other thingsis going on other than watching north korea. north maye saying the be preparing to fire another icbm missile test. we are looking towards the rba, the ecb on thursday. first, the australian central expected to leave the cash rate at a record low again. take a look at this chart. it illustrates nicely the development -- dilemma policymakers face. the red line is wage cost by the hour. wages are still falling close to record lows. close to record lows.

at the same time, debt to income at record highs, largely on account of runaway property markets, how much households are leveraged. will bekeeps up, there a problem when it comes to consumption and retail sales. for those reasons, the rba is expected to sit on its hands. options at the moment, just wait and see future data. the composite index coming in way better than anticipated. reflecting what happens to the manufacturing data in official and nonofficial iep. looking forward to trade numbers out of china, and fx reserves. it's about the yen, gold, and markets generally. what we see with north korean tensions, what do we have?

last time we checked, gold was maintaining gains. investors assessed these risks. we have havens picking up on momentum. gold up about 2/10 of a percent, per ounce level. the dollar yen trading at 109.54. the yen gaining ground. that is putting pressure on stocks in tokyo, leading the drop in asia along with shares -- you look at the hang seng. trim somewhat, but up about a 10th of a percent. we have stocks in shanghai remaining under pressure, following the latest pmi numbers coming in higher. interestingg moves when it comes to the yuan onshore rate swinging. the offshore rate is still in

the doldrums. the aussie is jumping about half a percent after the latest data showed net exports were expected to contribute more to australia's gdp than forecast. the aussie is leading gains dollar.the the euro is hovering around 119. the price action for the common currency indicating traders think the upside is here to stay 120the euro, and that remains the ecb's level of resistance for now. the asianover to space. the chinese dollar is leading, followed by the philippine peso snapping a five-day drop, following the latest inflation data for august coming in better than expected. riseorean won is on the recovering some of monday's losses,, retreating from a two-week low. while the onshore yuan has resumed gains for an eighth day,

the offshore rate still on the back foot, although raising its earlier drop. slightly stronger fixed to that. thank you for that. let's get you caught up with first word news. haslinda amin has the headlines in singapore. bitcoin tumbled the most in two and a half years after china tells banks that initial plan offerings are legal. the pboc has asked for all fundraising to be halted immediately, and says there will be harsh punishment for any offerings in the future, as well as for once already completed. bitcoin fell by more than 14% on monday, the most since january 2015. --ted technologies of dubai is set to buy rockwell collins for $23 billion. the deal is $140 per share in cash and united stock.

united technologies says it is funding the cash portion through that assurances and cash on hand. one of the biggest deals in aviation history is expected to close by the third quarter of 2018. the u.s. house of representatives will vote wednesday on a hurricane harvey that will contain language aimed at staving off a default on government debt. republican leaders are for now the bowing to the demands of the and conservative members, won't combined registration, which would raise the u.s. debt ceiling. the bill would provide almost $8 billion in aid. and mexican president have pledged to defend multilateral free trade after meeting on the sidelines of the summit in china. told xipena nieto jinping that nafta had promoted growth, competition, and prosperity in north america. however, bloomberg is told the latest round of talks is nearing conclusion without any major breakthroughs or new agreements.

global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm haslinda amin, this is bloomberg. rishaad: let's revisit north korea. lifeline may be at risk as tensions escalate after its latest nuclear test. trump calling for the highest possible sanctions. here is our chief asia economics correspondent. china is north korea's most important ally. why hasn't it acted so far? reporter: one of the reasons is it does not want to do anything unsettledtens the regime in pyongyang. it is not in china's interest to border, ores on its to do anything that creates a situation where the u.s. can extend its influence on the north korean insula. they are the biggest supplier of crude oil to north korea. china could turn off the energy source, but it would trigger an

issue of instability. rishaad: would it make any difference? what would oil sanctions or embargo, what would be the real impact? reporter: it is a very interesting debate. there are those who say that this would hinder the whole nuclear program. it could take away china's biggest source of leverage and removed them from the equation. it could not impede on their abilities, because they do have a stockpile. even a partial ban isn't necessarily the pen essay is people think it is. anacea people think it is.

haidi: the u.s. ambassador requesting more sanctions, what would that even look like? reporter: this is where we start going into blanket economic sanctions. one view is that you could target all exports of north korea, the most recent u.n. sanctions, agreed to say goodbye to about a third of the billion dollars in exports. they didn't touch areas like textiles, which is a vitally important source for north korea. you could go down that route. you could tackle guestworkers in china. you could put a block on that, and target those who trade with north korea as well. ultimately, that would be considered to be a severe impact on the north korean economy. if we go back to where we were beginning, has.

that's the problem a lot of economics -- economists say, that the sanctions only worked to a point. damageand the collateral as well, so many angles to look at this between seoul and beijing. if washington was to sanction chinese companies, the implication for that, even systemically, huge risks we are looking at. reporter: significant risks. war tends to escalate significantly. had warningsdy from mr. trump that he will cut trade off with anyone who does business with north korea. china has responded forcefully to that. this indicates companies would be caught in the middle. the consequences of the kind of a trade war initiated just to punish north korea would almost certainly spill over into

neighboring economies of south korea, japan, and china, as well as other western countries that do business. haidi: hugely interconnected. we will continue to watch this story. thel ahead this hour, fallout from china's crackdown on cryptocurrencies and a ban on all initial coin offerings. rishaad: next, we talked to tohru sasaki, the head of the japan market at j.p. morgan chase. ♪

rishaad: a quick check of the latest business headlines. toshiba issaying discussing details of a contract with western digital, as it seeks a decision on the sale of its chip is next. toshiba said last week it remained in talks with three groups, including western

.igital asahi says some of the company is wary of selling to the u.s. company, but lenders are pressuring them for a decision. blackstone is said to have shelved plans to sell off all or part of its australian retail interest. sources say blackstone had 10 shopping centers, including individual properties and other assets. the portfolio includes centers in sydney and melbourne and is said to be worth about $2.4 billion. hanergy's former chairman barred from serving as a director in hong kong for eight years. in misconductd related to the running of the former solar giant. for other executives were banned. he became china's wrist -- before stocksr --

fell 47% in one day. guest saysnext tensions over north korea could heighten as we approach their foundation day. let's go to tohru sasaki, the j.p. morgan chase head of japan research joining us in tokyo. great to have you on. it is interesting. we keep seeing this cycle of the classic risk off trade, people buying into the yen and gold, and then it fading. heightenedurrent and episode of saber rattling out of like there, it seems has not been more of an extreme reaction. why is that? >> i think the market is still skeptical about the conflict. market starts

feeling the tension is heightened, but the market still believes there will not be a serious movement between north once and the u.s., so there is something like a military conflict happening, the market will react more dramatically. so far, most of the market participants are still skeptical about tension. haidi: do you think that resistance is just about where short of the moment, waiting to see what the fed does, how that plays out for the rest of the year? also, what the ecb does later this week as well. the yen is gradually going lower if we don't think about north korean tensions. it will be gradual. the market has already priced in a certain level of rate hike.

the dollar continues to be the weak currency. the dollar-yen topside will be limited, and then a gradual downside. the dollar yen has a gradual downside risk. haidi: what about across other classes?asset in the last hour or so, the japanese finance minister saying they are concerned watching the effects of the north korean situation when it comes to japanese stocks and the stock market. clearly, the currency as well. at what point do you see serious concerns about equities, as well as something that might need intervention when it comes to the yen? course in any kind of way, if tension is heightened, the yen is likely to appreciate

more, which will be negative on the nikkei. the nikkei goes lower, the yen goes lower, the tension is heightened. i can't say what kind of tension, but they markets are concerned about that this week. it will be difficult for investors to go short the yen or long on the nikkei this week. a wealth ofhave had japanese data, which is surprising to some extent, to the upside. would you say that abenomics is working? would you say the japanese economy has turned the corner? >> the japanese economy has been doing well so far in the past several years. it is partly because of abenomics, but partly because of the global economic growth. economic growth. the global economy has been doing very well in the past four

years, which is coincidentally the same year of abenomics. the economy is doing well, probably supported by the weaker yen. if the dollar-yen goes lower, it will be a negative impact on the japanese economy. still, if you look at the , the average budget rate by the manufacturing of a aboutse company, it is ¥108. the current level is still favorable for the japanese manufacturers. even if the dollar-yen goes the heightenedf tension by north korea, the crucial level in dollar-yen is still far away. rishaad: i'm going to bring up a chart of the yen. if you can bring up my terminal, you can see what's happening. we have just seen a move, the spike showing the yen strength.

it is down to apparently an icbm being moved and location in preparation for a test. these are reports coming through from north korea that pyongyang itsstarted moving intercontinental ballistic missile for a possible launch before saturday,. this perplexes me. why is the yen seen as a haven when it could be that it's host country could be a target of attack? >> yes. thebasically in a situation whn the market is risk on, participants are taking risk, yen becomes a funding currency. investors are selling yen and buying high-yield currency, or selling yen. under the situation, what investors will have to do is

close. that means they have to buyback yen. that's why they yen tends to appreciate. also, japanese investors have been accumulating a large amount of falling assets. basically, the japanese people have this position. must something happens and people are in trouble, but we need is cash. so that'sd to close, why there is falling securities and buying back. yen that's why the yen tends to appreciate in this kind of situation. yes, it seems on the surface completely counterintuitive, particularly when the threat is targeting japan. correlation between japanese equities and the yen, do you expect that to be continuing?

historically, the market has been sensitive to yen movements, but we have sort of scene that effect somewhat fade this year. the coordination between dollar-yen and the nikkei has been a little weaker this year this is partly due to. year's movement being led by the dollar. the dollar has been weak. that's why the dollar-yen goes lower. but the nikkei did not catch up much. they yen is also weak. if you look at the euroyen, it has been appreciating this year. if you look at the debt -- japanese exporters, many euroyen. have this year's dollar year decline is not dollar weakness. that's one of the rea -- reasons why. if the situation continues, the court will be weaker and weaker. so much, tohruu

sasaki, j.p. morgan chase head of japan markets research in tokyo. next, the resignation of taiwan's premier could provide the president with an opportunity ahead of next year's election. we are in taipei, next. this is bloomberg. ♪

rishaad: taiwan's president will hold a briefing later today after approving the resignation of the premier. let's go to our bureau chief. what is the significance of this recessional -- reshuffle? reporter: in many ways, this marks the end of the first phase her presidency. she has been in power for just over one year now. the key hallmarks of her presidency so far have been a number of reform efforts, including labor, reforms in

pension, infrastructure spending, and tax reform. , thelast week administration announced its plans for tax reform, so it was decided this would be a good time for a change of government. of course, not all of these policy initiatives have been universally popular. elicited strong reactions from the public in taiwan. chief among them, labor reform. the hope being that by changing the head of the administration expectedng in what is to be the mayor of time and city he's verycity, popular, so they hope to put a more popular face on the administration and set the party up for a stronger showing in local elections at the end of next year. haidi: the economic outlook for

taiwan remains pretty strong thanks to this export rebound across asia. is it sustainable for policymakers? what do they have to do? reporter: yes, taiwan has seen a rebound in growth since the end year, and as you mentioned, this is predominantly driven by rebound in global growth. taiwan obviously is a predominately export dependent nation. the question is, what can policymakers do to support this? one of those is the infrastructure spending bill. that has now been pushed through. that is more than 100 billion taiwan dollars in spending the government will put towards improving railways, building up their digital infrastructure, boosting wind power. they hope over the coming fears that it will be the main driver for economic growth in taiwan. --di: i was a pleasure

always a pleasure. coming up, donald trump agrees to sell south korea arms worth billions of dollars. we will take an assessment of the probability of war. this is bloomberg. ♪

♪ >> the u.s. ambassador to the united nations says north korea is begging for war with its latest test. nikki haley called for the strongest possible sanctions on the regime, telling the security council that the u.s. wants a september 11 vote on new measures. president trump spoke with the south korean president moon to pressure the north with all means at their disposal. not bestakes could higher. the urgency is now. 24 years of half measures and failed talks is enough. >> a senior european lawmaker

has hinted september 21 may be the day theresa may gives the much anticipated brexit speech, daten official says the given by the coordinator is wrong. to give a speech on brexit with negotiation's stalling and the government having lost its parliamentary majority. mechanism to provide emergency funds to lenders following the bailout of one of the country's biggest private banks. lenders with liquidity problems .an turn to the new facility one of russia's biggest private banks had to be rescued last week after a credit rating cut triggered a run on deposits. the head of the world's second-biggest online travel agency said she is open to bricsition targets in

countries. she was speaking to bloomberg at the brics summit. >> we are very disciplined in terms of investment strategy. one isriteria, the first that it has to be closely related to travel. verticals, we the always invest in number one, not number three or number four. and the third criteria is they were asians need to be reasonable. >> if they fit those criteria -- >> exactly. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> with this headline, this

avement of the icbm for possible launch sometime before saturday according to local , you are seeing this starker risk off reaction .laying out is this a reminder of how sensitive markets are? well, this is something, isn't it? we sold the move in the yen, the first thing that alerted us, a quick jump in price, and that meant something is going on on the korean peninsula. gold is well bid too. sophie: let's look at what is happening with the yen. earlier, it jumped to an intraday high. that followed reports that pyongyang may launch an icbm before saturday.

we are seeing pressure on stocks in tokyo. the nikkei two to 5%. space a look at the haven with the yen, gold higher, up .2%, and treasury yields also in focus, the 10 year treasury yield lost three basis points, moving closer to 2.13% on the latest news out of north korea. we do have movement in the currency space, the dollar set for a fourth day of losses. the aussie tracking closer to $.80 before the iba decision. -- of the rba decision. we are seeing diversions in the renminbi space after the latest caixin services data. sliding,ore yuan snapping a 14 day rally, losing .2% this morning.

easing the earlier tumble. gaining, retreating from a to wake low, while korean stocks remain under pressure. korean equities valuations, stocks trading at a record discount to emerging market peers. you can see that with the pe ratio on this chart. decline.led to this have to askll themselves if the risk-reward so longf is worthwhile, as korea can deliver on the economic front and companies growth potential. rishaad: thank you for that.

taking a look at live pictures of president xi jinping speaking, where he has this leaders forum. that nuclear test on saturday from pyongyang was seen as something of an embarrassment as he was kicking off this global brics forum. he is saying economic downward the world are rising, uncertainties arising, and mention global economic downward risks are on the rise as developed nations see more complicated external environments. toalso called for opposition protectionism, calling for innovation and reforms and support for a multilateral trade system. similar sentiment he had made in his opening speech following the nuclear test from north korea. he had said dark shadows are

looming all over the world, alluding to that test as opposed to directly addressing it come a but you are looking at the chinese president xi jinping speaking live in china there. we will bring you more from that as we get those lines. the u.s. has called for the strongest possible sanctions on pyongyang, saying kim jong-un's regime is begging for war. our bloomberg asian editor has been tracking all the developments since saturday. trump pledging arms sales to south korea, south korea detecting preparations for another icbm launch from north korea. we saw this last report that has moved the markets, that that icbm may be on the move. to we headed down the path inevitable military conflict? >> it is certainly a war of words here it we have had the immediate reaction from ords.dent trump -- of w

we have had the immediate reaction from president trump and nikkei haley saying north korea is begging for war. the u.s. is making plans to further arm south korea and talk of removing japanese nationals from south korea and case there is something in japan. the question is what can the u.s. do at this point? what they are talking about is further sanctions. ready have tough sanctions and are asking the united nations and other , includingor help china, where stopping the flow of oil to north korea would the turning point. so far, china has been unwilling to go there. they have scolded north korea particularly for the timing of that launch, which was endorsing to the chinese government given the brics summit. been talkinge

about this theme of how distracted is the u.s. president. on his plate domestically, the cleanup after hurricane harvey, but this thent decision to in program that prevents the deportation of child immigrants. one million people will have their status put in limbo. what are we expecting in terms of the fallout from this? >> there is concern about economic and social fallout. this would be one million people brought he legally to the u.s. as dreamers, and they had been allowed to stay in the qs, many in the u.s.,bs -- many working in jobs where their employers would be worried about losing them. their homeew ties to countries, so it is a concern what would happen to them if they went back. the trump administration apparently wants congress to jump in and do something on this

issue. speaker paul ryan said he would like to come a but the problem is congress has a very loaded schedule in september with the debt ceiling, hurricane relief, and a budget to have to past them a so it is unclear how quickly they could work on this. rishaad: let's talk about the hurricane. hurricanean the relief and debt limit packages are unlikely to be tied together here? , they hurricane relief won't not apparently vote on it with the debt limit increase in the next day. they will probably send it to the senate and hope the senate does it that way and since it back to the house. someer paul ryan has had trouble from his conservative caucus that one it to get something in return for a debt ceiling increase, so they wanted to wait. if it happens in the senate, it will go back to the house and get tidied up and sent to the president before the markets can get scared about it.

is great politics by saying we cannot pay for the wall because of all the damage. is it a copout should he choose to do that? >> so far he hasn't. so far he has said he still wants the wall. if they get all this done with the debt limit and hurricane, it is probably mid-to-late september when they have to pass the budget by october 1 or the government has a partial shutdown. issident trump said he willing to risk that to get that funding and get the wall built. we have a couple of rounds to play out. rishaad: thank you very much indeed. right, let's get back to the north korean story. we have pyongyang upping the ante. also political pressure on the south from donald trump, threatening to end the south korea u.s. trade pact from 2012. let's find out more. that actually mean

for the united states? i find the timing extraordinary. is very strange. donald trump talked about ripping up this trade deal that started in 2007, but was renegotiated in 2012. it is a deal between obama and south korea, a big trade pact between the u.s. and south korea, and the idea was to get rid of tariffs, 95% of the tariffs between south korea and the u.s., and so all of a sudden they are saying amongst everything else that donald , let'sas on his plate rip this up or at least renegotiate a better trade deal for the u.s. rishaad: this was a long time negotiated come up wasn't this, this free trade agreement? what are the sectors likely to be affected by the friction? exports morea on

goods to the u.s. than the u.s. exports to south korea, things like cars, cell phones, , things that the u.s. does not have the manufacturing capacity to make. the u.s. also exports quite a bit of services to south korea, consulting, financial, law. rishaad: invisibles. >> exactly. goods, cars,ard the kinds of things that donald trump is focused on even though the u.s. is actually exporting quite a bit to south korea. rishaad: good stuff. thank you very much indeed. up, bitcoin taking a tumble, china turning the screws on the cryptocurrencies, banning new additional ico's. this is bloomberg. ♪

haidi: ico's are now illegal in china. the ruling comes as the central fundraisingng for activity to be halted. ico's andgation put the same category as ponzi schemes, criminal activity, and fraud. tom mackenzie is in shanghai. what is this all about? bolster theuivocal pboc saying ico's are illegal, banning banks from doing any dealings with them, saying funds need to be paid back, banning fiat currencies. just to give you an example, they are effectively fans of

cryptocurrencies get together and come up with some kind of idea for a business link to two cryptocurrencies, put out a white paper, and then you have the option of investing and in exchange get digital tokens or coins. which you don't get is any equity in the business. the focus is seeing whether these ideas paid off. if they do, these coins go up in value. that is a big if. to give you a sense of the scale of the growth of this industry, we have seen 1.6 again dollars raised so far this year in ico's , about 40 or so platforms in china operating in beijing, shanghai, guangdong. for the pboc this is an attempted to better regulate the cryptocurrencies market, and the ico's probably remind them of instances of lending that led to people losing money, protests,

and people demanding their cash act -- back. that is why you have seen a selloff in bitcoin because a lot of these tokens and virtual coins are exchanged and bought using the more established cryptocurrencies. i want to put this question to tim. the take on why they are trying to do it. what do you think they achieved by instituting this and here? -- ban here? >> it is about stability. there is a difference between cryptocurrencies and ico's. if you think of it as the renminbi or u.s. dollar, at this point they are not regulating the currency directly. they are regulating a fund-raising measure, which rico's. there are a lot of fraudulent

scams and projects going nowhere , so it is the funding scheme that is ico's that is being regulated rather than the currency itself. it is having an impact on the currencies. all the major cryptocurrencies are down double digits, so it is having an impact. a lot of that will be because of liquidity. because they have to the funds and give that money back, that will force them to sell out what they have earned and put it back into cryptocurrencies, so that will be in issue. the veryill see is tight restriction, but i don't see tighter restrictions on bitcoin from here. ban.ll not be a full on it is all about stability. china does not want to see people put money in these things and go bust.

most of these projects are going nowhere. this just the beginning when it comes to the regulatory oversight over ico's. with somehis comes disreputable activities associated with these ico's? ,> we saw the exchanges here some of the big exchanges had been the focus or in focus for the pboc and regulators earlier this year. goingw they had officials to exchanges and spending time poring over what they are doing and now they have to those regulators. what experts have said ties in to the idea that the exchanges more closely

scrutinized, but in terms of the other part of the cryptocurrency environment, there is still a hands-off approach. the chinese miners dominate in terms of bitcoin and the position in china, and they are continuing to expand. the field ining terms of the technology, chips, and hardware they are producing. in terms of the concerns around capital flight at something being flagged quite a few times as to why the pboc and regulators are taking a closer look at these, most people say it is not used to shift money abroad. there are much more established routes for getting money overseas from china still that can be used more easily. tim, are you surprised with how the chinese have been so free with allowing bitcoin to operate? a lot of free reign there.

isn't regulation a good idea for all of these cryptocurrencies? >> i have argued for a while that we do need regulation, and that regulation would lead to legitimacy. the need for regulation to basically allow the cryptocurrencies to flourish into the future and go mainstream. right now cryptocurrencies are groups, and that is the bigger issue. weterms of regulation, what see in china is they allowed new ideas to start get going and flourish and if they are concerned, then they might rein it in. didi get going, allowing them to flourish, then

they start regulating it and tightening the screws. i think that is what we will see with cryptocurrencies. rishaad: thank you. right, let's tell you what we have coming up after the break. codes?g cash for qr promoting electronic payments in the lion city. this is bloomberg. ♪

cash is still king in singapore despite the government's enthusiasm for all , ands innovative electronic payments in particular. his singapore pushing to be a digitally advanced society, the internet of things -- is singapore pushing to be a digitally advanced society come the internet of things, so why are evil still preferring hard, cold cash? >> you are right there. singapore has highest mobile phone ownership across the apec region. paypal came out with a report saying consumers are finding it overwhelming the number of methods to a digitally that they are turned off by it. that was one of the main reasons.

the other our privacy concerns. you are not sure what information is being exchanged, and with cash, you don't have that problem, a dollar is a dollar, so that is why consumers are not switching away from cash. it just consumers finding it difficult to switch to these cashless payments, or are businesses as well? >> it is not just consumers. businesses said they also found it challenging because they have to keep up with the pace of change, developments, and trends with de-payments. i mention multiple methods people can pay with, businesses have to consider it as well because they have to install the different software and card readers that they need in order to service these different methods of payment so they are finding it increasingly challenging, and that brings me to another issue, which is that although there are all these different methods, they aren't

all interoperable. people are finding it very challenging just trying to shift away from cash to eat payments because of that. e-payments. rishaad: thank you for that. singaporeans not opting to use their smartphones to pay for goods and services. some breaking news at the moment, report saying the north koreans may be moving an icbm and preparing it or launch by saturday. up on thatjumping move. ♪

angie: almost 11:00 in hong kong. i am angie lau. this is "bloomberg markets: asia." ♪ angie: south korean stocks give up early gains as the yen and gold strengthen as jitters persist over north korea. one report says pyongyang is moving an icbm ahead of a launch this week. the u.s. accuses kim on of begging for war. thea's president wraps up brics summit trying to drum up

support for a multilateral system. it is all about north korea. inwe heard from yvonne mann seoul, korea and taking a measure on the street, the average citizen there, it is business as usual. let's dive in deeper to see what kind of play we have here. 69 17, in white, the msci korea consumer discretionary index. below that korean index,r an sentiment showing the average korean consumer feeling pretty high about things, but we are not seeing that play out in the consumer discretionary index. perhaps this is an opportunity to buy when foreign investor outflows