♪ haidi: 7 a.m. in hong kong, 10 a.m. in sydney. welcome to daybreak asia. top stories this tuesday in this -- emergingew year markets heading into the new year with currencies rising for a third straight week. bitcoin though starting 2018 with further -- emerging markets heading into the new year with decline, extending the fall from the record seen in the middle of december. ramy: from bloomberg's global headquarters, i'm in new york where it is just past 6 p.m. on a monday. happy new year. china with three years of critical battles with a robust but cooling economy. -- forecasters see its slowest growth since

1990. kim jong-un tells the world north korea's nuclear weapons are a reality and a button is on his desk. ♪ good morning to haidi and good morning to our viewers across the world. we ended 2017 year to date for equities on a high note but we are seeing some volatility possibly happening coming out of north asia with kim jong-un. taking a look at what happened in the last day of trading here, down by half a percent. if you were totally in from 1 through the end of the year, you were 1 through the ene year, you were up by 20%, as much as 30% if you are in the nasdaq. haidi: absolutely. we were talking to garfield earlier, 7% when it comes to aussie stocks, barely a blip in

comparison to the heavy gains we have seen for u.s. equities and across asian equities. in particular when it comes to japan. one of the markets not trading today is japan as we have a number of markets still offer the new year's holiday. new zealand, tokyo, thailand and the philippines on a break today. we are setting up for a pretty holiday shortened week and thin volumes on the ground. we saw crucial data points out including china's pmi. of course, we are working our of dataugh quite a bit from u.s. culminating in payrolls at the end of the week. trading in australia is just trickling online. mining up when it comes to the iron ore and the aussie dollar as we get the crucial reading on the economy. ofpmi showing steady as she go. we are looking at more of the same when it comes to the private actor.

gold futures lower by 3/10 of 1%. we are seeing new york crude holding a $50 a barrel. iron ore seeing a bit of an up. we are looking at the miners potentially seeing that positive support. let's get you up today with the first word news. haslinda? haslinda: president trump has called for change in iran as protests turned fatal. he posted a series of tweets saying that country is failing on every level and denounced the 2015 nuclear deal signed with the west. the president wrote that the have beeniran repressed for years and hungry for food and freedom. he added the wealth of iran is being looted and it is time for change. kim jong-un has warned thathe ae north korean nuclear capability is a reality, not a threat. he revived his grandfather's message of a new year's message, something his father dropped.

he said the north has defeated its nuclear program and the launch button is on the table. kim also wish to the south success for the upcoming winter olympics and called for improved relations. expanded to exports its highest and at least six decades, boosted by semiconductors, machinery and chemicals. shipments rose almost 16% from a wideningier, leaving to $96 billion from $89 billion in 2016. the bank of korea raise rates in november for the first time since 2011. the biggest change in european investment industry rules in a decade take affect on wednesday as regulators seek to prevent another financial crisis by boosting transparency and shedding conflict of interests. a broad range of asset classes and products, including cash and derivative instruments,

commodities as well is fixed income. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ramy: thank you very much. two of asia's biggest economies finished 2017 on a strong note, as chinese manufacturing shrugged off the initial campaigns against debt and pollution. while korean exports hit a 60 year high. our policy editor kathleen hays has the numbers. let's start with china. can beijing maintain this momentum? kathleen: part of the question is how aggressively the chinese government can pursue these big policy changes like pollution and bringing down the inflated chinese debt. for now, 2017 and 2018 look good. let's go to the chart because we want to look at the purchasing managers index that we got in the last day or so are.

this white line is manufacturing at 51.6 in december. anything above 50 signals growth it is down a little bit from 51.8 in november. chugging along. not spectacular but definitely some momentum. i would like to point out that we had good growth in output, new orders and jobs picking up as well. now let's go to services -- nonmanufacturing at 55 in december, up from 54.8 in november. construction is the biggest driver. you can thank the chinese in -- government infrastructure spending and stronger global demand. a deleveraging program that was always promised it has not been hit hard yet. bloomberg economics expects moderate slowdown in 2018. they believe the tailwind an instructor spending will help less and go less strongly. they see the headwinds from as theaging increasing chinese government gets more serious about this.

the latest business survey, fourth quarter, painting a positive growth picture. good expectations. haidi: in south korea, the trade picture start of the year on the high, continuing the high. a 60 year high when it comes to south korean exports. what is behind this? kathleen: i wish i was a south korean exporter, frankly. let's jump into the chart. i want to take a look at some of these numbers in the context of these blue bars which are south korea exports. of course, the yellow ones are imports. pretty strong on both fronts. here is the trade surplus that results. it has had some ups and downs this year. that is an issue for the economy and government as well. with trade surplus to $89 billion in 2016. to $89 billion in 2016. semi conductor shipments jumped 57%. let's move on to some of the dynamics because the trade is driving the economy which is

also driving policy issues. exports helped drive the rate hike in november. maybe going to slow it down a bit. big trade surplus,g that continues to be a little bit of an irritant for donald trump and his white house team? charge isanipulator still over south korea which complicates that potentially. in terms of statements from the government, the global economic recovery is continuing to see it demand rising next year. those are some pluses. as for negatives, rising protectionism, the possibility of a stronger yuan, particularly of the bank of korea raises rates -- which they may -- that is something that it will take a chunk out of it. they could take a chunk out of their export growth and not t hat. haidi: thank you so much for that, kathleen hays.

china starts news with critical battles against debt, poverty and pollution, president xi is expecting more modest economic performance. joining us now is joshua crabb, head of asia equities. he thinks any efforts to reduce future risks and volatility is a positive for china's markets. let's get to how it is a positive when it comes the chinese equities in a moment -- thank you for joining us. do you think they are finally gettingdo you think they are fiy getting serious, is there going to be a followthrough and how much correlated pain is beijing willing to take for that? this is an interesting question. we have seen the financial arena, but also aspects of older excess capacity. i think for the first time, for the last decade, we are seeing genuine change coming across those areas.

some people see it as two steps forward and one step back. i guess it is not occurring but we do believe it is happening and we think it is a positive. when you consider the context, taking the hsci as a proxy for the value of the market, there is not a lot for positive outcome. haidi: how does that involve your outlook when it comes to chinese markets going into this year? because we speak to a lot of people and the consensus seems to be growth of some of the innovations, clearly if it is a financial risk being cut, you stay away from the developers -- what is your strategy when it comes to china this year? joshua: most people probably poorly last will do year. it was a very strong performing market and currencies would be

negative. it has a positive turn by the end of the year. poorly last year. our perspective is we have seen quite a bit of performance out which means you have to be focused on what you are looking for. reducing opportunities. if you look at the areas like which means you have to be focused on what you are looking for. technology, and a lot of people still very excited about, we think it is important to look at some of the new areas. 3-d sensing, rather than being focused on mobile internet where it is a very crowded space. you have seen good returns from even some of the industries like coal and steel. we think having an open mind and looking at the various opportunities will be positive. the backdrop of the market that people are still underweight and people don't like and is cheap with policy tailwinds is a great backdrop for the market. ramy: i want to get your reaction to what we got over the weekend for china eco-data with regards to manufacturing at 51.6. still growth but down by 0.2%. how much does this dovetail with

it seriousness about whether is really getting into the act or is it someplace else? joshua: i think it is difficult to look at the short-term measures and try to predict what the future has. we are seeing a lot of closures and some of the capacity areas. that staying a positive for the stocks in that part of the market. it has ramifications for things like the banking system and the bad loans as well which we think is quite a positive. the other sort of site is this is to have -- people tended to focus on manufacturing in china because that has always been a key part of the economy. we are seeing a huge transition not just in the chinese economy but many asian economies which moves much towards more towards consumption and the services side of things. we see that being a strong environment for china. ramy: with gdp coming in for 2018, it looks like consensus has incoming lower by about

6.7%. it is about 6.8%. looking ahead, what do you think about this -- i have read that it could maybe go as low as 6%. think this is one of those hard ones where people say there has to be a level of gdp because that will be a positive outlook. if we look at the u.s. market, it is more like cap that level. the rate of the market is almost double what it is in china as well. i think it comes back to the eight old submission that gdp is not necessarily the most important thing when it comes to the stock market and i think that is the case here. gdp has to slow. that will continue to happen over time. it does that mean the quality returns in the market and stock market given the valuation level cannot generate quite a reasonable return for the next. of time. ramy: we have to leave it there world'sstill ahead, the

first virtual reality theme park is up and running in china. and we will have a firsthand look at the future of interactive entertainment. haidi: next, old mutual telling us how the fed outlook will affected strategy when it comes to asia. this is bloomberg. ♪

♪ haidi: this is bloomberg asia. ramy: i am in new york. after a banner 2017, u.s. equity markets opened to 2018 in just a few hours time. will they repeat the highs of the last year and what challenges might they have to contend with? very big question. emma is here hopefully to answer some of these. what are you looking at? emma: i will try the best i can. challenges might they have to contend with? very big question.

emma is year. every desks&p 5002017 was inder and in every single month up every year. that is something that has never happened before. it was not just the s&p. all the u.s. majors did well. take a look at the chart and you can see that all three, the dow, nasdaq and s&p, all did very well. they hit simultaneous record highs 36 times over the current course of the last year. those of the white lines on this chart. itt was at a time where should have been more than it did. it is though coming from north korea in a way that president trump responded. it was not just the u.s. but we also saw global equity markets did very well with mostit was nr indexes ending on a high. haidi: are we looking at more of the same when it comes to 2018? as you said earlier, fed policy with tensions. is there anything that will give investors part this year?

emaa: i am looking at volatility. we know it hit his story close of 2017 bute investors are starting to bet that it is going to come back in 2018. take a look at another chart i have for you here. of 2017 but what we are starting to see is the relative cost of betting on an increase in volatility has surged to a peak compared to the bets on it declining. some people spending a lot of money hoping to capitalize on a rebound of volatility. what we are seeing is a number of strategists are saying they are expecting volatility to increase. .s. economic strategy said a rise in strategy will pay off and we will see less global macro conditions. the fed is expected to tighten more in 2018. ramy: we are looking ahead to

the fed minutes as well. thank you very much. bond traders see the specter of quicker inflation in the sweeping u.s. tax legislation. still with us is joshua crabb, head of asian equities. he thinks of the greenback is quite oversold short-term. any tax cuts will flow straight through to earnings. let's talk about u.s. dollar now. hop onto the bloomberghop onto , guys. because with this, we are taking a look at the performance of the u.s. dollar. take a look at this big white bar falling down, down about 10% for 2017. up 9.7%. joshua, talk to me about what you expect for 2018 and possibly how far this might go. saying theyanyone think this is going to rise. take a look at this big white joshua: i think -- if we go back to the beginning of the year, expecting a strong u.s. dollar,

expecting u.s. rates to pick up. the fed to be ahead of the rest of the world and that is why we see this environment. that was the best case scenario but what we saw with the u.s. dollar dropping, we have seen asian markets doing better than expected. 2007 go back to 2003 to which is very similar, the u.s. market gets quite strong valuation. expectations of a fed hiking u.s. dollar first reacted by going up and came down again. i think we will see something very similar because the positives are not coming so much from the u.s. anymore. the economic surprises coming from asia or even europe. you are seeing the money flow that people usually expect the interest rates in the u.s. is actually looking for the cheap asset classes around the world. u.s. dollarthose are markets la which is seeing the money flow to these markets and that is why you are seeing the u.s. dollar be a not as strong as people may otherwise expect.

given the fall it has already had, we don't expect it to necessarily continue to fall away aggressively. again, it is quite undersold at the moment. we don't expect that change to increase looking at markets in asia. we talked earlier about china with nine times earnings. the global economy is not that bad. it will continue to attract attention in 2018. ramy: the last time you were on bloomberg television, you were talking about the valuation gap between the u.s. and asian equities. hop back into the bloomberg because you probably saw it three in a half weeks ago. s&pred line is the price-to-book ratio. the blue line is the mx ip index. 1.6 to 3.29. you said you saw this closing in 2018. talk to me about where you think this is after a month of seeing riffing seven going as well, and why you think so.

joshua: i think the key thing is the valuation gap has been there for a while. what tends to make these things close is a catalyst and for us and that is earnings. earnings in the u.s. have been quite reasonable. in asia, we're seeing downward earnings since 2010 to 2016. 2017 was the first year we started to pick up. 2018, 2019, we are seeing the forecasts starting to improve. we think that is going to be the key driver. there are risks around. we know the u.s. is a valued equity market and that means there are greater risks, but we think that money will continue to go to markets like asia. the earnings backdrop is quite reasonable. the geopolitics, despite obvious paths, are relatively stable. we are seeing infrastructure spent in certain markets like indonesia and india. we think that is a very strong

backdrop for asia. haidi: just a final word on the watercooler topic of bitcoin. you say there has been more great and people should be looking at blockchain technology. that technology is not actually driving the volatility we are seeing. think watercooler conversation -- i don't like to get to any sort of function without this coming up. the simple reality is it is very difficult. it is quite speculative in nature. it has had a huge rise. it has obviously fallen quite a bit more recently. i think people that are invested do need to think about how much these things can go not just up but down as well. i think what is really important, but usually from the investors perspective, the blockchain impact will have on large amount of industries. whether that is the impact of the financial markets, or

bringing down costs in friction or, the way they occur and that will happen,. . it will impact a lot of business models in asia and that is very important from an investment perspective. haidi: you look at the likes of goldman sachs looking to set up a crypto. is there a fear you will miss out even if you don't know what is going on with this asset? joshua: i think anyone that turns around and sees an asset or speculative item with his level of volatilityd is going to try to take advantage of it. some of the exchanges are making huge amounts of money around these transactions in the currency, so i would expect certain investment banks to have an attempt to try to make some profits out of that. you are seeing a lot of the investment banks, and we saw a recently with the australian stock exchange talking about trying to establish a lot more in blockchain technologies. i think that is where we are going to see the mindset move over the next couple of years

and the impact that will have. haidi: joshua, think you so much for that. from old mutual global investors, joining us from hong kong. plenty more to come on daybreak asia. this is bloomberg. ♪

♪ quick check on the latest business flash headlines. thailand is expecting 2017 to show the economy's best years.ance in five years. although, that may be as good as it gets. a bloomberg survey says gdp probably increased 3.8% last year, the best result in 2012 for easing next year and the next. thailand was once praised in southeast asia for its strength and now lagging its peers, quica non-and the philippines are growing at more than 6%. bitcoin is already having a bad year for the first time since 2018, the cryptocurrencies on of the new year by falling,

extending its slide from record seen on december 18. $998 ando, it rose to netted 2017 having gained more than 1300%. more to come. this is bloomberg. ♪ . .

it is tuesday in hong kong prettyis going to be a with tokyo closed for the new year's day holiday. is 6:30in new york, it and you are taking a look at the empire state building.

red andoing to see green throughout the week. >> i liked the idea of keeping the festivities going. date get you caught up to with house when the almond in singapore. >> three years of critical battles against debt, property, and -- was at 51.6 and down slightly from november, signaling expansion. the prime minister has talked about the type of country that

they want to be. they said that australia it needs an honest and open debate. wouldy the president require a referendum. streakgest winning propelled the biggest increase among crop commodities and hedge gains in the next year. only cotton and wheat contracts posted gains last year. 10 straight weekly gains. the latest chapter with the top-grossing film over the

holiday weekend and the domestic total beat the market set by beauty and the beast. world news powered by journalists and analysts. this is bloomberg. >> we are counting down the opening of markets. sophie, it will be a quiet first week of trading. year andcks ended last what do you see with the kerry over? >> the gains are not to be snubbed and they are the best since 2008 and these are primarily helped along by optimism and corporate earnings

and does not seem to be dampening. could swaya that estimates and a private survey exports.th korean tradingak out of the thee and the last time index doubled, this could generate some optimism. 2018.ean stocks in we heard that kim jong-un -- testser a year of missile

and tensions, this could bode well. we are looking for olympic sharers to move. the koreand that investors have stuck to the cost faithogant they kept the and they haveies with the stocks they had a time and

reform. we're at the board -- a fellow conglomerate looks bleak. is the hardest ever and we watched the reopened here in asia. daybreak,next hour of we get a little watch. reynolds is here with me. good. pretty it is tightly tied into china

and the industrial side of china. you take a look at the chinese growth coming off over the last there is a wider index going from strength to strength. the index has gone from strength and weakness. china changes the growth profile focusedthe rest of asia on technology stocks? we have almost none of those companies build on global growth, u.s. growth, and

european growth to drive them higher. >> it is on the order of the progress stuck in neutral. >> they face a difficult outlook likely to be on hold with the federal expected to raise rates. bank interest rates are about the same. there is going to be in advantage to the u.s. in that and that is going to restrain the aussie dollar against the u.s. dollar.

even that -- looking at the crypto with this topping $19,000 on december 18. it hosts some of the a guest one of the largest digital currency -- >> the world of bitcoin can seem abstract. in mongolia, the crypto currency machines are whirring.

maker of chipsa and machines and is one of the largest in the world will step what's this is part of the central nervous system and there are over 25,000 mining machines that are crunching the code and processing the transactions, generating new bitcoins. adding these to the block chain. each is mind and the difficulty increases and requires faster processing power and more energy . it is something that is cheap in mongolia. people can do this at a very low cost. employs 50 people and generates a quarter of a million dollars a day in revenue. here arehe coins

traded on the crypto currency exchanges, some of the biggest in the world. they come under the scrutiny of regulators who are anxious about this being used to funnel money abroad. 20,000pany claims customers and evaluation in the billions and is laying the groundwork for a possible ipo and is looking to spend $200 million expanding in the u.s.. >> it is about $5 million or $10 million. in the long-term, the investment $100e u.s. could expand to million or $200 million. >> that is a big bet. >> if you are going to bootstrap a new currency, there will be doubles and volatility on the way up to becoming a global currency.

>> he has little doubt that the value will continue to soar. >> the bitcoin price is going up to $100,000 is quite possible. within five years. >> tom mckenzie, bloomberg. >> on the bitcoin trail in mongolia. the prime minister of singapore the that the gdp is double government forecast. we will be live with a closer look at these expectations. this is bloomberg.

>> this is daybreak. releasepore is set to the fourth quarter gdp reading

today. we are looking at those numbers. i understand we expect double the forecast full top what happened here? said that there was more than double the government forecast and there are a couple of reasons. the global economic recovery, and non-oildemand exports strengthening. and the markets look for 2.6% growth and a lot of room to beat the numbers. no sitting on laurels. that the minister says

policies are for the economy. watch on theing a bias there and what that is doing. signs point to early april and we could have .arly lending rates expect that to get a boost with we economic fundamentals and started 2017 with the expectations. asian economies have outperformed and you take a look

to 133 that it may go for the first time in three years and that is a level. >> we have gdp in 15 minutes time and we will be back here. plenty more to come this week and we are covering all of them here. andill keep an eye on india they will put reliance communications with all of the stemming from claims and that leads to staving off insolvency .ctions for more context as to what isre looking at, there

significant president issues and have this combination of it increased by almost 189 and the jobless was held at 4.9%. talking about what the see thatould be, you this is even lower than that.

right now, at 2.5% growth. and you see the latter half of 2017. it is something that the u.s. consumer will be look forward in 2018 and we will see what happens when the numbers come out and we expect a seasonal to december.ember these are things they are concerned about. withy to get some clarity wage growth. thise getting around daybreak. --oomberg and scrappers

you can customize settings that you just at the news of industries and the asset that you care about. plenty more to come. this is bloomberg. the opening of the first theme park. this is bloomberg.

>> this is daybreak asia. the biggest change in investment industry rules in a decade take affect. transparency and covering a wide range of asset

classes with. insurance and foreign exchanges. >> they expect the best performance in five years. it could be as good as it gets. gdp probably increased the most since last year. praised and once the strength is now lagging. >> semiconductors, machineries, and petrochemicals. ago searched from a year and the trade surplus forching exports led them

the first time since 2011. and it wasnue grew less than the median estimate for a 20% increase of a bloomberg survey. it is the first four-year growth. >> the country rushing headlong into the future and looking to -- our north asia correspondent enjoyed an immersive experience in beijing. impossible not to see the potential.

space killingeep spree. >> it is a movie and a gaming experience. >> all you are walking around is a a cement. is funded by a chinese film visionary who may transform some of these works into virtual reality. >> as a movie director, this is significant and you can be .maginative bandit is not flat you can even interact with it. a newwants to open up industry. >> they want to become the universal studio in china. the row will be

many of the chinese smartphone makers roll out the the art devices. this year is pivotal. venture capital ships to content providers away from the many initial equipment makers. >> that is another world. it was across china by the year's end. people playoff out games for 10 or 20 minutes top. companies that could afford it.

to do -- can start >> the industry is eager for a breakthrough. when everyone wants this, it will be too late. one more. ok. goodbye. >> bloomberg news. beijing. >> our chief asia correspondent. by the looks of it, and aliens and not quite the are. it is a deep dive with functions is for the bloomberg

subscribers only. up, the -- what to expect as beijing tries to juggle competing priorities. ties.

>> is 8:00 here in sydney. welcome to daybreak. markets closed as we went into the new -- we have a special report from one of the biggest digital mines in the world. headquarters,obal

this is just past 7:00 on monday. criticalpreparing for battles. an old threat for evera new yea. sitting on button is his desk. have breaking news and let's get the details from house --nda almon >> the market was looking for 1.6% year on year.

both are pretty much meeting growth. we have manufacturing pretty moderated. all of this is coming on the back of a global economic recovery. that is the export demand that has been gaining. this sounded a note of caution. the korean peninsula could weigh on growth going forward. what they could do is --

how do you expect that with the currency? >> there will be stronger with the greenback. singapore is bracing for this as early as april. it was pretty benign, but there and the gdpcern numbers quarter by quarter with the year on year estimates. the thing to watch is whether it will tighten. >> thank you so much for that indeed. we have the first trading

theion and a large chunk of asian markets closed for the holidays. there is not a whole lot of action in the early section. inwe don't have any movement this index. it did arise towards the end of tremors we got pyong-yang.yan aspects we are considering for the trading week weh the aussie shares and have the markets closed until

there is the currency snapping with the decline and it gains the most since december 15. gain checks tol stocks.he that we have the vice-chairman saying that this is expected to slow down in major markets and we have the sales target the olympics-related

the -- elated to we're still waiting on traders to get started on the first day of work in 2018. >> there is a bit of a hang over there. in the meantime, we get to -- the official manufacturing pmi was down so the from november and still signaling continued expansion. this would be the slowest expansion since 1980.

>> the slowest pace since it january. with lessry growth than the median estimate. rose and itmbling was the first full year of growth since 2013. it started a new year by bitcoin arise saw 1300%.gained more than investors inracted the form of futures contracts. >> calling for change in iran

tweetsposted a series of and said that he denounced the nuclear deal from the west. food andered for freedom and he added that the wealth of iran has been looted and that it is time for change. global news powered by 2700 journalists and analysts. is warning that this is a reality and not a threat. how significant is kim jong-un and his connection to south korea? shift for a tactical the north korean leader, who is being provocative in his

thosets, particularly directed towards trump. he said that he would be willing to have talks with south korea this is a change. we will see how significant it is. as part of the new year's message, this was a shift. look at thee a sanctions and how they might work out. and werom the u.s. have seen so much sanctions.

affects a great deal of trump called out china and said that they need to stop sending oil and it is something that they have not wanted to stop doing. they do not want to isolate north korea and do not want to have this on the border. >> what kind of mood's are you expecting? trump said that he would be willng to talk and he and we will see about they haveility and

said the only way they would hold talks is if north korea gives up the nuclear ambitions. something that wilmot happen. talks, it down and have it will put pressure on the u.s.. >> thank you so much for that. geopolitical tensions are a key theme of this year. we are looking at asian autos. janice will join us in half an hour. >> our next guest is downside for growth in china. it will be explained in just a moment. this is bloomberg.

>> this is daybreak. years of critical battles with -- ead biggest risks the for 2018. delicatehas the balance this year. we have the internal risks that need to get a grip on the debt situation and they want to do all of that without really the overall water macroeconomy and that will not be easy to pull off. there might be a fax with

infrastructure at work. this series of curbing risks will probably not go much higher. shortage of spots for china this year. from what you are seeing, how do you think the year might feel for china? >> it seems to be heading into 2018 with relative health and the manufacturing sector.

are heading into an unusual we will not get much over the holiday time in february. >> thank you very much. what comes of the business survey? is an indicator theyv-shaped curve and continue to hole up in china and this continues to bode well for

the near term. >> i want to bring in the head of china's economic and he says revising for the downside and we are talking about the intentions to clamp down on pollution and financial risk. >> i thought about the biggest risk and the leverage of the real economy. deleverage the outncial market and they go with the real economy and the withy is accommodative

stable growth. they had that. now, the power transition is and there is the real as the highest risk for next year. >> what is that likely to be? they are sensitive to these gauges of stability. they'll it to achieve these restructuring goals. term may be

economists slowing down a bit with policymakers back down and stimulating again. years ande past five the power transition takes a new perspective. the recent conferences limited andrage is this has become much higher. i think of that situation with the leveraging getting more real than two-year. hikes.ave rate what would that mean for the

dollar? has riskk that this issue with domestic chinese economic growth and i the depreciation and,tation has gone east for next year, if they slow down is more than expected, it is almost quite positive. all of the concerned would come back again. of theou see the easing capital account? and weink about that with -- rise

>> interesting. to hop into this. i know that you are the number one analyst on chinese imports. imports are set for tumbling next year and you can see the blue line here with the latest quarter for growth. what is your forecast and why? >> for next year, this will slow the the man has been strong. the inflation and commodity

price increase will slow down and the slowdown will be from the domestic demand with the chinese property sector and the infrastructure spending slowing down. this forhy i expect next year. >> you are optimistic. im lessext year, optimistic. there is economic export property and downside of the risk. ok. thank you for your time.

you can get around of of the stories that you need to know to get the day going in this edition of daybreak. this is also available on mobile. you can customize your settings so that you get news on they industries you care about. this is bloomberg.

>> this is daybreak. >> let's get a check of the business flash headlines now. it was boosted by semiconductors. the trade surplus widened from

led the bank of korea to raise rates. year of recovery with 14.6% and it was less than the median estimate in the bloomberg gambling andotal that was the first four-year growth. >> to southeast asia. thailand is expected to show the best performance in five years. that could be as good as it gets. the survey says that these are thailandresults with being praised for strength and

the it now in the philippines are growing at more. is the cost be and we have not seen much momentum, but the bounce theirand a with the number of closed and we around the region see the commodity is performing oil and crudeith down withures manufacturing and

up withacturing moving community -- commodity prices. to, bitcoin has been a it is coming and out of in her mongolia. this is bloomberg. this is bloomberg.

♪ haidi: it is 8:30 a.m. in half an hour out from the hour of trading. a turnout from trading with the better than expected gdp, largely being held up by services being above consensus. i'm in sydney. ramy: i'm in new york and you are watching daybreak asia. letter the first word news. has? haslinda: the biggest change in european investment industry rules in a decade take effect wednesday as regulators seek to prevent another financial crisis by boosting transparency. the broad range of asset classes and products, including cash and

derivative instruments, foreign-exchange come equities and commodities as well as fixed income. the longest winning streak propelled 2017's biggest increase among commodities. had fun seeing more gains in the coming years. of the nine component strengths, cotton and hwheat posted gains last year. increase with11% 10 straight weekly gains, the best streak since 1998. hase minister turnbull revised what kind of country australia wants to be when queen elizabeth dies. hinted at a survey saying australia needs and honest and open debate moving from a monarchy to a republic would higher changes to the constitution. whereby a president would

replace queen as head of state and that would require a referendum. the last jedi is giving movie theaters and new hope for 2018. the latest chapter in the star wars saga was last year's top grossing film after pocketing another $68 million in north america over the holiday weekend. that takes the domestic total to $533 million, leading the mark set by disney's beauty and the beast. worldwide, it has pulled in more than $1 billion. day, byews 24 hours a more than 2700 journalists and analysts. this is bloomberg. haidi: has, thank you so much for that. let's take a look at how asian markets are warming up to the start of the new year. let's go to sophie with a look. wwe are using our wa into the year given largely some of

these markets are not trading so far this year. sophie: we are slowly warming up. we have seen markets opening later at 10 a.m. local time. there will be a big ceremony to mark the reopened in seoul. trading will close at 3:30 p.m. local time. we are not seeing much action yet given that many traders are still on their holiday. japan reopens on thursday. when it comes to what investors have to consider to kick off the first trading week of 2018, kim jong-un's latest new year's address. that overture of peace might set the mood when it comes to geopolitics in the region. on the data front, korean exports climbing to a 60 year high in 2017. . cost of helped keep the treading water despite the provocations from young yang -- pyongyang. declines that we saw on the u.s. stocks. shares slipped at the

start of trading on monday. perhaps a little bit of gloom. when you take a look at the currency market, we are seeing gains for regional. the dollar has had its worst year since 2012 in 2017. with that gold bull, they are hanging tough after capping the best year for gold since 2010. we have gold continuing to climb above the 1300 dollars an ounce mark. continuing its best winning streak on a daily basis. gold has been helped by the crumbling dollar which is cushioning to blow from the equity rally and the fed tightening. you can see gold having a fairly run for 2017. gold miners in sydney are shining this tuesday the likes of revolution mining. we do have lithium players on opposite sides of the spectrum so far. western areas, that is getting a boost as of 2017's best

commodity funds. the nation's electric vehicle boom, industrial metals like nickel. we are seeing consumer stocks under pressure this morning, along with real estate players the likes of woolworths, along the biggest drags on the asx. we do have the asx 200 rising about 1/10 of a percent. it is looking like a neither here or there session so far. ramy: it definitely looks like that as asia-pacific traders are trying to wake up for the first trading day of the new year. thank you very much. onto bitcoin now because the cryptocurrency kicked off the new year by tumbling below $14,000, now extending its slide from a record of $19,500. this is the first time since 2015 that the cryptocurrency has started the new year with a fall. more on this, justina lee joins us from hong kong.

talk to us about why this is falling, what is powering the slide today? justina: it is a bit of a fool's errand to ascribed a reason to bitcoin. yesterday a 5% drop in bitcoin prices. i guess you could say there could be some process taking -- we saw a huge rally in december in the run-up to the start of bitcoins future trading. increasingly is the sense of that maybe we are waiting for a moment of reckoning for bitcoin because worrying this is a bubble in the making. you have the believers saying bitcoin is gaining mainstream acceptance. if you follow that argument that there could be room for more gain. haidi: if this is a turning point for bitcoin, what does it mean for other cryptocurrencies? ripple has been around since

2013 but we are seeing the headlines of that cryptocurrency over the past few weeks. justina: right. i think a big thing to watch in 2018 is whether we are going to see a catch up in the other cryptocurrencies, what other people called outcoin. some people have heard of the theory, but you have to remember a lot of these cryptocurrencies have their own technological characteristics and use cases. ripple tends to be associated more with transactions and payments. we need to see whether these other cryptocurrencies are going to catch up as well. haidi: ripple, which managed to jump 53% in 24 hours, much more volatile even than bitcoin. clearly, the year of crypto last

year and maybe again this year as we start out the year talking about it. china has been at the heart of the cryptocurrency economy and holds some of the biggest exchanges and dominate the mining of new bitcoin. tom mackenzie as had rare access to one of the largest digital currency mines in the world. he went on a special report from mongolia. ♪ tom: for the uninitiated, the world of bitcoin can seem abstract. here, the cryptocurrency comes roaring to life. this mine is operated by bitmain. of mining ships and machines and it is one of the largest in the world. this is really part of the central nervous system of the bitcoin economy. there are 25,000 mining machines here, processing transactions, and generating new bitcoins. the machines solve complex equations to record each bitcoin transaction to a decentralized

ledger. in the of mining ships and machines and it is one of pe rewarded with bitcoin. the difficulty increases, requiring faster processing power and more energy. something that comes cheap here in mongolia. >> in china, the cost for a farm is very low. when people make a decision to have a money farm, you can do it fast at a low cost. tom: this mine employs about 50 people and generates a quarter of a million dollars a day in revenue. many of the bitcoin end up traded on the currency exchanges, some of the biggest in the world. they come under the scrutiny of regulators anxious about bitcoin being used to funnel money abroad, but for now the miners are being allowed to thrive. bitmain, which claims 20,000 customers and a valuation in the billions, is laying the groundwork for a possible ipo. it is looking to spend up to

$200 million expanding in the u.s. >> $5 million to $10 million and to build the first mining facility in the u.s. in the longer term, the investment in facility in the u.s. the u.s. cd expand to $100 million or $200 million. tom: that is a serious bet on a cryptocurrency now synonymous with wild price swings. >> we have to accept if you were going to bootstrap a brand-new currency from zero, there will be bubbles. there will be a lot of volatility on the way to becoming a global currency. tom: he has little doubt that bitcoin's value will continue to soar. >> bitcoin price going up to $100,000 is quite possible. tom: within what time frame? >> five years. tom: tom mackenzie, bloomberg, mongolia. ramy: good stuff from tom mackenzie. bitcoin trails in mongolia.

south korea says hackers from the north are not targeting crypto miners to search for castle amid tough national sentence. ul says a unit seized a server in 2017 and mined about $25,000 worth of monero coins. the hackers seem to prefer it as it is focused on privacy and easier to hide than bitcoin. issuestransparency clearly not easing up when it comes to cryptocurrency. coming up, we will talk all things auto. electric cars in 2018. talking about the latest players. which if any can challenge clearly not easing up when it comes to cryptocurrency. coming up, we will talk all tesla's position at the top and become the new leader of the pack. also, taking a look at where some of the geographic hotspots will be for electric cars. this is bloomberg. ♪

♪ haidi: this is daybreak asia. hyundai says stalling global growth and rising protectionism will dent demand in major markets. it and its kia affiliate is due to report sales later this tuesday and likely to fall short of predictions for the third consecutive year. whos bring in james chao joins us from tokyo. good to speak to you. i want to get your reaction first off to these numbers coming out of younhyundai and kia, falling short of protections. what are your initial reactions on hearing this news? james: i think they were expected. hyundai has been quite weak in china and the united states. in china, they have a lack of the hotselling suv products as

well as political headwinds because of the issue between south korea and china. in the u.s., it is a product issue. it is still a fairly good market but they have not been able to come up with the sport-utility vehicle product that the market wants. at the end of the day, hyundai's announcement today is an acknowledgment of these issues, as well as telegraphing weakness in the u.s. and china markets in the upcoming year. ramy: now from combustion engines, i want to go to electric engines. this is why you are here to chat with us. hop into the bloomberg terminal because i want to show you this chart. what we are looking at is in the yellow line, china's domestically made pure electric passenger car sales. aside from the numbers you can see how much they are

skyrocketing, james, you are talking about the quest to be the next tesla. what are you seeing in terms of who that can be and in terms of the sales and in terms of sustainability? well, there are 23 new entrance in china alone that are vying to be the next tesla. why are they trying to be the next tesla? because tesla's powerhouse market valuation, of course. they see two things that are attractive. one, they believe they can match in the luxurytion vehicle market. two, they are attracted to tesla's, what people say are tesla's asset light type of model where you don't have to invest in whole lot into fixed assets. what these companies are discovering are that it takes quite a bit of success of fixed assets and hard assets to become

a car company. this is in the face of subsidies in china that are going down. they are now $15,000 per car. those are going down. second, there are a lot of traditional entrants into this traditional vehicle market and more competition is coming. haidi: you talk about the subsidies. clearly, a key component. electric vehicles, clearly china's national policy. national also china's policy and we know very well how that story turned out. james: that is right. chinag question is as transitions from these big subsidies on electric vehicles to a model where they are asking a certain to produce number of electric vehicles as a quota, well, somebody has to buy all of these vehicles. of subsidies, how many people will? that is the big question. with all of these new entrants

and traditional automakers coming into the market, will there be enough demand for electric vehicles to soak up all of this production? i think there is actually some doubt in that. while it is china's national policy, the laws of supply and demand still apply. it is interesting because anecdotally, i have friends are enticed by incentives by the consumer side but also trying to buy an electric car because it gets around the number plate issue. it is not actually reducing demand when it comes to traditional auto, it is just adding more cars onto the road. it does not speak to the problem of congestion and pollution, does it? james: that is right. you bring up a very good point. to be able to get a free license plate in major chinese it is is a huge incentive for buyers of

these vehicles. which is thetive, license plate, getting a license plate in front of everybody else, were to disappear, i think a big chunk of demand would also go away. but, great point in terms of -- we are seeing more and more vehicles get on the road in china. pollution is a huge issue. it is not quite clear that the electric vehicle route is the best route or the most optimal route to better conditions in the air, so to speak. ramy: i think there is this philosophical question that is brewing in terms of disruption with technology, for example, the grab in southeast asia. whether cars or automobiles are a product to be bought or a service to be rented for 10, 15, 20 minutes.

looking ahead, do you see a next nexus forhina -- china or asia in terms of one could cannibalize or disrupt another in the meaningful nexus? james: that is a very good point as well that you mention which is we have these disruptors, as you have pointed out. didi and others which are trying to make the vehicle not something you buy, but something that you almost rent. it is a service, in a think would you are seeing is automakers all across the world are very worried about this, because this has the potential to disrupt their entire business model. i see automakers are actually cars as aget into the service model, cars as a service model, not quite figuring it out yet, because when they tried to disrupt their own businesses, they will see their own businesses become

restructured and that is troubling to them as well. haidi: a ca contrarian call for this coming year? james: i think this year will be very tough. if you just stick with china and the u.s. markets, which represents about half of the cars sales globally, let's say 45 million units, china is going to be a flat market. this is after years of pretty strong growth. and wes pretty weak think 2018 will be pretty wea ak, as well. the u.s. as well. it has had a great decade and will probably see weakness or flatness at the very least in that market. tough go in 2018. ramy: within that flatness in china, there are ups and downs, a luxury car market for example

is expected to see a bit of a bump. what kind of opportunities could there be for asia and u.s. carmakers in that space? james: as flat as the market in china has been in 2017, the luxury, the premium market has been really good overall. you are seeing growth in the traditional automakers as well as new entrants. but automakers need to make sure james: as flat as the market in china hasthat they have great ly strategy and that starts with a great brand. there are some names that are attractive, but it is a question of how fast they can react to the market and capitalize on this before premiums see some weaknesses as well. haidi: james, we have to leave it there but we appreciate the insight. james chao joining us from tokyo. thanks for being with us. you can always find in-depth analysis from the newsmakers on

bloomberg radio. tune in to daybreak asia from 7 a.m. onwards hong kong time. you can download the bloomberg radio app or access it via bloombergradio.com. this is bloomberg. ♪

♪ ramy: this is daybreak: asia. a quick check of the

latest business headlines. south korean exports expanded last year to the highest in at least six decades. shipments of semiconductors, machinery and petrochemicals. shouldn't rose 16% -- shipments to $96%, flattening million. surging exports led the bank of korea to raise rates in november for the first time since 2011. revenuecau's casino grew at the slowest pace since last january, a softer than expected ending to at least a year of recovery. receipts gained 14.6% in december to $2.8 billion. that is less than a median asked estimate for a 20% increase. total gambling takings rose 19% in 2017. the first full-year growth since 2013. the u.k. may impose

penalties on tech companies to persuade them to remove terror propaganda more quickly. the security minister said some the biggest names are too slow suchu race s -- erase content and the government should be coppin state it for the money -- should be compensated for the money they spent. they should try to remove terror content within two hours. ramy: we are almost done with daybreak asia on this first trading day. time to take a look at what is coming up over the next few hours on bloomberg markets. the thailooking at shin pmi numbers coming in. momentum of labor manufacturing. small and medium-sized companies in china. if that momentum is being maintained. also, growth is at a fairly good clip in china, does that go on

and a heads up into how we enter 2018. looking at the december numbers. david looking at more noises coming up somewhat conciliatory on the one hand from south korea. taking a look at that with john park from harvard. that is a flavor of what is coming up in the next couple of hours. haidi: thank you so much for that. of course, getting into this year, getting started. that is it for daybreak asia. market coverage continues next. to goodbye from bloomberg markets. this is bloomberg. ♪ retail.

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♪ rishaad: first day of trading for 2018 for much of the asia-pacific. il showing some signs of life. showing some gains as the libyan pipeline comes online. critical battles but slightly cooling. the slowest growth since 1990. we have got an odd an showing se libyan pipeline comesd old threat for the new year. kim jong-un says north korea's nuclear weapons are a reality, but more importantly, the button is on his desk. i'm rishaad salamat in hong kong. this is bloomberg markets. ♪