeks shore up finances and boost growth. su keenan is here with more. su: we have a rising interest rate environment and strong

stock market, so one analyst saying the timing could not be better. issue newank will pricingnd announced the on sunday, in line with a 35% discount to friday's close. torture bank had a rough ride last year, and it is up 5% year to date, and the rebound has to do with the fact they are going to a capital infusion, the fourth since 2010. ceo john cryan was initially against a stock sale, but changed course when the stock price doubled from that september low, and they were unable to find a buyer for the consumer banking unit. the two biggest shareholders are said to be planning to buy

shares close to the matter. the initial investors, those already holding shares, can buy one new share for each two they hold according to the share rights offering from march 21 to april 4. yvonne: where expecting a new round of economic reports this week. su: housing and existing and new home sales, always important to the economy, and the latest factory data. home sales, existing home sales likely cooled in february, but due to a limited listings. we will get that data midweek. new home sales slightly higher, and this is closely watched data from a as we raise interest rates, they want to see a continuing trend higher. durable good orders likely rose. yvonne: thank you. coming up next, grinding to a halt, the impact of trumps trade tensions on china's industrial landscape.

we are live from new york as well as hong kong. this is bloomberg. ♪

♪ yvonne: look likes it is damp outside. we are 30 minutes away from asia's first major market open. york it is; 30 p.m. in new , where the markets were closed on friday down for the s&p and dow. looks like it is the last winter sunset for the season, because the first day of spring. i cannot wait to get out of this winter. yvonne: let's get the first word news with paul allen. >> one of south korea's most

powerful company families will be together for the first time in years. the father and two siblings will begin the meeting. the charges include embezzlement and breach, including a quarter of a billion dollars. the family, two sons are battling for control. angela merkel and shinzo abe have called for a conservative effort to defend free trade. after merkel held what was seen as inconclusive talks with president trump in washington, she and shinzo abe said market can be open and fair. they were speaking at the technology show in hanover. cooper has confirmed its confirmed-- uber has its president is leaving. he has grown tired of the controversies ranging from allegations of sexual harassment to the combative behavior of the ceo. he joined over from target less

than a year ago -- uber from target less than a year ago. they are facing a lawsuit with alphabet over secrets. the editor of lindy -- london's standard newspaper questioning whether lawmakers can have multiple jobs. he has more than one paying position including a role at black rock that pace of $800,000 a year for four days work a month. someone to review parliaments rules. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. yvonne: let's look at how the asian markets are shaping up on monday morning. here is sophie kamaruddin. u.s. stocksowing slipping on friday, asian stocks --ng up for a softer stop start. to demonstrate this, you can see

the play out from this chart, btv 6906, showing you the swings interesse. those are well below average. they are little to rock the boat in terms of the risk after the policy finance the -- bonanza. we have rpm debt and policy decisions on thursday. as the editors put it, things are widely positive -- quietly positive for asian scenarios. we are seeing shares fall 1.4% on a weaker footing, followed by the most leveraged snap of a two-day ride. construction firm fletcher building is the biggest slide in new zealand, shares tumbling the most since 2011 at cutting its profit forecast. consumer confidence edging lower, but the services industry is expanding. in sydney, australians stocks snapping a four-day advance at the fall -- after the fall of

treasuries. we saw a rally on friday. gold maintaining its advantage with the first weekly rise this month, oil looking little $49.ed, bill -- still taking a look at how countries are playing out given the dollar strength touched year-to-date losing somend ground after reaching 124 recently. we have the aussie hanging onto 77 u.s. cents, and maintaining its strength from last week, japanese market goes for a holiday on monday, so let's see how the rest of asia is looking to play out monday morning with the futures. we are seeing contracts in asia kospi slight gains, the slightly higher, and housing looking flat. in sydney, calico and property stocks lead the drag in sydney along with energy and minor

stocks. to show you what is going on in terms of civic movers, fletcher was falling in wellington. we are seeing that in sydney, fletcher falling 10.4% in sydney. ramy: thank you very much, a look at the markets. let's get to top tories in asia. u.s. secretary of state rex tillerson using a 24-hour trip to beijing to smooth away an expected meeting between the world's biggest economies. that is amid tensions of trade policy and north korea. tom mackenzie is in beijing. what did tillerson achieve here? really, tillerson came here in -- asmp is dilution reassurer in chief. the second notion was north

korea. north korea and the tensions on the korean peninsula, he had conversations and meetings with a foreign minister, and he dialback language from the earlier regional visit. he talked about not ruling out a preemptive strike of north korea. you did not hear that language here. he would make every effort to avoid conflict. but he managed to do it seemed is a minor concession from the chinese. he said the chinese would be considering approaching the north koreans to steer them off the path of the nuclear program. the chinese see this as more of a initiative for washington and pyongyang. they want them to have a dialogue. the u.s. say that will not happen until north korea moves away from their nuclear program. that looks unlikely because the program is central to change on -- kim jong-un's self-styled mission statement. you have a coalescing around the idea that china could approach

the north koreans. china to take a stronger action and use it economic and trade leverage off the north koreans. then tillerson met with president xi jinping yesterday. we did not get a lot of details, but it was about laying the foundations before this key meeting between the president's in florida him a reassuring the chinese that would be a successful and fruitful meeting, tillerson saying the relationship between china and the u.s. at an inflection point. they need to chart a nupathe the next 50 years. -- new path for the next 50 years. yvonne: it was a different tone in beijing. the chinese premier is visiting australia later on this week here what are chinese -- the chinese try to get out in terms of trade? tom: this is the premier's first

visit to australia since visiting in 2013, the most high for -- high-profile since 2014. this is about championing free trade and globalization. for the australians, they have been stunned by the effect of the americans have pulled out of tpp, and the chinese are trying to drum up support for the regional trade deal. australia would be a part of that. work ofralians have to fine line between appeasing and pleasing washington allies on things like strategic and security alliances, then with the balance of economic relations with china. they are also forming and putting together their first foreign policy white paper since 2013 -- 2003, so it may be a chance to have an impact before that policy paper which focuses on international relations and diplomatic ties is fully formed of an set. -- up and set.

and i should say that domestically, on the domestic front, the impact of trump on tariffs, the impact of trump on the factory sector in china, is starting to play out already. so we went down to south china, to a manufacturing hub, to look at manufacturing that is suffering even before trump and washington have enacted any of the rhetoric they talked about on the campaign trail. take a watch. last -- glassblowing on this scale is a delicately coordinated dance of blow bite and dodging danger. but for the factory owners, it is worth it, or it used to be. wage hikes, more expensive raw materials and cooling demand mean profit going up in smoke. now they have to contend with new trade tensions. 90% of the glassware made in this factory ends up on shelves

in places like home depot and lowe's in the u.s. the owner of this factory set any tariffs by donald trump on china's exports would kill his business. these town, past shuttered factories, the owner here has already made his decision. he plans to move his factory this year. the new u.s. president put the nail in the coffin. the uncertainty has been increasing ever since trump took office. we don't know what he is capable of planning to do. if he takes any further actions on import controls or tariffs, more places can leave china. tom: the factory that makes casting -- plastic casings, used to employ 800 people. now there are just 50. the neighboring city, 49,000 factories closed in 2015 alone.

he says many taiwanese bosses are looking to move. >> it has become really challenging to operate a factory and manufacturing business here in the pearl river delta region, because of the ever rising cost, especially the labor cost. steering the economy away from low-end manufacturing. other countries will pick up the battle. that means better jobs for the next generation here. these workers are on board. >> i certainly don't want my kids doing what i am doing now. i paid for them to go to university because i want him to find a proper, decent job in the future. tom: the remolding of the factory sector was underway long before trump came to power. the uncertainties over his policies are another potent catalyst fueling the change. tom mackenzie, bloomberg. , more on tillerson's

trip to beijing as the u.s. talks tough on north korea. this is bloomberg. ♪

♪ you are watching daybreak asia. i am yvonne man. ramy: a quick check of the latest business flash headlines, this indian group will mine coal for a $16 million carmichael product by the end of 2020. it will begin three months after the mine is even idle governmental approval which the billionaire chairman expects as early as may. it will fuel power generation for 100 million indians and create 10,000 jobs in queensland. kick --rising coal prices allow for a profit for the first time in four years. income rose to $3.6 billion last

year called my although shenhua --, although shenhua flagged that in january. wanted toment revitalize the industry and curb overcapacity. beauty and the beast has rose to box office,he setting up a record for march opening. million, aok on $170 new high for a family movie rated g or pg here the previous best was finding dory, $135 million on its release. it is in seventh best release for any movie. all right, u.s. secretary of state rex tillerson started his three nation asia tour with a tough stance on north korea, but as he wrapped up his trip, he changed gears and moderated his town. -- tone. we have someone from sydney now. general take away

from this, what is the u.s. projecting in terms of power and desire for what is happening in asia? ashley: on north korea, i think it is clear that the united states is projecting a tougher stance. tillerson's comments at the sart -- start at the asian to work -- providing for north korean time to do weekly rise and offer economic incentives at clearize at- de-nu different times. tillerson himself had a tough view on the subject, blaming china for empty promises on north korea and opening the option to sanction chinese companies still trading with north korea. the fact he has toned down his message at the end of this tour is diplomatic niceties when you

are in the host country. i don't think it signals a policy water down by the new secretary of state. ramy: this also has to go all the way to the top, donald trump . we all know he tweeted about north korea and how he wants china to get into action. i will pull it up. he said north korea is behaving very badly. they have been playing the u.s. for years, and china has done little to help you what could china do without hurting someone, a country, that is its ally? ashley: this is the million dollars dilemma in u.s.-china relations when it goes to north korea. the privatization is different. the united states wants denuclearize asian above all -- new clear eyes -- denuclearization above all else. they could ratchet up on north korea incrementally by targeting

some chinese companies still dealing with north korean entities where it is proven there is a link to between that trade and north korea's nuclear program. beijing may do that as a sort of inducement going into the visit next month, but it is unlikely that china, a rather more effective policy can run through beijing. ramy: china is telling the u.s. and north korea, you guys do it yourself. do not pull us in. just deal with them. , becausethe bloomberg i want to show our audiences how reliant north korea is with china. this is the ecr go function. north korea relies on china for $5 billion of its trade in 2015. the latest that we have. there are economic leverages, but china does not want north korea to implode. there will be economic and clinical ramifications.

-- political ramifications. ashley: the issue is not whether china has leverage. it clearly does. whether it is realistic from beijing's progressive -- perspective or from the point of view of the north korean people, china's argument is that is not the case. you will see the u.s. administration press beijing on sanctioning north korea more severely. having said that, the key thing from the asia tour is that washington does not have a better option. the fact rex tillerson made the comment, preemptive strikes on the nuclear facilities on the table is not news. that has always been in the background of u.s. policy options, but it is terrible. any predictive strike would not likely hit all the nuclear targets in north korea, and that would make terrible reprisals by north korea on u.s. interests and allies in the region, not the least japan and south korea. yvonne: the implications are

still there, but it seems like they have put their differences aside. tell us how this sets up for the potential trump and xi jinping meeting set to happen in april? there is still a lot of issues with trade and the east china sea, south china sea that were not addressed. that is right. it is a little bit of the wrong interpretation to say differences have been put aside. rex tillerson did make some positive comments when he met with the foreign minister. he used a lot of chinese language about mutual interest, compromise, relations from a point of view of non-confrontation. these were diplomatic pleasantries that you would make -- some say he went a little too far in making when visiting the most important foreign partner. having said all of that, the reasons for this apparent toning

down of position is because of the meeting coming up next month. the two sides want to have a positive meeting when trump and xi the the first time in mar-a-lago, the issues will be about trade, but the security tensions in the south china sea, the fact the u.s. and china do not see i die on north korea, even if -- i to i even if they needs i think washington to find a policy solutions for that meeting. yvonne: intense negotiations were forced here. what would it do if tense translations came between australia and china? the premiere will be going to china in the next couple of days. ashley: that is right. i don't think it is high on donald trump priority to manage the optics of an australian meeting with the chinese premier. as your story earlier this morning made clear, they may issue -- the main issue for

china and australia is maintaining momentum towards regional trade architecture. australia is pursuing even under the tpp the chinese initiative as well, the regional agreements . australia and china do share interest in a free trade and rules-based system in asia, which this administration in washington seems less likely to uphold, but i think that will be the focus of this week's meeting. yvonne: great to have you. ashley townsend, joining us live from sydney. we have plenty more to come on bloomberg television. you are watching daybreak asia. ♪

♪ yvonne: there is plenty of big stories coming up this week, and we are covering them all on daybreak asia. we will watch continuing talks between chancellor merkel and

shinzo abe. they are calling for the strong defense of free trade, and we will see more details when they address the media and go over to germany. i am watching japan trade happening on wednesday. we are expecting the latest official data to show improvement overall. we did see a bit of a blip when it came to the surprising deficit in january. look at the charts. i turned this by 40 years, because we have been on the surplus trend for many decades in japan, and with the exception of these four years after the 2011 tsunami that trigger deficits for four years. we are seeing a rebound, a trend developing, the global demand story is starting to pick up. we are seeing this across the board when it comes to exports as well as imports. we saw the demand for auto parts , ships as well, helping that picture for february. the weaker yen also helping.

a bit of a slowdown in oil prices, so that could reduce the import bill. what are you looking at? politicsig moment in will be with the u.s. house intelligence committee holds an investigation into russia's interference with james comey. and another election is over on thecontinent, in france, five leading presidential candidates hold their first televised debate of the campaign. go to the bloomberg terminal. this is something you want to see if you are a bloomberg user. 6386 is the chart. you can follow the polls in terms of the presidential candidates. in white, marine le pen, the far right national party, 28%. 25%s see, francois fillon, here, micro, emmanuel macron, a former economy ministry 24 percent and in purple, the socialist party candidate, the

party of francois hollande, but he is down number four at 12%. 6386. we will take a look at what is happening with the first televised event of the campaign on monday. yvonne: that will be one to watch after those dutch elections. they did buck the trend when it came to the rise and populism, may not be the case for france. we are watching the market -- market open in korea. japan is closed. here is sophie to talk to us about stocks you are watching. lunch time will be one. sophie: there are a couple of things. the latte shares. the three oldest children set to otheror corruption, and sad stocks, the consumer moves after tillerson's comments with south korea's tensions with its northern neighbor. in the first quarter operating profit for this company at eight

alien dollars. yvonne: thank you so much. when trading gets underway, market open

♪ yvonne: trade tops the agenda, finance ministers meet, although the u.s. did not explain how america first will work. beijing and washington prepare for talks over protectionism and north korea. yvonne: a rare reunion for the lotte family, but features warring siblings and allegations of corruptions. ramy: king of the road, the long battle with traditional cars is over, the suv has won.

yvonne: this is the second hour of "daybreak asia." ramy: it is just past 8:00 p.m. in new york. i am ramy inocencio. downmarkets close slightly by .1%. we do have a couple of fed speakers. janet yellen, for example, and the lone dissenter in the hikes last week. we hear from him as well. yvonne: it will be interesting. markets took a that decision as a dovish rate hike. we might see if these fed speakers will support that or refute it. we are seeing pressure at the open and south korea. japan is closed for the spring equinox. let's get to that open with

sophie kamaruddin. ofhie: we are seeing lack risk appetite global stocks shine of their all-time high. in korea, a weaker open, down .2%. stocks and wellington down 1.3%, the biggest fall cents a november 9. sydney stocks down .4%, with energy and miners there. we do have banks and i.t. stocks on the kospi leading the drop. out of south korea, february reduce or prices, 4.2% yearly, up from january's revised reading of 3.7%. currencies, the korean won higher .2%. it did leave the of vance and

emerging currencies last week with the indian rupee. currencies are taking advantage of the dollar pullback, especially those with high data to the dollar moves like a south korean won. the singaporean dollar slightly stronger against the greenback, seeing its february 28 support tested here. we do have the offshore yuan staying above the 6.88 handle for a second day. ramy: we are watching for some korean stocks at the open. how is it looking now? set to stocks, lotte stand trial, stocks opening 1.8% lower, halting a two day advance. we are focusing on related tillersonen what rex had to say about china's economic retaliation.

amorepacific falling after rising on friday. merit securities forecasting its first-quarter operating profit at $8.8 billion for cathay pacific. more leaks around the new galaxy device, this time pricing in colors. lotte entertainment up 3.3%. ramy: thank you very much. let's get the first word news now with paul allen. paul: the latest opinion poll in france puts the independent emmanuel macron in equal first place ahead of next month's first round. the survey gives him 26 percent support, the same as marine le pen.

the conservative francois fillon has 17%, with left-wing candidates on 12%. emmanuel macron is a scene beating marine le pen in the second round. japan and russia said to have agreed direct flights to disputed islands to allow former japanese residents the chance to visit. they have also discuss proposals for joint development of the four islands. the proposals are said to include health care, fishing, and tourism. north korea claims it has made a revolutionary breakthrough in space technology with the ground test of a new type of rocket engine. state tv shows kim jong un watching the test, quoting him as saying it was a great event of historic significance. north korea is banned from conducting long-range missile test, that claims its sunlit program is a peaceful use.

innese home prices rose february and more cities despite increased restrictions on property transactions. new homes rose in 56 of 70 cities tracked by the government , compared with 45 in january. beijing raised a down payment requirements for second homes to between 60% and 80%. one of south korea's most powerful corporate families will be together for the first time later in years when the trial of the chairman of lotte group begins in seoul. they face charges including investment, fiduciary breaches, amounting to $250 million. two sons of the family are battling for control. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy: thank you. the trump administration made

its mark on the g 20 finance ministers meeting in germany. economics and policy editor kathleen hays in the studio. to what extent is the final q medicaid a victory for the u.s.? >> it seems like it is. until a few weeks ago, the g-20 communicated would have said something about fighting the kind of trade agreements they have championed in the past. they are not templates or boiler plates, but it is like reading a fed policy statement. if they change it subtly, it means a lot. thank you for pointing that out. thing toimportant consider. steven mnuchin and and his team managed to persuade the g-20 to drop its anti-protectionism language. here's what they said instead. let's take a quick look. are working to strengthen

the contribution of trade to our economies. now who couldn't agree to that?" here is what steve mnuchin said on saturday. trade.elieve in free we are one of the largest markets in the world appeared we are one of the largest trading partners in the world. trade has been good for us and other people. having said that, we want to re-examine certain agreements. depiction ofe what stephen mnuchin and president trump are getting at. this is one of our bloomberg charts, 4785. in the top half, the blue bars show services. we tended to run a surplus in services. it is good. it is manufactured items where the deficit with the u.s. and the rest of the world is so vague, -- so big.

you can see it has been much arrower. position onhis new trade is being expressed to the g-20. yvonne: what was the response from some of the officials on the communiqué? >> throughout the summit, there was some frustration expressed. it is clear these guys are new. stephen mnuchin has only been in office a couple of months. obviously has the german finance doesn't have ahe mandate yet to sit down and negotiate. towardsrrison was kind steve mnuchin and said he performed well and met a lot of people and had constructive ideas, however the eu minister for economics and finance had this to say about why ultimately anti-protectionism has to be on the agenda.

>> we all shared the view that trade, fair trade, has to be shared to take on board globalization that trade is good for our economy and protectionism cannot be the solution. china's news agency also reported a positive development. the finance minister of china and stephen mnuchin agreed to economic cooperation that is more effective and efficient. bottom line everyone saying they will have to wait until july, the next summit of the g-20, in order to make real progress, real negotiations on the question of trade and a new approach to it. a lot of people talking about this new america first position for donald trump opens the way to trade to taunt and other parts of the world. how about the eu and china? finance minister has urged china and germany to have

a deal that includes reciprocity. there are many european officials who are still concerned about some of china's trade policies. --orts from china to the eu so it is a thorny deal when you negotiate trade, and perhaps that's why so many regret that the trump administration is moving away from these multilateral deals and move towards more bilateral deals, -- i don'tinvolve want to call it headbutting, but i guess that is what negotiation is. yvonne: thank you. still ahead, big is beautiful. we look at how suvs became the new rulers of the road. risk, theying for factors that could derail this year's equity rally. this is bloomberg. ♪

yvonne: you are watching "daybreak asia". i am in yvonne man in hong kong. ramy: a quick check of the business flash headlines, the dalian wanda partnering with ibm , introducing what this services to allow chinese businesses to have access to infrastructure and language services that allow consumers to talk to apps. more services are planned as the partnership evolves. fined 61athay pacific million dollars by the eu for antitrust violations. the carrier says finds relate to cargo surcharge levels which they say breached competition laws. last week, cathay pacific announced its first annual loss in eight years and will cut mid and senior management levels by

30% and is reviewing the eu ruling. expectsybank transactions to rebound on the back of an improved outlook for the regional economy. sales andys share rights offerings are likely to come from sectors such as power, infrastructure, and consumer products. he warned that geopolitical issues in the eu and u.s. and volatile commodity prices could continue to affect prices. utilities and sector --cks heavily under owned always great to have you. we don't have much to trade on this week. we got all this risk out of the way, so we are looking for some direction right now, but still see a lot of stocks in particular in this sweet spot. you say it is time to get defensive, why?

>> you are starting to see that rotation. crowded trades have built up over the course of the year, the short treasury trade, the long commodities trade, the long dollar trade is similar, and clearly the long -- you start to see some clearing of those traits last week, and i think that trend continues. up ae: i want to bring chart that shows the cyclicals versus defenses. given this tremendous piling up on the cyclical trades after the election, we have hit this lull that shows little sectoral dispersion in this recent rally. i get what you are saying. everyone is on one side of the trade right now, but if this narrative in the markets is based on better echo data -- eco-data can this rotation be sustainable?

>> if you look at the chart, in spite of the s&p 8% move since september, this chart has been flat since december. really unusual. normally when the market rally's 8% or 9%, you get a strong cyclical outperform. the two actors buying the market are broad-based buyers of s&p futures and retail, planning into egf's and index funds, and it has this effective pressing dispersion, increasing correlation among sectors. that's why you get days where defenses will be of 2% and the s&p is up, which is a fairly rare instance in the history of equities. the face of the donald, up 15% to sense trump elected into office in the u.s., financials up 26%.

while you're saying there is a potential unwind come i want to push and say, really? better,-data better and maybe we still might see some room to run here. what you think on that? >> i think economic data has topped out. one of the strongest rationales for the move we have seen as the return of inflation, but inflation, a large part of the reason it has been rising is ace effect. base effect popped out in february, and you will see a ratcheting down of inflation numbers. we think that trend is topped. dataa lot of the sentiment surveys similar to i us and will begin to reverse as well. last when we had you on month, you said china was the single biggest risk for global markets. do you still think that? >> i think it is the biggest risk, but in many ways not the

biggest opportunity. from a macro perspective, if you get a blowup around commodities, that has impact on other markets. but domestically it is looking more attractive. you see the government pushing speculative capital out of the commodities market and housing nlyket, and there is o one other alternative in the equity market. china is always a question of where is that money flowing to next, and the equity markets are a pretty good guess from here. yvonne: what do you make of dollar moves right now? in terms of the pace, we are uncertain about that. does this linger into something more permanent now that we are hearing a hawkish tilt from the boe and ecb? >> i think so. a couple of years ago all we talked about was the dollar and

policy rate differentials. what is the ec versus the fed, versus the boj doing? nobody is talking about that now. is a lot of complacency around the boj or ecb when it comes to tapering. yvonne: does that happen this year? to happen,it has certainly in the case of the ecb. it is less of a case of when it happens, and as we know from ben bernanke's statement, it's more about when it becomes priced into the market. of timethat is a matter come and the second half of the year is a good bet. to the when it comes fed, we did not get the projected number of hikes change. the market was hoping for four, possibly more than that. what does that mean when it comes to this market for risk? does it stole now? fed has not done

much actually. the only thing that has really changed in the last 3-4 months is that the fed has made a more concerted marketing effort to express they are all behind this three hike of view. the market relies will maybe there is consensus at the fed. then the market moved. the that has never really budged from that, so soon they continue the policies stability, that alone is unlikely to affect markets one way or the other. yvonne: when it comes to your positioning, looking at defensive assets, where do you see the opportunity in a share? >> a lot of the typical defensive names like utilities , defensiveg, japan markets in southeast asia like indonesia, philippines, and then it will be telecoms and staples and china, korea, taiwan.

yvonne: thank you. you very much. up next, china's property prices defy restriction. we will ask what more the authorities can do. this is bloomberg. ♪

ramy: you are watching "daybreak asia". i am remy innocence here in new york. property curbs may not be paying off. home prices rose in february and more cities despite increase restrictions on transactions. wong.bring in patrick he has been tracking these numbers for us. what are the key takeaways? now a pickup. basically top-tier cities versus lower tier cities, now it

is narrowing. we see some easing in the lower tier cities. they have more investment from the top-tier cities channeled, especially beijing and other markets. beijing just raise the down payment ratios for ,omebuyers 10 percentage points 60% to 80%, for a second home. what are the impacts of these latest tightening measures? shows tightening is happening. we see the prices coming down in interestingly, we haveore and more markets low prices. they had another round of

tightening last week. that it has triggered ,ome of the lower tier cities drawing more investment demand. to opt fory continue this city by city approach, but been talks about whether to bring in a nationwide property tax. do you think we need an approach like that now? think the key message is to clear the inventories from lower tier cities. we are seeing prices go up in the lower tier cities, so they are clearing inventories and

targeting higher sales this year. yvonne: the chinese developers have been doing well in the face of these curbs, so with these new tightening measures, could they still continue to rally? developerswe see raising their home sales this year, their targets. they have increased sales targets by 14%. the lower tier cities will have higher sales that outperform terms of sales growth and first-tier cities or second-tier cities. yvonne: thank you. you can turn to your bloomberg for more on this to get all the commentary and analysis with t

liv . we look at rex tillerson in beijing next. this is bloomberg. ♪

singapore this morning, 8:30 in the lion city. half an hour away from trading there. i was taken aback by that video there. hopefully that is a filter there. i am remy innocence you in new york. .elcome to "daybreak asia" let's get the first word news with paul allen. angela merkel and shinzo abe have called for a concerted effort to defend free trade. after angela merkel

held inconclusive talks with president trump in washington, she and shinzo abe said global markets can be open and fair. they were speaking at the cebi technology show in hanover. president of uber had grown tired of the controversies his departure. jones joined uber from target less than a year ago. the company is facing a lawsuit from waymo for allegedly stealing secrets. a new report says u.k. lawmakers may have to pass 15 pieces of legislation before the country these the european union. the institute of government has been examining what it calls the huge burden brexit will keep on parliament and civil servants during negotiations to quit the block. the additional workload will leave mp's little time for any other bills. the deployment of u.k. chancellor george osborne as

editor of the evening standard newspaper has prompted questions about whether lawmakers serve voters by having multiple jobs. he has more than one paying position, including an advisor broad blackrock that pays him $800,000 a year for four days of work per month. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. yvonne: thank you. time to see how the asian markets are shaping up. aoks to be a quiet week, but sweet spot last week. let's see how things are looking with sophie kamaruddin now. sophie: a moody monday and asia. perhaps reflecting the weather in hong kong and singapore. zealand, stocks are falling 1.2%. korean shares falling .5%,

snapping a two day rise. break seeing the kospi out of the doldrums. stronger producer prices are guiding the benchmark higher, the line in blue. the ppi growth is the white line. for february has surged to the highest since 2011, highlighting how the korean economy is emerging from years of deflation, boding well for corporate earnings which will support the kospi. ramy: you are looking at fletcher building shares, now taking a hit. what are the numbers now? of the biggest laggards and asia and those two at one point falling as much as 13% in new zealand, which put it on track for the steepest drop since 1997. you can see that the klein on this chart over the course of three days.

in sydney, shares falling for a fifth straight day, shedding over 10%, the drop brought on by the cut in annual profit forecast after the company identified more expected losses in its construction division around two major projects. fletcher says those losses are not systemic and there are labor pressures to contend with with the industry in new zealand. keep in mind this company supplies, soding the environment of great importance to the stock. you. thank meantime, rex tillerson used his 24 hour trip to beijing to smooth the way a little bit for an expected meeting between the world's biggest economies as tensions over trade policy and north korea emerge. tom mackenzie is in beijing, so what did rex tillerson achieve here? tillerson came here with

two objectives, one was north korea and getting traction from china to help with that issue, to dial down the tensions. -- second objection objective was to smooth the way ahead of this presidential meeting between president xi jinping and president trump in april. he met with his contra part, and they talked about the need for u.s., south, the korea, north korea, and china, all parties involved in this to try to dial down the tensions. really tillerson was walking back some of the language he when heseoul and japan talked about this imminent threat from north korea. what the chinese want is for the u.s. and north korea to sit down and have talks. the u.s. says that one not happen until north korea walks away from its nuclear program. that looks unlikely because it is so central to kim jong-un's

self-styled mission statement. they have that conversation and can hopefully build on that going forward. the other issue is the meeting with the two presidents, rex tillerson coming with reassuring language, saying that the at anonship is inflection point and need to focus on what their priorities are for the next 50 years, and i can start at the presidential meeting likely in april in florida. yvonne: looking at the events at the g-20 over the weekend. they dropped their commitments to dropping protectionism from their communiqué. how is that playing in china? spent the weekend at the china development forum, a meeting of corporate leaders from across the world and chinese leaders in beijing. one of the key topics on discussion amongst those leaders was this rising protectionist brexit, marine le

pen, or of course donald trump, and that is now a key concern. we heard a lot of them are focused on a stronger economy, the u.s. doing better, china looking stronger come up at the key concern is this anti-globalization sentiment. we spoke to the chairman of j.p. morgan international, former governor of the bank of israel, and we asked about the topics and concern around rising protectionism. take a listen. >> i don't want to appear extremely sanguine, but there is no sense of economic crisis, and the challenge is how to move forward, how to innovate, how to increase productivity, how to make growth sustainable, and how to protect ourselves from the protectionism virus. the g-20 communicate left out that commitment to combat protectionism. how concerned are you?

>> i think we will need to see how the next g-20 meeting looks like an g-20 communiqué. don't forget it is the beginning of a new administration that is priding itself, trying to renegotiate improved terms of negotiations, so i may think the politics of this is maybe a negotiating ploy. not to gete one is into the habit of putting protection to some -- putting protectionism as a hostage to the negotiations. markets are not only impressed by what is happening, but what is expected to happen. if governments are adopting policies which project clearly how the path of adjustment will take place, even though it will

be a long journey, the benefits will be seen in the markets immediately, but there are other geopolitical risks. i thought that north korea is an important risk. talking to people engaged in policy and engaged in losing sleep when these matters are not settled come they point to north korea as a major source of risk. there could be as many as four rate hikes this year, but what factor has the greatest chance of throwing that forecast off the rails? >> will inflation suddenly have a spike? will growth collapse? i don't believe so. the u.s. economy is like a heavy tanker, not moved around by a small wave. the big crisis that we are familiar with not on the horizon

now, but what is important is to ensure the global economy remains global, and that will be the major issue of my own concern, how to ensure the benefits of globalization which have been immense are continuing, and for this we should avoid and resist any fragmentation's and encourage integration. yvonne: that was tom's interview with jacob frankel. a corruptionw trial is bringing together one of south korea's most powerful families. this is bloomberg. ♪

yvonne: you are watching "daybreak asia". i am if on man in hong kong. ramy: the latest business flash headlines.

at the $16 billion iarmichael project by the adana group. the chairman expects it to be as early as may. it is meant to fuel power generation for 100 million indians and create 10,000 jobs in queensland. gold prices have allowed china's biggest producer to post its first profit growth and 40 years, rising 41% to $3.6 billion last year, although shenhua flag of the rise in january. gold prices surged after the government reduce production to curb overcapacity. "beauty and the beast" lord to the top of the box office.

170 million dollars, and a new high for family movie rated g or pg. the previous best was "finding dori." "beauty and the beast" is also this year's top opening and the seventh best release of all time for any movie. yvonne: the founder of south and threette group children facing criminal charges. could bebout how this an awkward family reunion for family, especially they have not been seen together for years. rosalind: there is a family feud to control power, and that's partly the reason why they have not in seen together for a while. the shin family, the four biggest names in the control of were indictedp

and accused of financial crimes, which amount to hundreds of millions of dollars. they were indicted before on issues surrounding a conglomerate and president park, so it is a separate investigation to the other ones going on. it has been a busy time for south korean prosecutors. let's look at the four people involved, the 94 year old patriarch, the founder of lotte group, his eldest son, and the sister. spends japanate and south korea and includes hotels, theme parks, duty-free, and generates revenue of $81 billion last year. the current investigation has impacted business for the lotte group, forced to shelve an ipo of his hotel lotte unit and had

to delay plans to list its malaysian petrochemicals business. had been the most active south korea agree and -- south can grin -- south korean conglomerate since 2010. they have denied wrongdoing, although the sister is in jail on separate charges and could not he reached by bloomberg for comment. ramy: how does the outcome of this trial tip the balance and the family fight for the entire company? rosalind: for the last couple of years, there has in this big fight to control lotte. essentially what we have seen it is the consolidation of power as chairman and pushing out his older brother and father, and the sister in jail as well.

ithe gets convicted, could give his older brother a gin,ce to get power a but that depends on what the court decides -- again, but depends on what the court decides in the coming days of the trial. on top of that, we all know the and and south korea -- south korea around conglomerates has started because of the issues related to president park and the samsung group. this trial is one of the biggest in many years, but there have been now so many issues conglomerateseen

and big business and allegations of embezzlement and corruption that the mood really isn't let's say positive towards what the conglomerates have been doing. thank you. deutsche bank expects to raise 8.5 billion dollars after pricing its new share sale. let's bring in su keenan now with details from new york. su: the environment for deutsche bank share sales is "almost perfect." given higher interest rates for banks and the strong equity markets. the share sale is preparing to take place between march 21 and april 4. the bank announcing a statement on sunday they were pricing the shares for which will raise at a 35%illion euros discount on friday's closing price. initial investors can buy one

new share for each to shares they are ready hold, so the sale only available to those who are existing investors and deutsche bank. ceo john cryan was initially proposed -- opposed to another capital infusion, the fourth for the bank since 2010, but when they saw their share price ,ouble from the september low they were unable to find a buyer for a consumer banking unit. o the share sale is on. ,he two largest shareholders both are said to be lining up to purchase shares come and that is according to people close to the matter. you can get a roundup of the stories you need to know with today's edition of daybreak for bloomberg subscribers, you can go to dayb on their terminal or on the phone with

the bloomberg anywhere app. news andnt to get certain industries, you can do that. just go to dayb . i and yvonne man. this is bloomberg. ♪

ramy: welcome back. you are watching "daybreak asia" . i am ramy inocencio in new york.

yvonne: i am yvonne man in hong kong. netmarble announcing they will be going public. the ipo will raise as much as 2.6 trillion won in south korea , $2.3 billion. details coming out with netmarble about to list. if you ever have resented suv drivers taking over the road and blocking your line of sight, too late. you are in the minority now. suv's have overtaken passenger austria,he u.s. and and are expected to head that way in china. weren't we all meant to be driving prius and teslas right now? >> indeed. oil was back 10 years, on its way to $150 a barrel and

all the attention was on fuel efficiency. the obama administration passed several feel economy mandates, one of which we saw president trump last week promising to unwind. there have been tightening mandates in europe, in india, which basically follows europe. in china, there were tax discounts for small engine cars last year and mandates for local governments for electric vehicles. so it seems to be running counter to the way it had been going. u.s. autoou look at sales, we were always talking about suv's are the ones popping, helping companies here, so what happened to cause these suv sales to revive? >> well, there is the popular image that it is a culture war thing. suve are conservative drivers and liberal prius

drivers at war, but i think there is more of the unifying picture. the key to what has happened is about fuel efficiency. suv'smandates have made much more fuel-efficient than they were 10-15 years ago. crv, america's best-selling suv, it has better fuel efficiency than a 2006 mini-cooper. and about the same fuel efficiency is a 2015 toyota camry, so these are not the gas guzzlers they were. a new market has been generated. more people can buy suvs then used to be the case. yvonne: it's interesting. 4 girl inyota roav the united states, but what does it mean for the environment? aren't green vehicles

by any stretch of the imagination. there are about 16-17 suv's in the u.s. rated by the department of energy with more than 30 miles per gallon, compared with 200 hatchbacks and small cars, so they are not green cars. electric vehicle equivalents are more than 100 miles per gallon. theyare also not the cars used to be. suvs were a car body weld and onto a truck base with all the efficiency you would expect from a truck designed to all loads. they are now high cars, cars with a high driving position, maybe a few more cupholders and room in the back for the family. at the same time, they have changed into a different type of vehicle. all the carmakers are spending a great deal of money to develop the electric car market. moneyic cars, they lose

that on everyone. i think there is a lesson here. they have invested a lot in making suv's more fuel-efficient and have done well as a result. what look for it, this is they are counting on for electric cars as well. yvonne: always good to have you. look at what is coming up. rish, are you an suv driver? rishaad: i'm going to call you a rav 4 girl from now on. yvonne: i loved it. i miss those days. it's all about rex tillerson at the moment. in china for 24 hours, what it means pure we have different interpretations of it. the chinese plated as a diplomatic win first som in some

way. we see markets looking a little positive as well. yvonne: talk us through the gas? rishaad: looking at house prices, credit suisse, the senior advisor for banking joins us to talk about the property market. minutes, cmc5 , saying sell bonds in the u.s. and by the dollar into weakness. that is all on the way. ramy: thank you very much good we are half an hour away from the open and china and hong kong. this is bloomberg. ♪

♪ it is 9:00 a.m. in hong kong come at midday in sydney, 9:00 p.m. in new york. i'm haidi lun. rishaad: this is "bloomberg markets: asia." ♪ haidi: the g 20 changes the language about protectionism, although the u.s. did not firstn how america would work. rishaad: