♪ asia-pacific markets expected to open stronger, building on new highs in new york. there is the feeling new data from china will show the economy holding steady. >> that's right. they banks kick off earnings season. j.p. morgan trading revenues the kleins, declined, but profits as well. >> have the headlines taken

their toll? unrest at uber. >> this is "daybreak asia." >> we have to talk about that disappointing data on friday out of the u.s. all eyes will be on the big china data dump in the next couple of hours, including second-quarter gdp. >> that will be key for asian markets. the cpi and retail sales numbers coming in. where is inflation? the fed is likely to continue to delay raising rates, and you saw the enthusiasm for that in the equities markets. let's pull up the boards for how we ended on friday, adding on

gains, the dow of 84 points come the s&p higher by .5%, the nasdaq adding .6%. quickly come inside my bloomberg. the fed delaying rates is great for everyone else except for the havecials, which investors been anticipating a hawkish fed and want to see those margins that,sed, but without another major headwind for the financials. we will see if there will be a rebound. we are starting trading in asia. >> it looks to be pretty positive and following wall street on friday. new zealand, of .1% right now. the dollar pointing to that fresh ten-month low. support some of

these higher yielding currencies like the kiwi. you strive australia, new two-year highs, and the best weekly gain since march for the currency last week. equities futures heading higher by 14 points, and oil about $46 a barrel. today for thed marine day holiday. dollar-yen still trading come a 113 -- irength, now at should say 112.51. that is ahead of the u.s. and ecb this week. wrapup of let's get a the first word news. haveind: china is said to

deposed a party chief considered a rising star ahead of the leadership shuffle. he is under investigation for violating party regulations and damaging its interests. officials say he was taken away on friday night while in beijing for a work conference. once furthert investigation into the activities of president trump's election campaign amid concerns of russia directed misinformation. senator mark warner pointed to the way false stories about hillary clinton were circulated. the president launched a fresh attack on the media as a new poll shows failing approval ratings. a medical scare for senator john mccain has meant the postponement of the republican new health care bill. mitch mcconnell says he has put off the debate while john mccain

recovers from unexpected surgery. say the new plan will be better than an earlier estimate, which forecast 22 million people would lose insurance by 2026. jp morgan's jamie dimon returns from an overseas work trip and unloaded his frustration. he said he almost felt embarrassed at being american because of the gridlock and inertia and washington. he said the u.s. must focus on things that are good for all and insisted growth would be stronger if politicians made more intelligent decisions. >> since the great recession, now eight years old, we have been growing 1.5% to 2% despite of stupidity and gridlock. we have become one of the most be are credit, confusing, and litigious societies. embarrassmentn embarrassin

traveling around the world and listening to these stupid -- about this country. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. markets awaiting a big data released from beijing, including gdp, factory output and retail sales numbers. time where china holds a twice a decade conference on financial regulation where president xi jinping\stronger role for the pboc. -- xi jinping backing a stronger role for the pboc. what were the key takeaway points? >> we just heard from jamie dimon. lounge inthe rooftop the middle of the financial center in china.

we have been looking at the financial sector and shanghai and seeing the ramifications of the weekend meeting as we await gdp numbers at 10:00 local time, expecting stability, but what everyone is talking about is policy going forward. gdp is backwards looking. conference was forward-looking, preventing systemic risks in the financial sector as an eternal theme, eternal theme, top priority number one, also financial deleveraging must serve the real economy. that is the number one priority. second, preventing risks. three, deepening reforms and opening up. accountability is also a big theme as they announced the to take over ag supervisory role along with the pboc, giving great power to the central bank in oversight.

acknowledged and and preventing systemic risks, basically they will have a new, coordinated committee within the state , andil with pboc oversight accountability is a key issue that has been promulgated by president xi jinping. was cited inf duty the announcement from the they do regulators, if not spot and dispose of risks and timely they will be labeled with their election of duty. -- with dereliction of duty. >> what about these reforms and how they might show up, or are they going to show up in the second-quarter gdp numbers that we will get in a few hours? >> that is the big question. the deleveraging campaign, how

much would this bite into the second quarter? first quarter, we had some stimulus late last year, but the economy to get on a stable footing, so 6.9% in the first quarter was perhaps the peak of this recovery. now we have stability even though ppv high inflation is urbanng to wane a bit and investment and industrial production expected to be flat. six point 8% is the consensus estimate, so it does not sound like much of a drop off. stability, and that is what authorities want. exports are doing really well though. all right, steve pearce. thank you so much. we will be back with you for more. we will be looking at those china gdp numbers throughout the morning on bloomberg television. citigroup chief and china a con a mess will join us for an immediate reaction as we see the

numbers crossed the bloomberg at 10:00 a.m. hong kong time, midday in sydney. >> up next, we will get the view from standard chartered joining us live in our hong kong studio next. this is bloomberg. ♪

>> we are counting down to asia's first major market open. japan is closed today. futures up .2%, building on gains we saw here in the u.s.. this is "daybreak asia." story, to our top china's latest gdp reading will be released later on. expecting six point 8%, keeping expansion within the government's target for 2017. joining us now is the chief china economist at standard

chartered, formally at the pboc and imf. let's talk about what we heard from this conference out of beijing overnight, over the weekend, the creation of this cabinet level committee. is there something different in this set up from the previous things we have seen? you have seen these top chiefs meet once a month or so, and a lot is not accomplished, but the fewest different this time around. >> the establishment of this backgroundome the has been inadequate coordination among the regulators, which gives an opportunity for regulatory arbitrage. , thenew committee institutionalization of the coordination mechanism among the regulators, is a positive step thisds addressing

regulatory arbitrage. we still do not know of a lot of details. >> who will be leading that? >> it appears that pboc may play a bigger role in terms of daily operations of the committee. >> do think that brings up any issues having the pboc at the helm, or does this clear up some of the arbitrage when it comes to regulation, having a more centralized role? >> it is less than the market is expecting as a super regulator. importantng to a very political event with the ninth party congress, and any major organizational shakeup could cause some regulatory vacuum. >> is there a bit of horse trading within the regulators? the major regulators,

including the pboc and committees, remain intact. another layerely on top of that to try to improve the working relationship and coordination among them. >> do you think that china needed something like this? werew the regulators sometimes in conflict with the government needed to make sure they were all in line, so do you think something like this is necessary? >> it is very necessary in my view. in the past few years, china's expansion has been rapid. we have seen the financial innovation, but in the meantime, financial regulation

gives riseind, which to financial risks, and that is a major shift in tone of the financial conference. going forward, i think financial , theation will be authorities will be wary about financial innovation. it will have to pass the test of serving the real economy. on the other hand on relative terms, financial security and stability will become more important in that context. deleveraging will remain the main task of the government, growth rates the has receded and growth will be moderate in the second quarter. >> we know that the beijing government wants to take this deleveraging campaign wider and broader throughout the economy. i want to bring up a chart here

that shows you the debt levels in china. we know that big problem is corporate debt. this is btv 624. it is incredible how much of gdp and china followed by household debt in blue and government that in me, the bankuse debt in red, just how much the corporate debt has risen. tackles, deleverage, , aree this problem here these companies going to start to find other ways to finance, and what does that mean for like ipos and equity markets? what are we going to see possibly? >> it is interesting to note that president xi jinping mentioned over the weekend that deleveraging, especially the sle

deleveraging, will be the first soe they -- leveraging, will be the first priority. soe's account for half of the total corporate debt come a so we think the general financial condition would be in general tighter in the medium-term as long as growth targets can be reached. for theorate sector local governments, the president also mentioned that will be strictly controlled. ,he corporate sector will still i think the financial conditions would be tighter for the corporate sector as well. >> can the pboc continued this momentum when you have money below 12%, hitting

single digits now. btv 4276, and we see the percentage of new lending versus the percentage of gdp, that actually continues to fall over the last two years, so some people see this is an indicator of where growth is heading in the cycle. do think this casts a shadow for the growth outlook for china? definitely the pboc is facing a tightening bias, and below 10% could become the new normal. our estimate continues to show of gdp isa percent rising, but most likely this year, it will rise at a slower pace. we also have our own estimate of china's corporate debt. currently the deleveraging is likely to be a

soft deleveraging, which means the first up is to bring down the pace of leveraging, and the ratio may continue to rise by 2020 from currently 260% of gdp. it's interesting they omitted that word neutral and the policy guidelines. great to have you as always. can get a round of stories you need to know in today's edition of daybreak for bloomberg subscribers, dayb on your terminal and in the bloomberg anywhere app so you get news on industries and assets you care about. make sure to check it out at dayb . this is bloomberg. ♪

>> this is "daybreak asia."

>> a quick check of the business flash headlines. includingholders benchmark said to have discussed selling stock to softbank. it represents a major turning point. amassed 500 backers in the world's largest start up. the troubles this year have taken a toll. >> toshiba has agreed to hold off on disposal of its flash memory chip unit. the sale is being contested by western digital. raise cash toto offset multi-billion-dollar at its westinghouse nuclear arm. western digital is concerned the chip tech knowledge he will in-depth in the hand of competitors. amazon expansion plans, including a $13 billion for whole foods, raising questions

in washington and wall street is washing. there are calls for the acquisition to consider implications. one investor has gone shortselling antitrust concerns will erode its value. banks in the spotlight to kickoff the week on wall street three of the biggest lenders posted earnings friday. j.p. morgan reported that drop in trading revenue, but also might earnings, so you call it a mixed picture come although financials were the worst performer on friday. >> mainly because of j.p. morgan. morgan chase, and wells fargo disappointed. that was the headline. the silver lining is j.p. morgan had record earnings. year to date, they are up almost 6%. they were under pressure on

friday. worseg revenue fell 14%, than warned. the bank has earned 26 $.5 billion in profit in the past 12 months, the most ever by any major bank. it said it would increase loans to the consumer this year at a rate double than anticipated. we did have the cfo lower expectations for trading revenue in the bond department, talking about muted volatility. >> citigroup, they managed to close a gap on investment banking with j.p. morgan. >> that was the headline. they did manage to come within striking distance, particularly bond trading revenue, with j.p. morgan chase. citigroup was under pressure on friday after performing better

than some of the banks year to date. citibank is saying that investment banking results were the strongest in years. trading also, traders proving adept at avoiding an industrywide slump. j.p. morgan has long been the dominant bank in that business. theceo on friday called best performance in seven years when he talked about the investment bank, revenue from $3.2 income was down 6% to billion, just $1 million less than j.p. morgan chase comes so they are on their tail. big question is how will it play out for goldman sachs and bank of america. wells fargo are planning to shelf more businesses. about theirtalk cost-cutting on friday, and some more headlines since then on

reduction in businesses. ceoof the things the pointed out is the bank has suffered the loss of tens of millions of dollars in municipal underwriting, and that is because a lot of states have backed away after their accounting scandal. is not a material and tack on the bottom line, but are concerned about the disaffection of clients and have pledged to win back trust. is the also interesting ceo reconfirmed that many of the banks are looking to, really washington and the white house, for what is ahead in terms of banking reforms and taxes. back to you. >> su keenan with that wrapup on wall street and earnings later this week as well. we take a look at those when hoter this >> we will look at trade numbers

just ahead. this is bloomberg. ♪

>> not looking good for this monday. there is a chance of rain it iss we are look at and very humid in very hot in new york and the markets were higher on friday and we saw the energy shares and financials not doing well. president xi jinping has part

of the efforts to safeguard the chinese financial system and he said that a new stability committee will be made and could not define the relationship with the central bank. the ecb is on track and it is likely to drag the process out. the unwinding is starting in january and it is up from the months previous forecast of. state media is says he is eligible for bail and served as somesidential aide and

opponents have condemned the deals, saying that they were to lean -- too lenient. the reports on minimum wage will be raised. minister said that they would address the unemployment and the growth. he pledged to raise the minimum wage by 2020. global news powered by 2700 journalists in 120 countries. this is bloomberg. i want to bring in the global markets editor. tell us how the week is shaping up in asia.

>> good morning. we are going to get positivity and there is not a huge amount to move the dollar and it will keep the pressure hanging around it is interesting coming off of the back of the inflation data and this is the focus moving on with the economic data getting sense of what is under the hood. both of these standing pat and it may not the enough. a start of the positivity for equities and

there are big bellwethers within the industry's. we have seen this rotation and a lot of people call it that. at thetainable is that moment? reminder selves of the outperformance in the equity there is an unwinding we are seeing and you alluded to the outperformance and a relatively decent performance

from european equities. the danger is that a lot of people are arty involved in this trade and the bank of america says the long european equities position as. they continue with the revisions and it is enough to keep the performance of stocks running and that is where they say you should be. >> thank you. sheetis a smaller balance and consumer prices barely barged. let's go to our global economics and polis the editor.

breakdown of the reports and it is a make it or break it number. a oversightit of with the expectations and janet yellen would remind us that this is not a set trend. this is envisioned by the markets. of course, i am here to cover the bank of japan meeting and isn't that interesting when they can't get the inflation rate to rise? that look at these details reverberate markets. we areack down and

taking a look at this and you see the peak inflation gauges. now, we heard a lot about the janetort factors and yellen admitted that is a lot goods andhe household all kinds of things with core consumer good prices. i want to look at the chart that our news team put together. and they been down stepped back from consumer goods and services.

they are lower on a year over and this is something they have to contend with now. >> he has been speaking to bloomberg as well. sheet and thece inflation. >> let's focus on inflation. we are all on board with the rate hikes and they say that something is going on and there is more of a sign that this is a thatitory problem and helps to have more pricing

power. this creates more rising. april and may were a little stronger and i believe that this is a transitory meeting and there are factors in the numbers, but i do not think it is all transitory. >> he says that he wants more said thatnd they nobody had a satisfactory answer for the inflation trajectory and there were the projections on the upper corner of the screen and the meetings were down and down and pay attention to that. by the one more chance end of the year. the odds were up and there was a

shift in expectations. what about the balance sheet. >> it is declining and not moving higher again. is still a longer bet and it is not likely to happen. if it persisted, moore would ask the question. >> i would think so. anye are not expecting polis he steps. >> they wrap up on thursday and they are the poster trialed -- poster child. the bank of japan issues in monetary policy and this is when they could change the forecast

for the target. will they push that date out? will they but the growth forecast? the bank of japan is doing better. they also have no big changes. that is the symbol the markets are waiting for. >> all right. thank you so much. up next, it take week. we are taking a look at the outlook. this is bloomberg.

>> we are counting down to the first major market open. up and -- sitive >> it looks gorgeous. what about the outlook for the banks? the have arty kicked off as we fargo groupwells dropped after posting those results. there was worries about the loan core loan growth estimate. thank you. andnt to pull up our charge i just want to ask about how

much they are able to and how unexciting they have been with equities. part of it has to do with a thewind we are seeing and trading income and revenue being a real drag on banks. is this a new normal? you look at the universal banks and our investment banks lower than what we saw and that has to do with the volatility and the trading and theyhat we saw

were looking at the fixed income trading and it will be around 10% or 15% and that is what we saw with the trading area. equity was good and fixed income was week on a year-over-year basis. more you think we have this week? heard the commodity beenng area and it had we expected the year-over-year numbers and it they madedown 20% and it into the commercial trade with them.

ceo and werd to be a saw some of those frustrations here and there was a point in berated where they them. there was the trading revenue in june and you could see that frustration. ,hat are we to focus on including load growth? that there suggest is the earnings call with he was trying to stress the economy is growing

it would grow faster, if they get the acts together and they would like to see that. the regulatory relief is on the horizon and you know the treasury proposals by came out a month ago do not require legislative changes. there are regulatory changes coming that will be beneficial to banks and profitability. why do we still see a selloff on the banks? there was a decent set of earnings. andit about the outlook comments? >> we are not going to see anything substantial and it will sentiment a negative on the bank. inthere are factors coming

number comes in quite soft. it will not be as aggressive and these banks one through they rigorous stress test every year and the numbers were off of the charts. some of the banks will give back newshere will be that good at the end of june. numbers are pretty good. are these going to be the same questions you ask during the call? >> these are key questions and a

reason the banks have done well. there is the net interest margin and it has been essential to the bottom line. andave to see loan growth that slowed down from a year to go. rates and the margins could widen out. is a bank that we are going to focus in on. goldman is going to be more about the trading we have talked about and that will be a key. >> great to have you. there is a feature we like to bring you about the interactive television function. this will also dive into the

and you canerviews become part of the conversation. is at tv go. this is bloomberg.

>> let's get into a quick check of the business headlines. this is moving into new energy vehicles. this is a statement from the stock exchange and they said that it involves the companies cooperating with production and design and brand promotion.

>> the hong kong billionaire is renaming his property unit as they continue to diversify and plan with infrastructure. after sellingamed . 25% stake to the affiliates the property shares have on since a spinoff of the business. the latest installment of planet the award the box thece, taking 57% and budget is estimated at -- is the third of a series and the ninth planet of the apes since the original in 1968. >> plenty of six stores and we will cover all of them here. histhing we will focus on

property prices coming out and data coming later today. is if theyion to ask will take hold here. you have been seeing some signs of success and this shows the purpleier cities and the there and we have seen this with there is a factor in the property market and we have seen the prices accelerating. is continuing and we do see more demand over the second tier and third tier city.

not and we will be watching out for that. we have been talking about tank earnings and how important they are. we're looking at trading revenue and any headwinds. week will be another big and that includes netflix, seeing theand we are tech and financials trading and it has been a great few weeks. raisexpect the fed might rates faster than expected. out was actually helping the financials and hurting tech shares.

you take a look at that sector and how it has performed and steadiness with seeing anhave a outperformance and we could see a rotation out of the stocks and we started to see some of that a few months ago. plenty more to come with the open. >> we're taking a look at australia and korea. >> we are looking for a big data drop and anticipate steady growth. there were losses seen here and the gains would extend the global stock rally.

they are looking at the open and watch out for rio tinto and stocks down under. this is bloomberg.

♪ >> asia-pacific markets stronger, building on new highs in new york, the dollar at its lowest since september. >> that's right. investors waiting for china data. there is a feeling it will show the economy holding steady. set toralian miners launch new investments on the back of a rally in commodities. north loophole that let's korea dodge united nations sanctions, cash still arriving

from china. >> this is the second hour of "daybreak asia" live from bloomberg's u.s. and asia headquarters. of course, we are building on the rally we saw on friday into the asian markets, but you get a feeling we are waiting with gdpd breath for the chinese numbers and economic numbers to come out and set the tone for asian trade. one,at will be a big especially fixed asset investment, retail sales slowing down, but 6.8% gdp. in two hours time, but let's look at the market open. sophie: quite a bit to consider monday aside from the china gdp data this morning, the work

conference to consider over the weekend and what president xi jinping highlighted, deleveraging and risk management the main priorities, so the offshore yuan strong ahead of that data drop. the core inflation numbers out of the u.s. on friday did not dampen wall street's enthusiasm. shares in seoul, korea gaining .5%, the tech heavy kospi tracking tech shares in the u.s.. marginallyks lower, lower, down .1%. trackingds dropping, the drop in u.s. 10 year treasuries. japanese markets closed, but futures hinting at weakness. the yen strengthening for the second straight day against the dollar, 112.44 this morning ahead of the boj policy meeting on thursday where

governor kuroda physics acted to stand pat. amid the risk on move. .5%, but thatng is not helping the aussie, falling .1%. chinese gdpng on data that could influence how the aussie will perform this morning. closer to that $50 a barrel for brand. futures pointing to a stronger open as investors focused on earnings, but the dollar not unscathed, falling as the odds of a fed rate hike fell to 40% on friday. the dollar near a 10 month low, the lowest since september. speculators are holding the most bearish positions on the dollar since 2013. the dollar in the doldrums, but

the aussie having a decent run despite weakness this morning. the next weakness there is $.81. >> thank you so much. ,ophie was mentioning the kospi some headlines on south korea coming out, building on reports earlier this morning about south korea proposing military talks to north korea this week, and it looks like this is confirmed, south korea proposing military talks with north korea on july 21, so this friday, and asking north korea to reply on this request for military talks, although it does not look like if there is any set the deadline here. these headlines saying south korea proposing military talks y 21.north korea on jul we will keep our eye on more headlines to come to south korea.

in the meantime, let's get to first word news. china has deposed a man considered a rising star ahead of the leadership shuffle this year. he is under investigation for violating party regulation and severely damaging its interests. officials say he was taken away friday night while in beijing for the national financial work conference. democrat wants further investigation into the online activities of president trump's election campaign amid concern about russia-directed misinformation. mark warner pointed to how stories about hillary clinton were circulated. the president launched a fresh attack in the media as a poll shows falling approval ratings. a medical scare for senator john mccain has meant the postponement of the republican's

new health care bill. mitch mcconnell says he has put off the debate while john recovers from unexpected surgery. party leaders say that congressional rigid office's report will be better than previous estimates. jp morgan's jamie dimon returns from an overseas work trip and unloaded his frustrations. he said he almost felt and bears that being american because of the gridlock and inertia in washington. he said the u.s. must focus on things that are good for all and insisted growth would be stronger if politicians made more intelligent decisions. andince the great recession now eight years old, we have been growing at 1.5% to 2% in spite of the stupidity and political gridlock. of the most bureaucratic, confusing, the kid societies on the planet.

it is almost embarrassing traveling around the world and hearing about the stupid -- we have to deal with in this country. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. markets are waiting for a data release from beijing, gdp, factory output, and retail sales numbers. despite a conference on financial regulation, president xi jinping back to stronger role for the pboc. jeff black joins us live on the set. good to see you. let's talk about the conference. the rhetoric was quite interesting. , theining systemic risks eternal theme for the party moving forward. what was your take away? >> the takeaways were pretty modest. we had the establishment of a new cabinet level committee to

monitor and coordinate financial regulation, and we have had an elevating of the pboc's role, but a lot is still unclear, and we will have to wait for more details. we also have the party congress coming out, so we may not get much more immediately. short of delivering this super regulator many were expecting, but the thing i thought was how reforms and how they could not that down when it comes to priorities. we will not see opening up until after the party congress i guess. >> the focus was on risk mitigation. soeave seen a focus on deleveraging, so the party is instability mode. let's get to the party congress and not have any difficulties here. inalso staying on china, but a few hours we will get china

gdp numbers. what are we likely to see in these numbers? >> over all, the economy is slowing, but may not slow by much. our forecast from our survey is 6.8% year on year in the second quarter, a pretty good reading. the target is 6.5%, so broadly we have an effort to slow the pace of leverage as a drag on growth, but also global trade and domestic demand, so that is a boost for growth. you will see how those forces and out in the data today. >> great to have you in the studio. expect outut what we of the growth numbers, i know you don't look too much into a decimal point between 6.9 and 6.8, but what are we looking at beyond that? what are some of the indicators we will be looking at? indicators important

came out last week, credit growth numbers. all those numbers are moderating. we are not seeing them collapsing, but growth is at the lowest point for history, and also credit growth has come down substantially as well, even though new loans are growing. i would say this of the most important leading indicators we are looking for. it is pointing towards moderating growth in the second half. quarter was the focus on the slowdown in loans, but it seems it was offset by shadow banking. how much has that story changed now? are these curbs starting to bite? >> the credit growth now is coming down towards the growth in m2. that is saying the off-balance

sheet credit growth is slowing down as well, so the financial regulation is showing some of the effects and will probably show more in the second half. the traditional markets are drying up for many , there is thenies shadow banking so-called market, but where else are companies going to be it would to get that liquidity from? will that impact the equity market? with that affect ipos, those sorts of things? what might we start seeing more of? >> i think we are trying to gradually change from a banking-driven financial system to a more market-driven system. we will probably see more ipos this year going forward, and also some more bond offerings as well, so the valuation on ipos

in the performance of stocks post-ipo is coming down, and bond yields are rising, credit spreads are widening, so financing costs are coming up for many firms in the chinese economy. going backuickly more macro and looking at some of the numbers we will see today in the gdp figures, what about wages? will we see much movement on wages do you think? >> i don't think so. we have a chronic labor oversupply come especially nowadays, so it has come up for a number of years now and since the beginning of this year, we are seeing wage growth coming down. it is the same sort of phenomenon in the u.s. as well because of higher labor costs, this is affecting those

overseas, and even moving back to the u.s. the labor supply is quite large and labor has no bargaining power. >> we have much more with you, the chief strategist and head of research at bocon international. this is bloomberg. ♪

♪ ." this is "daybreak asia" nine point $3 billion purchase up one does real estate assets could signal a return to record raking m&a in a deals and china's property sector. andtephen engle reports, the deleveraging push is having a disproportionate impact on chinese developers. get your shovel and fork ready for the great asset feast

of 2017, china's biggest developers are swallowing up rivals and land at a record pace. pending an unprecedented $14 billion on such deals, some c gobblingr with suna up wanda's assets for $9.3 billion, china's largest real estate transaction today. it is maker consolidation under the government's deleveraging campaign. medium size developers have trouble getting finance. they want the targets for the bigger developers. you will see a lot of developers, small or large, they will change their strategy slightly to an asset-like strategy, some were sales of moving assets and capital into different areas

that have high growth potential for paying down some debt. ac property developments are popping up all across china, and find the one that power lay, do we have a new debt keen in sunac?king in china with soared, and s&p puts sunac pundits and negative watchlist. they have raised their foot rent from four chinese cities to 44. the chairman has complaint options as being at absurd levels. wouldis a reason why they like to fork out for existing or older lower yielding properties, perhaps for redevelopment when the land underneath is more

viable than what is sitting on top. shanghai, we have completed 10 major capitals markets transactions for mature assets, and that was double all of last year. >> the biggest and developers in china based on sales last three years, they account for 70% to 80% of market share. table at ants at a increasingly exclusive inner party. absurd is avels, word often thrown around when it comes to china's property levels. chief international strategist is back with us. here is a chart for bloomberg viewers, chinese property developers and where they are trading, even though we have , theskyrocketing prices

government trying to get a hold on that. the developers are trading below book value, the red line here, in aggregate. it has not been at that level since 2012, so do you see value in being in these chinese property developers? >> the developers have done well this year. i think mostly because many developers have party locked in sales, so for them, this year's earnings target is easily achieved. that is number one. number two bank, many of them have quite a bit of cash because lastrging property sales year, so plenty of cash on the balance sheet and locked in earnings targets for this year, and that's two reasons why they are doing so well this year. >> they will continue to acquire? >> i would say that now we are going into a consolidation

stage. the rapid growth in the property sector in china is actually behind us, the rapid growth era is behind us, so going for it we will see more consolidation, some of the bigger developers will probably move into the service sector. for example, soho china and wanda is in the process of transforming from a property developer to property management , so we will continue to see consolidation and some transformation from developers to the properties service sector. talking more macro and about the chinese property market, the chinese government has been trying to cool down the property market. you have seen that happen in ierst, second, third tear the cities, but is it a myth

that the government can control property prices in china? stationrain left of the and it is really difficult to get a handle on this property market? >> i think that for now for this year we are seeing some moderating growth and property than last year, where we saw property prices surging across the country. for the government to main control of the property sector is very difficult, but for now, we are trying to control demand rather than increase supply, and that is the problem. if we want to bring property prices down, we should increase the supply. increasing supply, once the property prices come down, then banks would have alone problem and people probably are going to have demonstrations on the

streets and that could create social instability come and that is the reason why we can't afford to increase property supply. we had a bad episode in hong kong in 1997 when we tried to increase the supply by 20,000, 30,000 units and created a crash here, so that was a lesson to learn from. issue in hongsh kong. what we have learned from the financial conference of the onkend, they want to hone in deleveraging efforts when it comes to state owned enterprises. how difficult will that be for the government and the pboc? it seems like they have this mantra right now that they are able to manage these risks right now. >> they are trying to. we all know the risks cannot be hedge store diversified.

up, systematics risks go up. >> what will be the one hit the hardest? >> for now, the property sector is the sector with the highest leverage. with that sector is that for the last couple of years improvement in return to equity is all coming from increased leverage, so they use leverage for some return, so now we are talking about decreased leverage. think about that. that will put pressure on the putrns for equities and pressure on the equities market, but at the same time, authorities are trying to control the equity market. we are trying to do two different things at the same time, and that's why it is difficult, because we are not ready to face the consequences. calm in have a sense of the market so far this year.

a-sure market not doing a lot, but still seeing some decent gains here. long mscitraits china, long hsi, short small caps, do those still stick? >> from a trading perspective, things are getting less bad. we are trying to use low interest rate debt to swap for high interest rate debt, its so we don't have to pay back in one block. because we are seeing things turning out better than i worse expectations, enough earnings we areback, and now doing supply-side reform, so that should be filed commodit ies prices rise. that is why we should see this trade continue. things looking less bad. >> always great to have you as

we look ahead to the gdp numbers. plenty more to come here on "daybreak asia." this is bloomberg. ♪

♪ >> a quick check of the business flash headlines uber shareholders an early backer benchmark considering selling stock to softbank. 500 investorsed in the world's most bible startup. the fact that some backers want to reduce their stake suggests troubles have taken a toll. on theiba to hold off disposal of its flash memory chip unit until july 28. the sale is being contested by western digital. western digital is concerned chip technology will end up in the hands of competitors.

mean china isions not buying north korean coal, but funds are still reaching pyongyang. we will find out why. this is bloomberg. ♪

♪ >> 8:30 in singapore. openan hour away from the of trading there. >> you are watching "daybreak asia." >> breaking news out of quiteore, export figures, a sizable beat when you look at year on year figures for non-oil domestic exports, rising 8.2% for june. the estimate was 5%. forid see that falling 1.2% may, so trade signals seem to be turning around for singapore and north asia as well with trade data out of china last week.

export growth and taiwan looking good. south korea, similar story. seasonally adjusted month on month numbers in the negative, down 2.7%, not as bad as expected, a 5% drop in the month of june, but seeing a month on month slowdown. electronics exports, slower growth numbers, five point 4% rise for june versus 23%, numbers now revised upwards to 28.9%, so a mixed picture, but year on year figures still quite positive. >> that's right, a considerable beat there on that. let's get to first word news now. president xi jinping supporting a stronger role for the pboc to safeguard china's financial system and modernize the regulatory framework.

the national financial were conference that a new committee would be formed under the state council come although he did not defined the relationship with the central bank. he said financial security is part of national security. the ecb on track to unwind its stimulus program next year, but economists say it is likely to drag the process out. are seene policymakers to hold fire this week and wait until september to slow the pace of bond whining. seeing toing is start in january, taking nine months. the iranianof president has been detained over unspecified financial issues. he is in custody, but eligible for bail. he served as a presidential aide , and it is not clear why he has been arrested. some opponents have condemned

the deal, saying the president and his team were too lenient. reports from seoul, korea say the minimum wage is to be raised .espite years it may hurt the finance ministers says the rise would address the worsening employment and bolster faltering growth. the president has pledged to raise the hourly wage by a dollars $.20 by 2020. $.20 -- allars dollars $.20 by 2020. >> thank you. now to how asian markets are shaping up, here is sophie kamaruddin. sophie: taking a look at the gmm function, the global rally continuing apace, asian bonds climbing, the dollar near a 10 month low, a mixed picture in

the currencies space. adding .5%,on leading asian currencies higher. the singaporean dollar adding .1%, maintaining momentum after the latest data drop out of exports rosewing more than forecast, so the singapore dollar climbing for a fifth straight day. climbing to a fresh adding .5% despite the tumble in health care stocks in seoul, korea. .1%, the aussie losing .1%, snapping a six-day advance. a mixed picture when it comes to base metals, but the aussie holding above $.78. aussie stocks snapping a two day advance. ,esources firms on the up

materials gaining .5%, energy red,s switching into the asers in the spotlight investment moves away from producers as they attempt to maintain output levels as commodity prices have rallied after hitting a 25 year low in january 26 dean. -- 2016. deepening the drop. you can check that out using the grr function on the terminal, telcos falling 50.4% so far this year, so among the cheapest stocks in sydney in 2017, and with buyout firms sniffing around, that could signal a bottom for this segment. keep an eye on telcos stocks down under. thank you so much. >> north korea seeing an export boom when it comes to iron ore

relative to its other export activity. bruce einhorn joining us from more on this. north korea, a minor player when it comes to iron ore when you compare it to australia and brazil, so why is china increasing imports? >> china has strong demand. most of it comes from australia and brazil. north korea does have some iron ore, and china can't buy a lot because korean coal that is covered by united nations sanctions that got tougher last year. there is an exception for iron ore and it comes to sales that help livelihood, and true that -- through that, they are able to continue buying north korean iron ore. it is quite a loophole. to australia, brazil, , but africa, it is tiny

for north korea, this is is a major source of income. but these are for bid and under yuan sanctions? >> the you in sanctions do cover iron ore, but they have a carve out in the latest set of sanctions that the security council approved late last year for sales that the wording referred to livelihood, so if you can say that this is not supporting the nuclear weapons program itself, then it is not technically in violation of any rules, so they are on solid ground in buying north korean iron ore, the chinese. >> what about president trump? what does he have to say? >> this is part of a bigger

issue that president trump has with china. he has argued that chinese trade with north korea has gone up, two-way trade is up, chinese imports of north korean goods have actually gone down somewhat, and that is because the chinese have not been able to continue buying north korean coal, which is covered by sanctions. the twoan issue between sides. it is unclear where they stand. president trump has tweeted his displeasure a couple of weeks backed off on that a bit when he met with president xi jinping at the g20, so watch this space. there is still more to come here. >> we will indeed. bruce einhorn there on china and north korea. move smoothly to commodities in australia, because miners may be preparing a fresh round of investment as

the rally and prices boosting the bottom line, so might they expend more capital? matt, why are they planning to do this now? >> indeed, they certainly are. commodities have come up a little bit since early last year, so the miners have a little bit of cash to spend on some new mines they will have to develop, so the chinese hunger for the rust colored dirt has not waned. they are looking at over one billion tons of imports this , so australia and miners will have to replace 100 70 million tons worth of capacity in the short-term. with of that though bit of cash they have got, they are looking to do that. >> will that be good news for the equipment suppliers? >> definitely.

they are salivating over it. in investment boom came off 2012. we saw there was a lot of secondhand equipment that came on the market, so that created a little bubble there, but now that has dried up. that means that these miners are now looking at new equipment, not just in the short-term, but longer-term as well. they have been having discussions that could take up to 10 years because that is a long development time. were is that pipeline, but will not see the lofty heights we saw in 2012. >> good stuff. thank you. coming up next, are you a believer in unusual. ceo bringing justin bieber to singapore while finding new audiences. this is bloomberg. ♪

♪ ." this is "daybreak asia" >> singapore's best performing ipo has been staging concerts for the past two decades. now unusual is heading out on the road, promoting sold out supply, mariah carey, and also justin bieber in singapore later this year. thantock has surged more 150% since its listing in april. who hasing in the ceo been sitting on the ipo and the success of it. thank you for joining us. it was the headline, you bringing justin bieber to singapore, that piqued our interest here, talking about the growth of the company. you areabout where

after this ipo and why you are now asked anymore into china? >> we are looking at china, not extending toe, but southeast asia. entered manila. inhave launched shows singapore, manila, and kuala second so china is the city -- second-tier and 13 cities we are looking at. >> why is that? >> they are not that crowded. second-tiert, million, 15ike 12

million populations, huge. there are less gigs there, so we are looking doubt as our target next year. say why investors seem keen on your stock and seen on this expansion plan to other countries, and in particular china, is the chinese are looking for more and more ways to spend their disposable income, right? and youre activities, have seen that in the growth of places like macau, in retail, but is this entertainment that has become the new thing for the chinese consumer? >> yes obviously because they are definitely hungry for , becausefor more gigs the gigs are normally concentrating more on beijing,

shanghai, but we are looking into other cities that create the potential. last month, we brought city.ainers to a smaller they are hungry for shows and concerts. definitely the audiences are there, demand is there. we are definitely looking at that. we are also looking into expanding into venue management because we have been in venue management for the last 10 years come expanding to more venues to bring more shows. at this point, you don't have in-house ticketing capabilities, so how important is that when it comes to your growth ambitions? ticketing --nd venue and ticketing will go together.

is what weicketing are looking at, and expanding to overseas. momentin talks at the and it is part of our plan, yes. an optimismso much for this since the ipo. as you continue expansion, you will face some big players, so how will you set yourself apart those competitors? >> we have the experience of the last 20 years. we have many entertainments we can look at, not just western shows. , and nowhows definitely moving into children's shows, sports events, pop.lso korean acts, k

a couple of months ago, we brought k pop to bangkok in manila. we are looking to china may be next year to open up, yes. market there. >> k pop for bangkok. we are looking forward to the shows. you can get a roundup of the stories you need to know in today's edition of daybreak. go to dayb on your terminal. it is available on your smart phone on the bloomberg anywhere at you can customize settings to look at the news on industries and assets you care about. check it out. this is bloomberg. ♪

♪ "> this is "daybreak asia. >> a quick check of the latest business flash headlines. great wall motor moving into new energy vehicles, taking a 25% stake in another automotive company. it involves a capital injection, although no figures have been released. will cooperatees

on new energy vehicle technology production and design as well as auto parts supply and brand promotion. >> li ka-shing renaming his property unit as he diversifies away from real estate into plane leasing and infrastructure. stakealso selling a 25% in canada's reliance. he spunave fallen since off the business in 2015. >> leading investors and bhp supporting elliott's campaign for restructuring. it continues to ask how best to gain of five the miners do listed makeup in the future of its u.s. petroleum interest. the hp will report quarterly production numbers on wednesday, while rio tinto were released you numbers on tuesday. >> amazon expansion plans including a deal for all foods

raising questions in washington. wall street is watching. there are calls for hearings to discuss the acquisition. antitrust concerns will erode value according to one analyst. the fed's case for higher rates in the smaller balance sheet made become harder to make after consumer prices barely budged in june. in friday, another sign of a slowdown. kathleen hays is joining us from tokyo ahead of the boj meeting. break down the june cpi report we saw on friday. >> the bottom line is still no from one ofignal those two most important inflation gauges the federal economists, u.s. watch, key deceleration in

inflation has started to turn around. consumer price index, the pce deflator, two very important gauges of inflation. they are complementary to each other, but somewhat different. in the are both heading wrong direction, that is not what the fed wants to see. flat afteronth was being down 0.1% in may, so it did not get weaker on a monthly a smallut there was not move higher. downover year, june cpi, to 1.6% from 1.7%, and the pce deflator, they have been doing the same thing, decelerating. 6030.s btv choose whichever inflation gauge you want, the pce deflator is running under the cpi, heading

down year over year core cpi also heading lower, the chart says it all. andissue is janet yellen fed officials saying it is ,ransitory, one-time events suddenly competition, prices falling, drug prices. i think the problem for the fed is that it seems to be spreading. clothing and car prices and houses down across the board. i want to show you another chart, core consumer goods prices, put together by our bloomberg news team. what do these bars tell you? 14 of the past 16 months, those numbers have been negative. if i want to keep going, i would put up a chart showing you core services year over year have , soed and are heading lower

everything heading against the direction the fed wants to see right now. >> we did speak with rob kaplan last week, and he mentioned inflation and how he is in wait and see mode before raising rates. >> absolutely. it is not all transitory. is an evolution of what he and other fed officials were saying at first, saying it is a temporary soft is, but the longer it persists, the more fed officials wonder. in this interview, he talked , globalization, internet shopping, going online and competing for the best price you want, that's helping to keep a lid on prices. here is what he had to say. >> march was week. april and may were stronger. i believe some of this is transitory, meaning there are some one time factors in the

march numbers, but some of it is not transitory. similarly, fed governor lyle brainard wants to see more evidence. one has satisfactory answers for the current inflation trajectory. the doubts are spreading as well. the big doubt now is the fed has separated normalizing, starting to reduce the balance sheets, focusede rate hikes are on selling, balance sheet normalization, a bigger decision, but the question will be asked more and more if inflation stays weak. >> thank you. that is almost it for us here on "daybreak asia. time for a look at what is coming up on bloomberg markets. it's all going to be about china

gdp coming up. haidi: let's hope it comes out on time for a change, not just gdp, but the devil is in the details. activity data crucial, retail sales, industrial production, fixed asset investment, all giving us a picture of a modest slowdown. this is a year of stability when it comes to beijing. this political furor, that a sitting member of the politburo has been taken away. we will take a look at that story and implications for investors. >> looking forward to it. that is it "daybreak asia." market coverage continues. this is bloomberg. ♪

♪ haidi: it is 9:00 a.m. in hong kong. i am haidi lun. this is "bloomberg markets: asia." ♪ haidi: asia-pacific stocks edging higher as investors await data from china, new figures expected to show continued stability. some uber backers ready to cash scandals andhe headlines taken their toll. the rise of robot