7:00 a.m. in hong kong. i am yvonne man. welcome to daybreak asia. mahathir mohamad leads malaysia to a stunning victory, the biggest powershift since independence. the result will add the nervousness in emerging markets. eps tumbling along with ringgit. >> i am betty liu in new york, it is after 7:00 p.m. wednesday. they are focused on the sprint sale and masayoshi son's vision fund.

ceore joined live by uber's dara to talk about flying cars. malaysia's opposition party flying high after the elections, that stunning victory. i want to point out this gtv chart that shows you the biggest etf holding, malaysian shares, and how it reacted to this news, which means more uncharted political territory. it is uncertain what will happen in the future. all bets were that najib razak would secure another term. msci plunging on the news. markets are closed until monday, so we will see how investors

really react to this. yvonne: it will have further implications to em. already a lot of uncertainty with the rise of dollar and yields. now you add political risk on top of it, could be a little more fallout. when it comes to the u.s. session, a positive story when it comes to oil, even shrugging off the 3%. betty: kind of elusive. u.s. markets the led by energy shares, the dow up s&p up 1%.ts, the the nasdaq, the energy space seeing a lot of the bids today. oil prices edge higher. you can see for wti crude. gold prices, just a slight bid, but unchanged. the dollar retreated. that 10 year yield right at 3%. yvonne: it is interesting to see that bond auction.

seems demand from foreign investors is quite strong. let's see how things are setting up in asia. up about 0.2% in new zealand. sydney futures pointing to solid gains. a little bit of change with chicago nikkei futures in japan. looks like we could see downside given the moves we have seen with the dollar these days. seeing sizable moves when it came to the new zealand currency. i will flip the boards. the rbnz kept rates at a record low. a weak inflation outlook. the aussie holding. a slight weakening in yen. a risk on feel overnight. em currencies continue to be the big story. the ringgit, forward. a massive move, a little bit of upside.

the ringgit forward. it is back above four. that is one to watch, both of those gauges. we are offsetting losses tonight. we did hear from president are erdoganir to one -- discussing a possible credit line with the etf. 's stunninghamad victory in malaysia, ending the 76 year role of najib razak's coalition. has linda is from kuala lumpur. it really was a historic event. what comes next now for malaysia? unclear, but he will have to put a government together. he has said in a media

conference this morning that he has to speak to the president of both parties and come to a conclusion so they can put a team together. who will be in place we do not know, but we know he will be a prime minister first. up -- performance i the opposition. -- by the opposition. few people would have expected this to happen. thir out of politics for a while, but still knew how to win an election. malaysia, 60% of the population here in malaysia, they have been the bulk of the support of the ruling coalition. what comes next nobody really knows. will beearing mahathir

sworn in at 9:30 this morning. he wants to be sworn in as early as possible so the government can be put in place. to do,what he is going here is what he said at a press conference this morning. >> [indiscernible] in order to become a member of parliament. -- is the leader that is behind bars on sodomy charges. he has made it clear this will not be about revenge. it will be about putting the

rule of law in place. take a listen. we wille that tomorrow have a swearing-in ceremony of the prime minister. [applause] that is, if i am still alive. [laughter] haslinda: winning this election is just the first step. there are so many more challenges he needs to overcome to perhaps help a nation that is seeking reconciliation. betty: what happens to najib razak and the ruling party? at about 11:00 this morning najib razak is expected to call a press conference in which he is expected to step down as prime minister. nobody really knows what will

transpire. nobody knows what the future will hold for him. according to what mahathir mohamad said earlier, he will take najib razak, especially with regards to the scandal involving the 1mdb, the corruption scandal with billions of dollars being investigated across several jurisdictions, including in switzerland and the u.s. what mahathirs, mohamad government will do in terms of its priorities. it is one such area. he needs to boost growth, needs to ensure there is employment, especially for the young. unemployment for the country stands at 3%. butlowest in three years, when you look at youth unemployment, it is three times that of the national average. one issue he needs to address very quickly. much, thank you so

haslinda amin in kuala lumpur. let's get to first word news with courtney collins. >> first up, iran's leaders have dismissed the u.s. withdrawal from their pact. the ayatollah calling president trump's speech silly and superficial. said he was glad a pesky creature had left the agreement. they have warned iran against starting their nuclear program. pres. trump: i do not think they should do that. i would advise iran not to stop -- not to start their nuclear program. if they do, there will be very severe consequences. >> president trump says he will be at andrews air force base at 2:00 a.m. thursday eastern time to greet three american

detainees freed from north korea. they are flying back with secretary of state mike pompeo. menpresident says the three seem to be in good health and pompeo had a good meeting with kim jong-un. a meeting with the north korean leader is now set. walmart shares slumped lower after buying flipkart. some analysts think the price is too high, and describe the short-term dilution of -- as brutal. vision fund is a part investor. new zealand's a central bank had held interest rates at a record low while leaving the door open to a cut is inflation remains subdued. rbnz governor cap to the initial cash rate at 1.75% and said it

would remain there for some time to come. they pushed out the forecast from the second quarter of 2019 to the third. it could be up or down depending on time or events. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. u.s. stock market close higher after support from energy and financials. let's go to remy inocencio at the wall with the big movers overnight. thank you and good morning. let's see where we landed with u.s. trading. the s&p 500, dow and nasdaq up. the s&p 500 at the highest in three weeks, the nasdaq the highest in seven weeks. getting close to the 2700 marks for the s&p 500.

the biggest move since last friday. we are seeing some type of breakout. that is in large part with what you mentioned, oil. let's flip the screen and take a look at where oil is trading. first we will look at the i.t. -- etf function. ins is the biggest jump terms of 11 sectors of the s&p. the energy sector up 2%. this is its highest in the past three months. financials up 1.5%. nine of the 11 sectors are closed in the green. let's flip it up, take a look deeper at what is happening in oil. these are headed even higher in asia trading. nymex crude up above the $71 handle. brent crude above the $77 handle. especially with wti crude it is interesting. we were expecting a draw up of it waslion barrels, but

a surprise drawdown of 2 million barrels. also what is happening in iran. donald trump himself saying, do not buy iranian oil. that said, there is much more. let's go back into the bloomberg terminal. chart ine in the gtv your own library, as energy goes, so does the s&p go as well. this is the line chart you are following. in the past few days, the energy sector, we can see this pushing, giving that lift up, closing on the 2700 mark. we saw when it came to the outperform as it was financials the second-best outperforming s&p sector. ramy: i think it settled at around 3%, right now, even as we speak. follow me, this is how we ended for financials.

these are the biggest point gainers with jp morgan up about 2.5%, putting that on to the s&p 500. bank of america almost added zero point percent. wells fargo citigroup rounding out the top four. looking at what is happening for this, it has to do with those yields. going back into the bloomberg terminal, the yield is standing pat for the u.s. 10 year at 3%. we can see the correlation for the dollar getting a leg up as these two rise in tandem. the correlation had fallen apart a little. we can see this in red at the bottom of your screen. we saw it come back for most of 2017. those are the big arcs, with oil and financials. there are a few standout stocks i want to mention. the biggest movers, walmart taking a stake in india's flipka rt.

investors not happy because of the return on investment, maybe not happening for a decade. trip advisor up 23%. they beat the profit forecast, they were happy. electronic arts at a record, $131. also because of the profit and guidance, analysts are saying the guidance is conservative. that is why these investors and analysts are bullish. back to you. yvonne: thank you, ramy inocencio on the markets. it is a beat for softbank as sprint posts the first annual profit in more than a decade. we will have the numbers later this hour. coming up, more on the fallout from the malaysian election results. this is bloomberg. ♪ ♪

yvonne: this is "daybreak asia."

i am yvonne man in hong kong. betty: i am betty liu in new york. mahathir mohamad's surprise of victory, ending the 60 year role of najib razak's coalition. haslinda amin has a guest with her. what is the mood in the streets right now? >> it is hard to say what the mood is, but prior to this we saw lots of people still in the streets. mind you, it was 5:00 in the morning. some anticipation what the change could mean. our guest joins us this morning. good to have you with us. obviously, malaysia voted for change in this is just the beginning. guest: overwhelming, a swing in vote in the constituency, at least 20%. even though voter turnout was

down, many traditional did not come out to vote. they could not stomach voting for najib as they have in the past. this has been a malaysian tsuna mi. tolinda: it took mahathir win the support, it could not have been anyone else. guest: i agree with you, he was a game changer. also, they wanted najib gone. he had the worst scandals, he shamed the nation with the 1mdb scandal. they could not take it anymore. the way the elections of carried out with the measures we have seen to be excessive, tearing down posters of qualifying candidates, people came out and said, no more. 61 years the incumbent has been in power. they said, i am changing government. haslinda: the people said, enough is not enough -- enough

is enough. what will happen to najib? presst: there is a conference today, he is expected to make an announcement. he is no longer prime minister. my expectation is, he will be stepping down. it is interesting his father created the national coalition in the 1970's, after 1969. it is his son that ended this. haslinda: mahathir said it is not about revenge, it is about putting role of law. out?ill that play bridget: the question and issue here, it cannot be perceived as political witch hunting, which is one of the reasons why people were against the najib government. it was seen as excessively going after its critics.

keep in mind the opposition leader is in jail, though he is expected to be out next month. it is important the rule of law be practiced. there were charges it was perceived to be [indiscernible] in 2015. i think these cases will probably be reopened. it is important these are done in a fair and judicious way so malaysia can come to terms and move beyond the scandal and andre out how to manage deal with systemic problems of graft and hypocrisy from the system. haslinda: we will come back to you. for now, back to you. yvonne: plenty more to discuss with bridget welsh. plenty more to come. this is bloomberg. ♪

haslinda: welcome back, we

continue our discussion with bridget welsh on the opposition here in malaysia. the politics in malaysia have always been based on racial lines. could we see the end of that? bridget: i think it is too early to say that, in the sense that the campaign for the opposition lines,eal along ethnic calling for malaysia to join in for support of the opposition. mahathir mohamad himself introduced many policies. it will take time to change that, even though it was a malaysian tsunami. we see the opposition party is the islamist party. do still have religious politics very much on the ground as well. haslinda: you talk about the

alamic party, it has won greater number of the seats, showing greater influence. how will that play out, how will that work? bridget: it lost a couple seats compared to 2013. moved from being a nationwide party and winning seats on the west coast to only winning [indiscernible] seats back to its core support in 1999. i think they have been seen to be working very closely with the incumbent party of najib. they were seen to be cooperating. i do not think the group has the same power. its close relationship with najib will prevented having a more cooperative relationship in the short-term with above mahathir government.

haslinda: he will be sworn in at 9:30 this morning. what should be has priority and what do you think his government will look like? bridget: no question, beyond the and the mainathir issues were economic najib, issues, bread and butter issues, the high cost of living. the sense the economy was growing but not trickling down to ordinary people. i think addressing these issues as well as fundamental inequality in malaysia will be a key priority. topled with that will be send important signals to the market that malaysia is open for business, that it still has people who can help navigate the economy. i think those signals will likely be sent very quickly. beyond that, we also see a challenge in the government itself, it has to coordinate all four different parties. they had a record in the past of

being fractured and with a lot of infighting. haslinda: any sign who will hold the minister position? bridget: it is too early to say, but what is important will be twofold. mahathir setting a position and using his former allies, a former mine and's -- a former finance minister and a minister of trade. as well as to reach out to the anwar factions who formed the base of the opposition. reaching some sort of accommodation of the different toties will be important truly make a national government to move the country toward a different future. welsh, we haveet to thank you for your insight today. betty, what a momentous day for malaysia, a new government after the ruling coalition ruled for 61 years. what a day. betty: incredible.

in the next hour you will be speaking to najib's former secretary, now a senior adviser at the asian strategy institute. that will be at 10:40 if you are watching in sydney. this is bloomberg. ♪ g. ♪

a.m. this wednesday in hong kong. 30 minutes away from asia's first major market open. betty: a little gloomy over there. whereskies in new york, markets closed higher. energy lifting the markets overall. i am betty liu in new york. yvonne: i am yvonne man in hong kong. let's get the first word news with courtney collins. >> malaysian prime minister mahathir says he hopes to be sworn in thursday after leading the opposition to a historic victory. -- he hasalliance

promised to stand down and install jailed former leader as prime minister after anwar is released. >> he will be released in june, i think. pardon.work for his [indiscernible] he will have to stand for election in order to become a member of parliament. at&t andies including korea aerospace are under scrutiny after claims they put money into the account of donald trump's lawyer and longtime fixer michael cohen. this was in a dossier released by the lawyer for foreign

actress stormy daniels. firm's paid money to trump for how to address health care matters. senate committee she does not believe torture works and would not carry out any presidential orders she believed were immoral. following the 9/11 acts, gina theyl fran a prison where were water boarded. tonever, ever take cia back an interrogation program. we followed the law then, we follow it today. i support the law, i would not support a change in the law. i will tell you this, i would not put cia officers under risk by asking them to undertake risky, controversial activity again. minister italian prime

silvio burlesque tony says he is open to a government including the five-star movement he previously opposed. that could lead to a populist tied up, and outcome of markets consider a worst-case scenario. the italian president gave the populist 24 hours before he appoints a nonpartisan premier. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. yvonne: thank you. i want to bring you live pictures coming through from anchorage, alaska. this is at the airport carrying the three u.s. captives from north korea. should be followed by mike pompeo. once again, north korea.

contributed to a lot of the risk on tone we saw during the wall street sessions, given the positive headlines coming through from pyongyang releasing those three u.s. citizens. it is a good effort. we will see those pictures coming through from alaska. it will be an emotional moment as well. we will count down to major market opens in the asia-pacific. let's get to david ingles. plenty of motion in malaysia. this stunning election victory for mahathir mohamad. seeing anything until monday for the main gauges, but we are seeing some proxies. david: the key thing to remember, not a lot of people expected this. the market was positioned in one way. the currency should have been stronger. reaction,nee-jerk when you look at the currency reaction overnight to the offshore spot weakening, at the

moment, the last 20 minutes has seen that pullback. stronger against the dollar. a few proxies, msci and malaysian futures dropped overnight. the other thing i want to mention, here in hong kong you 082ha. proxy, 3 take a look at how that closed yesterday. it is a risk on session. if malaysia were open, that would stick out like a sore thumb today. yvonne: obviously, other things happening. central decisions, we have data coming out of china, inflation coming out. ppi, that is what a lot of people will be watching. we just had a bloomberg economist that said, if this does fall, -- we have a chart, if this does fall further, a complicates the situation because of deleveraging.

the other thing i want to mention, we expected this to take up to 3.4%. if this falls, we will be in for a rough headwinds. i wrote about this this morning. this comes at 9:30. a quick check of currencies, the rbnz with its decision to take away. they will not reach inflation target until 2020. the philippines will be the one to move later in the afternoon. malaysia is a more political story. yvonne: a lot going on. in terms of what we are expecting in open, new zealand so far pretty positive. the overnight session on wall street is pretty green, when you look at how energy played out. three year yield heading to 10%. a lot on the earnings side that move things forward. david: japan's softbank, a big one.

i am looking at japan right now. 0.4% likely for the open to the upside. similar gains when you look at australia. about 60 companies reporting earnings in japan, more toward the latter part of the trading session. we will be watching for reaction in japan for the earnings. a lot of these malaysian proxies listed in singapore, customers that do a lot of business in malaysia. lots of subplot today throughout markets in the asian pacific. betty: a lot to keep our eyes on. david ingles truck -- checking the markets. company's success is due to one bet. and economist joining us from taipei. what is the key take away from these earnings for softbank? >> you are right, it was one bet for the year. let's look at the whole year for softbank.

they do report on a quarterly basis, but are now becoming a company with so many ups and downs investors need to take a longer view, maybe half year for full year. we will have big winners in some quarters. the one big bet that did it for them was nvidia. they got the stock a while ago. during the fiscal year, which for softbank runs to the end of march, nvidia shares rose 100 chart for some -- 112%. it was the vision fund of masayoshi son, that started and got involved in and brought in a lot of outside money. it was the vision fund that brought large returns. without the vision son -- vision fund, operating income would have been down 2.5%. it was one big bet that made it

for the vision fund and took softbank through the fiscal year. betty: the major businesses for softbank, they are in telecom of course, that is that the future of the company? tim: i think that is a really good point. softbank had sprint in the u.s. and selling it off in a merger to t-mobile. more a selloff in a merger. they have domestic telco in japan doing well, pretty good earnings. iny are not the largest japan, but it is a nice utility place for investors. they will still hold onto most of it, but that will allow them to keep control of it. moving forward will be much more about their investment. they still hold a stake in alibaba, they have the vision fund, which was a big winner for them last year. this year they will get a win because they invested in flipkart, which just sold to walmart, that should make 1.5

billion u.s. dollars when the deal closes. that is another big win we will see this year. yvonne: interesting to see masayoshi son dropped the beat. joining us from taipei. you can find more opinion pieces from our colonists on your -- columnists on your terminal. uber has been talking up its plan and partnership for flying cars, this at the annual summit in los angeles. the uber ceo khosrowshahi speaking with brad stone at the conference. let's listen in. >> it has to be about transportation, along with this core value, this norm that we have, that we make bold bets. that is part of the company. we -- it is a big part of what got us here, which is all kinds of trouble, but also incredible

innovation, incredible services we built on a local basis. we have to be about mobility. we have to solve problems over the long-term for the cities in which we operate, and we have to continue making these big, bold bets and leading in the mobility space. kind of came together and said, this is something we have to push on. >> how hard did they have to convince you about uber elevate? >> it took a bunch of sessions and reviews and i went through the math of cost per mile. listen, there is a lot that has to come together. we absolutely no we cannot make this happen ourselves. these are new muscles we are building. what we are trying to do here with elevate is truly different than how we have approached these mobility and

transportation problems in the past. it is partnership first, it is bringing in many, many players and painting a vision. everyone in this audience will have a brush, and they will be part of this vision we are putting together. there was an alternative business plan, which was for us fledild a bunch of -- and -- flood demand in the city. >> that plan existed when you took over? business the way we are approaching this from the very beginning and working in artnership and bringing in number of different partners, it is a different muscle we are developing, but ultimately it will make us a better company. betty: that is of course uber ceo dara closer high -- dara

khosrowshahi with brad stone talking about the future. uber and flying cars now. uber subscribers can continue to watch that at live . stay tuned for that conversation. coming up, bloomberg recently spoke to malaysian prime minister mahathir mohamad about his plans for the nation after his stunning victory. here that exclusive interview next. this is bloomberg. ♪ rg. ♪

.vonne: this is "daybreak asia i am yvonne man in hong kong. " betty: i am betty liu. headlines from the royal bank of an agreement from the u.s. to department -- justice department

over mortgages issued. they have agreed to pay $4.9 billion. this is coming from a bank statement, although other settlements have not been released. royal bank of scotland paying or $.9 billion to settle the u.s. mortgage case. inflation in sharp focus as investors await -- the latest price gauges from the world's second-largest economy, china of course. kathleen hays with a roundup. the central bank of malaysia, the philippines, they face different economic landscapes. how will that face this -- how will that affect the central bank's decision? inhleen: it will put them different camps. we will start with of the bank of malaysia. after this historic election, a 92-year-old makes a big come back to take over as prime minister of this important malaysian nation. we have been hearing this all

morning, on how the markets are reacting to this unexpected victory. questions about fiscal policy, since they have talked about removing the goods tax. this would white in the budget thecit -- this would widen budget deficit. it should keep them on hold with bank negara. the economy is slowing. i want to start with -- you will pull up my chart for me? central bank, look how high inflation was, the turquoise line. it was well over 3%. the target was 2% to 4%. now the inflation rate has come down sharply. that gives them plenty of room to rest. a ray of hope for malaysia is higher oil prices. it will boost revenues, value of their exports.

inflation could use help. move on to the bsp. they face a different situation. inflation has been rising there. rising oil prices will push that up further. they are expected to hike that key rate today. let's take a look at another bloomberg chart, another gtv chart. here is their inflation and rate picture. inflation is up. 3% is where they have held the key rate. will it move higher, a lot of people are betting it will. a hawkish fed, a fed raising rates will also put the bsp under pressure to support its currency. it seems a complicated picture for the bank of asia because of

risingces, bond yields in the u.s. and what it is doing to their economies, when an election has rattled them even more. yvonne: interesting policy decision when it came to new zealand under the new governor orr. we could see a possible rate cut? kathleen: he was the deputy governor at the bank of new zealand. he was also an economist during the 1990's when they were one of the first central banks to create the concept of a new inflation target. that is when people wanted to keep inflation down. the question now, how do you boost inflation? they kept it unchanged at 1.75%. mr. orrcy statement and keeping it unchanged. let's look at one more gtv chart.

down toation range is 1.1%. towards the bottom of that target. seeing somewhat dovish has allowed the kiwi to weaken. that could be good down the road, it could boost exports, that could help relieve downward pressure on inflation. i think if you are a global macro nerd you could spend all night in the u.s., all day in asia, watching central-bank measures. you will be getting china cpi and ppi data. the boj will release a summary of opinions from the april meeting when it dropped its forecast on when they will hit their 2% market. bank of england meeting, even though they are supposed to keep it on hold. yvonne: a busy night for you, kathleen hays, joining us from new york. malaysian prime minister mahathir mohamad will be sworn

in thursday after leading opposition to that historic victory. the fourth party alliance won seats, getting rid of the coalition for the first time since independence. haslinda amin spoke exclusively to mahathir in april about how it would be different this time around. >> we will go back to the rule of law, we will become a democracy, we will become more open, but on the other hand, we want to have limitations on the powers of the prime minister. he can be prime minister only for two terms. also, the choice of senior officers. haslinda: what pledges would you like to make to investors if you should become prime minister? mahathir: we have always been business-friendly. during my time [indiscernible]

we work well with the private sector. we listened to their complaints, we try to satisfy them, in terms of government policy. we are very good to them. we guarantee their investments here [indiscernible] haslinda: is there any growth target you're looking out? mahathir: in terms of the growth of the economy during my time, as much as 8%. a percent is really high-growth. haslinda: that is achievable, where you to become prime minister? mahathir: [indiscernible] haslinda: the opposition has come out to say it will get rid of gsp or the tolls. najib razak said removing those measures would remove $100 billion in revenue, putting debt at stake. mahathir: during my time we had no gsc.

but wereted tolls, able to develop the sector you see today. you do not see, as many infrastructure projects in malaysia. of mys a continuation ideas. ministers prime [indiscernible] he already has three times more what i had. if hehould be sufficient, is spending the money correctly, that should be sufficient for running the government and the country. but what is happening, using money to buy popularity. salaries,are given

even if they do not fish. village heads are given salaries. .mams in the mosques lots of people go overseas. all of these things are wrongful usage. you do not have wrongful usage, you should have sufficient money to develop this country. betty: again, that was malaysian prime minister mahathir mohamad speaking exclusively to haslinda amin last month. you can turn to your bloomberg for more on these malaysian election results. get commentary and analysis from bloomberg's expert editors. in the next hour we will speak former secretary, now a senior advisor for international affairs with the asian strategy and leadership institute.

this is bloomberg. ♪

yvonne: a quick check of the latest is this flash headlines, the company aiming to raise $3.7 billion in its ai ipo. the second-largest insurer at 54% stake in money manager alliance bernstein. the biggest u.s. share sale this year. betty: bloomberg has been told from net to borrow earnings by selling a stake in its power business. our source says india's top wireless operator lands to raise $1.5 billion by listing 1/4 of its african unit in either london or south africa.

counting down to the start of trade in japan and south korea, just moments from now. spi futures at a higher open after the rally in the u.s.. this is bloomberg. ♪ this is bloomberg. ♪

>> 8:00 a.m. in hong kong. we are live from bloomberg's asian headquarters. welcome to "bloomberg daybreak: asia." a landmark powershift in malaysia. leaving the opposition to its first -- leading the opposition to its first victory. adding nervousness to emerging markets. malaysian etf's tumbling. betty: from bloomberg's global headquarters, i am betty liu in new york, 8:00 p.m. on this tuesday. treasuries failed to reach a 3% yield.

walmart's $16 billion deal to take control of zipcar gets a rude welcome on wall street. ♪ yvonne: it is the stunning victory we are focusing on. it seems like the big question is can he make malaysia great again? [laughter] perfect timing for this victory for mohamad. he made this pledge in 1991 when he was in power to raise malaysia's status. he wanted to make the economy great as a high industrial economy he has fallen short of that. the blue line is south korea, singapore in yellow.

he would have needed 7% growth to 2020 to fulfill that goal. with 5% growth on average for may come upey short. we have been talking about the challenges for mahathir when it comes to threading these opposition parties, which continue to be divided. what can he bring? mahathir mohamad ruled during a time where china was a big power. how will they manage the relationship in terms of the global trade fund? the malaysian markets closed, but caught offguard. voters inearly malaysia wanted change, but it is not clear for investors, whether they wanted change. we saw the etf on malaysian stocks tanking on the result of

this news. just a note on malaysia, the equity markets are closed today. it is unclear -- the malaysian central bank was supposed to be meeting earlier today at 3:00 p.m. local time. it is unclear whether that is still going to happen. we will see whether that decision is still going to come, or might it happen, monday when operations happen again. in the meantime let's get to first word news with paul allen. paul: iran's leaders have dismissed the u.s. withdrawal from their nuclear pact ayatollah khomeini calling trump's speech silly and nonsensical. hassan rouhani said he was glad a "pesky creature" left in the agreement. washington has warned tehran against restarting its nuclear program. . president trump: i would advise iran not to start their nuclear

program. i would advise them very strongly. if they do, there would be very severe consequence. paul: president trump says he will be at andrews air force base 2:00 a.m. eastern time to greet three american detainees freed from north korea. they are flying back with secretary of state mike pompeo. trump said mike pompeo had a good meeting with kim jong-un. he says the meeting won't be happening in the dmz between the two koreas, making singapore the likely bet. walmart shares closed lower after its deal to -- some analysts think the price is too high. they are more optimistic on the longer-term potential. softbank's vision fund is a flik

pkart investor. the government kept the official 75%, and said it will remain therefore some time to come. or says that could be up down depending on time and events. global news four hours a day and bytictoc on twitter, powered 2700 journalists and analysts in over 120 countries. this is bloomberg. yvonne: let's look at the market open. equities back in focus after we saw some weakness in asia yesterday. we are overlooking some of the malaysia risk at the moment, giving malaysian markets are closed. it was a stellar session overnight fueling things. and theng the tailwind decision out of the central bank.

just to quickly turn your attention to kiwi assets. weaker by about 7/10 of 1%. yields are on the way down. if they don't hit inflation by 2020, that is likely going to happen. we have pti coming out of china, inflation numbers the same time the cash market opens up. the next one is the philippines. unclear about malaysia. we have the bank of england as well thursday night. we have the expectations in that meeting later tonight. equity markets, decent day so far. earnings very much inflow. japan, 5/10 of 1%, up about 100 points. it hasn't put together a string of upward momentum, but who has, right? we're still waiting on the 77, 40pricing for brent,

cents. most active contracts in west texas. airlines are under pressure. asia airlines on the index. energy is bidding up as well. i mentioned earnings in japan, the likes of softbank. here is your scorecard as we make our way mid-earnings season. nikkei, reported on the a slight majority on the upside of revenues. earnings have been disappointing mostly speaking. about 60 companies are due out with earnings. a snapshot of four of those companies. of course malaysia still very much in focus. we have a few proxies we will be tracking when singapore opens

and of course hong kong. betty: we will be watching that. mahathir mohammed expected to be sworn in as malaysia's next prime minister in about 90 minutes's time. the ousted coalition, and a trademark shift for a coalition ruled by the same party for more than 60 years. let's get more on this historic moment for the country. now is the momd like right -- what is the mood like right now in malaysia? >> the mood is pretty much apprehension. people are waiting what will happen next. they are looking for change. we saw the results. with theng no more corruption, with the great. they want a leadership change. -- with the greed. they have looked to a leader in power for over 20 years, mahathir mohamad the longest

running prime minister in the history of asia. a lot of other ironies as well. mahathir was up against his own protege, someone he handpicked to be the prime minister of the country. teamed up with a foe, someone serving a jail sentence on sodomy charges. no shortage of ironies. this election was held against the backdrop of rising discontent among the people, rising costs, which has squeezed the rural malays in the heartland. they are finding it hard to cope with daily life, bread-and-butter issues. issues like low unemployment among the young, low wages. mahathir will have to address those issues. a spectacular win by any margin. theou take a look at where opposition coalition won its

power, the power came from traditional stronghold areas, states just across from singapore. never in your wildest dreams would you think the opposition could win support from these particular states. yvonne: you mentioned all of the ironies. a former prime minster now coming into power. what are mahathir's priorities for the economy moving forward? i spoke to mahathir before the elections. he did not spell out what he intends to do when he becomes prime minister. remember this nation has been up against 6% gsc introduced three years ago. mahathir says if the opposition comes to power, that will be eliminated. remember as well the current government put the gsc in place to boost the government

coverage. that has boosted about $100 billion to government coverage. mahathir would have to find a way to replace what is going to be lost. mahathir also taking issue with chinese investment in the country. in the past few years, we have seen an inflow of $2 billion of chinese investment in particular to infrastructure projects. mahathir has said there will be greater scrutiny on chinese investment. he is skeptical about chinese money and what that brings to the country. these are the issues. the issue of growth -- it comes at a time when there are tensions between u.s. and china. that could impact a country like malaysia, simply because it is an export driven country. moody's says directly and indirectly the malaysian economy will be impacted. looking to thest

press conferences later on this morning. emerging-market assets globally have been under the gun. asian forces may find a fresh dose of uncertainty out of malaysia's election results. global wealth management cio joining us from singapore. i was just told it was your birthday today. i want to say happy birthday to you. it is also a happy day for mahathir mohamad. investors not too happy with what we have seen in proxies in malaysia. gtv chart. tf have seen the malaysia e falling -- there is so much expectation things will be status quo. what now?

what should investors be watching out for now under a new regime? >> the very first thing to be watching out for is how far and to what extent the new government will come into changing the policies of the previous government. haslindae policies mentioned was scrapping the gsc. that is something that will shape the credit markets where government funds are concerned. it is held by foreign investors. front will on that help to that extent. today and tomorrow has been declared as public holidays. yvonne: ubs has stayed underweight on malaysia.

what concerns came to you even before this upset? kelvin: we have been underweight malaysia for the last three years. we thought a lot of the structure issues the economy has been facing has not been addressed. a lot of it has been priming. those measures or not going a long way toward addressing longer issues. for example, the fact that some of the industries malaysia is in -- the palm oil industry, the eu has banned the use of palm oil for exports. much of malaysia's export of palm oil goes to biodiesel. not much has been used to address the fact that electric vehicles are coming on stream and will likely be a big seller in this part of the world. not much has been taken to address the structural issues the workforce faces on that

front as well. s -- havingg that said that, the ringgit is on a tightening path. we have seen measures to boost inflation a bit. are things on the economic side looking favorable in terms of the rest of the southeast asian nations? kelvin: not quite. the ringgit has been boosted a couple of artificial measures. in november 2016 after trump got elected. firstly, you can't really hedge, because liquidity has dried up. you can't tell the level the ringgit should be falling to. we think there is a possibility the ringgit could weaken one's markets, on to play -- once markets come onto play as well.

for every $400 you bring back in, you have to convert 75 back to ringgit. all local transactions in malaysia have to be conducted in ringgit and not other international currencies. the ringgit is one of the best products, because oil prices have recovered to $75 per barrel. the ringgit on a five-year basis is still one of the worst performing currencies. yvonne: staying on malaysia for a moment, we are getting news that some of the -- moody's saying some of the new malaysian promises maybe credit negative. i imagine one of the promises made by mahathir mohammed was to replace this tax with taxes on corporate profit and revenue. do you believe that is going to be credited negative for -- to be credit negative for malaysia?

it is: if we remove gsp, bringing quite amount of sizable revenue to the malaysian government. this is the fact that dividends from the national oil company have been declining over the years, because oil prices are not $100 per barrel anymore. the new administration will have to find some ways to make up for the shortfall in revenue. that is likely to come at the expense of the larger infrastructure projects announced by the government. where the stock market is concerned, the construction related companies are likely to experience some sort of weakness when the markets open on monday. yvonne: i just want to broaden it out and it, because this comes at a time when emerging markets are under intense scrutiny. we have the stronger dollar, and the fed on this rate hiking path. given that context, how does

this election in malaysia affect other emerging markets which seemed to be more vulnerable these days? kelvin: the way the other emerging markets are concerned, the key is the 10 year u.s. treasury yields. the fact that they hit 3% has sent some signals out there. there are a fair bit of flows going back into the u.s. treasury, because the differential between u.s. treasury and germany is only 0.5%. fundamentally, the dollar is weak because of the budget deficit, the trade deficit is likely to widen even more. on a short-term basis, the dollar may be strong, but on a medium to long-term basis, the dollar should we can going forward from here. -- should weaken going forward from here. yvonne: moore with kelvin ahead. formerk to the ousted

as they shift to the opposition party for the first time in 61 years. betty: we take a look at walmart after its bet on flipkart. this is bloomberg. ♪

yvonne: this is "bloomberg daybreak: asia." yvonne: betty: treasuries held their losses after a solid tenure auction drew a yield of percentageh indirect sold to bidders. , what did you make of the auction today? yield coming in and just below that 3% level. if demand had been week,

and there were any signs of lower yield on the man's, that would spike up on a short-term basis. it is good for the markets that demand is strong. good berom the chinese a little bit lower. we did not see that happening. it has been positive for u.s. treasuries. yvonne: are we at peak here with demand? kelvin: once we get all these big issues out of the way, things should settle down a little bit because of the auctions we are seeing this week. way,we get that out of the we think perhaps the treasury yield should settle close to or slightly below 3%. if the treasury yield keeps climbing at the rate it has been climbing, the federal reserve is

likely to reassure the market and manage expectations as well. yvonne: speaking about rates, you mentioned right before the break we might see shorter-term strengthening in the u.s. dollar, but you see weakness going forward. i want to bring up this gtv chart. it is a chart we have shown many times, but it illustrates how this correlation reignite between the 10 year yield and the dollar. i am curious why you see a softer green back when it looks like this correlation is coming back together. kelvin: the key issue is one of months,last couple selling on he was equities tapered -- on u.s. equities tapered down. don't forget this year where

u.s. corporate earnings are sold , we are looking at growth largely because of trump's tax reforms. if the west equities -- if u.s. equities were a bit weaker -- saw driving the strike in the dollar. if the dollar is strengthening and yields are closer to 3%, that is an attractive level for investors to get in. that is why you are seeing the coalition work again. yvonne: that brings up the question of the tug-of-war between yields and equities. we talked about the volatility we have seen in asia. a bit of a reversal from what we have seen recently. i made this chart comparing volatility with the s&p. you say this is the sign of a new trend. why? kelvin: no, i don't think so.

i think this is just for the time being, actually. equities are coming in at lower volatility levels than u.s. equities. i think it is a matter of time before asian equities pick up again. it is largely because of the fact that this year asian earnings are selling as well. we are looking at 12% earnings growth. earnings growth for the company's reported nearing 18% to 19%. this is one of the reasons why asian equities are doing well. the chinese equities space also looks solid in that sense. yvonne: as you mentioned, the earnings season so far in asia has not been too upbeat. we see earnings estimates weighed down in the likes of korea and taiwan. what sort of earnings growth should we expect for the rest of the year? kelvin: we're looking about at

12% earnings growth for asia. that is largely because the fact that debt levels in asia are slowly tapering off. you did not get this picture three years ago, when roe's were declining sharply and earnings growth was lower. although we have a high base of comparison, earnings growth this year is impressive. iflatility will pick up corporations struggle to meet expectations in the second quarter. we think 12% earnings growth in asia this year is pretty much in the bag. betty: what do you make of these higher energy costs? we have these china inflation numbers coming through. looks like things are edging off when it comes to cpi -- ppi, we are hovering around these highs,

but edging off as well. how will that impact margins, do you think? kelvin: it is not want to happen immediately. we have a couple economies that could be impacted by higher oil prices. indonesia is one of those. that is the reason why the rupee has been higher in the last couple weeks. you have almost a doubling of oil prices. the government is likely to hold back from upgrading retail prices on oil, simply because you have a lot of regional elections this year and presidential elections next year. you don't want inflation to pick up dramatically this or next year. inflation is something we have to look out for where oil prices are concerned. anywhere $65 per barrel in indonesia is good.

areof indonesian exports oil related. betty: remember if you are a bloomberg user, check out our chart at tv . this is bloomberg. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. mr. elliot, what's your wiwifi?ssword? wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. hey! let's basement. [ grunting ] and thanks to these xfi pods, the signal reaches down here too. so sophie, i have an xfi password.

and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. yvonne: it is 8:30 a.m. in singapore. we are watching what is happening in malaysia with a stunning upset from the opposition party becoming prime minister. betty: it is looking to picturesque in singapore. you are watching "daybreak asia". let's get the first world news with paul allen. after leading the opposition to a historic victory, the new prime minister will be sworn in. the ruling party for the first time since independence in 1957.

he has promised to stand down and jim opposition leader as prime minister after he is released. in june,l be released forthen we will work parliament, and he will become a minister again. but he will have to stand for election in order to become a member of parliament. at&t companies including and korean aerospace are under scrutiny after claims to put money into the account of donald trump's lawyer and longtime fi xer, michael cohen. novartis has confirmed paying michael cohen over a million dollars.

president trump's nominee for cia director has told the senate intelligence committee she doesn't believe torture works and will not carry out any presidential order she thought was immoral. following 9/11 attacks, gina haspel on a covert cyber terror suspects were broadewater boarded. law itfollows the follows the log dan and we followed the law today, i support the lot and i wouldn't support a change in the law, but i will tell you this, i wouldn't put cia officers at risk are asking them to undertake risky, controversial activity again. paul: former italian prime minister says he is open to a government including the five-star movement which is loosely opposed that could lead to a populist tie up with the euro skeptically.

the president has given the form at on for hours to coalition before he appoints a nonpartisan premier. global news, 24 hours a day, on the air, and at tictoc on twitter. powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: it is looking decent when it comes to equities and we continue to watch the screwed crude story. i will take you through it isthe moment, new zealand fairly dovish and the currency is getting whacked and oil found a way up. yields in india are wants to watch and there is a risk on session across wall street. david: that the auction last night and oil is going to have a

lot of applications ahead. a snapshot across industries in the asia-pacific, the dollar is down and commodities up, as his energy as well and a little bit of pain in the consumer staples. in malaysia, typically oil is up, but recently because of the uncertainty stride by elections it hasn't gained. we see today a little bit of weakness in the currency. this is the last time we traded on short at 394, and these are american images of each other. when oil is on the way up, it gets strengthened, and once we do see this play out, but sick at how things shape up. you have a knee-jerk reaction. in japan you have the etf that

traded down 2%. this is one to watch when hong kong opens up. there is the weakness coming through overnight. for.e above ur. take a look at this mliv block. g. malaysia is your homepage for all things malaysia today. is a sharpation focus as investors await central bank decisions in asia and china cpi data coming up. kathleen hays is here with a roundup. we want to note it is unsure if we're going to get a decision i that malaysian central bank. kathleen: this election result is such a surprise and a shock,

to have the former prime minister going against his protege and going up on top. the bankte, we think of malaysia is meeting to release the questions of a policy decision. meet, rate, when they here is what they are watching. it has a lot to do with inflation. that's the this gtv chart. you can see inflation rate has gone up here and their target is 3% to 4%. it has fallen considerably and what of the reasons is because the economy has slowed down. they raise their key rate in january, so they are going to sit tight. both this uncertainty and fiscal policy, they are concerned about possibly dropping the goods and

services tax and others talking about putting on subsidies for oil is the price rises. this could hit their fiscal position hard. it philippines is different, is a clear case for a rate hike. ,ake a look at this gtv chart inflation has gone up 4%. to 4%.get range is 3% the head of the bsp told bloomberg last week he is going to take an immediate and appropriate measures to keep prices stable. a rate hike could be in order. yvonne: it seems the philippines could be following the fed and seen this policy divergence. and this is the deputy governor's debut, back to lead

the bank, where the tables have turned with inflation. look at for more charts to show you what they are up against what orr is struggling with. risk is passed in either direction, limiting that one up -- let me bring that up. bit asthe kiwi we can a the dovish tone came out in the policy statement. be a silver lining in that club because a lower key we can boost exports. in china inflation data we're going to await for the bank of england to meet. sit back and grab something to globalnd watch your

macro hearts content. yvonne: kathleen hays, thank you. chinang down the inflation numbers and an interesting story with tensions in beijing and washington affecting u.s. financials in the race to secure a majority of stakes in chinese security firms. give the first to apply americants, but lenders do not get the same advanced warning. tom mackenzie is joining us from beijing. is this more than a coincidence? om: it is an example of the pressure china can do on u.s. firms without making official announcements or unveiling any new policy. as you say, this was firm and japanese firm told by securities

regulators that they can speed up applications and majority ownership of their joint venture securities operations in china. and companies have done so, it is the interesting point that the likes of whitman sacks and morgan stanley are not as by regulators to do the same thing. we are told that was deliberate and the signal to those in as chinan to say that pushes ahead with measures in the financial sector and other parts of the economy, american firms will be left out or have their applications delayed, unless chinese investment in the u.s. gets equal footing. that is something beijing has demanded out of washington and has been delivered in saying that u.s. firms would not get this access as china opens up, unless chinese investments in the u.s. are looked at in an equal footing with other investments flowing in the u.s.

it is interesting because we heard from the likes of jamie dimon speaking exclusively the bloomberg this week saying he is hopeful trade tensions when hit j.p. morgan chase and he still plans to have a fully owned business in china at some point. it follows on in terms of soybean exports from the u.s. into china slowing in terms of the ramped up inspections of reports in china when it comes to u.s. goods flowing into the market. these an official steps china can take the pressure was companies. legalke to a experts was that this is a short-term consequence and longer-term u.s. firms would get access to these opening measures and would be treated like any other foreign firm operating here. that is a longer-term picture for the moment u.s. firms are facing pressure.

betty: walmart is trying to claim india before rival amazon, take a 77% stake in flipkart, the e-commerce giant. however, shares slipped in new york. peter, why were shareholders not happy with this? fort was quite a deal walmart and sister biggest acquisition ever. you are going to india to spend a big chunk of money that is still a startup and growing rapidly and taking a lot of capital in order to get their. walmart has said they want to pull back from some of the global markets growing more slowly and we treated in the u k and putting money into india, where the e-commerce market is growing rapidly, about 35% a year.

lipkart is the leader in that market and growing quickly with the market. amazon with that market years ago and is catching up quickly and jeff bezos made a trip to india and said he is determined to the that market. you spending more than $5 billion to build up operations and have hired a local manager was that. amazon try to buy control of but walmart was successful in this state and they paid a lot of money in order to get is controlling stake. is a bet on e-commerce and the global expansion. they have not been successful in foreign ventures in the past its is a but they can turn it around. wall street didn't like it in part because the financial profile of the company is so different than walmart. flipkart is growing quickly but

it requires big investments now in order to capture the growth in the future. perhaps too long of a bet for investors. after filling in markets like china, india is the bright spot. will this take necessarily beat the likes of amazon? we covered that negotiations blow-by-blow and amazon very much wanted to consolidate the market by flipkart so they can have a position are than slinging it out, especially if amazon is going to compete in the market. but we found out is that flipkart's board decided it is easier to get a walmart deal instead the amazon because amazon would be consolidated the market into one major player, they felt walmart approval was going to be easier so they went in that direction, even though karen to some reports that

amazon did was higher. there's work to be done between walmart and flipkart. ceo will leave in place the was that a good job of turning the business around after struggles two years ago. they have a business has turned them around again growing quite well and it is a head-to-head race in india between flipkart and amazon and they are getting reinforcements from walmart. yvonne: peter, thank you for joining us from tokyo. we speak to the ousted prime minister's former secretary next and ask where the country goes from here. this is bloomberg. ♪

yvonne: this is "daybreak asia".

betty: former malaysian prime minister is back in power after defeating the ruling coalition in a seismic political shift in the country of 32 million people. sophie has more. sophie: we have a serious of thisent, culminating in shocking upset. i am joined by a political analyst and former secretary. this is something that came out of left field. we saw a transformation. what do you think is going to happen next? there's quite a number of hurdles in place. number one, the coalition has of resultsification

from the election commission of malaysia, after which i imagine he will bring the results to audience in the malaysian king, and he will appoint him as the next prime minister of malaysia. sophie: we might see some leapfrogging or other moves? >> in this process it sounds simple but it could be prevented and in the process of is on members of parliament, to reach the other side provided the incentive is right. anything could happen. sophie: given some of the reforms with policy push backs the opposition coalition was what to do but in place, the abolition of the dst kumal are your thoughts?

>> corruption is not a concern, but corruption has been happening over the past years, the argument is taking away the governor revenue is enough to cover governor expenses. sophie: and our policies seen as populous, what is that? >> that is troublesome, billions of expenditures and something that they will have to think twice. sophie: what is next for chinese investments in my malaysia? >> i think at the end of the day, additional investment suggest the united states

withdrawing in isolation, there is no other choice performed investment other than china. i think it will be pragmatic on this and will come a lot of chinese investment. claiming he has a close relationship with trump, what does this mean for the country? think he is -- continues to tread that road. sophie: what is the new challenge? >> to look forward to developing this country, free of corruption and enabling the whole population to be able to live up to the fullest potential. [indiscernible]

i think the new administration would cooperate closely with various jurisdictions across the world, including the united states and switzerland to investigate the matters. so they are in sync with around the world. sophie: speaking of expectations, plans for the first 100 days, how close with a stick to that plan? tothey are going to try adopt some of the popular measures within the first 100 days. the abolition of the gsp or reduction, and they wanted collect

anymore polls for highways. and they can take on challenges. sophie: what will the cabinet look like? totallyap it will be reshuffled and there will be new faces the government. ranks of thehe chief secretary in the government and the of the central bank. they will be more in tune with the new policies of the new government. sophie: what is the long-term outlook for investors? >> i think this knee-jerk reaction is common among countries that recently have policyrough a series of changes.

the newong run, government will speak to the resolution in terms of getting rid of red tape and corruption, i think the confidence in investors will be restored in time. sophie: thank you for joining us on this historic day. conversation, sophie. don't miss our exclusive oferview with the brother the ousted prime minister who joins us live on "bloomberg markets" at 10:10 a.m. hong kong time. this is bloomberg. ♪

betty: a quick check of business flash headlines. e toa cte says it will ceas makers of it to buy components from american suppliers. the commerce department said zte violated the terms of a and chinese authorities have pursued negotiations with u.s. counterparts. raise: holdings in to $3.7 billion in its ipo that is expected the price shortly and

is made up of u.s. operations of europe's second-biggest insurer and has a stake in alliancebernstein and is place to become the u.s. biggest sale this year. that is it for daybreak asia. coverage continues next with our malaysian election coverage. betty: state on bloomberg television for that coverage. this is bloomberg. ♪ retail.

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♪ president trump called you and said i need you to help the country. what would you say? condoleezza: i am happy to be doing what i am doing now. david: you negotiated with north korea. , nothingza: i thought else has worked, so why not? david: on the iranian agreement. condoleezza: i did not support that agreement. david: what are the qualities you think great leaders have? condoleezza: a sense of humility about what they can achieve. >> 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.