♪ kong,: 7:00 a.m. in hong we are live from bloomberg's asian headquarters. i am yvonne man. welcome to "daybreak asia." asian-pacific stocks set for a big open. a slide in the yen. weak tech will still play a role. tesla one of the losers in new york. and a question about a fatal crash in california. betty: i am betty liu in new york. it is 7:00 p.m. wednesday. the wto says they see the first signs of a trade war that could derail the global economy. , amazonief for facebook

is the new punching bag among the fang stocks. ♪ betty: another way to end the week, with a whimper, at least in the u.s. we have one more trading day, but it is not setting up for any bright spots in the asian market. let's pull up what happened in the u.s. markets. we did see choppy trade, directionless except for tech shares, the s&p lower 0.3%. the dow, flat. the nasdaq down about 1%. named are a tech titan zuckerberg ormark elon musk, you're not having a

good we get all. -- a good week at all. 2/3 of the markets open. we are expecting robert lighthizer to lift out these tariffs on chinese goods from now until april. a lot to focus on the next 48 hours or so. betty: a lot indeed. let's turn to what happened at the u.s. market closed today. nasdaq on pace for its worst monthly loss since january 2016. now set-heavy nasdaq for a 6% loss in march. it looks like bearish sentiment is not letting up. it is now netflix and amazon who had not seen these steep declines, are now seeing this.

we talk about concern for investors, but traders consider this paradise, because of the whipsaw swings into the market. we saw the dollar and bonds higher on the strength of the gdp data, two point 9% growth, exceeding the 2.7% expectation. the dollar jumped, bonds rose, yields held below 20%. we saw gold lower in the trading session. new york traded crude was lower on supply data. you can see is setting up for a bounceback. let's look at the size of the losses in the tech names. amazon we are going to get to, in the crosshairs of regulation. netflix down on a number of concerns. people are threatening to cancel atflix because they added controversial former u.s. who wasor, susan rice,

involved with of the benghazi controversy in 2012. she is on the board, a lot of investors are threatening a lot of things if they do not pull her off. tesla, can it get worse? look at that one-month chart. down in a big way just in march. it is not just stocks, bonds are down. the question, is the negative feedback loop significant? everyone is worried. you have the setback with the fatal tesla crash. can musk deliver is the question? the question is, can he deliver? let's look at facebook. they caught a break in terms of stock market action, rebounding a bit on the day, but the decline has been significant. they continue to experience fallout. they are redesigning privacy settings.

they are pushing back a lot of home products. 14.'s go to g #btv 75 the fang darlings, as they are called. that continued with the selling pressure in this latest session. yvonne: you mentioned we saw that amazonact, replaced facebook as the new punching bag. saying from axios, president trump is obsessed with targeting amazon. su: they said the president is looking to perhaps tax amazon. investors bailed on the stock. you had and analysts say this is a buying opportunity. it erases losses, but puts amazon in a negative position. it is front and center in terms of fang losses.

million in losses. g #btv 1989. google,mazon, and volatility is not going away. yvonne: certainly is not. let's look at how we are setting up this thursday in asia. are continuing to lose the steam when it comes to the stock, the nzx 50 down. .7205.i down at the aussie dollar flat at .7656. stocks, not a lot of movement. yields heading lower, down one fors point at 258 -- 2.58 the aussie tenure.

the nikkei 225, looks like we could see a bounceback. given we saw that 1.5% gain. territory,er to 107 then perhaps yen bulls catching a break today. let's get the first new -- first word news. >> the wto is warning for the first time about a trade war between the u.s. and china, saying it could derail the global economy. the first indications of a commercial standoff between washington and beijing that could have much wider implications. repeatedly said it does not want a trade war, but will protect its interests. reports from japan say kim jong-un may meet prime minister shinzo abe as soon as june. willing to talk after meetings with president moon and trump. this is the first time cam --

kim has shown interest in talks since he took power in 2011. tesla plunged heavily a second day as questions about a fatal suv innvolving a model x california raised new doubts. the company tried to retrieve data from the vehicle. --la has said whether it was march has been brutal for tesla, the stock falling for all of about five days. saudi arabia has one omission. joining a group that includes china, indonesia, russia. they have been added to a watchlist for potential inclusion in 2015. classificationon as an emerging market in june. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

i am selina wang. this is bloomberg. yvonne: the trade war drums are beating as the trump administration targets china. warnings of a global economic slowdown are growing louder, too. let's get to kathleen hays in new york. white house tariffs now expected to target xi jinping in 2025? kathleen: we heard that today from peter navarro. made in china 2025 was an announcement made in 2015 that the chinese government wants to grow these more high tech, advanced manufacturing industries. kinds of the same industries many u.s. policymakers, economists and more say is key for the u.s. for increasing growth, productivity.

let's listen to what peter navarro said earlier. >> the focus of the tariffs are on what is called the china 2025 industries. brazenly hasview, released this china 2025 plan and told the rest of the world, we are going to dominate every single emerging industry of the future, and therefore your economies will not have any future. kathleen: i could not find a reference to the chinese government exactly saying that. it is true more than half of u.s. imports from china are electronics, advanced machinery. and the u.s. trade deficit the 2008.t -- widest since the trade deficit with china continues to have around $36 billion. china, to the u.s. to $250 million.

-- toe exports to the yes the u.s., half a billion and growing. betty: thank you, kathleen hays. stay with us. john silvia,ng in chief economist at wells fargo. , i want to clear up, because we have gone emails about whether we are in a trade war. in your economist of you, are we in a trade war? i no, but the challenge as assume kathleen hays will identify is that, when you pick out individual products, it industries, it becomes difficult for an investor to figure out, what is the supply chain, is interrupted, and what is the cost of goods sold in the united states? for individual companies and products there is a certain amount of challenge here. betty: certain amount of

challenge, what do you think the impact will be on the economy? i don't think we will derail the global economy. it increases the cost of goods people purchase, or exported abroad. that will be higher inflation. standardon in the real of living for people, over time. that is what freer trade does. that will be a negative to the overall economy. you may see imported goods prices rise, less goods are imported, and it will be negatively impacted in the u.s. and china. kathleen: people in the united andes have many clothes shoes in our closets we do not know what to do with. the cost of goods from china to the u.s. are so low, it is hard to imagine tariffs will work --

will ruin standards of living. if more goods are made outside of china, that is a win for the economy. ruin is probably too harsh a statement. reduction in the pace of growth and standard of living is an accurate assessment. to what extent can we substitute production in the united states for production abroad? do we have the skills, the land, the permits, the building capacity to put these goods into the marketplace? we heard reports the u.s. is negotiating with south korea on these side agreements when it came to avoiding currency devaluations. we don't see central banks intervening to stop their currencies. does this solidify that trump wants a weak dollar policy?

john: i think it does. one thing we learned in the asian crisis in the 1990's and the great financial crisis of currencies adjusted and you end up with a real trade advantages given to certain countries when they depreciated their currency in those circumstances. talking about recent turmoil we have seen, we have a chart for our viewers, g #btv 2070. we have seen a signals we are inching closer to some kind of recession. we have beentors looking at is the one to 10 year curve, getting flatter, credit spreads are widening, and the t-bill is flatter. john: i think for any investor the concern has to be, maybe two or three months ago, the

expectation was for 3% growth this year in the united states. now people are talking about 2.5%. problem for investors, they have to invest, expecting 3% growth. there is going to have to be a hit somewhere. on top of that, you have the fed raising interest rates, they look they -- like they are committed. lower-than-expected growth, higher-than-expected interest rates, will be negative for investors. a questionhere is what the u.s. wants in terms of currencies. this is where the currency question should be settled, at the wto. does the u.s. one thing weak dollar, or do they want to make sure china does not get too strong, or other asian nations, for that matter? john: it is a two-sided going. -- coin.

mr. trump tells me he wants a weaker dollar, there will be very little foreign-exchange intervention to prevent that weakness overtime. if the administration wants it, they will get it. much, john, thank you so chief economist at wells fargo. there were reports earlier that boeing had been hit by this wannacry computer virus. boeing is now coming out and limitedt had detected a intrusion of malware, it affected a small number of their systems. the reported statements were originally overstated and "inaccurate." commenting on reports that they had been targeted by the won a cry computer virus, saying it did affect a small number of

their systems, but it was a limited intrusion. boeing shares up slightly, 0.2%. one of china's biggest afterschool educational companies just made its wall street debut wednesday. we speak exclusively to the founder, ceo and chairman. yvonne: saudi arabia stock exchange just got emerging market status. this is bloomberg. ♪

betty: this is daybreak asia, i am betty liu in new york. yvonne: saudi arabia got second emerging market status from ftse . they could attract billions of dollars in investment and move

the kingdom away from an oil dependence economy. there is still msci inclusion to come. let's speak to khalid al hussan. thank you for joining us. this is a big milestone. tell us what this means for saudi arabia and the region. khalid: thank you very much for having me. at the beginning, this is just a recognition by the international reformsnt community for the saudi stock exchange have taken in the past 18 months to address the requirements of opening the saudi stock exchange attractivenessre platform for international investors. are you confident msci

will deliver a similar outlook in june? what are you doing to make that a reality? , weid: as we did with ftse worked with them and msci as well as international investors to achieve reforms. about they optimistic positive reaction of the international investors. we have been very closely in contact with msci and international investors to issues the saudi market has had in the past. we believe we are in a strong state as we speak today. are hoping for another milestone to achieve next june. yvonne: many investors before this decision were having their qualms about the saudi market overall and stocks after the

crackdown and corruption last year. there are still concerned something similar could happen again. we talk about geopolitical tensions, sharp oil moves. that is fair game in the saudi market. what would you tell them when it comes to these concerns? numberslooking at the is the right way to address such concern. over the last years, the saudi market has been very stable during tough rides. reasons have been around the anticorruption crackdown. weekat the numbers just a after the announcement. we have achieved record numbers rshipreign investors' owne in saudi markets and it is increasing every day, by having

more investors as well as more cash inflows to the saudi market. reflectionision is a of the international investors' confidence and appetite to invest in the saudi market. betty: seems like that lays a good groundwork for an ipo like saudi aramco. lots of speculation that will land in your market. how are you preparing the groundwork for that potential $2 trillion ipo? as any other exchange. is taking all required measures to address the requirements of such a unique ipo, with such size. andco is a saudi corporate, will be very glad to host one of the largest corporates in the

world. we are taking all necessary measures to address these. to have a very successful launch of a aramco and tadawul in the near future. betty: there are some who look at that and say, yours is still a nascent exchange. saudi aramco is such a huge ipo. news, to have a high profile listing land on your exchange, but it could be devastating. could your exchange handle this? is this almost too big to be handled properly? you look at almost any other exchange, but if you look at the saudi stock exchange compared to region,

international, we're still a sizable exchange. we're the seventh largest emerging market. we have seen a very positive liquidity in the past. and several large ipo's. every day there is a high liquidity in the saudi markets compared to the region. as well as the increase of international investors' inflow, even before the decision today. to thenal capacity capacity of the saudi market. this is liquidity. as far as technology and innovation, i am comfortable and can confirm, our readiness running such a unique, sizable ipo. yvonne: you are not worried aramco could be representative of the index itself, that it will not bring everything down

with it -- just everything else down, i guess? khalid: not at all. withe working very closely all of our stakeholders to make sure whatever decision the government takes on delegation of then you -- venue listing, it is a successful ipo. with is only tadawul, comfort, tadawul will address all concerns you have. as we today did, we will surprise the world with what we can do in the saudi economy. yvonne: before we let you go, there are indications in the market government funds have had to step in to give support the saudi stocks in moments of general stress.

examples like what we saw in the fall during this corruption crackdown. what is your take on the? khalid: this is speculation we have heard. we have a very transparent exchange. every sunday after market close activityce all the done on the last week. including the government. i would say we have not seen any of these moves. these public reports are available on our websites. the markets just reacted normally, as any other market would react to any other major event in their country or economy. show there is no interference by the government during that period. these figures are public information. yvonne: thank you, khalid al

hussan, the tadawul ceo. make sure you check -- catch our talk with of the ftse ceo. this is bloomberg. ♪

♪ yvonne: 7:30 a.m. thursday in hong kong. we will see a shortened holiday week. kind of like our friday here. most markets in asia will be open, china, japan and singapore among them. betty: 7:30 p.m. wednesday evening here in new york, where askets closed lower, but not bad as the 100 point fall we saw in the dow. tech continues to selloff. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." >> the fallout from facebook's

data scandal is increasing. it is resetting privacy settings on its network. home speakers with video chat capability are being reviewed to make sure they make the correct trade-off regarding user data. it will be reviewed at facebook's developer conference in may. facebook is no longer the top faang punching back. amazon is the new target. saidlunge came after axios president trump upset with regulating the company. it is not the first time he turned his attention on amazon, he accused them of squeezing low prices. boeing said reports it has been hit by one at cray -- one a cry acry ransomware has been

over. it only affected a small amount of systems. miss's enterprises will its initial deadline to ship coal from queensland. they began work at the carmichael project after failing to raise 3 billion aussie dollars from lenders. adani will continue to look for funds and expect coal production to be delayed up to a year. india confirmed it is selling 76%, as well as 2/3 of the airline's debt. air india will be sold in offer. the state will sell a 50% stake in the unit separately. singapore airlines and others have indicated various degrees of interest. global news 24 hours a day, powered by more than 2700 journalists and analysts in more

than 120 countries. i am selina wang and this is bloomberg. we are counting down to the open in tokyo and seoul. for the latest with sophie kamaruddin now. does not look like it will be quiet. with trader a period eruptions and geopolitical hiccups. the first quarterly decline since 2016. you can check that out on the 1.3% for therop of january through march quarter. route expecting the tech to deepen as the quarter nears a close. the facebook move spreading to amazon. see how futures are trading. today we might see more optimism. shares headed for gains in the region. 106, likely toe boost the mood for japanese retail sales.

property and utilities gaining along with financials. when it comes to stocks, watching hyundai motor groups. they streamline their ownership structure. we will see the family raise a stake in hyundai mobis. also keeping and i on lg chem and panasonic. also watching softbank shares as they reportedly hedge closer to a deal to buy a 25% stake worth $9.6 billion. betty: health care companies revving up. what is the story behind this? >> after making a bunch of deals and 20 at -- 2018, wednesday takeda said they would take over shire. thebiggest takeover ever,

price tag could approach $50 billion. said it has not received an approach or offer yet, and that takeda has until april 25 to do so. shire shares jumped as much as 20% on the news. this comes as the takeda ceo buts up overseas expansion, did not explain how what would pay for a company with a $46 billion market cap. should the deal go through, it will add to the busiest start to a year in over a decade for health care. transactions stand at $156 billion globally. deal would seea that top $200 billion. yvonne: thank you. facebook no longer the top faang punch back, amazon is the new target, losing 300 $50 billion,

after axios said president trump is obsessed with regulating the company. tom giles joins us from san francisco. interesting, the divergence of these companies today. what did you make of it? tom: we have seen facebook has gotten battered in recent days, but today there was the report about trump's interest in axios, and it was amazon's turn. you had a couple things that issue. one is a rebalancing within faang stocks. a couple stocks spared recently, amazon and netflix -- it was their turn to get hammered. some other stocks have been hammered in recent days, had a relief. of rebalancing. there is a bigger cosmic question, if you see greater

regulation, what is in store for amazon? what could the trump administration do? this story got people thinking, will this come on the tax side, will do things that help small businesses, take more tax from amazon, or how it treats its third-party vendors, it does not collect taxes from? other issue, are there antitrust steps and measures the trump administration can take? out,on as this story came as soon as the stocks started falling, you sell wall street analysts rushing to share their view, that the fundamental story for amazon remains robust, growth prospects in tact. -- intact. all the ways that amazon is really girding itself for the

future. the response many analysts have is that the regulation -- there are not many big, regulatory steps the trump administration could take. ,f you tried to break it up they had a chance to use antitrust measures when amazon bought whole foods, and they just did not do it. what will you do now? it would be hard to break up amazon. yvonne: there is still resilience behind the business model of amazon. we continue to hear how they are dominating almost every sector of the economy -- e-commerce, health care, grocery. does the president have a point? tom: you certainly see them disrupting. every time you hear about, whether we break the story or someone else, amazon is thinking about getting into this area, expanding here, you see entire

industries lose aliens of dollars in market cap. -- lose millions of dollars in market cap. the question for the trump administration, can they put together a cohesive approach to checking the power of these tech companies? two, what can it do? we speak to investors, they don't think the trump administration has powerful leverage for attacking amazon, and doing it in a way that will substantially cut margins, erode revenue, profit. betty: switching from amazon to facebook -- it was really amazon's day in the pits. facebook, are they out of the woods yet? tom: we did see a little jump

for facebook, an end to the carnage we have seen. i would not say facebook is out of the woods yet. there are things we have to keep an eye on. is delete facebook, this effort by people to delete accounts, will it have a substantial impact? so far, zuckerberg in his interviews last week said we are not ring material impact, but we will see results in the next month or so. that will give us an opportunity to see whether this had real material impact. two, lots of headline risks movening as you see this to get mark zuckerberg and other people from social media to appear before congress. it has the potential to be embarrassing for them, the potential for lawmakers to call holdook accountable, facebook accountable for these data lapses, the lack of privacy

they have given. you will see lawmakers continue to hammer away at facebook, lots of risks remaining. will delete facebook have a material impact? that remains to be seen. betty: tom, thank you. tom giles they are in san francisco. another stock in the ditch, tesla plunging a second day. that fatal car crash involving a model x in california. shares dropping the most in almost two years. march has been brutal for tesla, the stock falling on all but five trading days. i want to bring in our detroit bureau chief. certainly bad news here on the crash, we have an excuse for nervous tesla investors to take their profits and go? >> there is a lot of nervousness around tesla.

lasts been building the couple quarters and they had difficulty getting the model three out the door in big numbers. initially they wanted 10,000 cars a week. now they are just trying to get to 5000. those kinds of volumes are where they need to bring cash in. what have we seen? not only is the stock up 16%, but the bonds have plunged. bondholders hung in there because they had a longer view. they have the shorts and the squeeze. bondholders were hanging in there. betty: now they are worried. >> they are getting spooked. now you have this crash. like this,on stocks is that they will have these self driving cars that people

can use as ride hailing, ridesharing, and they will have big margins. you had the fatal, tragic accident in arizona. now you have this crash with tesla. accidentjust be an caused by a driver -- betty: it almost does not matter, the details. when the average american sees those headlines, it matters more than perhaps the details and differences in those incidences. this comes on the heels of the news of that enormous pay almost $3r elon musk, billion. how does that fit in to all this? that was welcomed by investors. this --e genius behind if you believe in tesla, you

believe in elon and his ingenious. he has a lot of distractions, spacex and sending rockets to mars. he has the boring company digging holes in the earth to get under traffic. he has a lot of other stuff he is interested in. tesla shareholders want to know the genius and visionary will be there and be in the game. the pay package was structured to keep him in the game. it is an expensive one, if it works out. issues leadon directly to cash flow generation. the possible problems with autonomy, is something that makes tesla investors nervous, and makes everyone in the car buying public take pause. here thisomy be quickly if we are having accidents because of these cars? it is still an open question, but that is the nervousness. yvonne: certainly sing it across

the industry, not just tesla. we will hear about production numbers for the tesla model 3. target per the 2500 week. will this be the downward spiral for tesla? david: it could be. they need good explanations for why they are not hitting the production numbers. elon has done a pretty good job of it, giving hope they were getting hold on the bottlenecks. i think he is going to need to show concrete numbers, that they are not just getting handles on the bottle, but blasting through them and getting cars out the door, getting the company standing, so they don't have to go back to investors again. they are burning over the past four quarters, $100 million a quarter. some it has been $1.4 billion in cash burned.

at this rate, they could run out of money by the end of the year. numbers, think those they would have to raise $2 billion to cover their cash burn this year. welch,ash, thank you -- thank you. the outlook for after school tuition in china. this is bloomberg. ♪

♪ this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu in new york. chinese afterschool provider onesmart made its debut on the stock exchange after raising millions. it was a difficult day in the markets overall. joining us exclusive till day is onesmart founder steve zhang. thank you for joining us. do you wish you could have ipo'd a different day in the market? steve: may be go back half a year ago. you raisedny case, this money, congratulations on this ipo. theep hearing how hot

online and afterschool market is in china. why is that? steve: in china, education is a huge market. [indiscernible] there is a limited supply of good education resources. online it is really hot in china. chinese parents pay a lot of attention to education. betty: is it true because of the rising middle class there is a knowledge anxiety among the rising middle class in china? they feel they are not getting enough of the right knowledge? is that driving this trend? steve: i think middle-class parents want to give the best education to their kids to help them succeed and be successful in a competitive society. middle-class families worry about their kids future.

globalization, all of those things. betty: it is giving us a more complicated environment. why did you want to ipo in the u.s.? steve: when we started the business 10 years ago, we wanted to be number one. from day one we said we wanted to be the largest from near education company and go global. being in the states is part of the strategy. betty: certainly the u.s. education market is quite deep and expansive. is part of the plan to expand here in the u.s.? steve: yes, definitely. in the coming three years, the top plan is the chinese education market. that is the number one growth. our five-year strategic plan,

north america, europe. a huge potential opportunity there. we will probably do active acquisitions in north america and europe. yvonne: thank you for joining us. i want to talk about the landscape right now. we talked about education -- whether it is brick-and-mortar or online, very intense right now. kids, they arep saying this is the future, that you can bring the classroom to your pc, a mobile phone, at a fraction of the cost with a greater reach of students. how do you fight a threat like that? steve: online business is growing very fast. last year we launched a new product. we have a course in english online. and we have kids mathematics

online. is it is a new, promising segment. i do not think it will derail off-line education. they are both growing fast. [indiscernible] yvonne: they probably do choose a combination of both, but it does not address the challenge in china, finding the teachers is still a concern, especially with of the like of english subjects. how do you attract and retain teachers, not just students? steve: teachers are key to be able to succeed in this industry. china has a 1.4 billion population. [indiscernible]

they are specially trained to be teachers. issue, supply is not an but you need a system in place to be able to hire and train. it is all about execution. you need a good system in place to find those people, train them, keep them and motivate them. yvonne: i guess that is the key on how you charge premium pricing versus your rivals. can you maintain that, given how intense the competition is? the competition is intense. us top guys like [indiscernible] they have less than 2% of market shares. for us, we usually pay teachers the best in the industry, so it is ok for us. curious about the

advent of technology and how that can be destructive for the education world. what are you seeing? what technologies could be most afterschoolin this tutoring, and adjacent education? steve: definitely ai, but it is just emerging. to succeed in this industry for the long-term, you need to be up front with new technologies and incorporate them to help improve student experience. we have a lot of immersion between new startups and using ai technology. betty: are you investing in those technologies? is that part of what you are using with your new cash? steve: we are like a vc. we invest in new technology education companies.

we definitely use those proceeds to do that. betty: to grow. steve, thank you and congratulations on your ipo. ceo andang, onesmart chairman joining us for that exclusive interview. japan's numbers just came out. yvonne: for the month of february. it looks like it was a slight miss from what economists were expecting. year on year coming in at 1.6%. retail sales month on month losing 0.4% gain. back intoe have swung positive territory from the 1.8% drop in january. we see this move the dial when you talk about private consumption. the last year, it has been pretty tepid. betty: it has been, indeed. lots of concerns of this rising japanese currency and the impact on the economy, exporters, and

how that might flow through to consumers. as we are waiting for japanese markets to open, let's pull up where the futures are trading at this moment, given the dismal day we saw in the markets. nikkei futures pointing to a slightly flat open. we saw declines yesterday in the nikkei 225, the dollar weakening slightly against the dollar yen. yvonne: at least we are getting back to 106, 107 territory when it comes to the dollar-yen. don't know if we will see risk-taking today. on the backdrop of trade tensions and tech, we are in for an ugly thursday, into that easter break holiday. betty: that holiday coming up quickly. we still have an hour of "daybreak asia." talk trade going to

tensions, global growth. this is bloomberg. ♪

yvonne: 8:00 a.m. in hong kong. we are live. i am yvonne man. welcome to "daybreak asia." asia-pacific stocks set for a miss open. tech will play a role. for ashares tumbling second day amid questions about a failed crash in california. from bloomberg's global headquarters, i am betty liu in new york, where it is after it :00 p.m. on wednesday. a new warning from the wto, seeing its first signs of a trade war that could derail the global economy. softbank may be taking on a little insurance.

bloomberg is considering a $9 billion stake in's with three -- re. were three -- in swiss yvonne: what a week it has been already, betty. it seems like every day is a different kind of headline we are reacting to what it comes to tech. the trade up as quarter, and look into the second quarter, money majors rebalance the portfolio and there will be a rethink on how to balance portfolios. will tech be the leader moving forward? we have got to take a look at the trade front as well. betty: as we have heard from more and more prominent investors, geopolitical tensions will be front and center on the market, but you are absolutely right. , thatf those trades

scenario is fast ending. withis a momentum play tech shares. could not make any money, really, over the last several days. yvonne: let's take a look at how things look in the market open, helping japan for today. let's get the latest with sophie kamaruddin. sophie: investors staking their hopes on that softer yen. we do have foreign investors continuing to shun japanese stocks with a record amount last week according to the latest data. as as heavyweights are getting knocked out of the tech space. asia, when it comes to the best-performing segments of our this year, it is health care over 6%, outpacing gains in the tech segment. goldman sachs could be poor and more cold water on tech stocks after cutting estimates for the march and june quarters. apple will have imagery to prepare for the rollout of new products in the fall, so that drag drop on the kospi --

on the kospi, marginally higher. samsung, rosenblatt pointing out that samsung as mine saw a cut in orders. keeping an eye on hyundai as korea's second-largest cable streamlines its structure. keeping an eye on player like softbank on the radar as it is set to a closer to buying a .tate in swiss re panasonic slipping. panasonic is to recall someone million laptops in japan after several fire related accidents. takeda as wellon after it announced its consideration to boost its portfolio, and we are watching group.rs, which signaling moderate growth, betty. betty: thank you so much, sophie

kamaruddin, on how the major markets are. japan, reports from the countries a kim jong-un and may meet prime minister shinzo abe as soon as this june. kim is willing to talk after meetings with president moon jae-in and donald trump. this is the first time kim has shown any interest in holding high-level talks with japan. this possibility arose after kim returned from a trip to beijing. boeing says reports that it has been hit by want to cry ransomware are in accurate. the seattle times reported the thatk, raising concerns production might be hit. boeing has the tech did a it has intrusion, but only affected a small number of systems and output. deliveries are not effective.

-- affected. the firstrning for time about a trade were between the u.s. and china, saying it could derail the global economy. that thereneral so are the first indications of a commercial standoff between washington and beijing that could have much wider implications. china has repeatedly said it does not want a trade war but it will protect its interests. powered by more than 2700 and analysts in more than hundred 20 countries. this is bloomberg. betty: thank you so much during saudi arabia we mentioned, one classification. includedom will be from next march as an emerging market. the ceo says it is a reward for the changes the exchange has made. a recognitiont

from international investment communities for the reforms that the saudi stock exchange have toen in the past 18 months address the requirements of opening the saudi stock exchange and pursue a more attractive this platform for international investors. betty: ftse international ceo marc may faces joining us now first on bloomberg. what was the tipping point? what is essentially made the decision more solid to include saudi arabia as an emerging market index? it has been a gradual process. we started working with the saudi authorities in september of 2015. a system fored

foreign investors, where they could invest directly into the market in june 2013, so we opened up discussions back in september, so it has taken several years to get to this stage, but there has been a lot of engagement. not just changes in the market structure, but engagement with some of the largest global investors to make sure everyone the right timeis to include this very large market. betty: why is now the right time? mark: i think you have got a market where the infrastructures will develop and there is a lot of interest for international investors. this is the biggest market in the middle east. q8, so recently added adding the saudi market now, i think, gives a much greater

exposure to the middle east, and investors are showing a real interest in this region. betty: did the saudi aramco ipo play at all into this decision? mark: it did not play into the decision, but i think it is an indication that the importance of some of the opportunity that exists in the middle east. not just saudi aramco, but other ipo's you would expect in saudi. it will mean this market will become a very sizable emerging market. probably one of the biggest emerging markets within a small number of years. we have been talking about the ceo of the stock exchange, talking about the geopolitical concerns that we see. those are pretty much fair game for the saudi market overall,

and before the foreign selling was quite limited, given the fact that the ownership was so low. are seeing potentially billions of dollars of inflows coming into this market. does it magnify the downside risk? mark: i am not sure it is so much the downside risk. i think you are right about aramco bringing a greater exposure to oil. global investors are looking across the market. they are looking across emerging markets. the saudi arabia market offers an opportunity for diversification. i am not sure the downside risks are always great. it offers a lot of opportunity. it is a market which we have seen as a 10% growth. think that will continue to grow. we will see increasing number of

ipo's, and i think international investors are very keen. it will add a lot of diversity to their emerging market portfolios. yvonne: even before this decision, we have seen stocks in riyadh trade at more expensive valuations than the other emerging market peers as well. how is this going to impact other emerging markets? think you are right. there's too issues p or one is the size of this market means international investors have started already to build up a greater exposure to this market. what we are trying to do to make sure there is not a market impact from this transition. try and spread the transition over the whole of next year, so we start in march. we will finish in december. given the size, you know, the concerns are investors will need to take money out of other

emerging markets to invest in saudi arabia. that is a real concern. we hope we will not see that. we hope that -- looks like we may have lost the connection. we will try to establish that. that was mark makepeace, joining us to talk about this saudi arabia inclusion into the em. asmp targets china on trade concerns of slowdown increase her dribble look at the outlook with s&p global ratings later on this hour. betty: up next, tech shares leading. slater sharing his take on were the market is headed. we all want to know that, right? this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu in new york. a deeper look at what is happening in the markets with chris, joining us from tokyo. as we saw today, tech weighing on stocks here. how about over in asia? well, asia looks a little better, to be honest. one thing that is helping is there was a big drop in the yen is boostingat japanese shares today, and that is feeding through to the rest of asia. the actions where was with regard to text. what we are really seeing your is a confluence of two factors. on the one hand, we have got the broader backdrop of an increase in borrowing costs. if you look at the three-month rate and how that has jumped up so sharply in recent weeks, it

is making it a lot more difficult to finance trades, a lot more difficult for banks to raise funds cheaply. it is a clear sign of the end of the era of easy money. with that backdrop, that is kind of putting stresses on all different kinds of parts of the financial markets. and if you think about the adage of the taller they are, the harder they fall, u.s. tech stocks were the leaders over the past couple of years in the massive run-up in stocks. we look at the nasdaq 100. that was up 60% over the two years through mid-march. environment,of an we have got borrowing costs rising and stress is playing out. trading in the community. people are taking more money off

of u.s. tech stocks. the other factor we have is a recalibration of investors thinking about the big tech giant future earnings streams. we have had a number of other things. there are facebook and others. there are concerns about the technology of autonomous driving with that unfortunate tragedy of the lady who lost her life in arizona. you have got pressure even from the white house with president trump raising questions about whether amazon is too big. there are things affecting u.s. tech stocks. not so much in asia so far. we are seeing some market reaction from the geopolitical headlines as well out of the korean peninsula about north korea wanting to hold summit talks with japan as well. what are you hearing on the ground? here isat we're seeing

all of these summits, kim jong-un going to china, it kim to make the south korean president, and president trump as well, it is all kind of defusing concerns and tensions surrounding an outbreak of violence on the korean peninsula. the big implications for investors is you get out of the yen. that is the classic safe haven currency. geopolitical worries are abating. then you see the end tanking. the biggest drop in the yen since last september overnight. that is a big reason for the ine and stocks -- gain stocks here in target. yvonne: chris anstey joining us from tokyo. joining us for more now on the market is fund manager chad slater, who joins us from sydney

this morning. thanks so much for joining us. the kind of figure poison about what is weighing on markets these days. chris was mentioning the rise. we have trade, tech. what do you think is the ultimate catalyst here? chad: look, in our mind, at least, the markets just got ahead of themselves. january was and that of last year was an incredible year. incredible ratio just by being long equity markets. when the market is ahead of itself, it does not matter what it is. it could be any of those things. it finds a reason to go down. market positioning is what matters here most. the market positioning from last year, has been tech. you're not a lever of tech at all? why? our firm is an

esg firm. they have differential voting rights. it's not really a line with the process, but the other thing is values, and there's not much value in what we see in the stocks. they are the growth stocks. everyone has investment stocks. not really hours. tech is overvalued. vulnerable when things go wrong, and you have seen it with facebook in the last couple of weeks. yvonne: how do you see this playing out? when it comes to this downside thatto asia tech, you see when it comes to some of the chinese stocks as well and some of these offshore chinese stocks for your tree have a chart, it for five. of these offshort chinese stocks.

we have a chart. if it is not tech that will be leading, what will? chad: look, and our mind, what is interesting about this year is markets may be down from their peak, but if you look at ofurveys, pmi's, all these things suggest we are not going into recession here. if we are not going into recession and gdp looks ok, the reason why they are raising rates is it's ok. last year, value was one of the worst-performing factors in asia. everyone went and bought a few of these tech stocks. we are seeing classic location. -- rotation. the s&p 500 is making new highs. what you're seeing is classic rotation into cyclical stocks.

financials were up. you are seeing more of these mining resources. banks. these are all cyclical stocks doing well. these were the unloved sector from last year. that is why we're seeing this affect where the big tech names can go down. betty: that's interesting. if we are not falling apart like we might have been in 2008, then what kind of a market are we looking at over the next couple of years? what is the shape of this market? is a good question, a hard question. i wish i knew the answer fully. at this stage, we are probably in something like 2006, to use an analogy. you are still in the cycle. in 2006, the fed with raising rates. rates were going up, and you definitely were not 2004. it was a great year. not much one wrong.

2007, those two of moneyu made a lot but it was volatile. what does this year look like? a bit more volatility than last year. cyclicals outperforming. rates going up. for us, we are a bit like that at the moment. we don't think we are in 2008. be muchy you make will different. betty: it is a pre-bear market? is it accurate to say that? chad: look, every year is a pre-bear market once you begin an upturn. you are counting down to the beginning of the next bear market. let's be clear. you can make a lot of money in the pre-bear market years. are just being aware if you five years, one year, or three years from a bear market.

betty: a lot of people say the market will leave the market or will the fed leave the markets? , do yout you have seen see the said being much of a factor at all in these markets? is theook, the reality fed ultimately blows up markets at some point. it just questions which market might blow up first. the fed is a factor. what is interesting in question is that the market is behind the curve were in front of the curve -- or in front of the curve? if the market think the fed is not fast enough, u.s. dollar tends to fall. if the market thinks the fed is getting ahead of the curve, the u.s. dollar tends to rally. this year, the market is not quite fully they on the curve? you are seeing u.s. dollar weakness, good for asian markets as well. the fed is a factor. moment, think, at the they have done enough to tighten too much liquidity out of the

session. the problem is, the fed never knows when it will hike, nor do the participants. the gilt curve is a good indicator and it would suggest we probably have another year or so. it is only when the curve stays inverted that you need to worry about the fed at that point. yvonne: thank you so much, chad slater. on the markets. don't forget, our interactive tv function, tv go. you can watch us live and catch up on the securities or bloomberg functions we talk about. you can become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only, so check it out at tv . this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. betty: i am betty liu in new

york. have gone on trial, accused of masterminding a $10 billion flawed. is said to have ordered doctors financial statements and used the money on himself and to capital.nbang's they alleged wrongdoing dating back as far as 2007. wu was the first executive to be publicly tried. an insurance company planning an ipo. it financial management unit could raise as much as $3 billion. paide told the insurer has other banks to work on a potential listing in hong kong, perhaps by september. one connect raised $650 million earlier this year according to the 2017 annual report released earlier this month. coming up next, softbank may be taking out a little insurance. we are told it is considering a $9 billion stake in swiss re.

we will talk about why and get to our colleagues in tokyo about this story. plenty more to come here on "daybreak asia." this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

>> 830 in singapore looking cloudy here on this thursday morning. where half an hour from the open of trading. equities are looking the next as we get closer to the weekend. betty: m betty lou in asia. -- i'm betty lou. >> saudi arabia has one omission to a group of secondary emerging markets, joining a group that already includes china, indonesia, and russia. it had been added to the watch list for potential inclusion september of 2015. msi is expected to announce the decision on classifications as the emerging markets come up

this june. the fallout from the facebook scandal is spreading. the privacyning settings on its network. video chat review capability is being reviewed to make sure they have the correct trade-off. devices were to be previewed at the developer conference in may. they spoke is no longer the top fang punching bag, amazon is now the new target. losing 53 billion dollars in market caps wednesday alone. this came after actio said president trump is "obsessed with regulating the company." this is not the first time he has turned his attention to amazon. he accused the company of squeezing low prices from the u.s. postal service in order to deliver packages. andy's enterprises will miss its official deadline to ship thermal coal from the queen

land. funding issues means it abandons the 2020 target to begin work on the carmichael project after failing to win 3 billion aussie dollars from lenders. sources now tell us they will continue to look for funds and expect coal production to be delayed by up to one year. day,l news, 24 hours a powered by more than 2700 analysts and journalists in more than 120 countries. rainy, thank you. we have an update. >> that's a quite end of the quarter as we get ready to say goodbye to a miserable margin. margins, the one bright spot is clawing back some of the losses. this at over 1% at the end softens. when it comes to the end, we look to the next survey on monday to see how japan think performs and if the yen will

roll with earnings guidance. is optimism over north korea and we could learn of a concrete date for the summit as soon as today. against the backdrop, you see currency is doing well. melissa drops along with another motor company. searchingerformer is since 2005. we will see the founding family increase its stake in the company, which means it spins off part of the business. that is just one of the scenes that moving -- that is moving markets. twong a look at the nikkei to five, i want to highlight recruit holdings jumping over 4%. grading thats is

gaming -- sony is falling after announcing a cut to the playstation br price. we also have a panasonic on the radar. recalling oneis million laptops in japan after several fire related accidents. customersis counting and that is perhapss playing on customers. we have decayed a -- maceuticals to boost the portfolio, betty. betty: thank you so much. watching those shares. they are close to buying a stake in the deal that would value as much as 30 $9 billion according to sources. anding us now, is possible, what do they want with a

150-year-old insurance company? everyone would like to know that, myself included. theoretically they have used a boost to the finances by the reinsurance cash flow. that is something that has worked for warren buffett, someone that we know fond of. what is not clear is whether a 25% stake in that will get us back to that place. but the bank itself has said nothing about the deal so far. in thekept investors dark. if you look in the share prices, is unchanged. what the stock is down 11% at the beginning of the year. they keepcause signing one massive deal after another without giving a proper explanation for the logic and the sense of where it will fit in. investors are owed a bit of an explanation here. >> what is the logic behind this

one, pavel? seen him take stakes in various things, but how does it all fit into the tech fund. fund -- fund? i think it will be an investment vehicle. it's not clear whether it will be an investment by the softbank group or the other partners. you could argue that insurance is something that has not changed since the 17th century. it evolved to death to the new risks going from explanation -- exploration but the fundamental part of it is how brokers redistribution and guarantee payouts. it has not been changed and is potentially right for disruption. ,nter your favorite buzzwords

whatever they like to talk about. softbank has also made moves and the young -- in other areas. it core problem is that assumes a is able to produce synergy from his portfolio companies. while he has a track record of making successful investments, generating these kind of synergies, there's not a lot of evidence for that. yvonne: pavel thank you. pavel thank you. in japan, we hear more about a possible takeover. one pharmaceutical is considering it's biggest one yet. shire approached $50 billion and brought them into the world of the top drugmakers. growth, we see the stock reflecting negatively down to

6%. why are investors not liking this potential deal? the stock reaction has been negative, not as negative as i thought it be given the size of the deal, i think the biggest question over this and investors would have, is how are they going to pull this off. before the deal was announced, they were about the same size as decayed. and now shire is bigger in terms of market terms. more than is. kateda is.n will they have to pull something off in terms of a large equity raise in order to be able to finance that deal. -- hasction has not been

been fairly muted given the size of the deal itself. yvonne: how are they going to pull it off? they have to come up with 40 some billion dollars. easy moneyjust how is in japan at the moment. is very easy to raise money in japan, and certainly since the financial crisis, we have seen a lot more outbound m&a deals. but rarely deals of this size. you were just talking to him -- pavel, and most of the deals we have seen in japan have been by softbank. will dot clear how they this, despite how easy it is to raise cash. a lot of analysts are saying they would need to sell shares. about $4 billion in cash at hand. throughwant to acquire cash, they will have to raise a lot of money.

some analysts are saying that it to describe it as a merger rather than an acquisition given how similar the companies are in size. but how they are going to do it is a complete mystery. >> what are the next steps then? you can circle in your calendar april 25, that is the deadline that takeda has to make a firm offer or otherwise abandon the bid. that is definitely going to be the next step for us. we need to find out how takeda proposes to afford this deal. of is thisuestion deal by shire, we have known shire has been on the market for a while, is this an effort by takeda of to bring in counter

offers or other suitors who have been waiting in the wings. yvonne: thank you so much. slow: up next, a global own and president trump turns up the heat for china. this is bloomberg. ♪

this is "bloomberg daybreak: asia," on the bonnet hong kong. betty: and i'm betty lou in new

york. are thed tariffs headlines for this segment. kathleen has our latest forlopments on us waiting this whole list from the u.s.. on what products they will slap tariffs on. kathleen: it was wednesday when people thought they would follow through on their signal. that there were be one -- over -- carats -- terrorists against the china. they will target china's made in to build the key manufacturing industry of the future. with investments, and one man said

the u.s. wants to maintain its productivity and growth, and i think he is a great china is going to overtake it. let's listen. >> the focus of the terrace are on the china 2025 industry. china, in my view, brazenly has released this 2025 plan. they told the rest of the world that we would dominate every industry of the future, and therefore, your economies will not have a future. yvonne: i supposedly turn this around, people are probably asking what does the u.s. have to worry about. kathleen: advanced machinery, marine technology, and various areas.

they also added artificial intelligence. we are waiting on is the imposition of these new tarrifs and they have until april 6 to release these. anytime we could be getting them. meanwhile, the director general of the wto also on wednesday see theis beginning to step into global trade war, which he thinks could have a severe impact on the global economy. this is the big worry, although china, in some of its responses, are being measured, and that is why investors are not too worried yet. >> in the white house is taking a victory lap on the deal with south korea, do you think they gave up more than they got? a look at theng question, i think it is very interesting. u.s. said we want, and we will sell more cars to korea. ,hat was a big stumbling block

but people point out -- first of all, here's why it is important, a large part of the exports to south korea, they would like to make them bigger. electronics, machinery, iron and steel, smaller. people are saying there is no guarantee this will work. deal, there was 25,000 per maker limits being raised to 50,000 per maker. 7.3 ler only sold thousand. 10 thousand 700. these are all far below the 50,000 mark. the chief spokesman for the white house said this will not does mean more purchases in

south korea, it will also purchase more -- it will always spark more purchases of parts. maybe this will make a difference, but from a political standpoint, it might be more important to claim victory than see any jumps in south korea. kathleen, stay with us. we bring in terry chen, who recently just wrote a report talking about how a risk with china trade war escalates. there's plenty of rhetoric, and retaliation from china has been muted. deal withis trade south korea, what prompted you to elevate your risk now on a potential trade war? i think it comes down to overshooting. we have seen the trump administration say they are willing to negotiate and, as

mentioned earlier, up to a thousand products is pretty serious. it depends on the tarrif rate. during the presidential campaign, there is a trended to impose 45%. that is serious. we're seen 25% on steel, other percentages on aluminum, so the question is how long will be tarrif be and the reaction from china. a bit too early though, because this is the beginning phases and there are lots of details that we still have not heard yet. why move -- why make this call now? >> our base case is not for a trade war, but we have ceded that the risks have increased. f you look at a trade war

six months ago, it is not likely, but the game has solarsingly began with panels and washing machines, and we went to steel and aluminum, .nd now this it is country specific. he is definitely looking to negotiate in a big way and china is a major act order. we see risk has increased, but it is not our base case that a trade war will occur. does china have room to make changes on intellectual or blocks toiffs u.s. exports, particularly when it comes to electronics in advanced machinery. kathleen: that is what makes up more than half of exports to the u.s.. therefore, they play ball with donald trump on the issues. this will intellectual property

thing is not new. a lot of people agree this is new. what can people do to avert this? that is the crux of the dispute. externally, in the west, many somethingyou will do with ip. china has come back and said we have done nothing wrong and we think it is fine. there is this dispute and because ip is hard to pin down, you see the terrace -- tarrifs focus on hard goods instead of soft goods. negotiation,ea of but it seems 180 degrees from yes,other in terms of, there have been problems, but china says there is no such thing. there will be some room for negotiation. is more ank this

matter in the u.s. and china negotiating and both sides realizing they have something to lose, but both sides have something to gain if they get past. and or, how much of it is an issue for the wto, particularly for the currency part of this. trump has indicated that he is willing to negotiate. we saw that with the steel and aluminum tariffs which were exempt in some countries temporarily. trump, under this action against china, said he will watch a dispute with the wto. the wto will be brought in, one way or another. and possibly as a mediator. that is still early days. it depends on the actual dispute terms,aunched, and the and what they are trying to achieve from the launch. >> what is the impact of a

potential trade war on credit in asia, if any? you could say chinese companies have less access to the u.s. which could impact their cash flow, but what is the direct linkage? >> pretty much, a lot of asia-pacific exports to china, 80 or mediate -- intermediate goods will also be impacted. kong,onomy is like hong and like singapore, they will be impacted. we can see the stock market gyrations every time there is a fear or tread coming out in the market and the market becomes volatile. factor, confidence is a once investment slows, it will have an effect on economic growth. it is a chain effect, dealing with confidence. >> just a quick question on interest rates, we have seen

yields on a 10 year go down considerably, given these rising political -- geopolitical tensions. how will that impact asia? there are two elements here. as you point out, there are 10 year yields and also the spreads. spreadsg we have is the and they stand -- 10 to reflect market confidence, particularly in slope of the yield curve. asia is mixed because there is a difference in the u.s. dollar, but also this local currency and money supply, which is managed by the regulators. it is a bit of a mixed bag. to investork confidence where the economy and rates are going. >> terry, thank you.

joining us from melbourne. also, thank you kathleen hays, our policy editor. coming up in the next few hours, on bloomberg television, let's check out the latest from "bloomberg markets." a member of the bank will be along to tell us, but he concentrates on the idea of regulation here. , it is theut brexit year anniversary, would you believe. we're going to be talking about what the implications are of, and looking at why the european fiscal reform and consolidation. and whether there is any impact on asia as well. in 50 minutes, we have john woods here in hong kong having a look at -- what is their strategy, how is it, and where are we. >> especially since we just wrapped up the first quarter of volatility. >> we had that chart the other

day showing we can't seem to get going these three times that we have fallen below the gain line. see,other prospects do you we have the supply and demand, and what is that telling us? is it telling us something about how people are looking at the u.s. economy in particular? we also talk about similar things and trade wars, tariffs, and it is a lot of noise. yvonne: we're still waiting on an indication from robert lighthizer for additional tariffs. nextoking at that for the three hours. betty? betty: looking forward to it. before we head over to him, a quick look at how markets are set to open in just a few moments. right now how they are trading at this moment, you have the nikkei 225 by higher by almost 2%.

kospi is low. the s&p 200 is also trading in cell mode. are showing aets yvonne., yunnan, -- markets inking at china and hong kong, the hang seng is down, but it looks like we will bounce back. are sitting pretty firm at the moment. this is the list. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

♪ david: what would you say the skill set was that you brought, great intellect, great drive, great leadership? phil: all of that. david: all of that. [laughter] david: let's talk about golf. phil: tiger woods, you could see coming from way back. david: in basketball, you have somebody named michael jordan. phil: everybody wanted him. david: if i wore those shoes, i wouldn't be jumping higher, right? phil: you might. david: when you give a $400 million gift, do you write a check? is it hard to write that check or? phil: yes. david: what would you say is the most favorable memory you have? phil: i kind of look at nike as my work of art, if you will. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪