>> it is 7:00 a.m. in hong kong, and i am yvonne man. welcome to "daybreak asia." president trump's longtime lawyer faces five years in jail. paul manafort is convicted on eight counts including tax and bank fraud. ramy: from bloomberg's global headquarters, i am ramy in the innocence you -- ramy inocencio in new york. investors seek safety. equity futures are already the and sanctions towards 110. the ping an could take out some insurance of its own with

pursuit of prudential operations in asia. good morning, yvonne, on a day we saw the s&p 500 hit a record. it was what happened after hours, closing, that really moved the market here with donald trump as well as the lines, paul manafort as well as michael cohen getting convictions. let's take a look at what's been happening in terms of safe it in place. the s&p 500 was up right .2%. we had an intraday record, but we did pull off of that. riding nasdaq and dow higher. we can take a look and see what's happening in terms of risk assets moving the bloomberg

--lar spot 2.3%. the s&p many futures is the big mover. gold futures on the rise above the 1200 month and, yvonne. -- 1200 mark, yvonne. yvonne: the s&p hit a record for beating january ties. we are poised to enter the longest bull market ever for u.s. stocks and certainly want to watch out for. sees take a look at how we the buying into the yen, the dollar dropping for a fourth day. the yen as well as the swissie catching a bid. the aussie also feeling down here on sympathies, and the offshore renminbi, we have seen this em fx rebound which is pretty much flat and holding steady at the pboc. they are not using it as a trade

. the equity backdrop, here we are. pretty mixed so far. the nzx 50 pretty much flat. aussie futures as well as nikkei futures on the back foot. nikkei futures down .4%. watch the dollar yen trade once again and the kospi futures looking better, up .1%, but of course, we are all waiting to hear from the president and this rally in trusting, west virginia, that is set to be in any minute now, ramy. ramy: let's get you more on our top story. president trump donald -- donald trump has been hit by a legal blow. michael: pleading guilty to charges stemming from payments to women who claim affairs with him and a jury convicting his former campaign chair, paul manafort, of fraud. the president says manafort is a good man, and he feels badly for him. pres. trump: this has nothing to do with russian collusion.

this started as russian collusion. this has absolutely nothing to do --

they started out looking for, russian involvement in our campaign. there were none. ramy: let's get to our chief washington correspondent, kevin cirilli. the latest lines here, nancy pelosi saying cohen's admission placing them in legal jeopardy. to what degree is donald trump in legal jeopardy now? kevin: democrats, including nancy pelosi, who would become the speaker of the house, likely she would have calendars on that front should the democrats take back control of the house representative in november, implying some tough the going which now. senator mark warner, a democrat from virginia, the top democrat on the senate intelligence committee, also releasing a statement similarly to congress one pelosi. first and foremost, the president defending paul manafort, his ex-campaign chairman, who was found guilty of fraud, but made no mention of michael cohen, his long-term fixer, who also pleaded guilty to a host of providing harsh money. women alleged extramarital affairs. this is getting interesting because within the last half hour, rudy giuliani, the former new york city mayor and a close confidant to president trump, releasing statements to the new york times and bloomberg news, saying that he is critical of michael cohen, calling him a liar. clearly, this administration defending paul manafort and president trump himself defending paul manafort. we just heard that comment. that was played ahead of this rally for president trump, which will begin any minute in west virginia. his surrogates are denouncing michael cohen. ramy: rudy giuliani saying he is pushing to throw mr. cohen under

the bus here. meantime, kevin, we are just showing live pictures here of that scheduled campaign stop for donald trump in charleston, west virginia. we will be looking ahead to see if he comments on anything with regards to the events, the circumstances, of the last couple hours, with two people were in- or at least, his inner circle. what might we expect? setn: president trump was to deliver what was billed as being an environmental protection the regulatory speech in coal country, charleston, west virginia. the president and this administration announced within the last when he four hours that they were walking back key obama era regulation that they argued were a hindrance to economic growth, in particular the coal industry. he will likely make mention of that. the bombshell reports within the last several hours regarding michael cohen and paul manafort is juxtaposed

literally at the same time in terms of their development, and the president, just after touching down, addressing those reports and defending paul manafort as he has done, but making no mention of michael cohen. rudy giuliani critical of michael cohen. playing this won't, the administration announcing the president himself will take an aggressive campaign stop between now and the midterms. most republicans agree with the president, according to recent polling done by cbs. seven in 10 republicans believe the mueller probe is a "witchhunt." democrats clearly disagree with that notion as well. yvonne: so kevin, what does this midterms?or do these developments but more uncertainty on whether the republicans can actually keep the house and senate? kevin: i focused one key confidant -- one source who was connected to this administration who talks frequently with folks inside the white house just said what president trump said, which

is there is no evidence of russian collusion. the second point that i would note is that enthusiasm gap. democrats have surged to the polls. so whether or not this mobilizes democrats to get out to the polls, that does pose a significant risk. yvonne: thank you, kevin cirilli, our bloomberg chief washington correspondent, joining us with the latest. for more, let's bring in george washington university constitutional law professor servedn turley, who has as counsel in the last two decades. he joins us on the line from washington as well. thank you so much for joining us. just between the paul manafort charges and michael cohen's guilty plea, tell us a little bit more about the severity of all this right now for the trump camp. jonathan: the more serious threat is clearly coming from

.he michael cohen plea the president is correct. the manafort conviction is far removed from the allegations that were the original mandate given to mueller. cohen is a different matter entirely. he talks about an unidentified candidate ordering him to commit a campaign finance violation. unless it is bernie sanders, it's pretty bad for the white house. he is essentially making the president and unindicted unindictedtor -- an co-conspirator to a crime he just pled guilty to. and cohen says in this plea that he knew it was a campaign finance violation and did it directly on the orders of the candidate. that should not take away from a couple of facts. one is michael cohen is a dreadful witness. he has a very bad record as a

lawyer. he says things that clearly now were untrue. a hard type of crime to prove. they brought this type of charge former john edwards, a presidential candidate, and it failed. it led to a hung jury in a criminal trial. but having said that, this is a stronger case than the one brought against john edwards. they did not have a michael cohen who is willing to say i knew it was a crime and he made me to it -- do it. yvonne: he has pleaded guilty, but essentially, he is saying he might not be cooperating as well. as a sitting president, could congress actually use these charges as impeachable offenses? jonathan: well, they could, because the president has denied these charges while he was president. so, the president has steadfastly denied that he knew not thesepayment or were campaign-finance violations, so that might be a

linchpin they could use. i think there are strong arguments against this being the piece -- basis of impeachment because it was before he came in to office, but certainly, i think the numbers itthe house could convert into an article of impeachment, and this of course is occurring before the house may switch hands. aboutone question here hashen's lawyer is he asked why the payment to these women is not a crime for trump also. is there a legal line that can be drawn from those payments to mr. trump? jonathan: certainly. that is a campaign-finance issue. cohen has admitted to is influence the election. he is destroying the defense of trump. he did not want the scandal out there. possibleof other

crimes associated with the payment, there are other possible crimes. they may deal with tax issues, fraud issues, and even false statement issues. trump's greatest advantage is he never really spoke to investigators, so the thing that usually gets people in trouble -- and this has certainly been the case in the mueller investigation -- is false statements to federal investigators. president trump is not facing that type of charge. ramy: switching to the other man involved today, paul manafort, convicted at his fraud trial here, donald trump has said that there is no links to collusion. i want you to weigh in on this. there are two cases that have happened today. jonathan: the paul manafort case then fact removed from presidential election and the mandate of robert mueller. the trial judge in alexandria said what many of us said for weeks, which is that this is an

effort to muscle or leverage paul manafort, to get him to slip against the president. he is unlikely to do that. i mean, this is a man who is older. if he even gets a 10 year sentence, it could be a life sentence. there is only one person that is going to give him a walkway deal, and it is not mueller, is donald trump. is donald trump. he is holding out for the possibility of a pardon. ramy: there is a difference in terms of the plea agreement, but there is not a cooperation agreement involved. that does not preclude the fact that these guys can also still cooperate if they wanted to pushing ahead. jonathan: both these individuals could easily become corroborating witnesses. it is more likely with cohen. andler could come to cohen say you're looking at a high potential of six years. i could cut that in half. i may be able to cut it by two

thirds, but you have to give me deliverables. problem with cohen is he already gave him what he needs. people are not going to prod the cattle when you are giving away the milk for free. are dipping into live pictures out of charleston, west virginia, where you see president trump just meeting the crowds there at this rally, this make america great again rally. of course, it's going to be hanging on what he has to say in light of these developments with paul manafort as well as michael cohen, and what does this mean for the midterms? will this be a factor? does this strength in his position here when it comes to a lot of these trade discussions? here.nly want to watch we are waiting for him to step onto the podium. he is there now. on what he is going to say. in the meantime, tell us little bit more about rudy giuliani. at this point, how should he be advising the president on how to approach what comes next?

jonathan: well, unfortunately, giuliani has not had a stellar performance since he came on. the first thing he has to do is to fulfill a legal hippocratic oath to do no harm. there is no positive way to spin the matter. factrtainly can cite the that metaphor to is separate and distinct from any russian collusion or obstruction claim. the most important thing for the president to start to focus on is that he has now an exceedingly hostile witness in his former lawyer. he's going to meet cohen again. whether that is in a house proceeding or in the form of an indictment, there is a live torpedo in the water, and he will have to deal with it. charlie, thank you very much. meantime, you are watching live pictures of u.s. president donald trump speaking at a campaign rally stop in

charleston, west virginia. his original intent here was to count a proposal to -- tout to roll back carbon regulations, but over the past three hours or so, we have been getting breaking news consistently regarding to people central -- two people central to his inner circle. paul manafort and michael cohen being convicted of their undercounts here. we are going -- their own accounts here. he is just saying his hellos here. we will get lines as we get them and we will bring them to you as well. let's get to first word news now with jessica summers. jessica: thanks. china has reiterated his pledge as a weapon.e yuan the pboc deputy governor says the exchange rate will be decided by the market, and policymakers were confident of keeping the rate at a reasonable level. they spoke after president trump repeated his claim that china

manipulates the u.s. to remain competitive. britain and the european union say they will negotiate brexit continuously from now on. that is in a bid to reach a deal before the u.k. crashes out of the block. michel barnier says talks are entering the finer stage and he believes five -- final stage, and he believes common ground can be found. brexiteers say it is time for the u.k. to stand up for himself in the world. the u.s. has sanctioned the owners of six russian ships after claims they were helping transfer refined petroleum products. washington says the company violated u.s. and united nations sanctions on pyongyang and says the measures will remain in place until there is evidence that kim jong-un is breaking up his nuclear program. 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 jessica summers. this is bloomberg. yvonne: thank you. we are waiting to hear more comments from president trump in west virginia. we are going to focus a little bit more on earnings as well. a closer look at paying on when we read -- pang on. who seesnext, a bull no reason for wall street to hit those breaks. we watched jason thomas where he sees market movers. this is bloomberg. ♪

yvonne: this is "daybreak asia." i am yvonne man in hong kong. ramy: i am ramy inocencio in new york. you are watching live pictures of donald trump in west virginia, talking about right now about steel tariffs making the industry when of "the hottest." we are looking for lying to see if he will be talking about what's happening over the past few hours with two men from his

inner circle, michael: and paul as michael cohen as well paul manafort. you can watch it on your bloomberg terminal, mliv . we will get you headlines as they come from donald trump campaign speech here in charleston, west virginia. meantime, let's go to the markets. the s&p 500 touched an intraday record in the latest wall street session, marking yet another milestone in the nine-year bull run. we are one day away from breaking that, depending on what data you are looking at. joining us from l.a. is a ceo and chief investment officer. jason thomas, good to have you here. before we get into the highs, let's actually go into the market lows. the s&p 500, in terms of its features, are at a low. .afe havens are also falling this is in regards to what happening between donald trump and some of his aides here. to what degree do you think that this is short-lived, long-lived?

what is your take on this? jason: that is a great question, and thinks by the way, -- thanks, by the way, for having me on. the intraday high, you know, having this political news to deal with. i think that the market will be trying to assess is how the president may react to that. i do not comment on political issues, but to the extent that there are tweets about what the federal reserve should be doing or an attempt to distract, some attempts to do good.attempt what is the implication of this trouble for trade policy and for the fed being able to manage his own strategy? ramy: whether this is a knee-jerk reaction here and investors do not really know what to do, so they go into the japanese yen or they pull out

their money from equities, but looking ahead, how long do you think this might have an effect on the trump trade, for example? we are headed towards the mid-trade election -- midterm elections. won't push the republican voters away, but it could galvanize democrats and jeopardize all the things donald trump promised. jason: i think that's right, but you got to remember there was plenty of steam the hunt economy before the tax cut and before some of these stimulative six goal -- fiscal policy. what most professional 4%nomists would say is growth is probably a little too hot. we think the underlying trend rate of growth in the economy is more than 2.5%, so to the extent cap policies stimulate the economy beyond that, it is future us up for

trouble. many economists and investors would be fine if we took our foot off the gas a little bit and just sort of let the economy slowed just a little bit. jason, just going into the news of the day with what's been going on with paul manafort and michael cohen, markets have largely ignored these headlines until now. we are seeing s&p futures, dow futures, heading lower. the safety trade bid really catching it. what do you think markets are pricing and?why do you think -- pricing in? mighty think it matters this time around? an economist, not a traitor. we have the benefit of the long-term, the wisdom of the crowd, equilibrium. on a day to day basis, it is the most extreme views on the market that carry the day, so we have to have a little bit of a thrillseeking mentality to be a traitor, so we can speculate about what is happening. it may be people are simply positioning for what they think other people may react to, other

market participants when they wake up. think, other than worrying about economic policy, it is hard to point to anything in the u.s. economy, in particular, looking at what companies are saying. for example, looking through all the comments from the s&p 500 ceo's. they are saying the trade issues did not really impact them. maybe they made some plans. it really has not had that much of an impact so far, and i think the companies are thinking that it may not. going forward again, they are making plans, but i think if you are an investor today, there is no reason to think that the bull market is coming to an end. if we look at the grass, the reason we want to be in equities is because the line moves up and to the right. it has got to move up as we go to the right. every reason to think that markets will continue to reach new highs and that records in and of themselves are not

necessarily the sign of a downturn. yvonne: all right. we will see how things go, especially with what we are hearing in west virginia. jason thomas, going to leave it there. chief investment officer, joining us from los angeles. a quick check of the headlines. american airlines dropping a second major china route as services turned out to be colossal loss makers. it will end in october. american had already planned to halt like the same month between chicago and beijing. it will retain roots in dallas and los angeles. buying business in asia. first half results show profitability at its operations in china. that even after a rebound in the second quarter. that all me revive talk about ping an -- may revive talk about ping an buying stock.

it said it is not interested. and we will hear more about those results from ping an's chief strategist. stay tuned. that is on "daybreak asia." yvonne: japan's top wireless carriers tumbled after the government said they have room to cut phone bills. they lost $9 billion in market cap when you're shaheed a pseudo--- when he said they could lower bills. there is concern the government will renew its push for greater choice. ramy: just ahead, the rule of law. manafort and cohen are both found guilty. we will chart the market reaction, next. this is bloomberg. ♪

♪ my teachers from charleston -- taking live pictures from charleston, west virginia, where president trump has been addressing a crowd at his make america great rally. theere looking to hear from president regarding the last couple hours with paul manafort, that guilty verdict coming at the same time his personal lawyer michael cohen pled guilty as well. the president suffering through perhaps the worst day of his presidency on this tuesday, after these charges. certainly one to watch out here, but no comments yet.

ramy: wondering what is going on in donald trump's head right now. if he's totally focused on what's happening here. with campaign rally stops like this, this is his element. he does love this kind of excitement, but with that said, what has been happening the last three or four hours or so with michael cohen and paul manafort pleading or being found guilty, you really have to wonder if he's going to say anything with regards to that. somee: we did hear comments from the president before the rally when he stepped into charleston, stressing that the manafort charges are not related to russia, that there was no collusion there. but certainly this could potentially boost special counsel robert mueller's investigation into the russia probe as well. we will have to continue to watch what comes through in west virginia. you can watch, bloomberg subscribers, on life go for -- live go for more of the rally.

meantime, jessica summers joins us from new york. jessica: president trump's longtime lawyer michael cohen faces up to five years in jail after pleading guilty to eight charges stemming from hush payments to women who claimed affairs with the president. cohen said he violated the law at the direction of an unnamed candidate for federal office. a jury convicted trump's former campaign chairman paul manafort on eight counts, including tax fraud and bank fraud, handing a crucial victory to special counsel robert mueller. the jury could not reach a decision on another 10 charges. confirming quitting a gas project in iran after failing to secure a waiver from us sanctions. tehran has 20% and china's cmpc has the remainder. world's largest digital id

operator faces a lawsuit over failure to adopt adequate security that led to data leaks. -- digitalauthority identification authority of india provides id's to over one billion people, but has suffered weeks. the id's are used for every thing a bank account to a gas connection. ise governor of tokyo casting doubt on plans for daylight savings to manage heat during the 2020. they are concerned about moving the clock forward for just a couple years. as the world prepares to focus on tokyo, she praised the city's transformation into a global finance hub. >> we have had a lot of positive responses from global companies. i heard there are many companies considering going back to tokyo,

or setting up here for the first time. jessica: 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. this is bloomberg. ramy: thanks very much. the legal troubles facing trump's longtime lawyer and formal campaign chair have sparked some demand for haven assets right now. adam haigh joins us from sydney. what impact are you seeing in asia this morning? ramy, this hit risk appetite across the board. the yen strengthening, a little move in treasuries, showing a bid in the futures market currently, and s&p 500 futures have sold off, down about 0.5% currently. that feeds into asian equities, weak,se equities looking

and all this is just the perfect time and excuse to try to dial back risk. investors have been looking for something like this for a while. u.s. politics has kind of been not front and center of thinking recently, but it reminds people, they need to keep on top of these things. of course, going into the november midterms in just a few months. the fact geopolitical risks, be they a domestic u.s. situation or something more broadly, can very quickly flare up, cause this trigger of safety-seeking, haven assets for global investors. so it looks like risk appetite has taken a hit. the moves are not huge, we should add, but they are reasonably pronounce. the selloff in the s&p 500 futures is taking a little leg further down. yvonne: we are seeing china and some state backed funds stepping in to buy stocks.

seems the government is not just protecting the renminbi, but also equities. is this a one-off, or could it provide a sustainable floor? to, a lotou alluded of support we have seen from chinese authorities over the last few weeks and months, among all the terminal for markets in china, has been focused more in the currency markets and the tuan. -- yuan. today was different, in that the so-called national team was behind the buying of equities in mainland china, and that's reasonably unique in the last few months. the question now is whether we can see some stabilization in sentiment for chinese equities, which is still incredibly fragile. turnover was very low starting off the week. that started to pick up yesterday with some report -- support from the state authorities, but it is still an open question, whether this

gives longer-term relief. we will be watching the open of chinese markets closely today, to see if there's any evidence of that, but on one day alone you certainly cannot reach that conclusion. what we really need to see here is kind of a series of further measures, an overall package of support that will give enough support to sentiment that is still incredibly fragile in china. yvonne: adam, thank you. adam haigh, bloomberg global markets editor. china has repeated the pledge not to devalue the yuan or use foreign-exchange as a weapon in the escalating trade war. the vow comes ahead of renewed trade talks. tom, the timing of this, pretty timely here. a response to president trump's claim china is a currency manipulator? tom: they did not call out president trump, you will not be surprised to hear, but they felt

compelled to restate this line, that they are not and have no plans to use the currency as a tool in this trade spat with the u.s., saying they were allowing the market to play a greater role in the exchange rate, and saying as well, the pboc officials, that the good fundamentals they described in china's economy will support the concerns he -- the currency going forward. listen to the director of the monetary policy unit of the pboc, speaking today. >> effects ability of the yuan exchange rate has improved significantly. we put an emphasis on letting the market play an increasingly vital role in choosing the yuan exchange-rate. we will not use exchange rate as a weapon or devaluation in response to trade frictions. we will stick to bottom-line thinking and the confidence we an keep the yuan at

reasonable and equilibrium level. yvonne: that was li bo, speaking yesterday. tom: we also heard from other officials at the pboc, including the deputy governor, outlining plans to continue to support the country economy amid trade tensions. they want to see credit going to high-tech manufacturing and the service sector, reentering they want to -- reiterating they want to avoid funding going to sectors where there's excess capacity or highly polluting companies. this line regarding the yuan was in response to the trump comments reported by reuters, trump saying the chinese are manipulating the currency. that goes against what we have heard from the treasury department in the u.s., and against much of the ground evidence in terms of capital controls, window guidance, and the stronger fixing we have seen, suggesting policymakers want to support the currency rather than see it depreciate quickly.

bloomberg economics says the yuan is still probably overvalued by almost 6% despite the almost 5% drop against the dollar this year. ramy: pushing ahead, what is next in this trade saga? are the low-level minister meetings still on track? expected toalks are kick off tomorrow in washington. the vice commerce minister in china will be there for those talks with his counterparts. there aren't great expectations of any major breakthrough, but it could lead to the foundations for potentially more significant talks down the line. thehe same time, we expect additional $16 billion of tariffs to be imposed on both sides, taking the total on each side to $50 billion u.s. dollars. have a proposed additional tax on potentially $200 billion more underway in the u.s., with the consultation

ending september sixth. that's when you could see additional tariffs by the u.s. the chinese said they would respond with their own measures. then you look at the potential of 250 billion dollars of chinese goods targeted, $170 billion of u.s. goods targeted, and renewed momentum to see both leaders sit down. there's opportunity for president trump and xi to talk, potentially at the apex summit in november. if they fail to make any deals, and there is the g20 toward early december, some see that any resolution could come from a meeting of the two leaders of these nations as the trade war escalates. ramy: thank you very much. coming up, weak profitability may bolster ping an's need for some insurance in asia of its own. we look at its results and

possible next move. this is bloomberg. ♪

ramy: this is "daybreak asia." i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. ping an, new business growth rose at the slowest pace in six years even after a second quarter rebound. let's discuss that with ping an group chief strategist james garner. also with us, bloomberg intelligence analyst stephen lam. james, seemed like in the first half you were weighed down by regulatory tightening in china. the second half, do you see this as a continued impact? james: the first half was in credit the strong. dividends up 24%, net income up

34%. return on equity was 23% on an annualized basis. we are very satisfied with delivering a consensus beating set of results. yvonne: but the life insurance business saw the weakest growth in six years. does it speak to just how concentrated ping an is right now in the china market? is there now an urge to expand further, internationally now? james: the concentration you talk about is a bit misleading. yes, we operate in china, but we have 33 different businesses, 10 of which are actually technology. re verys of life, we a satisfied with the results. fell 8% because of new regulations last year, but we said q1 would have a trough. in the second quarter, value bounced to grow 10%. also important to stress, new

business value is only important in that it drives our return on embedded value. our life return on embedded value is on an annualized basis 35%. find a lifeuggle to insurance globally who can deliver embedded value close to that. --what are you think out and what you thinking of potentially buying prudential's asia business? james: we have absolutely no comment to make on any acquisition. we never comment on m&a speculation, and i will not begin today. ramy: with regard to expansion, pushing with what yvonne was saying, in terms of other interests elsewhere, are you happy with the current structure geographically of where your businesses are? or is there something you guys want to push outwards to? james: we are very happy being a leading technology, power, retail, financial services

provider in china, but internationalization has already begun. we have already expanded geographical footprints of our tech businesses. a subsidiary in singapore was set up last july. -- one connect also setting up a southeast asian opposition -- operation. ramy: james, thanks for that. just want to touch on the overseas more. do you see the trend for ping an , the ambition on the tech front afore insurance, or scenario where insurance and tech can go overseas outside of china? james: we are part financial services, part technology. for the last decade we have invested heavily in terms of technology, firstly to enhance

performance of our core business, and secondly for new revenue streams, selling our technology to other companies, and thirdly to develop our ecosystem. ping an is not a traditional financial services group. million internet users. the ecosystems in the first half, 33% of the new retail customers we acquired came from those ecosystems. when you acquire a customer through an ecosystem, it is cost-effective. those customers tend to be stickier, and you have better customer satisfaction. following on that point, i think you guys are very successful in china, you have a lot of users. the mentality of the user base in southeast asia is very different, a broader group including hong kong, east asia

and the like. so the question is, it's a very big market, a lot of potential youping an to tap into, but also have to face a lot of regulations, integration hurdles, stuff like that. how do you think about that area? james: southeast asia offers huge growth potential, 640 million people there, but more broadly we see technology as offering significant value creation for our shareholders. what was staggering in the first half, the prophets we were making from technology were 10 times higher than in the first half of last year, and now operating profit around 7% is coming from technology. one year ago, it was less than 1%, so we are enthusiastic about the ability to monetize a very heavy investment in technology over the last decade. yvonne: which units are you more optimistic about after blue fax? james: we are optimistic about

all of them, which is why we make significant investments. doctor is listed. the other big one, the largest online wealth manager in china. one connect, a business we are very excited about. is providinging an technology services to 441 thanks, 38 insurers, 2100 other ,on-bank financial institutions proof of how versatile our technology is. ramy: you said fintech contributed to 7% of first half products. when might that get to 10%? james: i don't give exquisite forecasts. we don't give explicit forecasts on anything. stephen: what does it take to get there? which business units do you think have the bigger potential

of coming out to bridge that gap to 10%, even 15% going forward? james: we have 10 or 11 tech businesses, four of which are already unicorns. we are excited about them and the other six businesses we are incubating. building tech businesses requires a lot of investment, but ping an has some unique advantages. we have a lot of data, a lot of tech talent, and what may surprise you, internally we have 24,000 i.t. developers. our total tech headcount is closer to 60,000. group,inancial services we have 6100 technology patent applications, which doubled. yvonne: it seemed there was a drop in aum, increased loans in management. how did that change the economics?

james: we had a very strong first half. aum fell because of restructuring, at the moment consolidating risk to put the platform in position to be successful in the new environment when asset managemene effect. the credit performance, secured and unsecured, was very stable. yvonne: you don't think the overall macro environment might damage the quality of some borrowers? james: ping an is a very professionally and prudently managed group, very diversified as well. historically we have had some bigger risks, such as the banks. sinceairman at the banks, taking over in 2016, has aggressively de-risked the banks sheetand off balance

assets. we stress test all of them. yvonne: always good to have you, james garner of ping an group. also want to thank stephen lam from bloomberg intelligence. ramy: on bloomberg.com, there is a buzz around the impact trump's tariffs might have on start ups. are on tictoc, followers tweeting about a trend that has seen techies shun silicon valley, opting instead for the japanese dream. over on the bloomberg terminal, most read by subscribers, news of course about the cohen and manafort double guilty decisions. you can follow these stories and all the breaking news you need on the web, the terminal, and right here on bloomberg television. this is bloomberg. ♪

check of's do a quick

the latest business flash headliness. tesla's plan to go private taking a new turn with morgan stanley the second big-name to suspend coverage. although goldman sachs said it was dropping the rating while it advised elon musk, morgan stanley has offered no such guidance, prompting speculation they are maneuvering for a role in the privatization bid, triggering tesla's biggest intraday gain in two weeks. uber has ended a three-year run without a cfo. anil recently, he was ceo of insurer to automakers and consumer goods manufacturers. uber aims to go public in the second half of next year, but he declined to comment until having a chance to go through the books. xiaomi reports after the close in hong kong, the first result since going public last month. the beijing-based smartphone maker wants to evolve into

online services as apple has done, and raise over five billion u.s. dollars in the ipo. some investors are starting to lose faith. the stock is almost 20% below the post listing peak. yvonne: we are counting down to the market open in japan, south korea and australia. about three minutes to go. it has really been about the post-market reaction on the u.s. side, which we are honing in to after the last couple hours. we learned on the paul manafort trial, guilty on several counts, and michael cohen, the president's personal lawyer with a guilty plea. set for a choppy session potentially for the nikkei, given what we have seen with the dollar-yen, the safety bid into the yen and swiss. sydney futures heading the other way. in the next hour of bloomberg daybreak: asia, the much-anticipated xiaomi earnin gs, will they meet

anticipations? we crunch numbers with our guest. plenty more to come with the market and open coming up. this is bloomberg. ♪ retail.

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yvonne: 8:00 a.m. in hong kong, live from bloomberg asian headquarters. i am yvonne man. welcome to "daybreak asia." president trump's longtime lawyer faces five years in jail. michael cohen admits paying hush money to women. and the president's former campaign chairman paul manafort convicted on eight counts, including tax and bank fraud. ramy: from bloomberg global headquarters, i and bring the inocencio in new york, where it is just after 8:00 p.m. on tuesday -- remy inocencio in new york, where it is now just after 8:00 p.m. on tuesday. the yen is strengthening towards 110. china rejects washington's accusations of currency

manipulation, the pboc insisting the market alone will decide. ♪ yvonne: good morning. you are taking a look at live pictures from charleston, west virginia right now. a bad day, perhaps the worst day for the president here since his presidency, as we have seen these developments in the last couple hours. his personal lawyer, michael cohen, entering into a plea deal, essentially admitting that he was directed by "a candidate for federal office" to arrange payments to two women, as well as paul manafort, his campaign manager, entering into a guilty verdict with the trial there, now charged on eight counts. we heard from the president in the last couple minutes, ramy. he did mention the "russian

witch hunt" still looking for collusion, talking about prospects for the midterms. a lot about what these cases mean for november. ramy: interesting that he skirted around any comments regarding mr. manafort, as well as mr. cohen here, as we wait for further lines to drop, but of course we have been getting a deluge of comments from washington, d.c. and new york, rudy giuliani for example, basically throwing cohen under the bus, saying he has shown a pattern of lies. cohen's lawyer and members of congress also weighing in. yvonne: a lot of questions for markets. what does the cohen plea mean for the president? does this continue to go on? can he distance himself from these charges we have seen, when it came to paul manafort as well as the guilty plea from cohen, and does this week in his position when it comes to trade, especially with china? he answers that, questions we

need to answer. david ingles, what does this mean for markets? david: at the moment, very much a sentiment play. do we have to extend the torative, how it pertains continuity of policy. i will get to the other asset classes. a fairly acute story as of now. the markets, so far playing out as far as u.s. futures. getting a little tilt lower across most benchmarks, but all but academic at this point in time. when the news did come out, it was fairly, obvious, the headline of u.s. stocks touching a record high, didn't last very long. again, to that very same point, bidd futures were already leading up to the open in tokyo, so when we get trading in treasuries underway, a drop in the two-year and 10 year yields

slightly flatter, slightly steeper if you will on the five-year and the 30 year. not a lot there. this tells us the story that so far it is not a broad market story as it pertains to sentiment, dollar-yen falling on the back of the news, but not much as far as the other majors are concerned. the other thing i want to point out, the other big story we are tracking today, is when the chinese markets open up. em's in general have been bid. we are on the biggest two-day pop on emerging-market equities since june. that comes back to that the yuan has been stable. do we fall below 6.0? we will have to wait and see. we have not traded below that level, 6.80, from a stall this month. let me bring up -- for almost all this month. let me bring up the msci emerging market index, on the way up there. back that closely, on the

of lines out of the pboc that they will let markets decide, will not use it as a tool or weapon in this trade war. quickly back to the equity markets. do we have trade underway for the mobile carriers? can we get that up please? big drop yesterday. let's see if we are getting any sort of reprieve today. not really, on the back of news yesterday that they might be taking down tariffs there in the telcos. lots of news. fairly busy wednesday. ramy: that's right. david ingles on the markets, seeing if there is any reaction coming out after the headlines from washington. let's get further into this. now that we know president trump has been hit by this double legal blow, his longtime lawyer michael cohen pleading guilty to charges stemming from the hash payments to women who claim affairs with him, along with a jury convicting his former campaign chair paul manafort of fraud, but the president says manafort is still a good man and

says he feels badly for him. take a listen. >> this has nothing to do with russian collusion. this started as russian collusion. this has absolutely nothing to do. this is a witchhunt, a disgrace. this has nothing to do with what they started out looking for, russian involved in our campaign. there were none. ramy: let's get to our chief correspondent in washington, kevin cirilli. very long day for you, i know. taking a look at the last three hours and are asia-pacific viewers waking up, get them up to speed with what has been happening. kevin: president trump's former campaign chairman paul manafort, found guilty of eight charges related to fraud. there was a mistrial on the remaining 10 charges. this is perceived as a win for special counsel robert mueller who has really been focusing on paul manafort. we heard from president trump before his campaign style speech in west virginia, defending paul manafort, calling him a "very good man."

the president did not have the same to say for his longtime personal confidant,e fixer and one-time personal attorney michael cohen, who pleaded guilty earlier today in the united states and ultimately said he was instructed by "a candidate" -- now the only candidate he was working for at the time was then-candidate donald trump -- he was instructed by the candidate, michael cohen says, to provide hush money to women who alleged extramarital affairs to impact the election. all this comes now with a great deal of scrutiny. fallout has been swift. republicans say there no evidence of any russia collusion. the president speaking out in charleston, west virginia, not addressing paul manafort nor michael cohen during his speech. he made no mention of michael cohen before the speech. he says, where is the collusion, show me the collusion. democrats are saying, this is just the beginning, and this, they are raising concerns that

the president might pardon manafort and cohen. ramy: in terms of legal jeopardy, that phrase has been bandied about the last few hours. to what degree, how deep is donald trump in with regards to being basically in a lot of trouble? kevin: you know, two things. when you look at paul manafort, this is someone who had deep ties to the president, then -candidate's political network. the charges he was found guilty for were not stemming from his time on the campaign. one source who works with the white house echoed what the president said publicly, no evidence of collusion. in terms of michael cohen, this is someone who has a deep understanding of the trump organization, citizen donald trump's financial dealings, and how the whole apparatus, from the trump organization to the political campaign, was in fact orchestrated. but the political implications of this could impact the policy. if you're in asia, for example,

should this motivate democrats to get to the polls in the midterm election and the house of representatives is overtaken by democrats, obviously that has significant policy implications, particularly on a day in which the president deregulated the energy sector. that's where all this is headed. should the issue of impeachment come up, if democrats take back control, does that become something folks have to price in, for after the midterms? yvonne: we are just days away from the u.s.-china trade talks as well. when it comes to trade policy, could that be impacted? is the president going to come from a position of strength or weakness now, approaching talks with china? kevin: great question. obviously there's no relation to paul manafort, michael cohen, an d steven mnuchin negotiating the trade deal, but you have a situation now where republicans are trying to get the president to act tougher on situations like russian sanctions, and you

also have a situation now where legislation, there are uneasy republicans who want to rein in the president's negotiating power on trade policy. political capital, political capital, political capital. the president is going to have to exert a lot of political capital in order to defend himself domestically on this issue of michael cohen and paul manafort, and it is political capital they are not going to be able to expand on something like trade talks, selling it to the american. yvonne: always great to have you. thanks for staying up. kevin cirilli, chief washington correspondent. kevin: this is why we do it. [laughter] yvonne: this is what we are watching, out of west virginia right now, the president speaking about trade. it seems like he is exerting that political capital when it comes to trade policy, the president saying trade deals take time, but overall they are doing ray well -- very well.

he says allowing china to be bigger is not going to happen now. he also mentioned a little bit about how he threatened 25% tariffs on cars from the e.u., so certainly that threat is still in play right now. also talking more about the midterms, saying america was never great is a new theme for democrats, and says there is no worst nightmare than if the democrats win the midterms. trump says he could win six or seven more senate seats, touting his record when it comes to endorsements. pretty defiant comments, in light of what we have seen the last couple hours. bloomberg subscribers can continue to watch that rally on live go on your terminal. in the meantime, let's get you caught up with the rest of the world with first word news. jessica summers is in new york for us. jessica: china has reiterated

its pledge not to use the yuan as a weapon in the escalating tread -- trade war. deputy governor li bo said the exchange rate will be kept at a normal level, after claims that china minute relates the yuan to remain competitive. >> effects ability of the exchange rate has improved significantly, putting the emphasis on letting the market play a crucial role in deciding the yuan exchange rate. we will not use the exchange rate as a weapon in response to external challenges from trade frictions. we will stick to bottom line thinking, and we are confident we can keep the yuan exchange rate stable at a reasonable and equilibrium level. jessica: the u.s. sanction to the owners of six russian ships after claims they are helping transfer refined petroleum to north korean vessels that sea. vostockton says two vladibv

based companies violated sanctions on pyongyang, and says measures will stay in place until there's verifiable evidence kim jong-un is breaking up his nuclear plan. total is quitting a gas project in iran after failing to secure a waiver from u.s. sanctions. the company is the operator of the field, holding just over 50% of the project. cmbsn has 20% and china's the remainder. over,as the right to take but total has not heard from beijing. the governor of tokyo, casting doubt on official plans to introduce daylight savings to help manage the heat during the 2020 summer olympics. she's koike said concerned about the disruption of moving time for just a couple years, but she said that as the world prepares to focus on tokyo, she has praised the city

transformation into a global finance hub. >> we had a lot of positive responses from global companies. i heard there are many companies considering coming back to tokyo, or setting up here for the first time. jessica: global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalistss and analyss i -- analysts in 120 countries. ramy: later this hour on "daybreak asia" we will talk about the latest deals, mergers and acquisitions out of china and hong kong. that's with pwc's david brown. yvonne: up next, expectations are high for xiaomi's earnings despite a post-ipo share slide. elinor leung joins us for a preview. this is bloomberg. ♪

ramy: welcome back. this is "daybreak asia."

i am ramy inocencio in new york. yvonne: i am yvonne man. earnings watch turns to xiaomi in hong kong, with the first results since going public last month. stephen engle has been tracking this as well. a lot of expectations the earnings will turn around what the stock has been doing. stephen: there is evidence that the chairman -- fits into the narrative the chairman wants to convey, we are becoming an internet services company, not just a handset maker, although 70% of revenues come from handset sales. we see gross margins in the second quarter likely improving due to higher revenue from internet services. that plays into the narrative. average selling prices likely higher as well. selling more midrange phones, rather than just the cheaper ones. even though ibc says total shipment growth in the quarter slowed to 49%, in the second

quarter we had 88%. smartphone sales likely moderated in the two main m arkets, china of course and india is the biggest international market, but likely picked up in places like indonesia. that fits into the other narrative they are trying to convey, we are going more international, but there are challenges there as well. to build an ecosystem, you need to sell smartphones, and global smartphone sales are generally on the wane. xiaomi has an ecosystem of i.o.t. devices, and those makers are mostly domestically focused. ramy: let's bring in our next guest. more on xiaomi, joined by elinor telecomlsa head of research. are you convinced that xiaomi is a high-growth internet services company? elinor: i think as you

mentioned, internet services are highly correlated to the market itself, especially in china. the good thing, we see a good momentum in china, although the shipment number is not going up a lot. but they are already very dominant in china, and now they are penetrating into the high-end market. well, 8 is selling selling one million units in 18 days. the good thing about that, the average pricing is 2500. the average smartphone price in china is only 900 renminbi, so that will help them to increase the revenue growth in china. outside china, still doing well, number one in india. global share increasing from 8.4% to 9.4%, a very good improvement in terms of growth, expansion. with a good penetration in china, able to sell internet services as well.

we might see a slowdown in gaming, mainly because of the industry, but advertising growth will be very strong. overall, we still think they are on track with growth. ramy: so fairly positive even though we see shares coming off nearly 20% ever since the post-ipo. one of the two big issues looking ahead, the transformation they are trying to do from being a hardware maker to that internet giant, but what do they really need to do, and across what timeframe can this actually really happened? -- happen? elinor: right now they are mainly a distribution platform, generating good money from advertising, disturbing other people's content. the next level they need to expand into, original content, in order to differentiate themselves, in order to maximize revenue. they might have to invest in games, videos, music in the future, but the good thing is they have some experience.

in the past they were a major shareholder of king soft, so that will help in the future. ramy: one other aspect of growth, international expansion. guest saids week a it was all about not what is in china, but what is outside china. india, i know, is one of those aspects for expansion, but there are also competitors trying to knock them off that perch. what do they need to do in terms of trying to make sure that does not happen? elinor: i think that they are still very competitive in the low-end market, especially with the home mi. it is difficult to produce a phone that is cheaper, because they are ready have very large scale, so the prices very competitive. they also are known to have very effective is to be should and maketing strategies, with rgin for the low-end phone.

to price lower, you would probably have to sell at a loss, so a big challenge for competitors to compete at the overseas markets. in india, is trying unveiling their cheap phone. the other overseas markets for xiaomi. maybe getting ahead of ourselves, but i saw more announcements here for payment services in hong kong, also rus sia, israel. what about the united states? elinor: i think united states is probably not a big focus for xiaomi. their main focus right now is still the emerging markets, because the developed markets, including emerging markets like china, smartphone penetration is pretty high, over 70%, less attractive compared to other emerging markets. with the supply of the low end phones, the penetration of

emerging markets is only 36%, so attractive compared to a developed market like the u.s.. yvonne: switching to alibaba earnings. we saw jd.com, tencent disappoint. these have been the proxies for the trade war. is alibaba more insulated from that? elinor: i think alibaba is not 100% insulated from a trade war or economic slowdown. but they will be relatively resilient, like a lot of retail companies in china, including other online retailer companies. that's why we still think the line is very strong. ramy: revenue growth, consensus is 60% growth in sales year-over-year, but gross margins are being squeezed. all the investment in businesses , including off-line retail. elinor: also, all business margins are going to go down. alibaba, the main negative is

margins decline, earnings growth much slower, mainly because of china.solidation in also, they have to pay expensive world cup exclusive broadcasting rights in the quarter. a lot of this is temporary costs. declinese margin likely to moderate in the second half as they start consolidating. ramy: the logistics company and food company. but they have direct competition from tencent. how much will that hammer margins? elinor: in retail they have a very strong lead compared to tencent, working directly with off-line retailers to help them upgrade their i.t. software, solutions, bringing more traffic.

online sales., online sales are already the world's highest, but that could see more penetration in the future. ramy: that new retail you talk about, is it the same as convergent retail? with getting from online to off-line, it is really not so much one or the other, e-commerce or brick and mortar anymore. what is a doing well, or something they -- what are they doing well, or something they need to do better? elinor: there is a misconception in this new retail. a a lot of people think it is because they can't sell products online, so they go off-line. the concept is actually to help the offline retail companies sell more online. a plot of the off-line retail companies still have a separate operation, online and off-line, making the business highly inefficient. two warehouses, for online and off-line. than waiting for

retail companies to create their own strategy, alibaba says, here is a solution, adopt it for on line sales. the typical model they want to promote, where productivity is three times compared to the traditional market, because over half of sales are online. once over half of sales are online, productivity is much higher, but to do that you have to upgrade software, supply chain management, payment, ever ything. baba is going to provide you with all these solutions, for you to upgrade to online. yvonne: has the chinese consumer behavior changed? i was looking at jd's earnings. seems like it's becoming a bigger contender. that?baba at risk of

elinor: a new type of selling model in china, one of many. i don't think that will change the model in china. the next step is to deepen relationships with big brands to help themdidas, sell more efficiently online. if you look at china, we do have a consumption upgrade in china, more towards the alibaba model. ramy: a lot of market chatter and media reports about a timeline for an an financial ipo. elinor: we hear the same thing. [laughter] it could be delayed by a rate greater issue, because relations are not set yet. but the company is already profitable and has positive cash flow.

they raised money for international expansion. i don't think it's a problem with them. yvonne: we have to leave it there. elinor leung, thank you for joining with stephen engle on this conversation. plenty more to come on "daybreak asia." this is bloomberg. ♪

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west elm. order now and get $150 off, and free shipping, too. go to buyleesa.com today. you need this bed. >> 9:00 a.m. in tokyo right now. that is actually beijing. come infor what is to the china session. we have been watching the japanese yen, little bit up. a risk-off move given developments with paul manafort as well as michael cohen. >> taking a look, the yen is again, which it did yesterday. we also saw u.s. futures lower in terms of what has been happening. let's get the first word news.

trump's longtime lawyer faces five years in jail after pleading guilty to eight charges from hushed payments to women who claimed affairs with the pleasant mr. president -- affairs with the president. a jury convicted paul manafort on eight counts, handing a crucial victory to robert mueller. the jury could not reach an agreement on another 10 charges. britain and the european union say they will negotiate brexit continuously from now on. that is in a bid to reach a deal before the u.k. crashes out of the bloc. michel barnier said talks are reaching the final stage. he insists britain must respect the single martin -- market.

>> there are still many opportunities left unrealized. that is what this strategy is intended to change. it builds on the government industrial strategy with the ambition of making exporting of the norm and not the exception. digitalorld's largest ip operator could face a lawsuit over failure to adopt security that ultimately led to data leaks. indiata authority of provides id to a billion people. it has suffered a string of information leaks. the database is used from opening a bank account to installing a gas connection. a powerful earthquake hit venezuela, shaking buildings and interrupting a pro-government rally on controversial economic reform. it was a magnitude 7.3 tremor with the epicenter 20 kilometers

up the peninsula. no injuries or damage have been reported. is similarly powerful quake till dozens of people in the same area in 1997. global news 24 hours a day on air and @tictoc on twitter powered by journalists and analysts in 120 countries. this is bloomberg. >> thank you. let's get a quick check of your markets. we are relatively higher with the exception of australia. losses of 0.5%. a flat session in tokyo today given the strength we have seen in the yen trade. haven buying has intensified given the developments we saw out of two cases with paul manafort as well as michael cohen. the walls get closer to the president. that rally in west virginia we have been watching out for.

catchingeing the kospi 0.3% for south korean markets. this is following the game we did see in the u.s. market and the turn of events we did see in virginia and d.c. as well is ironic even what we saw the u.s. session during the active session where we reached record highs of the u.s.. especially when it came to the s&p up a fifth of 1%. the question is, can this will run continue? we reached higher than that high water mark in july -- january. we see equity futures headed the other direction in the u.s. in light of the presidents -- the president and what he is facing domestically. we are watching given these record gains, the world's largest pension fund seems to be betting on the u.s. market lasting longer. japan's government pension investment fund has doubled its commitment to foreign shares with the focus on wall street.

our japan stocks reporter has more on this. how reliant is gps when it comes to u.s. equities in global markets? gpisen you look at the holdings, the ratio of foreign equity holding is now on par with that of japanese equities. if you look at foreign equities, the u.s. market in particular now accounts for more than half of its foreign equities. this is largely because gpis invests passively and tracks the all world index. because of this the gpis has huge holdings in couple u.s. equities and a lot of heavyweights, a whole bunch of tech companies including apple, microsoft, amazon. now the fund has billions of dollars of stakes in these u.s. equities. >> what does this mean for the

fund's performance as well as its returns? fortunately as you mentioned, because the market has been in a huge rally for years and years, basically the u.s. equity is in a bull market. saying gpisare benefited from this. they overhauled this strategy in 2014 at the fund has been able to boost its returns writing on the huge global equity market rally. the risk has increased as well. analysts are saying this has been a good move for the gpis return for now. >> thank you very much. meantime, china has repeated its pledge not to devalue the yen or use the foreign-exchange rate as a weapon in the escalating trade war. that wow comes ahead of renewed trade talks in washington. our china correspondent joins us

from beijing. is this a response to president trump's claim that china is a currency manipulator? >> certainly china's policymakers are very aware the yuan is a stick trump would like to beat them. -- compelled to reiterate they are not going to use the rmb as a tool in this trade spat. they say they are allowing the markets play a greater role in the exchange rate. they say the good economic fundamentals in china will support the currency going forward. take a listen yesterday in beijing. this is the director of the monetary policy unit at the pboc. the yuanexibility of exchange rate has improved significantly. you put an emphasis on letting the market play a crucial role. we will not use competitive currency devaluation or use exchange rate as a weapon in

response to external challenges. we will stick to bottom-line thinking and are confident we can keep the yuan exchange rate stable. >> pushing back against trump's claims they are manipulating the currency. and of course trump's notion this is happening goes against what we hear from the treasury department, which did not name china a currency manipulator in its latest report that came out in april. against what many economists view our measures the to bolster in fact the currency in light of what we are seeing from the fed rate hikes, in light of the slowing economy, and the trade tensions. you have had window guidance. bloomberg economics saying the yuan is still overvalued by 6% despite the 5% we have seen versus the dollar year today. -- year to date.

we've also heard from the pboc on a measure to support the economy as trade tensions continue. they want to see more credit going for small firms, to the services sector, saying they want to avoid credit going to areas of the economy where there is excess capacity. nonetheless, these are measures we have heard outlined broadly. they put a bit of flesh on the bones and forth market to expect additional supportive measures should trump go ahead with further tariffs down the line. >> we did just hear from the president during his rally in west virginia saying allowing china to be bigger, not going to happen now. how should the chinese approach this right now with talks just days away? >> many economists would take issue with that comment. if he goes and these issues -- these meetings, or if his officials go in with that kind of line, it is not going to play well.

these meetings are expected to happen, kicking off tomorrow in washington. china's vice commerce minister will be there with a delegation of chinese officials along with their u.s. counterparts. they could lay the foundations for future talks. both sides are expected to pull the trigger on an additional $16 billion of tariffs. it is happening at this consultation period continues the u.s. over proposed additional tariffs on another $200 billion worth of chinese goods. china has said it would respond to that. really there would be additional -- for these leaders to meet as an option, a potential meeting point at the apec summit in november. if they fail to meet them or come to an agreement, there is the g20 summit in argentina toward the end of november. we have heard from the likes of mark's ceo about damage to the u.s. economy, but we have also

been a bloomberg survey of economists who suggest if we see tariffs oncherubs -- chinese exports, you could see a drop in chinese gdp. clearly there is damage on both sides. now we are looking to be stocks in washington. >> thank you. tom mackenzie in beijing. coming up, overseas acquisitions by chinese companies have been falling. the implications, next. ♪

>> this is daybreak asia. >> let's do a quick market check based on what has been happening over the past three or four hours out of washington, d.c.. we did see a bid for some

safeties. let's look at the bloomberg dollar spot. we can see it is meandering right now around the 1180 mark. it had been weakening over the past few days with regards to hopes for u.s.-china trade tensions coming off of oil. we will also take a look at what's been happening in terms of the u.s. treasury 10 year, specifically. on, butt was very risk right now, we can see folks have actually started to come back into the 10 year. let's take a look at u.s. futures. the s&p 500, pretty much near session lows for the futures session, down by almost 0.5%. similar numbers for the nasdaq dow.e >> let's take a look at the m&a space. pricewaterhousecoopers says china's m&a activity has declined for two straight years.

down by 18% in the first six months of 2018 to it total of $348 billion. joining us now is their services transaction -- transaction services later. talking about the changing dynamic of what we have seen, tell us about the appetite for deals. >> there is certainly a lot of appetite. numbers, yout the said the value is down by 18%. two really big sectors are the domestic deals within china. chinese buyers and chinese targets. then you have the outbound. domestically there was a decline about a quarter in dollar numbers. that is not a real trend. it was a big blip in the previous six-month period. you are really just coming down to a more normal level within the country. where you are seeing the trend is really in the outbound.

there we had a very big peak at the start of 2016. 43 billion u.s. dollars. since then, we have seen a steady decline in the outbound. that is where the trends are coming through. >> there still seems to be hesitation amongst companies to go for these large-scale m&a's given the fact you have currency weakness, geopolitical tensions as well. do you see signs of a turnaround? coursetical tensions are , and it is not just state enterprise. it is often misunderstood. exactly coming from the private sector. if you look at where the decline has come from, it is all must entirely come from deals going out to the u.s.. europe is steady, the rest of the world's steady, but deals have come down in the u.s..

this is the geopolitical tension. anybody i think who is looking high-profilellar cross-border transaction in , i think people are thinking twice about that. the has come off strongly. if u.s. me to look forward, what happens next? in a way, the u.s. cannot take it lower. the u.s. is down to bottom already. the displacement we are seeing into europe, what is happening now is sensitivity is starting to rise. you have seen germany -- germany was the latest one. there really is as political sense actually all around the world, these high-profile cross-border deals. that i think is having a dampening effect. >> it is interesting. of favorite sectors, technology was still number one in the first half.

we know it is a target by the trump administration. in terms of what is looking ahead, do you still see this as taking the top spot in the second half and 2019? >> check -- technology's technology is technology. technology will be there, real estate will be important, it is always big. financial services will be important. people are interested in health care, agriculture, food safety in particular within china. broad, but technology always is important. >> on the flipside, the non-favored sectors after that march regulation that really try to put the kebab on psyche -- kibosh on speculative deals. stopped.asn't government listed

several sectors, entertainment, sports teams, hotels, you are seeing that dropping right off. some of the companies that were very active in those sectors have now had to sort of divest themselves of those assets. currency, thehe five, 6% drop we have seen, the last time we saw these moves, we saw this curve m&a's. do you think there is still a risk that could happen? >> the currency is still interesting because on the one , everything becomes more expensive. , what we haveand tended to see and practices as long as people have a few the currency is on a downward track, and many economists think it is still overvalued, when people

have that view there is almost a rush to get money offshore and to foreign currencies. the currency drives in both directions. it is a little bit different in terms of -- >> to determine a trend. >> we are seeing tightening of access to foreign currency. that could slow down. that could be a negative on the outbound. >> m&a activity is falling. what does that mean for the ipo market? do you see signs of strength? rex moore the other way around. when the ipo market is struggling as it is at the moment in china, that has -- impact.mpact on listed companies no longer have the strong currency of their shares to do acquisitions area they are not active buyers of private equity assets. private equities are not exiting through the ipo markets.

it is the other way around. they become a bit depressed and it brings down the m&a as well. >> great to have you joining us on the china hong kong transaction services here in hong kong. don't forget tv , you can watch us live and catch up with past interviews. you can become part of the conversation and send us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . ♪

>> this is "daybreak asia." >> let's do a quick check of the latest business flash headlines. facebook says it has taken down 652 more pages and accounts over what it calls "coordinated inauthentic behavior." the social network says behavior originated in russia and iran. it also suspended accounts for engaging in manipulation. microsoft said it seized web domains being used by russian hackers masquerading as conservative organizations. >> security is not something you are ever fully solved.

our adversaries are well-funded and we have to keep improving to stay ahead. the shift we have made from reactive to proactive detection is a big change and it is going to make facebook safer for everyone overtime. an insurance company is bolstering its case in asia. first-half results show profitability in its life insurance operation at the weakest in six years. aboutay revive talk another company buying. it is also focusing on fintech. >> we see technology as offering value creation for shareholders. what is a staggering, the profits they were making from technology were 10 times higher than the first half of last year. now our operating profit around 7% is coming from technology. a year ago it was less than 1%. we are very enthusiastic. carriers areless

falling after the government said they have room to cut phone bills. they lost about $9 billion in the chief with cabinet secretary saying they could lower bills by 40%. he also said competition between the big three was not working, sparking concern the government will not renew. >> american airlines is dropping a second major china route after the services turned out to be a .olossal loss maker service between chicago and shanghai will end in october. american had already planned to hold flights between chicago and beijing. it will retain roots connecting the cities with dallas and los angeles. >> let's bring in our aviation expert for more on the story. interesting stuff here. there was a huge expansion that china was the place to go. what happened yet the -- happened? >> expert might be pushing it, but nevermind.

,he phrase colossal lossmaking america's vice president telling all the employees during an interview, in terms of the two routes, chicago and shanghai, you canand beijing, still fly going through dallas or los angeles. --know higher oil prices these will end in october. they are not really company doing this. ryan airlines also dropping theirs.-- that is what we have at the moment. 11 overseas routes in total, adding nine at the same time, starting a new flight between phoenix and london as well as more frequency to london as well. berlin as well.

>> what is coming up on "bloomberg markets? " >> telling us the trade war is an opportunity. he is a this is an opportunity for china to make economic changes such as tax cuts rather than resorting to these old playbook of pumping and more liquidity. that is coming up. >> thank you. a quick look at how markets are trading right now. we are largely higher here today with the exception of australia, down 0.4%. shrugging off the turbulence we have seen in d.c.. ♪ ♪

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rishaad: president trump suffering his worst day yet. his campaign manager convicted on tax and bank fraud. ae president slams it as "witch hunt." stocks edging to the upside. in hong kong, i am rishaad salamat. tesla jumping as younger investors to english.